Byline: Katherine Bowers / Peter Braunstein / With contributions from Eric Wilson / James Fallon

NEW YORK — The mad cow and foot-and-mouth epidemics that have led to wholesale slaughter of British livestock have many forecasters predicting a 20 to 50 percent jump in the price of finished leather products, based on dramatically reduced supply.
With such rapid increases, many in the industry wonder whether they can continue to meet record consumer demand for leather apparel. Others speculate that as the U.S. spins out of its economic boom cycle, consumer appetite for leather apparel will diminish and prices will stabilize. But based on recent market activity, it seems consumers are still enamored of sexy, luxurious dressing where leather and fur play a paramount role.
The latest cattle crisis adds momentum to a year-long trend of increasing leather prices. For the past two years, designers across every price point and persuasion have touted leather. Remember The Gap’s 1999 “Everybody in Leather” campaign?
According to the most recent report from the Leather Apparel Association, retail sales of leather apparel grew 71 percent in 2000, reaching $4.2 billion, up from $2.5 billion in 1999. Observers attribute the jump in sales to leather’s evolution from outerwear to a year-round fabric, used in everything from T-shirts and shorts to dresses and suits.
Sales of women’s leather sportswear, for instance, jumped a whopping 323 percent last year, up from $287 million in 1999 to $975 million in 2000. The 2000 sales figure was the largest year-to-year percentage increase of leather apparel in a decade, according to Morris Goldfarb, chief executive officer of the G-III Apparel Group, a New York-based leather outerwear manufacturer.
According to John Pittard, group managing director of UK leather manufacturer Pittards, prices for rawhides used by the leather-goods industry have generally increased by 20 to 25 percent since November, resulting in increases of 10 to 15 percent in the prices of finished leather.
“But those increases took effect before the BSE [Bovine Spongiform Encephalopathy] crises in France and Germany and the foot-and-mouth outbreak in Britain,” Pittard noted.
Many large leather vendors said they moved fast and bought early to avoid price increases from the cattle diseases. At last week’s Bank of America Securities Consumer Conference, Gucci chairman and chief executive officer Domenico De Sole also claimed a certain insulation from the European epidemics.
“I heard about mad cow,” De Sole said, “but we already bought our year’s supply for 2001 and part of 2002.”
But for smaller resources, higher prices — and less control over margins — have necessitated a shift in strategy.
Los Angeles-based designer Sheri Bodell quipped that the last thing the market needs is higher-priced basic leather pants.
“How many more does the market need?” Bodell said. “If I was in the junior market, I wouldn’t be touching leather.”
But since Bodell is known for specialty leathers, she felt the time was ripe to launch her Gold Luxe label, a higher-priced, leather-intensive collection that features unusual items, such as basket weave dresses and blazers, a technique that consumes nearly 50 percent more leather.
Although Bodell said leather prices are increasing “daily,” advance purchasing made it possible for her to introduce pieces like the basket weave jackets.
“I was in Paris in March when mad cow broke out,” Bodell said. “My suppliers called me about it immediately and I went ahead and purchased goods in advance to cover ourselves.”
But she’s managing orders tightly. She gave her sales manager 30 days to round up orders for “Rodeo Chic”, a full-length cowhide coat with a pink and brown burnout finish.
“The [coat] is at least $4.50 per square foot,” she said. “We have to be very careful with how many we cut.”
Alexander Zar, a Los Angeles-based leather accessories designer, is maneuvering part of his business into a trend he hopes will continue to grow: fabric trimmed with leather. So far so good, Zar said, citing fabric Kelly-style bags trimmed with natural leather as strong sellers in his three boutiques.
Rather than cope with rising prices, some junior resources have walked away from a market saturated by cheap leather.
“Last year, leather was the new fashion, so you could sell a slightly higher price point,” noted Karen Frazier, whose Los Angeles-based company BB Co. produces private label for a variety of department stores, as well as for its own junior line, Luna Chix. “But leather got killed by price point.”
Instead of playing limbo on leather, Frazier said Luna Chix’s fall offering consists of pieces that work with leather, such as punk-inspired tartan miniskirts or pleat-front tweed skirts.
One factor that could have a substantial impact on leather prices is the effect of mad cow disease on the dietary patterns of Europeans and Americans.
After Germany was hit with a BSE epidemic last year, demand for beef dropped off by close to 80 percent. Given that cattle hides are only derived as a beef by-product, a drop in demand for meat could substantially reduce the supply of hides and wreak havoc on leather prices. While BSE has not yet appeared in the U.S., public perception of meat eating as a health hazard may imperil both the meat and leather industries in the long term.