Intense Focus on Definition of Leather Distracting from Discussions about Sustainability

Now, it's been seven years since the Fashion for Good programme. Could you tell us what progress Leatherteq has been able to make? What have been the challenges so far?
Alexandra Pelka: The seven years since Leatherteq's participation in the Fashion for Good programme have been a critical period for the company.

One of the primary challenges for any innovative technology, and so this is valid also for LiteHide, in the leather industry is scaling up from successful pilot tests to commercial-scale operations. We have been working with our partners to implement LiteHide in larger production settings.

We have started collaborations with the two of the largest meatpackers in the US to produce LiteHide and we have successfully expanded into other geographies as planned, particularly in the EU, but also the Middle East, India and New Zealand.

On the market side, we have converted the interest from global brands into long-term commercial partnerships that have even withstood the crisis during and after COVID-19.

A major hurdle we have managed to demonstrate is not just our environmental benefits, but also economic viability. Leatherteq has been gathering data on the cost-effectiveness of LiteHide compared to salted hides, considering factors like reduced water usage, eliminated salt costs, and improved transportation economics and the creation of carbon credits.

As mentioned, the pandemic had an important impact on the leather industry and so on LiteHide as well, but we have used it as an opportunity to further improve and offer even better conditions for our clients and partners.

In recent years, there's been an increased focus on traceability in the leather industry, driven by consumer demand for ethical and sustainable products. We have created, through our IP Rights, a fully traceable solution that likely aligns well with this trend, potentially accelerating its adoption as well as other important ESG factors brands and suppliers have to report on (especially in Europe or working with Europe).

Our success is reflected in our current market presence and due to our latest improvements, we are expecting an important growth in the coming years.

The whole idea of LiteHide was about cleaning up the process. But the salt issue is only one of those plaguing the leather industry. Overall, how proactive do you think the leather industry has been in trying to clean up? What do you think is lacking: is it technology, financial resources, or the will? And yes, has this changed over time?
Alexandra Pelka: The leather industry's journey towards sustainability is a complex and multifaceted one. It's important to recognise that there have been and still are many challenges in the leather industry we have to face and solve. LiteHide tackles some of them such as TDS, salt in general, water consumption, storage and transportation. However, there are many more we all need to be aware of. This is why we focus on collaboration, in order to offer not only our solution, but also advise how to improve as an industry.

Over the past decade or so, there has been a noticeable shift in attitude and action towards sustainability, driven by a combination of regulatory pressure, consumer demand, and a growing recognition of the need for environmental stewardship.

The industry has been proactive in many areas. For instance, there have been significant efforts to reduce water consumption and improve wastewater treatment. Many tanneries have invested in closed-loop water systems and more efficient processing techniques. There's also been a push towards using more environmentally friendly tanning agents, moving away from chrome tanning in some cases.

However, progress has been uneven. Larger, more resourced companies have generally been able to invest more in sustainable technologies and processes. Smaller tanneries, especially in developing countries, often struggle to implement costly new technologies or processes. This is why LiteHide wants to be affordable for all different kinds of suppliers and brands.

The will to change has certainly grown over time, particularly as brands have made sustainability commitments that cascade down their supply chains. However, transforming an entire industry takes time, especially one as globally distributed and diverse as leather. Looking forward, we believe we'll see accelerating change in the industry. Innovations like Leatherteq's LiteHide technology are crucial, as they address sustainability without compromising on quality or drastically increasing costs.

As these technologies prove their worth, and as pressure from both regulators and consumers increases, we're likely to see wider adoption of sustainable practices. However, for comprehensive change, there needs to be a coordinated effort involving all stakeholders — from farmers to chemical suppliers, tanneries, brands, and consumers. Industry associations, governments, and NGOs also have a crucial role to play in facilitating this transition. This is why our focus has always been bringing people in one room. Already in the past we have set up meetings with representatives of all stakeholder groups, in order to make lasting and feasible changes as a united industry.

And, what about your own technology? Have you been refining/improving the technology? Could you elaborate?
Alexandra Pelka: First, scalability has been a key area of focus. As the technology moves from pilot tests to full-scale commercial implementation, there are often unforeseen challenges that arise. We have probably been working the most on optimising our process to work efficiently at various scales, from small tanneries to large industrial operations. Integration with existing tannery systems is key for widespread adoption. LiteHide starts at the pickling process and is added with your usual workflow. After that the hides are dried and shipped, rehydrated and then tanned as usual. It works in all traditional tannery setups, minimising the need for extensive retrofitting.

A second pillar of our work has been quality consistency, as it is crucial in the leather industry. We have been working with our partners on ensuring that the process produces consistently high-quality hides across different types of animal skins and in varying environmental conditions. This involves fine-tuning the preservation process for different hide thicknesses or adapting it to work optimally in different climates.

Further, we have been expanding the application of our technology. While it was initially focused on cattle hides, LiteHide is adapting to the process for other types of leather, such as sheep, goat, or exotic skins.

In the last years we also wanted to validate our assumptions and calculations of the past in order to ensure 100% transparent and truthful communication. Therefore, we have worked with an internationally recognised consultancy company to create an LCA that showcases our positive impact on the leather production process.

Prima facie, it seems the technology would have to be implemented by tanneries, but the pressure needs to come from brands and retailers. Would that be a fair assumption?
Alexandra Pelka: The implementation of new technologies in the leather industry, like LiteHide, often requires a multi-stakeholder approach, with brands and retailers playing a crucial role in driving adoption, as already mentioned before.

Tanneries are the primary implementers of our technology and often they are the ones who need to invest in new equipment, train their staff. However, tanneries, especially smaller ones, often operate on tight margins and may be hesitant to make significant changes to their established processes without a clear market demand.

This is where the support from brands is crucial. These entities, particularly large global brands, have significant influence over their supply chains and when they commit to sustainability goals or express a preference for more sustainable materials, it sends a strong signal throughout the supply chain. However, if such a statement is made, support should follow. Brands need to support this shift and not only demand it, but embrace the connection that can be created. Also because, the better you know your supply chain, the lower the risks and the more stable a business.

Like the apparel sector, the backbone of the leather sector too is made of countless small enterprises or also what one might call the unorganised sector. Doesn't the very nature and spread of the leather industry make it difficult to implement technologies and processes?
Alexandra Pelka: This touches upon a crucial point that's often overlooked in discussions about industry-wide technological advancements. The leather industry, like many traditional manufacturing sectors, is indeed characterised by a complex and fragmented structure, which has posed a significant challenge to us trying to the uniform implementation of LiteHide.

This fragmentation exists on multiple levels:

1. Geographical dispersion: Leather production is global, with significant operations in countries as diverse as Italy, India, Brazil, and China. Each region has its own regulatory environment, infrastructure, and local practices. We have tried to adapt to all different issues and are confident to be able to work in all geographies. Thanks to its special properties LiteHide can store up to five years if kept dry, this reduces spoilage risks and similar during shipment or storage and increases revenue.
2. Scale of operations: The industry includes everything from small, family-run tanneries to large industrial operations. This diversity in scale means vastly different capacities for investment and innovation. As LiteHide is price-competitive with other solutions such as pre-tanned hides, we can be adapted by all different scales of operations if the basics are available:
   - The producer of LiteHide needs to have a beamhouse facility and if possible driers or space for hang-drying.
   - The ultimate user of LiteHide, as in the tannery, only needs drums as there is no special treatment necessary
3. Market focus: Different segments of the industry cater to different markets (eg. luxury goods, automotive, furniture), each with its own requirements and constraints. This fragmentation does indeed make it challenging to implement new technologies and processes uniformly across the industry. LiteHide, however, has been tested in all industries and passed different tests (eg. fogging) with flying colours.

We have a very holistic approach of implementation, as we can be adopted all the way from the meatpacker onwards. The key for us is demonstrating that the benefits of the technology — both environmental and economic — outweigh the costs and challenges of implementation, even for smaller players.

In conclusion, while the fragmented nature of the leather industry does present significant challenges to the uniform implementation of LiteHide, it's not an insurmountable obstacle. Our approach — one that combines an adaptable technology, strategic partnerships, and effective knowledge sharing —  can potentially transform the industry. 

In which all geographies do you operate now? What are your expansion plans? Also, how does the business model work? I understand there are authorised meatpackers/tanners who have the licence to manufacture LiteHide.
Alexandra Pelka: We have established a significant global presence and still have ambitious expansion plans. Our company, headquartered in Hong Kong, has strategically positioned itself to serve major leather producing and consuming markets across multiple continents.

We are working with clients in Europe, America, and Asia and are continiously looking for more partnerships and collaborations, especially with meatpackers producing LiteHide, as we have more demand than production capabilities for now. New markets for us in the upcoming months will be:

• South America
• New partnerships in the European Union
• Australia and New Zealand
• Middle East

This expansion strategy is targeting the key requests from our clients at the moment.

But how does it work?

We operate on a licensing model, authorising meatpackers/tanners who have the licence to manufacture LiteHide. The price of LiteHide is included in the chemical needed which makes the price structure very straight forward. The necessity of the chemical (which is non-hazardous and bio-based) is based on the weight of the hide or skin.

Just the other day I saw a presentation made by Desmond Ko (Director · Leatherteq Limited) at the London College of Fashion in 2015. The presentation starts with the very definition of leather. And it's very interesting that the very definition of leather is so much in focus now. Textile Exchange has made its definition more stringent, and many European countries are cracking down on the usage of "leather" in many so-called alternatives. Comments, please.
Alexandra Pelka: The definition of leather is indeed a crucial and increasingly contentious topic in the industry. Your observation about the focus on this definition, highlights a significant shift in the leather industry's landscape.

Traditionally, leather has been defined as a material made from the hide or skin of an animal by tanning or a similar process. However, the rise of alternative materials marketed as 'vegan leather' or 'synthetic leather' has challenged this definition and sparked debates within the industry and regulatory bodies.

The stricter definition by Textile Exchange and the crackdown by European countries on the usage of 'leather' for alternative materials represents for us an important step. Consumers need to be informed and able to make informed purchases. Leather is an animal by-product of the meat industry that would otherwise go to waste. Therfore it can be seen as the perfect example of upcycling and as long as people in the world eat meat, we will have hides to transform into leather. Other, new materials are not to be called leather. This does not mean we are against them, on the contrary, we see them as a substitute for plastic if bio-based or an improvement if still plastic-based. But they have nothing to do with leather.

The intense focus on the definition of leather is distracting from discussions about sustainability within leather production itself. Leather is by definition sustainable as it is a byproduct and upcycling at its best, but it needs to be produced in an ethical and environmentally conscious manner. We want to bring the terms sustainability and leather together, and help consumers and brands understand the beauty of a material that is not only durable, but also, if produced in the right way, bio-degradable.

In conclusion, the evolving definition of leather and the regulatory actions surrounding it reflect broader changes in consumer preferences, sustainability concerns, and market dynamics. For innovative companies, such as us, these developments present an opportunity to differentiate our product and potentially reshape the narrative around leather production. By offering articles that are unambiguously 'real' leather while also addressing key environmental concerns, Leatherteq is well-positioned to change how leather is not only produced, but also perceived by the consumers.