A letter from World Leather, arguing that the true value of high-quality leather in luxury goods is vastly greater than the cost brands pay, appeared in the Financial Times on December 21.World Leather wrote to the newspaper after a columnist, Valentina Romei, pointed to the relatively low cost of the leather in a Prada handbag to show that expenditure on services such as branding, advertising and marketing is much greater. Ms Romei used this example as part of her argument that economists place too much importance on manufacturing output when gauging the performance of economies. In response, World Leather argues that the contribution the high-quality leather makes to the true value and beauty of bag is much higher than the figures suggest and that, because of this, tanners should receive greater recognition and support from all luxury brands. The letter can be viewed on the FT’s website at this link. The full text of the letter appears below.
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Sir
It’s not clear if Valentina Romei in ‘Three reasons why we should stop focusing on manufacturing production’ (https://blogs.ft.com/ftdata/2015/12/11/three-reasons-why-we-should-stop-focussing-on-manufacturing-production/) (December 11) seeks an answer to her question about the cost of the leather in a Prada handbag, but just in case she does, €95 or €100 tops won’t be too far away.
For example, at an educated guess, you could say Prada will use 0.6 square-metres of calf leather to make each of its Inside bags. Then there’s the nappa lining, plus the leather in the handles, plus a bit of wastage. Sourcing the best material in the world (French calfskin tanned in Tuscany, with the highest levels of care for workers and the environment) doesn’t come cheap.
Prada’s website charges €2300 for each bag, making the material cost 4.3% of the price the consumer will pay, at most. Clearly, this supports Valentina Romei’s argument that material costs weigh little compared to branding, advertising and retailing in the product’s “overall value”, but it is some consolation that, while Prada could execute most of those smoke-in-the-wind services anywhere, the French calfskin can only come from France and the Tuscan tanner can only produce the finished leather in Tuscany. And if 4.3% of “overall value” is too little a share for anyone to make much of a fuss about leather, it would be nice if big brands’ buying departments could at least stop trying to beat tanners down to 4.2% or lower in every conversation.
Leather makes a vastly higher contribution to making the bag as beautiful as it is than the 4.3% suggests. That so much money and effort should go on branding, advertising and retailing brings to mind a phrase from Borges, calling the people of our age naïve for believing products to be good “just because the company that made the merchandise insisted it was good, and kept repeating the message”.
