World Market for Upholstery Leather Still Growing

September 5, 1999

New York (USA) -- Leather, once the exclusive domain of the wealthy, has become an attainable luxury for an expanding market segment. Increased affluence as well as increased awareness of leather's unique properties have both been credited with the upswing in the popularity and attainability of leather.
"In developed countries, more people can afford to buy a leather suite than could buy one 25 years ago," said Klaus Luczynski of Germany's high-end tannery Lederfabrik.
In 1997, leather was the chosen material for 15 percent of all upholstered suites sold in the UK, an increase of 50 percent over 1996, pushing the market share up from 10 percent.*
Industry experts estimate that across Europe, some 60,000 hides--which equates roughly to 800 square feet--are being processed a day.**
According to Furniture Today, leather in one form or another accounts for 15 percent of all upholstery marketed in the U.S. also. This figure is expected to continue to increase, though the market still has a way to go before catching up with Europe Ð research indicates that some 50 percent of European households include leather furniture. Some estimate the market in both Europe and the U.S. may peak at 30 percent of total residential upholstery sales.**
Demand is not a problem right now for those selling top quality bull hides at high price points, where sale of leather seating to offices, banks, airports, concert halls, embassies, luxury liners and wealthy home decorators are all in the lift.
"We sell quality," said H.G. Van Leussen of Hulshof Royal Dutch Tanneries, a leading supplier of aniline and semi-aniline leather. "We are finding that the combination of high standards and the soft, natural look and feel are what people want."
While residential sales are up, automotive is decidedly the fastest growing market for leather upholstery in the world. Current estimates put the automotive industry worldwide as using about 500 million square feet of upholstery leather a year, the furniture industry using in excess of 400-500 million square feet and another 100 million square feet being used in areas such as aircraft and boats.

Enter South America
Whereas some of their European counterparts have been turning out upholstery leather for a hundred years, the tanneries in Uruguay, Argentina and Brazil have not been particularly involved in producing upholstery leather until the decline in sales of leather shoes and clothing in recent years, and the shift of shoe production to China.
But now, in Uruguay a tannery such as Curtiembre Branaa handles 3,000 hides a day, exporting to twenty countries including U.S., Europe, Canada, Australia, South Africa and Taiwan. In Argentina, Curtarsa Curtiembre operates one of the most up-to-date tanneries in the world and produced 40,000 hides a week in 1998. Many of the hides now go to producing upholstery.**
As demonstrated by the South American producers, in the history of leather production flexibility has been the key to prosperity Ð if not survival.
"The center of furniture production is shifting out of Europe and North America toward the Far East, especially China, much as the center of shoe production did ten years ago," said the writers of a recently-published book about the leather industry, Sitting Comfortably. Leather suppliers have had to follow, turn to export or in the case of fully vertical operations, change their production focus.

Suppliers Turn To Contract
For many European tanneries, the shift in world shoe production 10-15 years ago led to a gradual phasing out of shoe leathers and to specialization in the upholstery segment. But now the upholstery segment is seeing a shift from residential to automotive or contract.
Many manufacturers who began by making residential furniture leather now produce both residential and automotive leathers, or have focused manufacturing entirely on the automotive sector. The sectors have widely disparate requirements. In the automotive sector, physical performance standards have been set by the industry whereas in the furniture sector, the aesthetics of fashion and feel, appearance and comfort, take priority. The contract sector requires a bit of both.
In the case of the UK's Andrew Muirhead & Son Ltd, part of The Scottish Tanning Industries Group, whose roots date back to the 1700's, flexibility over the years has paid off. The company moved from case, bag and shoe leather to residential upholstery leather, and then gradually into the supply of upholstery hides for the airline industry, in which they are now a leader.
Its sister company in the Group, Bridge of Weir, claims that contract now makes up its biggest growth factor. Many of its more than 20,000 hides per week go to offices, hotels, marine resorts and aircraft, in addition to "a lot of yacht specifying in the U.S."
For Wollsdorf, Austria's second largest leather producer, who made the move from shoe leather to upholstery leather ten years ago, the residential leather upholstery market in Europe is beginning to level off or even decline, so the company is now focusing its efforts, too, on automobile and contract.
"we're not pursuing residential right now," explained Werner Goetz, manager of commercial accounts. "We're focusing our efforts on contract, contract, contract." Right now, contract sales are booming in Europe, Australia and the U.S.

Leather Going Greener
Besides staying flexible to deal with the shifts of production centers and changing consumer demands, most producers have had to change to meet stiffening ecological demands.
Once considered one of the most polluting industries on earth because of the toxic chemicals used in tanning, today leather producers today have found ways to treat the hides more naturally. Attainment of ISO environmental standards has become a benchmark of comparison of tanneries, synonymous with quality and care.
Stringent environmental controls in Denmark forced all but one of its tanneries out of business. That one, Swewi Svendborg, has found a niche market for the 'eco-leathers.'
Those who produce eco-leathers point out not only the environmental but health benefits, as they claim their leathers have proven to produce little or no allergic reaction in people sensitive to the chemicals or metals usually used in tanning.

Focus on Exclusivity
Despite the current popularity of leather upholstery, many producers are approaching the Millenium with cautious optimism. They have to stay flexible because of the enormous forces at work that could hurt or help at any given moment -- globalization, ecology, economy, -- not to mention the dependency on global red meat consumption, since leather is a byproduct of the meat industry.
Some feel that leather's popularity will naturally lead to bastardization in order to make it an even more affordable luxury. What Swewi did with eco-leathers may have to be repeated in other arenas focusing on the desirability of an all-natural, elegant, yet practical upholstery material.
"We turned it around and used it as a selling tool," Bay said. "It's one of the last ways left to live out business rules. Exclusivity:  That stores can still have product that people long for." F&FI

*GfK Marketing Services

**F&FI gratefully acknowledges information and data obtained from Sitting Comfortably: Upholstery Leathers into the New Millenium, published by World Leather. Copies of the book can be obtained from World Trades Publishing Ltd, PO Box 6, 36 Crosby Road North, Liverpool, L22 0QN, UK at U.S. $33 including airmail.

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