Down and Feather Prices Stable

Wes Kennedy, Michele SanFilippo, August 15, 2005

New York — With the shipping season under way for down and feather products, several U.S. suppliers remain confident that pricing has stabilized and shortages in Asia will not be part of the equation this fall.

However, one Chinese supplier of down sees a different scenario of oversupply forming due to lower demand by U.S. retailers this year.

Stephen Palmer — chairman of the American Down & Feather Section of the Home Fashion Products Association and co-owner of United Feather & Down — noted that prices of raw materials increased between 30 and 50 percent through 2004, and have not reverted to pre-2004 levels.

“This year, I believe, largely due to the high amount of down outerwear produced in Asia, that the price will remain where it is,” Palmer added. “My best analysis is that prices will hold steady.”

According to the association, last year the United States imported 25,000 metric tons of down and feathers, 80 percent of which came from China. “Production in China will be equal to or increased over last year,” said Palmer. “We expect demand will continue to grow in China, but the supply will also grow with it.”

Bob Hickman, vice president of sales and marketing at United Feather & Down, said that the amount of promotional, lower cost down is declining in China. “There is a tightening of supply based on increased consumption of down in the domestic market and limited outbreaks of avian flu,” said Hickman.

“We think we are going to see more quality-control issues in the fall than we've ever seen because of the aggressive manner in which China is going direct to American retailers,” he said.

Hickman added that retailers have limited options when they receive containers that don't meet their quality levels because of such practices as the blending of species and/or feathers and not properly washing the down due to shrinkage.

But Justin Yang, general manager of NewPoint International, a U.S. branch of Maolong Down in the Zhejiang province of China, said that when one compares 2004 and 2005 exports of finished down bedding products to the United States, there has been a decrease of 50 percent in exports this year as retailers changed to down alternatives.

“Even though the demand for down is growing on the apparel side, that doesn't compensate for the loss of exports by about 50 percent. The apparel industry in China is approximately one-third the size of down bedding exports to the United States,” explained Yang. “My assessment is that there will be more value pricing this fall. I believe there will be a 30 percent oversupply. Raw down materials have already dropped between 5 and 10 percent since the first quarter and will continue to stabilize, maybe another 5 percent,” he added.

However, Fritz Kruger, senior vice president of marketing at Pacific Coast Feather Co., sees no possibility of a surplus.

“It's a commodity business that does fluctuate but not to the extent where there will be any overage. There is no shortage like there was to some extent last year and the year before,” said Kruger, adding that supply is available but not at the same prices as last year.

While the prices of down and feather products have consistently remained high since the end of 2003, quality down alternatives have made inroads into the marketplace.

Palmer added that the increased placement of down alternative products last year had to do with “retailers' need to fill a price point as opposed to a desire to change their merchandising scheme.”

The ability of these products to maintain shelf space, he said, will be based on product performance and how consumers respond to the goods. “I don't think man-made fibers will ever outperform or outpace natural fibers,” Palmer said.

Bob Altbaier, senior vice president of Down Lite International, agreed with this view of alternative fills. “Quality down alternatives started at such a low level of sales and increased in terms of units sold faster than down products, which consistently is a much larger share of the market,” he said.

John Facatselis, president and CEO of Phoenix Down Corp, said: “Down in general is high, but retailers like Costco, specialty stores and better department stores are continuing to have a wide assortment of down products. Marshall's, TJ Maxx and Kohl's seem to be shying away from down and bringing in more alternatives. The big boxes are developing down alternative businesses as well.”

In terms of pricing, Facatselis said Asian suppliers are making it advantageous to buy down as finished product out of China as opposed to greige goods.

“Right now the price of down is steady, and I expect it to stay this way through the end of the year with no shortages,” he said, adding that there's been a 10 percent increase over 2004 in the price of duck down, due mostly to the increase in down jackets on the apparel side.

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