We are in the final phase of what is traditionally the busiest production season. Fundamental decisions about leather as a material, in the planning of consumer goods producers and in retail, have long been made for the current season and there is still some way to go before the decisions for the next seasons are made.

The global economy, including the leather industry, is so closely interlinked today that the immediate and direct influences are not so easy to analyse. If you look at the automotive industry alone, which includes seats and interiors, some products cross borders in the course of production and may be subject to customs duties in the future. For other products, the situation is somewhat simpler because they are directly and immediately affected by customs duties. However, it is not yet known exactly which tariffs will be levied, for what, when and in what form.

This makes planning and strategic location decisions extremely difficult for many producers who are involved in longer transport and production chains. If you are unlucky, you may even be affected by customs duties several times and the calculation makes the question of the location of a production facility of fundamental importance at the moment. But before possible effects become apparent, you first need to be clear about the level of customs duties and their effect on location costs. Not every tariff immediately makes a location unattractive, apart from the fact that relocation is not possible in the short term.

Another important aspect is, of course, the impact of customs duties on the price development of end products or, to put it simply, on inflation. While the impact on the product, made of leather, may not be of crucial importance, the issue of inflation does play a major role. Let us not forget that most products made from leather are not necessarily part of basic consumption. This means that the demand for leather products is determined more by disposable income than by the price.

Of course, basic consumer behaviour also plays a decisive role. You can twist and turn it however you like, but with very few exceptions, luxury leather products have lost a great deal of their appeal to consumers. The impression of glamour that leather products used to create for consumers, particularly in Asia, has lost some of its magic at the moment. As much as luxury goods manufacturers would like to convince us otherwise, proof of a trend reversal in the second half of 2025 has yet to be provided. At the moment, the sales figures of most suppliers speak for themselves. Only very few brands, but Hermès in particular is a good example, have managed to retain their image among ultra-rich consumers and maintain their market position with uniqueness and quality.

If you are honest, and you look at many other luxury leathergoods, then in all honesty you have to say that in the course of their success and growth, they have failed to work consistently on quality. As unfortunate as it is, a lot of the brands have relied on their name and logo and against all protestations have failed to take care of the quality of the materials and the quality of the finish. Although this has been a slow trend, it has been absolutely noticeable to experts who are able to judge these things.

Of course, this quickly made us a victim of those who like to pounce on such developments and trends. There are now almost as many influencers who decorate themselves with brand names as there are people who have made it their business to dissect branded products and scrutinise their quality and workmanship. None of those involved can really claim to be the ultimate authority on these issues raised, but of course one thing that cannot be argued away is that if it is easy to point out inadequate workmanship or easily expose the materials as sub-standard, exclusivity can very quickly be called into question. If it can then be proven that production does not take place in the company’s own factories with great craftsmanship, but in possibly less qualified subcontractors, then one can only hope that this does not register too much with the public.

We have all seen how quickly big brands can become big losers if the important parameters that lead to luxury and exclusivity can no longer be defended. The brand diversity of the leading luxury conglomerates that has emerged in recent years with the strong growth is now facing a big challenge and it will probably take a lot of energy if all brands want to defend their positions. Unfortunately, a lot of this is also directly related to leather as a material, which plays a very special role in this sector.

What else can be said about the last two weeks in the leather pipeline? In the absence of any major news from ongoing activities, we took a look at the media.

We noticed two things in particular. Firstly, that leather clothing once again played a major role at the fashion shows in New York. At the same time, anyone who watched the Super Bowl could also admire many leather jackets during the half-time show. Considering that the TV adverts for this event are among the most expensive you can book, you have to be thrilled and the only question is whether the industry will be able to make the most of this opportunity. Once again, doubts are justified.

We also noticed that adidas is continuing unwaveringly on its path with leather. Further models and also an expansion into other product areas. Leather as a material is currently being rolled out vertically and horizontally. Animal rights organisations complained about the use of ostrich leather in adidas products, but were quickly told that ostrich leather is not used at all. It was a surprise that it took so long for these protests to emerge. It was also very telling that well funded organisations that claim to care about animal protection and welfare, and therefore reject leather, should have so little knowledge of the product. Adidas handled the issue confidently and competently.

The demand for splits from all sectors remains stable at the moment. The lower production of leather is reducing supply and therefore the by-product of leather production can be marketed relatively well. This is not having a major impact on prices at the moment because, firstly, this market is very price-sensitive and, secondly, the extremely low prices for hides leave little room for major price increases for this by-product.

There is also still no major news regarding sheepskins. The potential for leather clothing remains high, but as long as it does not really find its way back into the major brands and retailers, the impact will remain manageable. It is worth noting that prices for lightweight lambskins with fine wool are continuing to strengthen. Demand clearly exceeds supply at the moment. As these skins are mainly used in the clothing sector and to some extent also in high-quality shoe linings, demand must have improved significantly and this means that there will definitely be orders for this type of material on the market for the next winter season. Let us hope that this also extends to other sectors.

The next issue of Market Intelligence will be published immediately after the Lineapelle fair in Milan (February 25-27). There is a high probability that there will be more impressions worth reporting afterwards. It will be exciting to see if there are any new fashion developments. It will be exciting to hear whether there will actually be more leather clothing again. And it will be particularly exciting to see how the European leather industry is doing at the moment and what developments we can expect in the rest of 2025. We will know more in a fortnight’s time.

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