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High-End Ethiopian Handbags Enter Global Leather Market
FrontLines - April 2009
By Phillip Kurata
Leather jackets inside an Ethiopian factory
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Taytu's products
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Addis Ababa, Ethiopia—Well-heeled shoppers in New York, Paris, Tokyo, and other global fashion centers are beginning
to see a new name, Taytu, beside familiar Gucci and Chanel, among the ladies’ handbags
in exclusive shops.
Ethiopia, home to the largest livestock population in Africa, produces and exports millions of hides annually, mainly in the form of semi-processed leather. Eyeing higher profits, Ethiopia is developing its own trademarked leather products. USAID is helping
Ethiopia develop its leather processing and branding sector, along with the U.N. Industrial Development Organization (UNIDO) and other development
groups.
“The Ethiopian government supports an export sector of high-value, finished leather products, not semi-processed leather,” said Taytu Trade and Industry Managing Director Salpi Nalbandian.
Taytu markets the products of 12 Ethiopian manufacturers of leather goods. The consortium was formed in 2006, when the Ethiopian government identified the leather industry as a potentially
lucrative sector.
For example, Cabretta leather, prized for golf gloves because of its strength and elasticity,
brings the Ethiopian herder $2 for the skin needed for one glove, $5 to the exporter of the leather, and $25 to the retailer of a glove manufactured outside of Ethiopia.
Another Ethiopian leather product, Bati goat skin, is reputed to produce the softest, finest suede. Ethiopian herders make about $10 for the skin needed to make one suede coat. The leather exporter collects about $40 to $50 after tanning. The coat, which is manufactured
outside Ethiopia, will bring at least $400 to the retailer, according to Light Years IP, a group that helps developing countries spur growth through the use of intellectual
property rights.
Taytu handbags sold by the upscale Barneys New York fetch prices around $1,500; one
particular Taytu handbag design is priced at $22,000, according to the company’s Web site.
Taytu made contact with Barneys and other high-end foreign
retailers by participating in trade shows in New York, Paris, and Los Angeles. Theory, another high-end retailer of clothing and accessories, is considering
marketing Taytu bags, according to Nalbandian.
Salpi Nalbandian
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Entering the international market
is difficult, and Nalbandian credits USAID and UNIDO for helping to make that happen.
“It involves a long chain of work, getting the raw materials, meeting delivery deadlines, correspondence,
understanding the work and business conditions abroad,” she said. “We must win the confidence and trust of foreign
buyers.”
UNIDO provided expertise in design and manufacturing and USAID, in marketing, she said: “They have guided Ethiopia into the high-end market niche—they have advised that Ethiopia should not compete with China and India in producing for the mass market.”
Taytu’s sales revenues have risen from $25,000 in 2006, when the consortium was formed, to $85,000 in the last fiscal year. Five months into the current fiscal year, which runs from July to June, Taytu has received about $70,000 in foreign
orders. Sales from its shop in Addis Ababa, Ethiopia’s capital,
also are rising sharply as a result of Taytu’s entry into foreign
markets.
“When local newspapers wrote about Taytu’s success in New York and other cities, Ethiopian consumers became excited about the Taytu name,” said Teshome Kebede Redie, a USAID contractor working in the Ethiopian leather sector.
Nalbandian said as Taytu profits rise, it will wean itself from USAID financial support. USAID pays the Taytu shop rent in Addis Ababa and the salaries of the shop staff. The Agency also bought the computers and furniture in the Taytu shop.
In another attempt to boost leather profits, the Ethiopian leather company Jonzo PLC plans to enter the shoe business, which absorbs 60 percent of the world’s
leather output. Jonzo currently
specializes in leather garments and handbags, some of which are marketed by Taytu.
“Footwear is a big opportunity for Ethiopia,” said Jonzo General Manager Solomon Yesuf. He expects Jonzo to start shipping footwear to the St. Louis-based Brown Shoe Company in 2009.
USAID’s Redie said that many shoe companies
in the United States, Germany, and Italy are looking away from China to shoe suppliers in other regions because of rising prices that Chinese manufacturers
are charging.
Jonzo is building a shoe factory on the outskirts of Addis Ababa and expects to have the capacity to make 55,000 pairs a day by the end of 2009. Its goal is to export half the production. The Ethiopian government facilitates the growth of the shoe industry by providing customs facilities, bonded warehouses,
and concessionary rates for land rental at the factory site.
Getting the financing for expansion from Ethiopian banks has presented a challenge for Jonzo. But USAID has played a helpful role by offering to guarantee
50 percent of the loans as an enticement for an Ethiopian bank to put up the other 50 percent.
★
These articles originally appeared on America.gov, a Web site produced by the State Department’s Bureau of International Information Programs; reproduced with permission.
FrontLines is published
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U.S. Agency for International Development
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