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Leatherbiz Market Intelligence executive summary: • • • •
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Early 2026 is slow, reflecting weak demand But leather’s functional advantages over synthetics are regaining visibility Agile companies communicating leather’s strengths are best placed to benefit Demand for leather in furniture and automotive continues to soften, but footwear and apparel show signs of renewed consumer interest in leather Opposition to animal-based materials among some consumer groups may have reached a peak The opportunity to present leather’s properties, functions, durability and naturalness has rarely been better.
MARKET INTELLIGENCE
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ime is flying, and it is hard to believe that the first month of the year has already passed. In Europe, Christmas and New Year celebrations are long forgotten, while China, and much of the rest of Asia, is preparing for the Lunar New Year festivities (February 17). According to reports from the region, this will involve a break of at least two weeks, during which people take time off and spend time with their families. The order situation along the leather value chain does not currently require shortened holidays or additional shifts. Exceptions may always prove the rule, but in general this assessment holds true. In Europe, conditions remain significantly more challenging than in the rest of the world, as we have maintained over recent months. Europe is suffering from extremely high production costs and a shortage of adequate labour. Leather product manufacturers continue to pursue the relocation of production, further distancing themselves from EU tanneries. The luxury goods industry is facing a decline in sales and is therefore no longer able to serve to the same extent as before as a stabilising pillar of a fully integrated EU production chain. The European automotive industry is undergoing a fundamental crisis, and in addition to lower vehicle production and sales, several premium brands continue to attempt to replace leather with alternative materials. In Asia, mass leather production is characterised by fierce price competition, further intensified by weak consumer demand and the same underutilised capacities. The relocation of production sites because of geopolitical developments,
combined with the unresolved issue of US trade policy, is leading to unclear and insecure supply chains. For decades, leather demand was initially driven by the growing share of leather in the furniture industry and by the steady expansion of leather usage in the automotive sector. This compensated for a decline that had begun in the use of leather in the footwear industry. The Asian real estate crisis, a general post-covid slowdown in consumption within the furniture sector, the increasing shift towards cheaper and easier-to-process materials, and, more recently, US trade policy have significantly burdened leather demand in furniture. In the automotive sector, the true underlying reasons remain unclear. However, cost considerations and the complexity of leather processing likely encouraged the industry to move away from leather, supported by campaigns against animalbased materials. These decisions continue to have a significant impact. In the global footwear sector, we may already be at a more advanced stage of development, with leather beginning to show early signs of a successful renaissance. In the luxury goods sector, the radiance of big-name brands is fading. While brand recognition remains strong and exclusivity may still resonate for certain iconic products, it is becoming increasingly difficult to justify high price-premiums for products of only average quality. This is particularly evident in Asian markets, where questions of quality and value for money are now far more prominent than they were only a few years ago, when brand ownership primarily served as a symbol of achieved prosperity.
Not long ago, particularly among some affluent middle-class groups in the West, natural animal-based materials, especially leather, had come to be considered socially unacceptable. Consumers embraced questionable alternative materials, while industries in Europe and the US invested heavily in the development of non-animal substitutes. These efforts were largely unsuccessful, leaving recycled plastics as the main alternative. None of these substitutes, however, have been able to match the properties of leather. Wool was the first material to overcome these challenges, experiencing a remarkable renaissance in recent years. Is this now the final countdown for leather? No, because there is little doubt that the trend opposing the use of animal-based materials has slowed and may already have stopped. Economic pressures and material choices by consumer goods manufacturers do not yet fully reflect this shift. However, anyone observing major cities will recognise that consumers appear to be ahead of manufacturers. Genuine leather jackets, gloves, and everyday shoes are once again being worn in many places where trends originate. These styles are often being reintroduced under the label of “vintage”. The year 2026 will determine whether this is merely a brief revival or the beginning of a broader mass-market trend. Media coverage, including streaming services, reinforces the hope that fashion may be the source of this renewed impulse. Authentic leather jackets in 1980s and 1990s styles are increasingly visible, without even needing to reference Nvidia’s CEO, Jensen Huang. Even in vegan bars and restaurants, leather jackets and leather sneakers are reappearing. When discreetly asked about the material, consumers often justify their choice by referring to durability and sustainability. An industrial automotive leather manufacturer in Europe is unlikely to benefit significantly from increased demand for leather jackets or footwear. There are currently no signs that the automotive industry is prepared to reconsider its stance on leather in the near future. Although existing structures remain in place, time for decisive action is limited. In other sectors as well, growth prospects may sound simpler than they actually are. Increases in leather demand will likely be achievable only in specific segments and at specific price points. Attempting to generate volume through destructive price competition, as currently seen among mass