We extend our best wishes to all readers and business partners for a healthy, peaceful, and successful new year. Owing to the pause over the Christmas period, we are covering a slightly longer time span in this Market Intelligence report. We will look back at 2025 as well as at the key parameters and framework conditions at the beginning of 2026 along the leather pipeline. 

In retrospect, 2025 will likely be remembered as one of the most eventful and most difficult years in the leather industry’s recent history. Political decisions, geopolitical tensions and extraordinary events shaped the market environment to such an extent that reliable planning was significantly impeded for long stretches of the year. In particular, the trade policy of the US and the ongoing military confrontations dominated the year and will most likely continue to have an impact in 2026.

As in previous years, it once again became clear that political decisions and extraordinary events remain unpredictable. Year-end outlooks work with probabilities and assumptions. Reality, however, has repeatedly shown that decisive developments often occur outside these corridors. We can only hope that there will at least be no further escalation of military confrontations.

From a broader perspective, 2025 confirmed that global demand for leather as a material came under further pressure. The decline was particularly evident in the automotive sector in Europe, but the furniture industry also recorded noticeably weaker demand. In the footwear segment, the overall picture was one of stagnation. While production volumes for classic leather dress shoes declined in particular, the growing use of leather in the sneaker segment acted as a stabilising factor for overall leather consumption in the footwear industry.

In the luxury goods industry, the factors mentioned at the beginning of this report had a pronounced impact in 2025. On the one hand, inventories resulting from 2024 planning continued to weigh on the market; on the other hand, overall demand momentum weakened. In addition, further factors came increasingly to the fore and should not be underestimated.

Consumers placed greater and greater emphasis on the relationship between quality and price. Some brands implemented price increases that, from the buyers’ perspective, were no longer in an appropriate ratio to the qualities delivered. This effect was further reinforced by the fact that social media commentary increasingly questioned the price-to-quality relationship and garnered a lot of attention in China. As a result, certain brands came under considerable pressure.

The very top end of the luxury segment remained largely unaffected by this. In this part of the market, the question of quality is beyond doubt for certain brands, but at the same time it is about far more than the product itself. Unique selling points play a central role. By purchasing a luxury product, one acquires not only a material product, but also a feeling, an experience, an expression of distinctiveness and differentiation, or a mixture of all these factors. Ultimately, the only brands that will remain successful will be those that are able to deliver these intangible values. For all other brands, price inevitably becomes a significant factor again. When highly positioned brands attempt to move toward mass production in order to drive higher revenues without adjusting their price positioning accordingly, the model reaches its limits. This has also affected demand for leather in the production of these goods.

Raw material availability remained relatively high and stable overall in 2025, even though there were regional shifts. Overall, developments in beef production, and thus the availability of bovine hides, played a smaller role than in earlier market cycles, because demand was the constraining factor.

What became increasingly apparent, however, was a stronger segmentation of markets. On the one hand, there was mass production, where margins suffered under a difficult consumer environment and sustained price pressure. This pressure was directly reflected in leather prices as well. The European leather industry was particularly affected, facing not only falling selling prices but also significantly rising costs at the same time. Higher labour costs, energy prices, EU policy, the limited availability of qualified workers, and logistical challenges further intensified the situation. No longer competitive in the low-priced mass segment, European tanners were hit hardest by the decline in the middle- and higher-price segments. Overall, 2025 proved exceptionally challenging for the European leather industry, a situation that is unlikely to ease fundamentally in 2026.

In Asia’s traditional producing markets, increasing pressure was also noticeable. Trade-policy measures and tariff regulations by the US government played an important role in this context. In the meantime, the situation surrounding US tariff policy appears to have eased somewhat. Not that tariffs have disappeared, but agreements have been reached with numerous countries that at least restore a certain degree of planning security. Nevertheless, it must be noted that almost every producer who still wants to supply the US market is affected by tariffs, either directly or through necessary price adjustments.

What is often overlooked is the basic economic fact that tariffs are not paid by foreign countries or by the supplier, but by the US importer and ultimately by the US consumer. Even if tariffs can lead to intensified price competition in the short term, the financial burden remains within the US market itself. The widespread impression that this represents a net inflow into the US state budget financed by overseas countries does not reflect this reality. So far the good news for suppliers was the decision to suspend an increase in tariffs for furniture for another year. Perhaps sense has prevailed; North Carolina furniture factories cannot just reopen, find qualified workers and start supplying cheap furniture at the drop of a hat. 

It remains the case that leather is no longer a strictly necessary product, but rather a classic discretionary product. In phases of economic uncertainty, rising costs and subdued consumer sentiment, demand and prices react, which further increases volatility across the entire value chain.

In summary, it can be stated that the global total volume of collected bovine hides in production and usage, after the peak years between 2010 and 2020, was noticeably corrected in 2025. This decline in leather demand resulted in a raw material supply that was no longer covered by demand and reacted with correspondingly falling prices. At the same time, rising production costs meant that leather increasingly struggled to hold its ground in the competition among materials. Against this backdrop, a stronger focus on alternative uses of the animal raw material became inevitable.

With the decline in leather demand, many beef producers began to look for alternative sales channels. This development was already visible during 2024, when demand for animal proteins increased noticeably, particularly in the dietary supplement sector. Corresponding investments became visible through the expansion of existing production capacities, as well as in the strategic plans of major groups in South America. In recent years, substantial capacities have been built for processing bovine hides into proteins, collagen and gelatins. At present, there are no indications that this trend will reverse.

On the contrary, one increasingly hears of new projects in various countries that are not primarily perceived today as beef producers.

However, capacity expansion does not yet automatically imply an equally rising demand that could fully compensate for the decline in the traditional use of bovine hides in leather production. Nevertheless, these developments must be monitored very closely in the coming months and years, as they will be of central importance for the long-term balance of supply and demand for the raw material serving the leather industry. What can be clearly stated is that the increasing use of bovine hides in the animal protein sector in 2025 had a stabilising and balancing market effect. Without this additional outlet, the situation regarding the utilisation and processing of bovine hides would have been significantly more strained.

For the leather industry, 2025 will certainly be remembered as a year marking the beginning of profound changes.
With this assessment, we conclude the review of 2025 and turn in the following section to the current framework conditions and the outlook for 2026.

We are in a phase of major political uncertainty. It is clear from events in the first days of 2026 that tensions and military activity in different parts of the world show no sign of easing. If one considers global supply chains, the consequences of the continuation and even the escalation of these tensions will be so far-reaching and complex that they would surely exceed the scope of our publication. Besides the availability of raw materials, questions of production capacities, access to necessary materials and the role of leather as a material would all have to be reassessed entirely. A further disturbance of world peace would, in the first stage, represent another major problem for the leather industry. Production security would be endangered, and consumers would initially forgo treating themselves to many products that are still made of leather today. If, however, everything were to remain as is, and there were a return to a generally more stable political situation over the course of 2026, then the fundamental parameters would come to the fore again.

It would then be reasonable to assume that the availability of bovine hides worldwide would not change significantly. Even declines in slaughter could easily be offset by resources that are currently not being used. This would, however, require that prices for bovine hides rise again, so that the economic rationale for collection and processing in many regions of the world could return. If leather were to experience significantly rising demand again as a material, then many other resources such as sheep, goats, kangaroos and so on would also immediately become sought after, although such a situation seems unlikely.

At the moment, this remains wishful thinking and a matter for the distant future, because we still have large volumes of semi-finished material sitting in stocks, waiting for customers. This means that the probability of a short-term change in the supply-demand balance, even under stable and favourable market conditions, can hardly be expected for the early part of 2026. One should also bear in mind that the current price pressure in the markets has by no means eased, and this already sets the cost-based pricing targets for the coming months.

Why are we not completely pessimistic despite all of these negative conditions? If the world and the leather industry can once again calmly focus on the future, we are still dealing with a raw material whose final product is not only an upcycling product, but also continues to offer superior properties. The fundamental failure of the leather industry to concentrate on the strengths and special characteristics of the material is a sad story, but it can still be changed. When one considers the effort consumer goods manufacturers go to to make alternative materials sound attractive to customers, it remains a mystery that the leather industry expends enormous energy and money on all kinds of non-productive certifications with little value in terms of external market impact, yet loses sight of the decisive objective and, as a result, has missed it for years.

In fairness to the leather industry, it must be said that in most cases it was effectively forced into this pursuit of certifications of one kind or another. It was not part of the industry’s own hopes and strategies. Even so, there is still an attempt to justify the mistakes of the past, even today, without the results being convincing in any way.

In 2025, we discussed these issues several times, and thus for the outlook for 2026 a question arises about what actually needs to be done. Without doubt, associations and institutions can have a supportive role, but they do not have a direct effect on consumer decisions. No consumer and no manufacturer of leather products is truly influenced in their decisions by the activities of these institutions. From whichever angle one looks at it, a genuine success in bringing leather back as a material cannot be achieved by the leather industry alone. Without support, without persuasion, without mutual and intense cooperation with manufacturers of end products,  and without open communication toward consumers, no material can actually achieve market success.

Even for successful brands for whom leather is part of their DNA real active communication about why they use leather as their preferred material is mostly limited to fine print. Even for products whose performance depends on leather (for protection, comfort, utility, durability, wear properties, and so on) a truly comprehensive explanation of leather as an important material choice is rarely provided.

This makes it clear once again that communication toward the consumer is the key, while it is also clear that the strength and resources of the leather industry are not sufficient to give leather globally the necessary attention again. One will therefore have to take detours through various communication channels. We also doubt that a joint and coordinated campaign will ever become reality. Ultimately, only the initiative of individual players remains. In discussions on this topic with the leather industry, however, the objection always arises that customers would not be ready for this.

We strongly doubt that. Even producers of consumer goods need, especially in times when business is difficult and competition for market share is intense, arguments and innovations to gain attention and attract new customers or to win old ones back. What is obviously missing is simply persuasive power on the side of the leather industry and trust and courage on the side of manufacturers. Arguments for using leather are more than sufficient, and more than adequately known. A brand manufacturer that makes use today of this incredibly large reservoir of facts and arguments would certainly have far greater chances of success than risk of failure.

One could certainly find some additional positive statements for a more successful 2026 for the leather industry, but in the end all thoughts in that direction lead to the same conclusions and required efforts described above. We also have very good reasons to assume that such thoughts may already exist among certain consumer goods manufacturers. Examples of how leather can be used successfully are increasing, and presumably only the last remnants of factions that have solidified over the years against leather within many companies still need to be removed. The more difficult business becomes, the greater the chance for change. However, this change must then truly be initiated proactively by the leather industry and not only awaited but also intensively supported. We are quite positive about this, even though we know there will be no short-term successes.

What the leather industry definitely needs again are strong salespeople who have both the knowledge and the talent to reach those places where decisions are ultimately made. The barriers that have become cemented in many companies and departments must—and can—be overcome. Waiting and hoping for these thoughts to develop on their own and for the customer to come to you will certainly not be sufficient.

Otherwise, very little—or almost nothing—has happened in the markets over the past weeks. In the western world, people took a very long break, and we hope it was used for intensive reflection. In Asia, many are now approaching holiday interruptions as well, and in the coming weeks it will become clear what decisions have been made, or will be made, for the time after the Chinese New Year celebrations in February. Essentially, caution and waiting remain the current motto almost everywhere. However, since this condition has also persisted in Asia for quite some time, there is at least a realistic hope that there could be certain catch-up effects in the first half of 2026.

For the coming weeks, we still do not see any real impulses for an improvement in the overall situation along the leather pipeline. If no positive impulses can be identified in the first quarter, 2026 could once again become very problematic. The time window in which many companies now need planning security and orders is narrowing daily, and it may simply no longer be enough if recovery sets in too late. We will therefore monitor the situation very closely over the next three months and very much hope that, along the leather pipeline, attention returns to what matters most: focusing on the advantages of the product, using existing competence, and shifting from a generally defensive, passive posture to an active, forward-looking stance.

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