Luxury race to bag the best skins Luxury goods companies are snapping up crocodile farms and tanneries in a race to secure supplies of exotic and other top quality leather as demand for exclusive handbags escalates. Commodities and oil may be strategic raw materials for most industries but for luxury suppliers, it is high quality pelts. Hermès, LVMH and PPR, owner of Gucci, have all made such acquisitions in recent years. PPR took control in March of France Croco, a Normandy-based tannery that sources and processes crocodile skins, citing the need to: "secure a sustainable supply of high quality crocodilian skins." It takes up to three crocodiles to make a bag, according to Hermès. The luxury goods group famed for its Kelly and Birkin bags, has bought up crocodile farms in Cairns, Australia and Louisiana in the US in the past six months. LVMH, the world's biggest luxury group by sales, took a majority stake in 2011 in Heng Long, a Singapore-based crocodile farm. Bernard Arnault, chairman and chief executive told shareholders last month: "We don't want to find ourselves in a situation where we might be short of supply." PPR, which is changing its name to Kering, is also examining ways of improving its sourcing of python skin because the reptile is a regulated species. Although growth in the overall luxury goods industry is forecast to fall this year - after a clampdown on gifting in China - demand remains strong for the most exclusive products, according to a study published this month by Italian luxury goods association Altagamma and consultants Bain. "Absolute luxury items, consisting of high-end products with no logo, highest-quality materials, and exquisite craftsmanship, lead the way," according to the report, which forecast luxury industry growth of 5 per cent this year, half the 10 per cent growth rate of last year. The trend towards buying up suppliers extends beyond exotic skins to the finest calf leather. Hermès in January bought the Tanneries d'Annonay in southern France, its longstanding supplier of calf leather. Patrick Albaladejo, Hermès" deputy chief executive for strategic development and corporate image, said: "Our preferred model is partnerships with trusted suppliers but sometimes, if there is a tightening in the market, and if you have a source that would be difficult to replace, then purchasing is the ultimate way to guarantee supply over time." The French National Leather Council says that supply of top-quality leather is constrained because people are eating less red meat. At the same time, demand for luxury bags has risen, putting pressure on leather prices which have increased by about 30 per cent since 2008. "The biggest groups have adopted a strategy of integrating suppliers, in the same way as they have integrated production," said Paul Batigne, council chairman. However, leather producers continued to supply a variety of clients, not just their main shareholder or owner. Mr Albaladejo expected the sourcing of best quality leather to remain a problem. Good quality calf skin depends on the breeding of the animal; if it is not raised in good conditions - in freedom and eating grass - it will not live a good life and the skin will not be at the quality required. Unfortunately, the quality of breeding is not necessarily going up these days. Mr Batigne said that first-class leather supply would rise "spectacularly" if cows were reared under conditions of best practice.