Foot-and-mouth threat to leathergoods

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By Kevin Rozario

European leathergoods suppliers claim the recent outbreak of foot and mouth in the UK, and other parts of Europe, will have a knock-on effect on prices by the Autumn.
The industry has already been hit by rising raw material costs as a result of the BSE (mad cow disease) outbreak in the last decade as well as the increased use of leather by the car industry for seat upholstery. Foot and mouth, and the consequent burning of infected cattle, is limiting the source of good-quality hides further and forcing leather manufacturers to go outside Europe for them.

Texier export director Pierrick Maignan commented: "We have experienced a 3% to 4 % price rise and it will be more in the future, up to 10%. The retail prices of products will be hit." Maignan predicted that consumer prices would increase when Autumn/Winter 2001/02 collections, delivered from September, are put into stores.

Jean Paul Gaultier duty-free director Frédéric Serriére told TRW that prices of raw hides had risen by about 20%. He said: "Unfortunately, our retail prices will be affected and so will our margins, in order to offer reasonable store prices."

High-end leather house Tanner Krolle, which only sources UK hides, has enough pre-purchased leather to cope with demand. But managing director David Raymond told TRW: "We are experiencing some increases in costs, of up to 20%. There is also limited availability at highest quality levels. He added that the company was unlikely to raise retail prices, but was more concerned that this latest health scare had reduced the number of tourists travelling to the UK.

European Leather Industry representative, the Confederation of National Associations of Tanners and Dressers of the European Community (COTANCE), has recently managed to reach agreements to save several hundred thousand hides from slaughtered cattle infected with BSE. It said the move would prevent the loss of Eur500m ($450m) to the industry. However it will not be able to save hides from the 2.2m animals killed so far in the UK as a result of the foot and mouth outbreak, most of which are being incinerated.