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Leatherbiz Market Intelligence executive summary: • • • • • • • •
Last year was extremely challenging for the global leather industry, with weak demand and high uncertainty across the value chain Global leather demand fell, sharply in automotive and furniture, while demand in footwear stayed largely flat Leather is now discretionary, making demand highly sensitive to economic uncertainty and cautious consumers Oversupply of raw hides pushed prices down, redirecting raw material to proteins, collagen and gelatine Europe’s leather sector suffered from falling prices and rising labour, energy, regulatory and logistics costs Market gaps widened: mass production faced margin collapse, while top luxury brands remained resilient Geopolitical tensions and unpredictable policies disrupted trade and supply chains In 2026, high inventories and price pressure mean slow recovery; longterm growth will require better communication and collaboration with manufacturers.
MARKET INTELLIGENCE
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e extend our best wishes to all readers and business partners for a healthy, peaceful, and successful new year. Owing to the pause over the Christmas period, we are covering a slightly longer time span in this Market Intelligence report. We will look back at 2025 as well as at the key parameters and framework conditions at the beginning of 2026 along the leather pipeline. In retrospect, 2025 will likely be remembered as one of the most eventful and most difficult years in the leather industry’s recent history. Political decisions, geopolitical tensions and extraordinary events shaped the market environment to such an extent that reliable planning was significantly impeded for long stretches of the year. In particular, the trade policy of the US and the ongoing military confrontations dominated the year and will most likely continue to have an impact in 2026. As in previous years, it once again became clear that political decisions and extraordinary events remain unpredictable. Year-end outlooks work with probabilities and assumptions. Reality, however, has repeatedly shown that decisive developments often occur outside these corridors. We can only hope that there will at least be no further escalation of military confrontations. From a broader perspective, 2025 confirmed that global demand for leather as a material came under further pressure. The decline was particularly evident in the
automotive sector in Europe, but the furniture industry also recorded noticeably weaker demand. In the footwear segment, the overall picture was one of stagnation. While production volumes for classic leather dress shoes declined in particular, the growing use of leather in the sneaker segment acted as a stabilising factor for overall leather consumption in the footwear industry. In the luxury goods industry, the factors mentioned at the beginning of this report had a pronounced impact in 2025. On the one hand, inventories resulting from 2024 planning continued to weigh on the market; on the other hand, overall demand momentum weakened. In addition, further factors came increasingly to the fore and should not be underestimated. Consumers placed greater and greater emphasis on the relationship between quality and price. Some brands implemented price increases that, from the buyers’ perspective, were no longer in an appropriate ratio to the qualities delivered. This effect was further reinforced by the fact that social media commentary increasingly questioned the price-to-quality relationship and garnered a lot of attention in China. As a result, certain brands came under considerable pressure. The very top end of the luxury segment remained largely unaffected by this. In this part of the market, the question of quality is beyond doubt for certain brands, but at the same time it is about far more than the product itself. Unique selling points play a central role. By purchasing a luxury product,
one acquires not only a material product, but also a feeling, an experience, an expression of distinctiveness and differentiation, or a mixture of all these factors. Ultimately, the only brands that will remain successful will be those that are able to deliver these intangible values. For all other brands, price inevitably becomes a significant factor again. When highly positioned brands attempt to move toward mass production in order to drive higher revenues without adjusting their price positioning accordingly, the model reaches its limits. This has also affected demand for leather in the production of these goods. Raw material availability remained relatively high and stable overall in 2025, even though there were regional shifts. Overall, developments in beef production, and thus the availability of bovine hides, played a smaller role than in earlier market cycles, because demand was the constraining factor. What became increasingly apparent, however, was a stronger segmentation of markets. On the one hand, there was mass production, where margins suffered under a difficult consumer environment and sustained price pressure. This pressure was directly reflected in leather prices as well. The European leather industry was particularly affected, facing not only falling selling prices but also significantly rising costs at the same time. Higher labour costs, energy prices, EU policy, the limited availability of qualified workers, and logistical challenges further intensified the situation. No longer competitive in the low-priced mass segment, European tanners were hit hardest by the decline in the middle- and higher-price segments. Overall, 2025 proved exceptionally challenging for the European leather industry, a situation that is unlikely to ease fundamentally in 2026. In Asia’s traditional producing markets, increasing pressure was also noticeable. Tradepolicy measures and tariff regulations by the US government played an important role in this context. In the meantime, the situation surrounding US tariff policy appears to have eased somewhat. Not that tariffs have disappeared, but agreements have been reached with numerous countries that at least restore a certain degree of planning security. Nevertheless, it must be noted that almost every producer who still wants to supply the US market is affected by tariffs, either directly or through necessary price adjustments. What is often overlooked is the basic economic fact that tariffs are not paid by foreign countries or by the supplier, but by the US importer and ultimately by the US consumer. Even if tariffs can lead to intensified