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Leatherbiz Market Intelligence executive summary: • • • • •
There is a need to build an information bridge to the consumer to put across the message that leather is a good choice Too little information has been made public, for example about the long history of the leather industry What seems self-evident to us does not exist at all in the consciousness of urban society This is not intentional; it is simply a lack of knowledge Artificial intelligence (AI) could help put the message across, but AI has too little access to the really important information and resources in the leather supply chain.
MARKET INTELLIGENCE
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t remains difficult to keep the focus on a relatively small and unimportant area such as our leather supply chain and the production of leather and leather products. We have war in various parts of the world, and the risk of them spreading remains realistic. A spiral of violence can be difficult to stop and if those responsible are old and feel little danger to life and limb for themselves, then the risk of justifying further violence is always relatively high. Whatever the motives and justifications, death and destruction from war remain great evils. It is also true that for the vast majority of people on this earth, life continues quite normally at the moment. They are more concerned with their daily routines, just observing the possible effect on energy prices and other consequences of political action for their own lives. Leather is still a material that can be used, but does not have to be used. For a product made of leather, it is still true that it is not perceived as an essential need. You may need shoes, but they do not necessarily have to be made of leather. There is a need to convey the really good reasons why shoes should be made of leather. This has been a problem in the leather industry for a long time and it still is today. Members of the industry explain to each other at all levels how wonderful and important the material leather is. The bridge to the consumer and the message that leather is still the best choice in terms of quality, properties and, of course, durability and sustainability, is still not being built. At the moment, large producers are once again decorating themselves with the term ‘sustainability’ in their presentations. Whatever is right or wrong about this, the leather sector remains in a deep crisis. The demand for and use of leather as a material remains inadequate. It is also known for some
time now that even some of the icons of leathergoods are now having difficulties. However, this is not so much due to the use of the material, but more to the fact that the assessment that the wealthy and rich people of this earth have an insatiable appetite for any kind of so called luxury goods is simply not true. Luxury alone does not mean that you are riding the wave of a successful brand, but that you produce something special, exceptional in quality and, in the best of all cases, largely unique. The group of those who are then willing and able to pay the corresponding prices for the product is not growing as much as many had imagined. In addition, even for those who are willing to buy these products, it is in the end unattractive to be able to afford any number of them. This also kills the extraordinary. True luxury is that you only sell what you want without pushing towards the maximum market potential. It is not all about price. The current news and developments from the luxury goods groups prove this very clearly and the various changes in the executive positions prove that they are neither satisfied with current results and strategies, nor that they believe that they can continue to operate unchanged in the coming years. The different and new is still the answer to these difficulties. There will always be individual successes, and these are of course also exceptionally important for the leather industry and the material. But finding the right balance between exclusivity and quantity will probably be the main task for the dominant companies in the coming years. Success and growing sales are also extremely important for the rest of the leather supply chain. Of course, it is much easier to present a material that can be used successfully in the luxury sector to the mass markets too. It would be absurd to have doubts about the material when it is appreciated by a group of buyers who, at least, are assumed to have very good reasons and understanding for why they surround themselves with these products. The
fact that mass brands repeatedly fail to take advantage of this option is something they may need to ask themselves about. They have allowed a small group and the supposed mainstream to dictate their decisions against the potential of leather. For the moment, we will disregard the economic reasons that are indisputably associated with the use and production of leather products. This is always the next step, that the higher costs could be justified with the higher prices for the products with longer use and better quality. It also brings us back to the question of whether one is willing and able to think about ways to bring these facts directly into the consciousness of consumers. Unfortunately, this is not happening at the moment. In the absence of much activity along the leather supply chain and the fact that we are now in the quietest period until the end of August, the opportunity gives us the opportunity to think a little more about more of the leather industry’s situation again. First of all, many people are currently dealing with the European Union Deforestation Regulation and its importance for hides and skins and the production of leather. The EU Commission has once again manoeuvred itself into a dead-end here. The problem remains that Brussels simply cannot reconcile it with its selfimage that it has simply issued nonsensical or, in the best case, erroneous regulations. Normally, a person is expected to see a mistake and simply correct it. In the case of the EUDR for Europe, it would simply be the decision not to apply EUDR to the leather supply chain in the EU. So: cancelled without replacement. Now, on the political stage, this cannot be reconciled with the expectations that have been created and the demands that have been made on producing countries worldwide. The only question that remains is whether the situation that you have ultimately created yourself justifies what you are demanding. Even if there is a continuous effort to convey to the public the impression that the bureaucratic effort for companies is negligible and that the conditions for easy implementation can be created, this is not correct. Nor does it bring any additional benefit to local supply chains within the EU. In any case, one can be sure of one thing: attempts will be made with a crowbar and by all means to implement EUDR by 1 January 2026, no matter what it means or what it costs. This is not particularly good news for anyone operating in the EU. However, we very much doubt that orderly compliance and implementation will be possible. Anyone who looks at the conditions in the various member