Artificial Leather Market

The global artificial leather market is projected to witness remarkable growth registering a CAGR of 7.37% during the forecast period, 2019–2025. The prominent factor driving the growth of the market is the healthy growth of the footwear industry across the globe. The footwear market globally is expected to generate a revenue of over USD 135 billion with an adoption rate of 43.1% by 2025. Additionally, the increasing use of artificial leather in the manufacturing seat covers, dashboards, and other clothing and fabric parts in the automotive industry is also expected to boost the growth of the global market during the forecast period. However, environmental issues associated with PU and PVC are likely to hamper the global market growth.

Artificial leather is a leather-like plastic and is widely used in the footwear industry due to its wear-resistant property and soft texture. Artificial leather offers a brighter appearance than natural leather, is folding resistant, cheaper than natural leather, waterproof, as well as alkali and acid-resistant. The chemical resistant property allows it to be used in the manufacturing of footwear, such as boots for use in the chemical industry and other industrial purposes. Artificial leather is also cost-effective and easier to manufacture as compared to natural leather. The major factor responsible for the growing adoption of artificial leather in the footwear industry is the obsoletion of natural leather made from skin or hide of animals. Many countries have come up with regulations to limit the slaughtering of animals for the production of natural leather, such as Directive 94/11/EC of European Parliament and Council (EU), Regulation (EU) No 1007/2011 of the European Union (EU), “40 CFR 425” of document citation “61 FR 35680” by the US Environmental Protection Agency (EPA), Legge 1112 and Legge 8 in Italy for discipline of the use of the names "leather" and "fur" and of the terms that derive from them, Decreto 3289/1974 in Spain, Consumer Protection Act, 2008 (68/2008) in South Africa, and many others. These regulations over the years have resulted in an increase in the manufacturing of artificial leather to meet the growing demand in several application areas. The genuine leather used in shoe manufacturing requires chemical treatment, which damages the biodegradability property of the leather, whereas artificial leather is used to make vegan shoes. The artificial leather due to its long-term value is used across formal patent shoes, boots, sandals, slippers, and sports gears. The growth of the footwear industry in recent years, particularly in developing countries, is expected to fuel the demand for artificial leather in the coming years. According to the Brazilian Footwear Industry Association (Abicalçados), the global footwear industry had generated a revenue of USD 91.6 billion in 2018 and is expected to register a CAGR of 4.82%, and by the end of the review period and generate a revenue of USD 127.1 billion.

The demand for artificial leather is proportional to the growth of the footwear industry. As per the figure given below, the adoption rate of footwear in the industry, which was 23.6% in 2018, is expected to reach to 45.1% by 2025. The growing adoption is expected to increase the manufacturing of footwear and thus the demand for artificial leather.

The increasing manufacturing, import, and export by the major footwear manufacturers such as Nike, Adidas, Skechers, New Balance, Asics, Belle, Nine West, Puma, Kering Group, Wolverine Worldwide, Clarks, VF Corp, ECCO, Anta, Under Armour, Salvatore Ferragamo, Daphne, LI-NING, Mizuno, Red Dragonfly, C.banner, Peak, K-Swiss, and KAPPA is further projected to boost the demand for artificial leather during the review period.

The major countries involved in the production of footwear include China (52% share in 2018), India (13.8%), Vietnam (4.7%), Brazil (4.4%), and Indonesia (3.7%), while the consumption of footwear shows the similar shares in China (16.9%), India (14.1%), the US (12.3%), Brazil (4.2%), and Japan (3.9%). Additionally, in 2018, according to the Associação Brasileira das Indústrias de Calçados, the total artificial leather used in the manufacturing of footwear accounted for over 55% in 2018, which is expected to cross 60% by the end of the assessment period.

The evolution of various platforms for the sale of goods specially footwear is another factor that is increasing the sale of artificial leather footwear. According to the stats by the World Trade Organization, the sale of footwear has increased by 4.1% in 2018, which it is expected to further increase by 2.2% by 2025. The sale of goods by offline channels is expected to decrease by 4% over the assessment period. The increase in sale through online channels is expected to create opportunities for manufacturers to sell their products across the globe. Thus, the growth of the footwear industry across the globe is expected to increase the demand for artificial leather and drive the growth of the global market during the forecast period.

Leather manufacturing is a toxic process. Leather tanneries emit chemicals that are harmful to the environment and human health, they pollute the waterbodies with formaldehyde coal-tar derivatives, mineral salts, dyes, oils, lime sludge, salt, acids, and sulfides. The residents living close to tanneries pose a higher-than-average risk of developing leukemia, whereas more than half of the tannery workers are likely to foster testicular cancer. Besides, the artificial leather manufactured from PU and PVC is not biodegradable. Thus, the manufacturers are making efforts and commercializing artificial leather that is bio-based. Bio-based artificial leather consists of polyester polyol which has a 70 to 75% renewable content and is softer and scratch-resistant as compared to PVC and PU. Some of the companies are developing bio-based materials, which could be used for producing bio-based products. For instance, DuPont Tate & Lyle Bio Products, with their joint venture in 2004, had developed Susterra propanediol, which is a pure, bio-based, petroleum-free diol, and a United States Department of Agriculture (USDA)-certified 100% bio-based product that delivers high performance in various applications, from polyurethanes and unsaturated polyester resins to heat-transfer fluids. Flokser A.Ş which is one of the major Turkish competitors in the artificial leather business has introduced its SERTEX brand which has 70% renewable content. SERTEX consists of a polyester polyol which is made from the DuPont Tate & Lyle Bio Products' Susterra bio-based 1,3-propanediol and BioAmber's Bio-SA(TM) bio-based succinic acid. SERTEX is produced 150,000 metric tons per year. Thus, the increasing research and development by the manufacturers towards producing bio-based artificial leather are expected to create lucrative opportunities for artificial leather manufacturers.

Artificial leather majorly comprises materials such as polyvinyl chloride (PVC) and polyurethane (PU). PVC is the world's third-most widely produced synthetic plastic polymer, which accounts approx. to 43 million tons per annum globally. However, harmful dioxins and highly toxic chlorine are used during its manufacturing process. PVC is used to make artificial leather, which is further used to make footwear, home furnishings, and many other items. Most of the vegan leather is produced from PU, which is slightly better than PVC, as the production process of PU requires fewer toxic materials. Polyurethane is derived from fossil fuels and is not biodegradable. The waste of PU leather can lead to lung irritation and trigger asthma attacks due to off-gassing.

The other most important reason hampering the growth of the market, other than the effect of PU and PVC on the environment, is the pollution during the tanning process. According to a study conducted by the US Environmental Protection Agency (EPA), tanning of leather is one of the top 10 toxic processes that leads to pollution. On a yearly basis, the tanning process affects approximately 1.8 million people. The tanning methods, i.e., chromium, aldehyde, and vegetable, with chromium being the most used tan, which is used across 80% of all the leather manufactured. Moreover, the liquid and solid waste from tanneries are dumped untreated into the lakes and rivers thus affecting marine life. This is common in most of the developing countries, such as India, China, and Bangladesh, which are also the leading countries in leather production. According to the Bangladesh Ministry of Environment, the tanneries collectively dump 22,000 cubic liters of waste into rivers every day, which is also the water source for residents, thus causing infections, respiratory problems, birth defects, infertility, and other diseases.

Thus, the pollution due to tanneries involved in the manufacturing of artificial leather from PVC and PU and its adverse effects on human health and environment are expected to hamper the growth of the global artificial leather market during the review period.