German Perspective – 16.04.19
16/04/2019
To look at the protests taking place, one might get the impression that we have to deal with the global anti-beef campaign. This might appear to be the case, but the reality is that global beef consumption is rising and so is production. The simple logic is that those willing to consume beef can hardly reject the use of leather as a material.
We can also see completely different attitudes in the major industries that use leather. On one side we have the luxury goods industry, which is reporting record after record and is expanding production capacity from year to year. It is true that this is a pretty limited volume base, but we do not see any resistance from brands to using leather and consumers are not showing any signs that they are tiring of accessories made from leather.
On the other side we have the shoe industry, which has turned against leather in favour of plastic. Has any of this decision been made by the consumer? As much as the anti-leather and anti-beef campaigns would like to say yes, it has not. It has been made by the manufacturers. The growing beef-consuming population does not refuse leather as a material.
The only reason why manufacturers would not use leather today is profit and margin. It is much more profitable for a shoe manufacturer to produce a machine-made plastic sneaker than a hand-sewn leather shoe. For their part, luxury goods makers realise that they cannot charge a four-figure fee for a ladies handbag if it could be easily copied using a machine. One of these is a mass market, while the other is niche, but their drivers and targets are completely identical.
We can only hope that with the changes to manufacturing in the automotive industry, the margin and profit situation will not hit standard leather there as well. The moment that extra margin cannot be achieved for a leather interior, consumption could change quickly there too. There are already signs of it beginning to erode, with the ‘vegan’ argument just a shield for the real intentions. This will not happen tomorrow or in a few months, but one has to monitor if this is a trend or not.
We have time to talk about all this because very little business was done last week. There were some renewed programmes with the tanners who continue to run normally, but no real activity from the overseas markets. Prices continue to slide, to a different extent depending on the article, but the direction of the market remains the same. Most of the sales were for the regular, local male hide tanners.
The kill: To our surprise, slaughter went up by about 10%. This is a bit strange, but it might be related to supermarkets stocking up for the upcoming Easter break. This rise was mainly seen in the female section. Hide weights begin their seasonal decline and cattle begin to return to the fields during the days.
What we expect: We don’t expect much. What may happen in the automotive industry in the long-term is not important for now. With all the new models coming to market, we hope at least for a moderate recovery in demand for extra heavy bull hides. For the rest of the market, we remain on the cautious and less optimistic side.
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