Down and Feather Prices Strain Suppliers
GDA Staff -- Gifts & Dec, September 12, 2011
NEW YORK - A confluence of events has culminated in higher than ever prices for down and feather, with many wondering whether down-filled products may become a strictly high-end offering.
Suppliers of down readily rattle off the reasons why: China's domestic economic issues and higher prices overall (China provides 80% to 85% the world's down); farmers growing fewer geese and ducks (down is a byproduct of meat production); and greater worldwide demand, especially in apparel.
The result: less availability at prices that have tripled in the last 18 months in some estimates and as much as 300% in the last few years. Meanwhile, makers of down-filled home products are now pondering their next move as prices continue to climb.
"There is a finite supply of down and feather, and demand doesn't mean that supply will necessarily increase to an equal degree," noted Joe Crawford, marketing chair for the American Down and Feather Council. ‘With growth in demand within China for apparel, comforters and other top of bed, plus the demand in apparel worldwide , you are going to see consistent pressure in pricing."
"Rising feed prices and low prices for meat prices are preventing the farmers from raising more ducks and geese, contributing to higher prices," acknowledged Beth Mack, chief merchandising officer, Hollander Home Fashions. In terms of sourcing, "the only impact we see is less stock piling and more spot buying," she noted.
In fact, makers of down and feather products have gotten a one-two punch due to another raw material.
"The price of cotton has had the greatest impact," said Donna McLin, general manager, Down Inc., a part of Maple Leaf Farms. "Cotton is used in so many components. The supply chain was able to absorb some of the price increases for a short time, but we're all concerned about how the consumer will react to higher prices in stores."
"The higher-end goods are selling better; they're doing okay," noted John Factelis, president, Phoenix Down, who said the days of $19.99 promotional down pillows are gone. Factelis noted that the hospitality business is also holding its own, but production costs are impacting every company. "I'm analyzing every aspect of my business, including energy costs to manage it in this climate," he said.
"China is no longer willing to take losses on programs just to keep it running," said Bob Hickman, United Feather & Down. "It's not necessarily getting a better price for a bigger order."
In addition, though high-end goods are selling, Hickman noted that there are "fewer places to shop for better quality goods." He anticipates even more contracted offerings for down-filled products in the mass market. "We're managing through it and hoping to get some breathing room in 2012," he said.
Crawford, who is also svp, finance and procurement for Pacific Coast Feather, agreed. "There will always be retailers targeting a certain customer that is willing to pay a higher price. What you will see are other retailers saying ‘I still have a natural fill customer' and look for ways to hit that critical price point. They'll do it by reengineering the product and working with down-feather blends to meet the prices," he said. (Geese live longer and cost more to feed - one of the reasons premium goose down is more expensive). He also concurred that doing business in China has changed dramatically. "They are on much stronger footing," he said.
It may be counter intuitive for some, but Steve Uretsky, president, Allied Feather & Down, said a warm winter will do the trick in terms of demand. "A warm winter will slow demand in apparel and make more down available for home textiles and bring down prices."
Down apparel has had its own price increase, but it is not as significant due to the small volume of raw material needed. "There are 14 to 22 ounces of down in a pillow [and] about one to two pounds in a comforter. For apparel, it's only a few ounces," noted Uretsky.
For its sister company, Allied Home, Uretsky noted that it has an advantage as a new company: "We're not holding stock, and we are putting a lot of thought into product development."
With no price relief in immediate sight, will consumers pay more for down? Crawford noted that decreasing prices at retail in years gone by gave consumers the false impression that down and synthetics were interchangeable, and a re-education has to happen. The issue now comes down to convincing consumers that down has its merits and is worth the price.
"The down industry can do public relations, they can get the word out," suggested Mack, who has a particular pro-down stance: "Overall, natural products are more expensive; however, feather and down has a lower carbon footprint, is a true natural product, is lighter and provides much greater warmth properties."
"That's one of the things that doesn't get enough attention. I don't think consumers realize how environmentally friendly down is. It is a meat-by product, so there is no waste. It is cleaned with bio-degrade-able soap. There is no oil, and if you take the feathers out, they decompose quickly," said Crawford.
The environmental claims notwithstanding, down and feather products have a tough road ahead as suppliers face the rising price of down.
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