DELIVERED TO YOU BY EMAIL AND VIEWABLE ACROSS ALL PLATFORMS TUESDAY, NOVEMBER 05 2024
Leatherbiz Market Intelligence executive summary: • • • • • •
• • • • •
If leather regains popularity, demand and prospects for the industry will increase If this does not happen, the problems that we are already experiencing today will remain What has happened in recent years with retro sneaker designs shows how quickly things can change One of the grounds for hope from this is that we may now be seeing a new social trend of consumers who have no problem with leather The number of potential customers is very large The re-evaluation of the impact score for bovine leather in the Higg Materials Sustainability Index may also be an indication of a change in the assessment of the environmental compatibility of leather There is hardly anything more progressive, modern and in keeping with the spirit of the times than leather It is just a question of waiting for marketing departments to rediscover its potential The low point in the negative trend for leather as a product has probably already been reached or is not far away There are reasons to believe that an improvement can occur within a time frame of 12-24 months However, this will probably be too long to provide a lifeline for everyone.
MARKET INTELLIGENCE Macroeconomics
T
he overall picture in the US is similar, as the labour market there is very stable and consumer behaviour could also prevent the Federal Reserve from cutting interest rates to the extent or as quickly as almost everyone expects. In China, there were the first positive signs from the economy with a slight increase in factory production last month. It is too early to judge whether this is directly related to the government’s recent measures. Interest rates have been cut again in China and further government measures are expected to be announced soon to provide additional stimulus for the economy The stock markets remained very stable until the last few days of last week, either reaching further record highs or not moving far from them. This sentiment changed relatively quickly at the end of this period, which certainly had something to do not only with interest rates, but also with the election in the US. Taking profits and playing it safe for the time being seemed to be the best option for many investors. The gold price has not yet been able to
clear the hurdle of $2,800 per ounce, although most experts believe that this could happen soon and even that the magic figure of $3,000 could be reached in the foreseeable future. The general global environment favours investment in the precious metal in many ways. The oil price fell significantly after greater escalation of the war in the Middle East seemed to have been avoided. Most analysts expect an oversupply in the coming months with a corresponding effect on prices. The international data on inflation and the expectations derived from it initially put an end to the soaring US dollar. It recovered from values below $1.08 to levels of closer to $1.09 against the euro.
Market Intelligence The phase of universally welcomed, peaceful globalisation has come to an end. Nationalism, with shifting alliances and possible military aggression, is definitely not good news for the leather pipeline. Whatever this means and whatever political consequences it may have, the main problem is that it makes it almost impossible to make reasonable forecasts about the leather industry and consumption. The only thing that remains certain is the fact that we have over 8 billion
people on the planet who have to try to satisfy their needs and desires in one way or another. This means that leather, in theory, has the same opportunities and conditions as every other product. If leather regains popularity, demand and prospects for the industry will increase. If this does not happen, the problems that we are already experiencing today will remain. We have a major structural problem in Europe, which is made up of many different components. We have lost the markets in Eastern Europe for the middle price segments and at the same time consumer sentiment in Europe is also poor. In Europe, tanners have maintained the largest market share in the midand upper-price segments. The mass market is price-sensitive and therefore of little or no importance for European leather production. For various reasons, the luxury sector has lost its momentum for many brands but the belief that this sector could have a linear upward trend was never really justified. There are and always will be individual success stories. Overall, however, we are at least in a ‘pause’ phase. In the automotive sector, European premium brands are currently losing market share rapidly and their competitors are nowhere near focused enough on the quality of the interior for leather to benefit. The fact remains that leather as a material simply has to become more popular again and we can see how easily and quickly this can happen with the much-cited history of retro sneaker models. Nobody really cared about the suede uppers at first, but marketing and fashion have played the decisive role. In the new round of marketing, consumers are experiencing the superior properties of leather and can incorporate this into their purchasing decisions. A new and exclusive adidas Samba model made from vegetable-tanned calfskin with an additional leather lining has met with an extremely positive response. It would come as no surprise if the model sold out quickly, even at a price of $350 per pair. One must therefore assume that even without an explicit focus on leather, using the material in these models has had no negative impact on the success. Competitor brands have also taken note of this development and model after model is coming onto the market that also focuses on “the good old days” and leather as a material. Coming to a bold way of looking at things, we should perhaps take a closer look at the current global zeitgeist. Social groups that have dominated public opinion particularly loudly in the western, democratic world in recent years, have triggered a counter-movement. This discussion should not become political, but it cannot be denied that we are now seeing a