Diamonds Are Forever: South India sees spike in demand due to falling prices, younger customers

Diamond prices are falling across the country, and that has gold-loving consumers in South India making a beeline for the precious stone. A quick survey of jewellery stores across premium stores in the south reveals that even traditional jewellery made of gold sees diamonds occupying the pride of place in the ornament.

This newfound patronage, diamond retailers say, is compensating for the fall in prices. De Beers Forevermark expects festive season sales to account for a 20-25% growth in sales, supported mainly by Bengaluru, Hyderabad and Chennai.

"In terms of sales, the south contributes 45-50% of our total volume, and that is primarily because South India loves to buy a better quality product," said Amit Pratihari, Vice President at De Beers Forevermark, "There is no doubt that gold demand continues to be very strong, but when I look at millennials and GenZ — that's where the diamond affinity is coming from."

The emergence of this new demographic of diamond buyers has more retailers widening their customer base by selling jewellery that appeals to younger consumers. They point out that while this demographic may not buy as much as more affluent customers, it is aspirational nevertheless. This has resulted in subtler designs, with an emphasis on style, as opposed to statement pieces that are made to stand out.

For the moment, the approach is working. at Chennai's Khwaahish Diamonds, 40% of sales recorded this fiscal are accounted for by millennials. That also explains why the showroom's latest collections on display are made up of significantly smaller stones, and understated designs.

"I think curating a product line which is fashionable, trendy, chic and very, very appealing to the audience is the way forward," said Ashwin Chetan, MD at Khwaahish Diamonds, "We managed to do that this festive season."

It's this focus on mid-range consumers and subtler, fast-moving jewellery that has insulated players like Titan from the estimated 35% price correction in diamonds this festive season. However, South India's new affinity for diamonds does not mean it is shying away from the lab-grown kind either.

At Aukera Jewellery, which opened in Bengaluru earlier this year, sales of lab-grown diamonds are going strong. "We are seeing a 20% month-on-month increase in our own grown-diamond jewellery brand," said Lisa Mukhedkar, Founder and CEO of Aukera.

She added: "The South has always appreciated high-quality diamonds, and grown diamonds beautifully deliver on something like that (quality) because you only get the best grade of diamonds here."

This take does not suggest that high-rollers who make up the top end of the segment, have stopped being counted, nor are traditional diamonds going out of vogue. Experts say the expanding aspirational segment means there's plenty of scope for both segments to grow together. Additionally, if prices stay as low as they have been, diamonds may well become the South's best friend.