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Diamond demand surges

The demand for diamonds continues to surge, even with the economic troubles continuing in many countries.

Retail diamond sales for 2011 were up 18 per cent over 2010 totals, and exceeded the peak seen before the financial-crisis, according to research from Bain & Company. The industry was on track to see even greater sales gains in 2012, say industry experts.

China, as well as India, account for the most growth, as their middle classes continue to expand. More families in the West are practicing the giving of diamond jewellery to celebrate engagements, weddings, and anniversaries alike.

However, the surge in demand will not mean growth and profits for all the major producers of luxury. The companies who stand to benefit the most will be those which carefully manage their own inventories, along with refining and mixing of stones for a wide range of consumer price points.

While global demand is certainly growing, research has noted that at the retail level, the business is still very localised. Consider the Chinese market, which has seen an annual growth rate of 32 per cent since 2005, and is the fastest growing in the world currently. The annual sales are approaching $9 billion, and long-standing interest in gold and jade, are being bolstered by the fascination of Western culture in the good-luck stones. The trend will continue to rise as the middle class expands in the midsize and small cities across the growing regions.

Indians in particular are demonstrating that there is a very large appetite in the country for the precious stones. The middle class of the country is now spending twice as much on luxury jewellery as China, despite having less income. That fact leads to the 22 per cent growth in each year since 2005.

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