Looking Inward

Demand for Locally Made Leather Bags Surges

Ethiopia’s locally made leather handbag market is rapidly evolving as new designers enter the market. People commonly carry locally produced handbags, which are now available in different sizes and captivating designs, contrary to trends just a few years ago. Although there have been shortages of raw materials, many are capitalizing on the opportunities and investing in the sector as EBR’s Kiya reports.

Just a few years ago, seeing people carrying locally made leather bags was rare. In fact, the market was flooded with imported products, the majority of which were criticized for not being durable despite being available in various designs. However, thanks to the popularity of local products, this trend seems to be fading away. As consumers, like Emnet Worku, are becoming more attentive to quality, the demand for locally-produced handbags is on the rise.

“The Chinese-made bags which flooded the market are attractive, but they are not durable,” says Emnet, who recently started buying Ethiopian-made products. “Local producers seem to learn from their foreign competitors. They are coming up with attractive and durable products, both of which makes them preferable in the eyes of customers like me.”
For Emnet, considering the raw materials they are made of, locally produced bags are very affordable. “You can find a leather bag for something like ETB600,” Emnet tells EBR.

Areas like Merkato, Shola, Stadium and Megengna are known for hosting retailers who sell locally produced handbags. Be that as it may, thanks to the explosion of malls along Addis’ main roads, there are more shops that sell locally made leather products such as handbags of different sizes and colors in malls along Africa Avenue around Bole. The majority of the products include purses, satchels, and wallets that come in a variety of designs.

Industry insiders say that the fashion industry has had a direct impact on the latest collections of handbags presented by local producers. This is because designers and single branded stores are investing in and opening standalone handbag stores to capture the attention of consumers.

Aynalem Ayele, owner of Ayni’s Design, a company which locally produces bags and clothes, is one of them. Aynalem opened her company 12 years ago in one small room with a capital of less than ETB50,000. When she set up the company, she only had one employee. “Our attempts to gain the attention of buyers were not stress free,” she says. Although it was not quick, her efforts bore fruit.
Gradually, she was able to win over new customers, while trying to retain existing ones by unveiling products with distinct designs and more durability. She now employs 18 people in her factory in Bole District and three shops, one of which is located in Addis and the other inside Kuriftu Resort in Adama.

Compared to the number of bags she produced when she first set up the company, its production capacity has grown by around 65Pct, chiefly because of the rise in popularity of locally produced items. “As we come up with new designs and a very durable product, local as well as foreigners have started to prefer Ethiopian-made products,” explains Aynalem, who produces 500 handbags every month.
Although it comes as no surprise that shoppers are turning to locally-made leather bags as their design and quality has improved tremendously over the years, the market is still in its early stages in Ethiopia compared to global trends. Handbags are considered an important accessory in the fashion world, especially for women. The global handbag market is expected to post an annual growth rate of close to five percent between 2019 and 2023, according to the latest market research by Technavio, one of the most influential market research and advisory firms in the world.

PVH Corp. (Calvin Klein), Compagnie Financiere Richemont SA (Chloe SAS), Furla S.p.A., GANNI A/S, Giorgio Armani S.p.A. (Armani) and Gucci are key players in the global handbag market. However, even though these luxury branded products are preferred by some in the higher and middle classes, they remain out of reach to ordinary Ethiopians. Capitalizing on these opportunities, Chinese-made products still dominate the bag market in Ethiopia, despite the recent growth in popularity of locally-made handbags by designers.

For years, Aynalem’s customers were foreigners. Although she is gaining more local customers, she says that the majority of Ethiopians prefer imported products, because of their comparative affordability. “Local customers think that our products should be sold for a very cheap price just because they are made in Ethiopia,” says Aynalem. Bags at her shops cost between ETB 460 and ETB 3,500.

But Aynalem says there are also challenges hindering the expansion of the business. “Although Ethiopian leather is known for its quality worldwide, we don’t get that level of quality because of a lack of proper care before, during or after collection of hide and skin,” she argues.
Ethiopia leads Africa in terms of livestock population, with more than 100 million cattle, sheep and goats. Despite the huge potential, in Ethiopia the quality of raw hide and skins supplied has been deteriorating because of skin diseases, inappropriate management of animals, faults during slaughtering and improper handling, among others.

Although 1.4 million cow hides, 6.7 million goat skins and 13.2 million sheep skins are supplied to tanneries every year, according to the Leather Industry Development Institute, it is not enough for expanding and increasing locally leather products manufacturers.

Henok Gonafa, designer and owner of Moon Light Leather, which is located around Stadium, agrees. “Shortages of processed leather are stopping us from producing at our full capacity,” he complains. “Although we have the capacity to produce 120 bags a month, we are struggling to reach it.”

Eight to 15 square meters of finished leather is required to make a small bag. On average, one square foot of finished leather costs ETB 40 from tanneries. On top of that, producing a bag needs skilled labor, a ward sewing machine, glue and thread. Ward sewing machines are imported from China and cost around ETB 25,000 on the local market. Although leather producers need relatively low capital, only a few have taken advantage of the market opportunities and the potential in the country.

The leather industry, including the handbag market, is one of the sectors that are expected to play a significant role in the enhancement of the overall economy of the country. According to the Ethiopian Investment Commission, the leather industry is one of the government’s priority sub sectors and is expected to generate close to half a billion dollars in export earnings on top of creating job opportunities for 59,580 people between 2015/16 and 2019/20.

Yet, the tanneries have been unable to meet the demand of local handbag producers. As the shortage persists, producers are forced to raise the price of their bags.

Eskedar Yidnekachew, general manager of East Africa Tannery, says their production has declined because of government rules that require tanneries to build second level water filters to avoid harmful chemicals being mixed with water during the production process. “Instead of requiring each and every tannery to build a second level water filter, which costs a lot, it is better to build one common filter that will allow a group of companies to filter what they discharge. This would reduce costs and allow us to invest the money to expand our business,” says Eskedar, who estimates that building a filter woould cost around ETB10 million.

As a solution for the deterioration of the quality of skins and to minimize costs, Aynalem has expanded her business ideas. “We began to make jewelries and keychains from the waste products,” Aynalem tells EBR.

8th Year • May.16 – Jun.15 2019 • No. 74