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Just How Big Is the Market for Next-Gen Leather and Biomaterials?

The potential global wholesale market for better-for-the-planet next-generation fashion materials is projected to top $2.2 billion by 2026, a new report said, citing a “paradigm shift away from a reliance on industrial animal agriculture” that is doing for textiles what alternative proteins have done for the food industry.

Next-gen materials, the Material Innovation Initiative (MII) said in its second State of the Industry report, are between five and 10 years behind the likes of Beyond Burger and Impossible Meat. Nascent but rapidly growing, the sector could take up 3 percent of an addressable market of more than $70 billion, the California-based think tank said.

The speed of uptake has been unsurprising, the report noted. Given that at least two-thirds of a brand’s environmental footprint stems from its choice of raw materials, next-gen options have become a “necessary step” for achieving ambitious sustainability goals in the face of the mounting climate crisis. Of 40 leading fashion brands that the MII has met with, all but two were “actively searching” for next-gen materials to deploy into their supply chains, it said.

“Animal-derived materials, especially leather, are widely used in the fashion, automotive, and home goods industries,” the report said. “Production of animal-derived materials is a contributor to climate change, environmental degradation, public health risks and animal cruelty. If we hope to move rapidly toward a more sustainable materials industry, next-gen alternatives with optimal aesthetics and performance are needed.”

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Positive feedback from consumers has also helped: In polls commissioned by MII, 55 percent of U.S. respondents and 66 percent of Chinese respondents said they preferred alternatives to traditional cowhide because of animal-welfare and environmental concerns. Most of those surveyed said they would be willing to pay more for products made from next-gen materials that dovetail with their values.

Indeed the next-gen milieu tilts heavily toward animal leather substitutes, whether made from fruit and vegetable waste, mushroom mycelium, microbial fermentation or cultivated animal cells. Of the 95 next-gen material companies the MII has logged, 67 have zoomed in on leather biomimicry, while 12 have turned to silk, seven each on wool and fur, six on down and just one on exotic skins. Also ripe for R&D are innovations in components of next-gen materials, such as coatings and dyes, which could result in more “holistically sustainable” formulations that don’t have to rely on petrochemicals.

“Innovation in sustainable alternatives to fossil fuel-derived polyurethane would make a big impact in the next-gen leather industry,” the report said. “PU is often the choice for binders or coatings because of its versatility and performance attributes. We need bio-based PU formulations reliant on green chemistry, or entirely new resins to lower environmental impact. Across all next-gen material categories, additives, dyes, and finishes should also be considered by material innovators and converters, as these inputs also play an important role in product sustainability.”

One thing’s for sure is that the investment dollars are there for the taking. Since 2015, a total of $2.3 billion has been poured into next-gen materials, the MII said. The amount being unlocked is also growing exponentially, with 2021’s sum more than double that of 2020 and nearly the same as the previous four years combined.

“The number of deals has not drastically increased from 2020 to 2021 but dollars invested has more than doubled, demonstrating bigger deal sizes are to be expected as companies mature, show proof of concept, and scale,” the report said.

According to publicly disclosed data, the top-funded next-gen materials companies include spider-silk producer Spiber at $863.6 million, Mylo maker Bolt Threads at $471.1 million, ersatz-leather firm Modern Meadow at $335.3 million, cellulosic “wool” spinner Spinnova at $168 million, carbon-capturing manufacturer Newlight and mycelium leather purveyor Ecovative at $97.4 million.

“Going forward, the greatest opportunities lie in developing technology and materials that inherently meet market demand for sustainability, style, and performance without the low margins, high variability and myriad issues associated with using animals as inputs,” the report said.

Traditional materials aren’t ready to be counted out yet, however. JBS Couros, a Brazilian leather processing giant, announced last week an infusion of 40,000 euros ($403,605) into a research center that will support the “development of knowledge about the sustainability of biomaterials” derived from animals.

The facility, which will be managed by Spin 360, a consulting company specializing in sustainable business models, will aim to “promote and consolidate” scientific deep dives into the environmental impacts on the value chain of biomaterials, such as JBS Couros’s more efficiently produced Kind Leather, and “establish product parameters and best practices.” According to a recent life-cycle assessment, Kind Leather requires up to 62 percent less electricity, up to 40 percent fewer chemical products and 62 percent less water than conventionally processed leather. It also generates up to 93 percent less waste.

“With this investment, JBS Couros is strengthening its commitment to the sustainability of its products and processes by becoming one of the founders of the new research center, embarking on studies that provide databases with more precise information and which better represent the livestock farming-related impacts in the product’s final balance,” it said.