Part
01
of one
Part
01
What are current and future trends in the leather industry, both in general and pertaining to the aviation industry?
Hello, and thanks for asking about the current and future trends in the leather industry, both in general and in the aviation industry. The short version is that growing demand from the aviation industry is one of the top trends driving the leather market. Industry revenue is forecast to reach $91.2 billion by 2018. Below is a deep dive of my findings.
FINDINGS:
A Lucintel market research report in states " In recent years, the demand for leather goods has grown. Industry revenue is forecast to reach $91.2 billion by 2018, with a Compound Annual Growth Rate (CAGR) of 3.4%, over the next five years." According to the report, "The competitive rivalry seems to be high due to the large number of players competing with each other to gain market share. Consumer demand has been shifting, it says, "toward the new design and innovative leather products with changing fashion trend and lifestyle. Upgraded designs, global economic growth, and the purchasing power of consumers are important key drivers for the leather goods industry, according to Lucintel."
On the other hand, Lucintel says, "The rising input cost of raw materials such as leather and plastic have severely impaired profit margins, which in turn have reduced the industry’s gross profit margin."
To quote Mike Redwood, "The trends of the last few decades have been quite strong. Footwear used to take up nearly 70% of all leather produced in the world but it dropped to nearer 50% in the middle of the last decade which has just ended. On the other hand automobile upholstery was only about 1% as we moved into the 90s and was nearly 10% by the mid decade with general upholstery for households and aeroplanes also growing."
Technavio’s latest report, July 2016, on the leather and allied product market in Romania, provides an analysis on the most important trends expected to impact the market outlook from 2016-2020. Technavio defines an emerging trend as "a factor that has the potential to significantly impact the market and contribute to its growth or decline." The report goes on to say "The revenue generated from leather and allied products is expected to reach USD 406 million by 2020, growing at a CAGR of over 8%." It is reported that the leather luggage segment saw a significant increase of close to 11% in 2011 compared to the previous year. Chandrakumar Badala Jaganathan, a lead analyst from Technavio, specializing in research on bio-chemicals and bio-materials sector, says, “Large investments and innovative interiors in the automotive sector have boosted the leather market.
According to Technavio's chemicals and materials research analysts, "The top three emerging trends driving the leather and allied product market in Romania, for example are:
- Growing demand from aviation industry
- Rise in marketing through social media
- Gradual increase in startups
Leather is used in the aviation industry because of its durability and ease of maintenance. With the decline of the leather industry during the economic crisis, many companies filed for bankruptcy and exited the market. This has led to the availability of free capacities in the market, which is attracting new players. The leather and allied product market in Romania is likely to grow at a high rate during the forecast period. Factors such as rise in demand from the automotive sector for manufacturing interiors, increase in imports of leather goods from European countries, and increase in awareness of luxury products through the social media are fueling the growth of the leather products market in Romania.
According to an article by United Nations Industrial Development Organization (UNIDO) , "The apparent continuous growth in the demand for leather upholstery in Asia may maintain the overall demand. Indian producers of upholstery leather were successful in recent years by developing their markets in Russia, China, Malaysia, Italy and the USA.
UNIDO further states that "Even some budget airlines had the (non-reclining) seats of their planes fitted with leather to offer luxury and comfort while maintaining practicality." These seats can easily be cleaned using liquid detergents, while textile seat covers would be out of service after a relatively small number of flights. It explains "The types of leather used for covering seats in budget-airline planes are sometimes of lower quality; the typical such material is corrected grain leather, which may downgrade the value of genuine leather in consumers’ minds." At the same time, UNIDO continues, "upcoming new aviation regulations will affect specifications for materials used in airplanes; the leather industry may have difficulties to meet them, which may lead to a shrinking of the upholstery leather market."
An article in Technavio dated August 2015, states "A key factor that fuels the demand for cabin interiors is the increasing number of commercial aircrafts as a result of rising air passenger traffic." This in turns drives an increase for leather. This presents an attractive opportunity for aircraft cabin interior vendors to introduce improved seating design, upholstery, materials, colors, and other similar additions. The demand for cabin interiors has shown promise and key findings of this report predict it to reach a CAGR of more than 10% from 2015 to 2019. The article proceeds to explain " The Americas have witnessed an explosive growth in the use of technology in aircraft interiors. Innovations and product launches by vendors are likely to drive this growth even further.
Product Development Technologies was at Paxax Trends Aircraft Interiors Expo (AIX) 2016 where new ideas and trends that could be a part of "What's Next" in this dynamic industry was introduced. Aircraft Interior Expo 2017 revealed that "technology keeps marching on, while airlines look to the industry to deliver high perceived value innovations for passengers to drive brand loyalty."
New seating, new colors, new materials were introduced. Interestingly, Product Development Technologies also revealed that "Boeing has teamed up with automotive interiors company Adient to explore a future aircraft seating partnership. In a press release, Adient spokesman David Roznowski states, "As we expand into adjacent markets, we will share our knowledge internally and with our partners to improve the experience of passengers in the air and on the ground,"
CONCLUSION:
To wrap up, the findings above reveal that there will be continuous growth in the demand for leather. This is driven mainly by the increasing number of commercial aircrafts as a result of rising air passenger traffic and large investments that are being made in the automotive sector. The data used to answer the question was sourced from industry reports, trusted media sites and websites.
Thank you for using Wonder. Please let us know if we can help with anything else.