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Leatherbiz Market Intelligence executive summary: • • •
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Overall, the industry enters 2026 in consolidation mode The merger of JBS and Viva Group to form JBS Viva is an event of considerable significance With more than 30 production sites worldwide and an annual capacity exceeding 20 million hides, the new entity’s vertical integration, financial strength and global reach can have lasting effects on market structures For mid-sized and smaller tanneries, this will increases competitive pressure; such a large operator can influence price levels as well as efficiency and quality standards across the industry For companies that use leather, however, this development may offer several important benefits These include a more stable supply chain, greater scalability and that ability to rely on large, dependable partners JBS Viva thus represents a structural turning point, one that extends far beyond the merger itself and is likely to reshape the dynamics of the global leather supply chain in the long term.
MARKET INTELLIGENCE
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s the year draws to a close, it has become more evident than ever that the geopolitical and economic environment along the leather supply chain has shifted significantly in the past 12 months. The increasing fragmentation of trade zones, more volatile consumption patterns, regulatory interventions and a noticeable relocation of production capacities have created an environment in which past certainties are losing relevance while new dependencies continue to emerge. Nowhere is this more apparent than in Europe, where persistently high energy and labour costs, stricter environmental requirements and rising financing burdens are undermining the economic foundation of many price-sensitive product groups. Segments that for years formed the stable backbone of European leather production are losing their viability. The consequences are already visible: production is shifting to lower-cost regions, European downstream manufacturers and brands are becoming more dependent on external supply chains, and a structural erosion of industrial capacity is taking place, an erosion that may accelerate further unless fundamental adjustments are made. Against this backdrop, the recent decision on the European Union Deforestation Regulation (EUDR) merely postpones the time pressure, but this is still a matter of some urgency. The relaxation of the original timeline offers short-term relief, but the
fundamental issues remain unaddressed. The technical infrastructure required for comprehensive traceability is still incomplete, data availability along the supply chain remains insufficient and the role of the “operator placing the product on the market” is not yet fully clarified. As a result, the industry remains in a regulatory limbo that complicates planning and delays investment decisions. Many market participants are deliberately operating on a short-term basis, postponing necessary modernisation and compliance projects. The EUDR decision does not resolve any of the structural challenges, it simply extends them and delays the point at which companies will inevitably have to reposition themselves. Developments over the past two weeks clearly reflect this uncertainty. In the processing industry, call-offs are declining, production windows are being shortened and capacities reduced. Even long-standing customers are revising their demand planning for the coming quarter, often opting for more conservative volumes and avoiding long-term commitments. In downstream manufacturing, inventory reduction remains the main priority, and appetite for new projects is low. Price increases are difficult to implement, and activities are frequently being shifted into the first months of next year. On the brand and OEM side, caution continues to dominate: the automotive sector is still grappling with uncertain sales volumes, particularly in the electric vehicle segment. The furniture sector remains focused on cost
optimisation and conservative purchasing. The luxury market is stable but lacks meaningful growth drivers. The raw material market mirrors this picture: supply is adequate, but offtake, especially for Asia, remains weak, putting prices under continued pressure. Trading activity is exceptionally low, driven by buyers and sellers who are consciously opting to wait. In this already challenging environment, the merger of JBS and Viva Group to form the new entity JBS Viva carries particular significance. With more than 30 production sites worldwide and an annual capacity exceeding 20 million hides, a player emerges whose vertical integration, financial strength and global reach can have lasting effects on market structures. For mid-sized and smaller tanneries, this significantly increases competitive pressure; such a large operator can influence price levels as well as efficiency and quality standards across the industry. For brands and OEMs, however, this development may offer advantages: more stable supply chains, greater scalability and a growing reliance on large, dependable partners. JBS Viva thus represents a structural turning point, one that extends far beyond the merger itself and is likely to reshape the dynamics of the global leather supply chain in the long term. Another structural factor gaining importance is the persistent imbalance between global hide supply and leather demand. While global tannery capacity is theoretically sufficient to process the available hides, the worldwide supply of raw hides has for some time exceeded the real demand for leather and this trend appears to be solidifying. Raw material producers and suppliers are currently trying everything to mask or solve the situation, but under present conditions this is barely feasible, especially with the additional disruptions caused by the upcoming holiday periods. The unavoidable consequence is that part of the raw material must be permanently diverted away from traditional leather production into alternative uses, primarily protein-based or energy-related applications. As long as this structural demand weakness persists, returns for raw materials and finished products will remain under pressure, as competitive dynamics within the supply chain tend to push prices below the minimum thresholds required for economic viability in many tanneries. Under these conditions, a trend reversal appears unlikely. Instead, the industry will be forced to adjust its structures with adjustments that, once implemented, are not easily or quickly reversible. The result is a long-term, profound reshaping of the value