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Leatherbiz Market Intelligence executive summary: • • • • • •
Politics and geopolitics are driving volatility across the leather pipeline Energy shocks and logistics risks are likely to raise costs and uncertainty These challenges can spark a renewed debate about re-shoring and shortening supply chains Already, leather is visibly regaining some cultural and fashion relevance Consumer fatigue with synthetics supports renewed interest in authenticity Differentiation, character and quality can drive future growth
MARKET INTELLIGENCE
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laughter volumes, raw material availability, tannery utilisation and downstream sellthrough still follow familiar patterns in many regions, but politics remains, more than ever, a key factor when assessing conditions across the entire leather pipeline. Two events stand out and are influencing trade, logistics, energy prices, and finance. First, on February 20, the US Supreme Court ruled that the International Emergency Economic Powers Act (IEEPA) does not authorise President Trump to impose tariffs. At first glance, this is a relief for global trade because it limits the risk of sudden, broad “emergency tariffs” and should, in principle, improve predictability for pricing and contracting. Yet it is only partially reassuring, because it does not end protectionism. Instead of abrupt tariff waves, companies may face more reliance on alternative legal bases, export controls, sanctions regimes, procurement preferences and non-tariff barriers. For the leather industry this is very tangible, because, depending on the region, different parts of the pipeline are exposed to imports such as chemicals, auxiliaries, machinery and parts, and to exports of raw hides, wet blue, crust, finished leather and byproducts. Removing one broad tariff lever may reduce immediate cost risk, but volatility remains high because uncertainty often materialises through stricter origin and declaration scrutiny, longer clearance times, more audits, disputes over HS codes and customs valuation. In short, the ruling improves legal clarity, but it does not replace the strategic need to build resilience. The second event is far more immediate in its impact on pricing and logistics. On February 28, air strikes began against Iran, with retaliation following. In such situations the effects on global trade are clear and fast: oil prices, freight costs, insurance fees and lead times all increase. The expectation of
escalation increases the geopolitical risk premium, and market attention quickly turns to energy and transport infrastructure and to potential chokepoints. As a consequence, working-capital requirements tend to increase as companies build buffers and finance longer cashconversion cycles, while credit conditions often become more restrictive in a higheruncertainty environment. Finally, the demand channel matters as well: an energy-driven cost shock dampens consumption and marginsensitive end markets—especially where leather competes intensely with alternatives and price tolerance remains fragile. In such an environment, the debate around re-shoring, in leather production and in downstream processing, can regain importance, as companies reassess the balance between costs, availability, lead times and geopolitical exposure. Against this political and logistical backdrop, we are leaning particularly far out of the window this time: leather is back. In many recent issues we have repeatedly reported on success in small areas, which we then, perhaps with a touch of understatement, called niches. That was not wrong, but it may have been more than that: the small seedling that eventually becomes a tree. Anyone who has listened carefully and looked closely over recent months could see a series of signals that, taken together, appear to be more than a brief flare-up. One of those signals has been a change in the public’s broader stance toward animal-based materials, leather included. In major cities, even materials that were once highly stigmatised have become visible again, initially through vintage or imitation products. This signals that the broader societal discussion around animal-based materials is moving. This is not a guarantee, but it is a catalyst that allows leather to move from defensive to more confident positioning. We have repeatedly heard that major
fashion houses are no longer hiding leather and have regained the courage to show it openly. In some collections, exotic types have reappeared, some as genuine reptile articles, others using creative embossing techniques. This was already visible and tangible at Lineapelle in Milan and was confirmed again at further fairs over the past week. The interesting part is that it does not feel like a single, top-down dictated trend, but rather a broader rediscovery of material culture, driven by a desire for durability, fatigue with sterile uniform surfaces, and a renewed appetite for products that are allowed to have character, value and performance. Of course, some campaign groups are raging. Their protests may become more aggressive as their impact in public opinion continues to weaken. But this has nothing to do with downplaying animal welfare. On the contrary: animal welfare must be ensured for domesticated species. For wild species the protections already widely embedded in CITES must be respected without exception. Anyone in our industry who ignores the legitimate core of these debates simply makes themselves vulnerable. Yet the public verdict is becoming more differentiated, and simplistic black-and-white narratives are losing traction, an empirical factor we cannot ignore. In the same context, another development, perhaps even more important for our pipeline, is gaining momentum: the often exaggerated demands for traceability, documentation, and proof, is beginning to weaken. We are not saying transparency is unimportant. But we do see “compliance fatigue” across many industries: ever more lists, seals, questionnaires, audit loops, and in the end the sense that paper has been produced, not necessarily better practice. There is also an uncomfortable but logical point that matters: anyone speaking seriously about circularity cannot avoid leather as a byproduct of the meat industry. If animals are slaughtered anyway and hides exist, utilising that resource is not the problem; produced cleanly and responsibly, it can be part of the solution. It is no coincidence that wool has experienced a meaningful comeback and that something similar now appears to be emerging for leather. Both are natural materials, both represent “authenticity” and both fit a time in which many consumers still talk about sustainability while increasingly wanting products that do not fall apart after two seasons. From our perspective, however, it is not as simple as it may sound. There are two fundamental trends that must be considered. Leather can only regain market share if it