Executive Summary

The number of people employed in the tanning industry worldwide is estimated at well over 500,000 and those employed in the leather manufacturing sectors increase this number substantially. The textiles and leather sector, which also includes clothing and footwear production, had a combined turnover of more than _200bn in the EU (EU15) alone, prior to the joining of ten accessionary countries in May 2004. However, over the past decade, many jobs have been lost through modernisation and as a result of international competition from developing countries. The leather industry is now very much a global one with raw hides and skins, part-processed leather, finished leather and leather products widely imported and exported. Competition will only intensify with the abolition of import quotas that took place on 1st January 2005, leaving the enlarged EU industry facing an uncertain future. While the UK has traditionally had a trade deficit in luggage and leather goods, it is one that increases at an alarming rate. The value of UK exports has increased over the years, but not to the same rate as its imports. From 2001 to 2003, the trade deficit rose by a staggering 88.8% and this, of course, was before the removal of quotas.

An example of globalisation, the UK's leading luggage manufacturer, Carlton International PLC, was acquired in 2004, by one of Asia's leading luggage manufacturers, VIP Industries Ltd, part of the US DG Piramal Group. Carlton International's plant and machinery have been moved to India to increase output capability at VIP's facility in Nashik, while the new wholly-owned subsidiary of Carlton Travel Goods Ltd will market both the Carlton and VIP brands in Europe.

On the retail side, one of the market leaders is the LVMH Moët Hennessy-Louis Vuitton Group, which derives around a third of its turnover from sales of fashion and leather products. The company has ambitious plans for expansion in the UK. It currently has five standalone stores in Great Britain — three of them in London, a newly-opened one in Birmingham and one in Edinburgh — with further concession outlets in the UK and Dublin. Another competitor at the forefront of the UK retail market for luggage and leather goods is Mulberry PLC. The Somerset firm has suffered a torrid time over recent years, closing stores across the world and withdrawing from some major markets, including the US, but has recovered sufficiently to record its first pre-tax profit in 8 years in its half year ending 30th September 2004.

Key Note estimates that the value of the UK market for hand luggage and leather goods increased by just 1.1% from 2003 to 2004. It has already been noted that its principal threat is that of cheap imports, but the manufacturing industry also suffers from unreliable supplies of raw materials, particularly good quality local hides. In addition, it needs to invest heavily in complying with strict environmental standards. Suffering low profit margins, the value of UK manufacturers' sales of luggage, handbags and the like, saddlery and harness fell by 11.5% from 2002 to 2003 and, as is the case in most UK manufacturing industries, it must concentrate on the quality, design-led end of the market since it is unable to compete on price. Key Note forecasts that the hand luggage and leather goods market will increase by 5.5% between 2005 and 2009.

Price:	£ 399.00 GBP ex VAT (£ 468.82 GBP inc VAT )
Publication date:	30 Apr 2005
Licence period:	365 days

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