The leather market - France

1.2 A growing global market

The leather market is estimated to be worth nearly $*** billion in **** by Grand view research. According to the same organization's estimates, the compound annual growth rate (***) between **** and **** is *.*%, reaching a market size of over $*** billion in ****.

Global Leather Market Size Forecast World, ****-****, $ billion Source: ****

Furthermore, according to the Economic Observatory of the National Leather Council, in a report published in December ****, the main importers of raw hides and leather are China (***). The latter increased their market share by *.*% between **** and **** on a global scale, while the former lost *.*% of market share over the same years.[***]

It can also be noted that *% of raw hides and skins exports worldwide come from France, making the country the third largest exporter in the world.

Main importers of leather World, ****, in Source: ****

Top leather exporters in the world World, ****, in percent Source: ****

In the diagram below, we observe the distribution of trade in raw leather and hides in the world. The bulk of trade is intra-European, with over **% of trade by value.

Source: ****

The figures represent the share of trade between two zones in relation to the whole. For example: Exports of raw hides and skins from America to Asia-Oceania constitute **% of all ...

1.3 A European market dominated by Italy

On a European scale, COTANCE (***) estimates that there were more than *,*** companies and more than **,*** jobs related to the leather industry in the European Union in ****. [***]

Italy is the main producer country of the European Union in the leather sector, with a total production valued at *.* billion euros, or **.*% of the total of the European Union countries. Germany comes next, far behind with a production value of ***.* million euros. [***]

Share in leather production by country in the EU Europe, ****, in % Source: ****

1.4 The french market follows the global trend

The Conseil National du Cuir estimates a turnover for the leather sector of *.* billion euros in ****.

Turnover of the leather sector France, ****-****, in billion euros Source: ****

France is the world's *rd largest exporter of raw hides and leather, as well as leather goods in ****.[***] Its main client is Italy (***). Over the period January-November ****, its imports are up *% while exports decline by **%.

French production stood at ***,*** tons of raw hides of bovine origin in ****, **,*** tons for calves and **,*** tons for sheep. [***]

In the tannery-megisserie sector, France had, as of December **, ****, ** companies and *,*** employees, mainly in the Occitanie region (***).

The Conseil National du Cuir also compiles statistics related to the footwear and leather goods sector, summarized below for the year ****. The raw hides and skins sector is mainly the business of trading houses directly integrated within the slaughterhouses.[***]

2.1 A demand marked by the influence of foreign players

The demand for leather in France is twofold:

Textile and leather goods players, most of them oriented on premium or luxury products, consume tanned leathers ready to be assembled or raw leather; French consumers and tourists buy finished products (***) from these textile and leather goods players.

There is a strong appetite for leather goods such as bags (***). In ****, sales of leather goods were distributed according to the chart below, with the largest market being handbags.

Breakdown of French production of leather goods and saddlery France, ****, in % Source: ****

According to forward-looking studies, revenues generated by leather textile players will decline significantly in the French market. There is also evidence of stability in the prices of leather products. Both of these findings suggest a decline in demand for leather clothes. However, the decline in demand for leather clothes is to be dissociated from the continued demand for leather goods, supported mainly by tourist purchases from the major French luxury brands.

Consumer price index for leather goods France, ****-****, CPI index Source: ****

Turnover of leather clothing producers France, ****-****, millions of US dollars Source: ****

Foreign trade in leather is relatively stable between **** and ****. In ****, the trade balance turns into a deficit in the leather ...

2.2 Determinants of demand

Leather is mainly used in leather goods and shoemaking. It is also used in the saddlery, glove, decoration and furniture industries

Leather goods, number * in demand

In France, leather goods are the leading market for leather producers. Hermès, for example, owns * of the * largest tanneries in France. Luxury brands are therefore key players in the leather industry. The demand for leather is therefore varied, for materials from different animals (***). The key players in the production of luxury leather goods are also present in other products generally made of leather, such as wallets, belts or gloves. This market is logically very sensitive to periods of economic recession. The leather goods sector is also closely linked to the tourism industry. In this respect, the coronavirus crisis accompanied by travel restrictions has strongly affected the sales of the sector as shown in the following graph:

Sales of leather goods France, ****, index base *** in **** Source: ****

Footwear industry

Shoe manufacturing is the second largest market for French tanneries and leather goods manufacturers. However, this sector has been declining steadily since the ****s in France (***), due to aggressive competition from developing countries and the mass distribution of shoes made from other materials. The niche corresponding to ...

2.3 Demand trend

In terms of value, the handbag segment is largely dominant with estimated sales of €*,*** million in ****. It is also one of the fastest growing segments since ****, preceded by small leather goods (***).

Source: ****

3.1 An increasingly concentrated sector in France

The number of players in the raw hides and skins sector on the one hand, and that of tanneries-megisseries on the other, has been declining in recent years: from ** companies for the first sector and ** in the second in ****, France has gone from to ** and ** companies respectively in ****. The number of employees has declined by **% and **% respectively in these two sectors over these same periods. [***] This is due to the tightening of environmental constraints, soaring raw material prices, the erosion of traditional markets and the development of artificial leathers of better quality. Competition with border countries, including Italy, is also an aggravating factor

However, this decline is diminishing over the period ****-****. Indeed, the number of tanneries-megisseries factories has increased by **% over this period, supported by the label of excellence made in France for the manufacture of products with high added value. The turnover has also jumped in ****, with an increase of *** million euros (***) between **** and ****.

Turnover of companies in the sector France, ****-****, in millions of euros Source: ****

Turnover of tanneries and leather goods manufacturers France, ****-****, in millions of euros Source CNC Turnover of the footwear and leather goods sector France, ****-****, in millions of euros Source: ****

3.2 Structural characteristics of the tanneries

All tanneries and megisseries - consisting of the transformation of raw hides into leather - are grouped under NAF code **.**Z: Tanning and dressing of hides; preparation and dyeing of furs.

Number of companies registered under NAF code **.**Z France, ****-****, in number of units Source: ****

The number of companies specializing in leather tanning and finishing has been declining since ****, while sales have been rising. Thus the market is condensing.

Turnover index (***) France, ****-****, index base *** in **** Source: ****

3.3 Leather production

The skin of the animals is generally made up of * layers: the epidermis, on the surface, which undergoes the aggressions. The dermis, where hair and nerve endings are born. The hypodermis, layers of fat cells in contact with the muscles.

To preserve the raw skins, but also to eliminate the water from the tissues, they are salted in a temperature maintained at about ** degrees. The skins are then sorted according to their thickness. [***]

From there, the skin undergoes the work of river, which consists of five successive operations:

Soaking, to remove impurities and dirt The depilation, in order to remove the hairs Fleshing, which consists in removing the subcutaneous tissue The confit, to soften the future leather Pickling, which consists in acidifying the skin, ready to receive the tanning

The tanning is the operation of transformation of skin in leather, thanks to vegetable or mineral tannins, in order to make the material imputrescible.

Then follows the currying stage, during which the leather will undergo chemical treatments to give it its color, suppleness and granularity

The last operation, called finishing, allows the leather to be uniform in texture and appearance. There are three types of finishing [***] :

Aniline, which is the covering of ...

3.4 Distribution channels

The production and distribution of leather can be summarized in the following diagram: Leather goods remain the key sector of leather sales. According to the site Je Suis Entrepreneur, it represents **% in value of leather goods sales in France, divided between multi-brand retailers and exclusive distributors. Distribution of leather goods distribution channels France, ****, in % Source Je Suis Entrepreneur - Businesscoot processing The distribution of leather products is mainly done according to usage. Thus, there are several professional distribution organizations depending on the sector: Federation of unions of traders in leather and crepins of France and related professions (***). Federation of footwear retailers (***). National Federation of Shoe Retailers (***). National Federation of retailers in leather goods and travel (***). Union française des distributeurs importateurs exportateurs en chaussures (***) Union Sport & Cycle (***) Finally, several trading houses put leather suppliers and customers in touch with each other, such as Sofic, official distributor of the ALCANTARA® brand for automotive upholstery

4.1 The different varieties of leather

Depending on the origin of the skins used and the different treatments applied, there is a wide variety of different leathers

Origin of the leather

Leather can come from all kinds of animals, from cattle to fish and birds for example. Below is a non-exhaustive list of the main leathers found on the market [***]

Lamb leather: used mainly for clothing and glove making, this leather is particularly smooth. Sheep leather: used more for clothing, this leather is more affordable than lambskin, but with a rougher grain. Goat leather : particularly resistant and inexpensive, it is used in the manufacture of coats and jackets. Pig leather: it is a thick leather, very resistant, porous and naturally clear. Cheap, it is used for the manufacture of jackets. The calf leather: a high-end material, it is found more in the luxury leather goods sector and in the large shoe industry. Buffalo leather: it is used for the manufacture of laces and possibly men's clothing. It is one of the most resistant, but it is also more expensive. The suede: soft leather used in a large number of industries (***). Cowhide leather: very abundant because it comes directly from the remains of human food, this leather is ...

4.2 Price range

On a global scale, leather prices have risen in recent years, driven up by a growing demand for leather goods, especially in Asia [***]. Indices given by INSEE establish a **% increase in prices between **** and **** for all markets resulting from the production of tanned hides and skins.

There is no official global price for leather, because the varieties and quality ranges are too different. However, the CBOT (***), offers a FOB spot price in US Cents per pound for beef leather:

Beef leather prices World, ****-****, in US cents per pound Source: ****

4.3 Trends and innovations

After a steady decline during the decade ****-****, the leather industry has experienced a slight upturn since the ****s, mainly driven by the luxury industry, which does not hesitate to buy out its suppliers to ensure its supply. The leather market is also subject to strong environmental concerns, prompting tanneries to offer new innovative materials from leather, such as waterproof or transparent.

Luxury boosts leather market

Luxury leather goods manufacturer Hermès established two new production workshops in France in June ****. The segment grew by *% in ****, reaching €*.* billion that year. Other luxury brands, such as Chanel or LVMH, are also working to buy out their leather suppliers in France (***) [***]

In addition, the French skilled labor allows to obtain a label of origin. The National Leather Council signed a partnership in September **** to promote the "Origine France Garantie" label [***]

Innovation in manufacturing processes

Faced with constant pressure from associations defending the animal cause, but also general environmental problems, several tanners have proposed new materials and manufacturing processes. Ecological charters have been created, for the treatment of leather without chlorine for example [***].

The annual Première Vision Leather show, a reference for leather and furs, has allowed to highlight new creative materials: in ...

5.1 Regulatory aspects

The activities related to the exploitation of leather are framed by several legal texts belonging to the national or European Community law. These texts regulate the various stages of leather processing as well as its marketing.

The decree of November **, ****: the law on the modification of the nomenclature of classified installations (***) makes tanneries and megisseries go from an authorization regime to the registration to the declaration.

The decree n°****-** of January *, ****: it imposes mandatory labeling for sale or distribution free of charge. It also specifies that "The use of the word 'leather' [***] is prohibited in the designation of any material other than that obtained from animal skin by means of tanning or impregnation preserving the natural shape of the skin fibers."

The tanners and megissers must develop their products in compliance with the European REACH regulation, protecting consumers from toxic products and the removal of hazardous substances. French companies are regularly monitored by the DREAL (***) on compliance with the standards in force. [***]

Directive **/**/EC of the European Parliament and of the Council dated March **, ****: it sets out the regulatory elements relating to the labelling of materials used in the main components of footwear and footwear offered for sale to consumers. ...

6.1 Segmentation

The activities of the tanneries and megisseries is listed by the INSEE under the NAF code **.**Z "Finishing and tanning of leather; preparation and dyeing of furs"

The following companies are divided between luxury players, who may also own tanneries and megisseries , and tanners-megissers:

Luxury brands:

LVMH Hermès Kering Longchamp Chanel Dior Prada Lancel

Tanners and leather goods manufacturers :

Haas Tanneries Fortier Beaulieu Rémy Carriat Tannery Gustave Degermann leather factory Pechdo Tannery Mégisserie Joqueviel & Cathala Fiscuir

• LVMH Vins et Spiritueux
• Longchamp
• Chanel
• Prada Groupe
• Lancel (Piquadro)
• Tanneries Haas
• Fortier Beaulieu
• Tannerie Rémy Carriat
• Manufacture de cuir Gustave Degermann
• Tannerie Pechdo
• Mégisserie Joqueviel & Cathala
• France Tanneries
• Rioland Groupe
• Alcantara (Toray Group)
• Norki Décoration