Jonathan Clark, CEO di PrimeAsia, is very clear. The companies of the meat industry are playing with fire. The price increase of raw materials, already denounced by UNIC – Italian Tanneries, risks of turning into an irreparable damage. That’s because, explains Mr. Clark, the increased costs for leather risk of turning some to alternative materials. “Every market quota taken away from leather – he writes on Linkedin (from the picture on the right) – is a part that will never come back”.
Irreparable damage
Mr. Clark begins his statement by talking of 2014. “The demand for finished leather had decreased sharply – he says -, which, together with other factors, brought raw material from the USA to record levels”, along with that of Brazil. “I have many friends in different companies and, at the time – he continues -, conversations on prices all had to do with the relationship between demand and supply. They wanted to explain that the increases had to do with them or our relationship with them”. The problem on this occasion, repeats the CEO of PrimeAsia, came after the usual price-increase season.
“We all remember the consequences: we opened the door to cheaper alternatives. Many innovators came out from all over the world, with many substitute options to leather. The chain never recovered what it lost. And now once again we are in the same place”.
Short and long-term forecasts
Mr. Clark invites the responsible parties of the livestock industry to the debate: we need to focus our priorities. “I must believe that there are people in those multinationals – he writes – that understand that any short-term gain from the price increments of raw material will, inevitably, damage the future demand of their product in the long-term”. And yet, looking at the trends, that’s not the way it’s going: “It’s frustrating to say – continues the CEO of the Asian tanning group -, that there are companies that prefer to damage their profitability in the long term”.
How? “By raising the prices on goods that, in the end, is worth less than 2% of their total revenue on a single animal – he answers -. The answer then can be found in the dialogue between stakeholders: “I am not saying that leather prices will be excluded from the ups and downs of the market – he concludes -. But when leather is under pressure from many fronts, I can only hope that the meat industry will take the time to analyze the situation and preserve its own demand”.
On the left and center, images taken from primeasialeather.com
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