Leather Pipeline: Time for brands to appreciate the true value of leather
30/10/2018
The report takes aim at handbag and leathergoods brands, which it says are squeezing tanners in the pursuit of better profit margins. It explains that the need for these brands to spend more on marketing in order to stay ahead of their competitors is leading them to seek out cost savings elsewhere.
Material price and manufacturing costs are two of the areas they have identified in this regard, with price negotiations become increasingly aggressive. These buyers are in a position of strength, however, as they understand their “volume importance” to material producers, the Leather Pipeline says.
It adds: “Rough and tough negotiations in business are to be expected, but the price of leather is not calculated by simply adding the cost of the raw material to the manufacturing cost. These buyers want more than that, but are not happy to pay for it.”
The report points out that these brands are also asking their material suppliers for things such as guarantees of secure waste management, labour conditions they do not need to worry about, and product and production controls.
“It would be fair to say that the price for leather and raw material is being hammered down so much that the preparation of raw material and the production of leather is becoming uneconomical,” it warns.
The full report can be accessed here.
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