Luxury goods brands are prepared for higher leather prices
08/03/2011
Rising hide prices in the US and constraints in supply elsewhere, most notably in Australia after flooding there this summer, have put pressure on the supply of raw material, at a time when, brands have acknowledged, demand from consumers for leathergoods is very healthy.
In addition to the challenges in bovine leather supply, Hermès told the newspaper it was worried about the price of exotic skins for its handbags.
Chief executive, Patrick Thomas, said: “What worries us the most are increases in primary materials to come, notably for exotic skins, with high increases expected for crocodile, around 25%.” He said Hermès, which generates half of its annual sales from leathergoods, would spread price increases over time and that any price increase to consumers this year would be modest.
The president of the Italian tanners’ association, UNIC, Graziano Balducci, said his member companies were also trying hard to avoid price increases. He said: “It's a problem. Our clients don’t want to pay the increase of the prices. It's logical that the industry will have to raise prices.”
For Dino De Maio, export manager of Solofra-bsaed tannery Conceria Derma, a lack of suitable raw material is already causing his company problems. He said in the report that high demand from increasingly wealthy Chinese consumers would normally be a good thing for Italy, but not in the current climate because there hasn't been enough hides to go around.
A London-based luxury goods industry analyst, Luca Solca, told the Wall Street Journal that brands would make the most of strong demand and raise their prices. Mr Solca’s estimate is the leathergoods and leather shoes account for between 22% and 23% of luxury goods sales
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