Category Archives: Leather

Why “Leather” Prices Keep Moving Higher

Most of us are well aware of the tight cattle supplies which have led to record high beef prices over the last year. If you haven’t bought a new pair of shoes lately, you may not have noticed how high the price of leather goods has climbed as well. Wholesale hide prices are up around 17% this year. That’s on top of the 17.4% increase seen in 2013. Heavy native steer, the predominant hide type, is now selling at the highest levels seen since the government began tracking it in 1998. And it’s not just high-end leather that’s skyrocketing either. The price of splits – which are used to make suede or coated to make sports shoes – have also climbed to record levels. And here’s the really cruel twist to leather goods producers – as their costs continue to climb, so does demand. As the economy has improved, consumers are once again splurging on everything from fancy bags to luxury cars decked out with leather interior. With producers margins being so high, they’re unfortunately not reaping much reward in the end. The Scottish Leather Group is a classic example. They reported an 18% gain in revenues this past fiscal year, but their hide costs were up 16%, eating up nearly all their profit. Beef prices have a little bit of a buffer when it comes to adding weight, which has been able to somewhat offset the supply shortage. Hides however ​see no gains from the added weight. About half of all global leather supplies are used in footwear; another 30% is used for furniture or auto interiors; and the rest is used in wallets, belts, bags and other accessories. So far, wholesalers and retailers alike have been less shy about passing on the additional costs to consumers than grocers have. Various industry groups estimate that prices at the retail level have been raised anywhere from 10% to 20% and again, that is on top of price increases seen in 2013. They also predict that prices at all levels will continue to climb for at least the next year, if not longer.