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Leatherbiz Market Intelligence executive summary: • • • • • • •
Geopolitical tensions are keeping energy, logistics and raw material costs high Buyers of leather remain cautious, focusing only on immediate orders Europe is struggling with weak demand and high production costs Pressures on China’s property and automotive markets are also affecting leather demand Even in luxury leathergoods consumers are buying more selectively Fashion-driven demand supports selected leather apparel segments Any recovery is unlikely before late summer 2026
MARKET INTELLIGENCE
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n recent weeks, the number of questions in the leather pipeline has grown faster than the number of answers. That may be the best way to describe the current situation. There is still movement, individual markets are still functioning, and in certain areas demand can still be heard. Nevertheless, the overall picture has become noticeably more uncertain. The market does not feel like a market that is simply becoming seasonally quieter, but rather like a market that has to deal with a very large number of open issues at the same time. The geopolitical situation, and especially the situation in the Persian Gulf, is currently playing the decisive role. This is not just a political crisis somewhere in the world, but a situation that can very quickly have direct effects on energy supply, energy prices, transport costs, raw material supply, inflation and ultimately also consumer sentiment. In addition, the situation in the Persian Gulf is also highly relevant for the availability of intermediate products used in the manufacture of many goods. This includes tanning materials, chemicals and other products required for the manufacture and finishing of many leather products. Any disruption in this area would therefore not only affect general industrial costs, but could also directly influence the availability, timing and pricing of materials needed within the leather pipeline, and so production itself. So far, hope still dominates in many areas. The hope is that the situation will not escalate further, that energy supply will remain stable, that transport routes will not become even more expensive or slower, and that consumers will only postpone their purchasing decisions rather than cancel them altogether. This hope is understandable, but it is not a reliable market strategy. The clock is ticking because the leather industry has a
long pipeline. What is not ordered, produced or prepared today may be missing later exactly when certain articles are needed again. At the same time, almost nobody wants to take too much risk at the moment. This means that purchasing is becoming increasingly narrow, increasingly cautious and increasingly focused only on specific articles or existing orders. Europe and Asia in particular are strongly affected by this situation. In Europe, the leather industry continues to suffer from high energy and production costs, weak consumer sentiment and a generally very cautious retail environment. From many of the European centres of leather production, feedback remains mostly negative. Order levels remain below average, and even though not everything has come to a standstill, the market lacks breadth. There are functioning supply chains, individual specialist markets and, of course, companies that can still serve their niches. But this does not change the fact that the general mood remains weak. For consumers, the current focus is less on new furniture, a car, a high-quality bag or other major consumer wishes, and more on short-term spending and the summer holidays. This is particularly relevant for the coming months. If the current global situation also puts air travel, fuel prices or holiday budgets under pressure, the effect is negative in two ways. On the one hand, there is less money and less confidence for other consumer goods. On the other hand, tourism itself is an important driver of many leathergoods sales. If people travel less, or if travel becomes more expensive and more uncertain, this also affects demand for products that are closely linked to international consumption, including shopping at airports, in city centres and in tourist areas. The officially available business results from the leather industry for 2025 delivered very
few positive signals. Many companies had a difficult year. The start of 2026 has not created the impression that a rapid and broad recovery is now ahead. The picture in China also remains difficult. The weak real estate market has been weighing on demand for furniture and other durable consumer goods for some time. In addition, a weaker automotive market gives little reason for optimism regarding leather demand. When real estate and cars are both weak at the same time, two very important end markets for leather and leather-related materials are affected. As a supplier industry, the leather sector always feels such developments with a certain delay. That does not make the situation less serious; on the contrary, it often makes it harder to assess. Immediate demand may still be supported for some time by old orders, existing inventories or ongoing programmes, while the actual weakness only becomes visible later. The market for luxury leathergoods is also weakening. Externally, many major brands continue to project strength, exclusivity and stability. That is, of course, part of this market. But internally, and among market insiders, it is clearly visible that demand for very highpriced products is no longer as self-evident as it was in recent years. The upper middle class in particular, which had been an important growth driver for many luxury brands in recent years, is buying more selectively. If the super-rich buy ten or 100, or even 1,000 handbags each, it may sound spectacular, but it would only change industry volumes to a limited extent. For the leather pipeline, the decisive factor is not how high an individual sales price is staged, but how broad and regular real demand is. The fashionable mid-range segment can partly benefit from this. Brands that are strong in fashion terms but positioned below classic luxury have been able to absorb demand in some areas over the past few months. For leather, this is generally positive because fashion can still create demand. At the same time, this segment is much more price-sensitive. It does not accept rising raw material and processing costs without limits. It would be particularly critical if the market for second-hand and vintage products were also to weaken. As long as high-quality used products perform well, part of the consumer desire is satisfied outside new production. If this market loses momentum, pressure on new products could increase, but not automatically at prices that are satisfactory for manufacturers or raw material suppliers. A central problem remains the increasing narrowing of demand to focus on very