Denim is a versatile fabric. Moving from work wear to fashion, denim is not only for the youth and for style icons, but for all age groups and genders. Fibre2Fashion analyses the potential, challenges, and opportunities India, Bangladesh, and Pakistan hold as a sourcing hub for denim.
Developing with changing demands, it has become the common thread binding India, Pakistan and Bangladesh in a common goal. The Indian subcontinent is growing fast for denim, be it denim fabric or finished products like jeans. India and Pakistan have an edge in fabric manufacturing. Bangladeshi mills are picking up fast. Manufacture of jeans has converged in Bangladesh with practically all major brands from Levi's to Gap to Zara. This region is viewing this development enthusiastically, confident to bring in huge business. Buyers are positive and looking at the region as a complete sourcing destination.
India is also emerging as a huge market for the final product with Pakistan and Bangladesh eyeing the business. India is a huge end consumer market and nearly 75 per cent of denim fabric produced in the nation is used for the domestic market while the remainder is exported to countries like Bangladesh, Turkey and more recently to South America and several African countries. India is known for its bulk production of denim in different weaves and counts. The nation is also a source of sustainable options in fabric with limited capacity in jeans production. According to the industry, India is among the front runners in sustainable options in denim, though there are many other players around the world concentrating in this area.
Pakistan: Investing in R&D
Pakistani mills have invested on research and development in designs and finishes. Many big mills are giving tough competition to Turkey. Since Bangladesh has acquired the covetous reputation of being the jeans manufacturing capital of the world, Pakistan is looking to set up jeans manufacturing units in the country, getting skilled edge of both the countries for growth.
Many manufacturers are working on recycled yarn for denim manufacture. The most exclusive is the Back to Life fabric for H&M, the only company which runs a Post Consumer Waste (PCW) programme partnered by denim manufacturers in Pakistan. H&M collects used jeans from customers and sends it to Pakistani mills for shredding, spinning and fabric production. Another exclusive product that the mills are working on is for G-Star called RAW. This uses bionic yarn, made from reclaimed pet bottles fished out from the ocean. The yarn is provided by G-Star and it is converted into fabric by companies in Pakistan.
Bangladesh: The nerve centre of jeans production
The wide consumption of denim has created a new opportunity for Bangladesh. Currently, Bangladesh is the third largest denim exporter to the United States of America, after Mexico and China with 11.3 per cent market share, according to the US Department of Commerce. Brand Bangladesh will source four in five denim products for the European market by 2020.
According to Bangladesh Textile Mills Association, Bangladesh has 25 denim fabric manufacturers, which produce 30 mn yards of denim a month against the monthly demand of nearly 60 mn yards. It imports 50 per cent fabric from countries like India, Pakistan and China. The share of imported fabrics decreases gradually as the capacities of Bangladesh denim mills grows.
Bangladesh exported denim products worth more than $ 529.53 million to Europe between January and June 2015, marking 23 per cent growth compared to the same period last year. Best quality and competitive price range have ensured that more than 66 international brands including Charles Voegele, G-Star, Jack and Jones, Oliver, River Island, H&M, C&A and PVH have turned to Bangladesh in the last couple of years for denim products. In 2013-14, export of denim products to the United States of America and Europe rose by approximately 20 per cent.
Another major reason is the focus on washing and finishing. Most jeans manufacturing factories in Bangladesh have invested in washing plants. All major exporters who ship and manufacture denim have the capability to do any kind of finish at par with what is done in Hong Kong or South America. The growth of Bangladesh as a major denim centre and effort to support the industry with innovations in weaves and different constructions help garment manufacturers play around with washes to create unique looks.
With all requirements from yarn to finishing available in Bangladesh, buyers are increasingly shifting their jeans business to the country. Gap had anticipated this movement a few years back and shifted a lot of the business to this region with fabric support from India. European brand S.Oliver diverted its China orders to Bangladesh. Companies producing fashion denim garments for global brands such as Mango, Calvin Klein and Next recently increased production lines, enhancing production capacities.
The road ahead for Bangladesh's denim industry is bright as global importers have realised that Bangladesh is not only competitive in price but also can make high fashion denim.
India's Denim Market
The Indian denim industry has shown continued growth over the last few years. The country boasts of a denim manufacturing capacity of around 1.1 billion meters per annum. Denim manufacturing industry in India contributes 5 per cent of the global scenario reflecting overall performance of the textile industry. The market is projected to grow at a CAGR of 15 per cent to touch INR 27,200 crore by 2018. Denim is a key segment in the Indian textile industry that has huge potential to grow. The Indian denim export market has grown at a CAGR of 4.78 per cent from 2010 to 2013. Owing to its cost effectiveness, quality standards and large pool of skilled work force, an increasing number of global denim manufacturers are looking at India as an emerging denim export region.
India has an integrated value chain for denim products starting from fibre to retail. Denim is primarily produced from cotton and India is expected to overcome the Chinese as the single largest producer of cotton in the world. The denim fabric production capacity of the country is more than 1,000 million meters per year and it is still witnessing new entrants.
Denim apparel production in India remains fragmented where only 20-30 per cent of denim apparel is manufactured in organised units. It is a 60-40 share where 60 per cent of the production comes from unorganised non-branded producers. The rest is supplied by branded companies.
Denim has a strong presence in both urban and rural regions. It is currently estimated at approximately INR 5,200 crore and is expected to reach approx INR 10,920 crore by 2015. Production capacity is expected to grow at 12 per cent annually to increase to 1,130million meters by 2015 from the existing 640 meters.
It is significant that each country has realised that the competition is not within the region and it is beneficial for all the denim players if business shifts to one region. The countries are no longer looking at each other as competitors but to work cohesively, respecting each other's strength and continuously working to improve their individual capabilities.
Global Denim Market:
The global denim market is predicted to reach US$ 64.1 billion by 2020. Asia-Pacific is forecast to emerge as the fastest growing market with a CAGR of 9.4 per cent over the analysis period. Growth in the region is led by rising disposable income, surging GDP rates, rising number of women in the workforce, rapid rates of urbanisation, westernisation of lifestyles and rising fashion consciousness.
Over the past few years, the global denim market faced considerable pressure. Global recession has left an impact on consumer spending. Expensive is out and affordable is in. The sale of jeans in United States of America has declined over past several years, the popularity of low cost knitted athletic wear has gained considerable market share. There was once a time where the purchase of a pair of jeans was a prized possession for a young consumer. Today smart phones and gadgets compete with jeans for customer's attention. It is true that the extreme high end of the jeans market remains robust, but the mass market for denim around the world has stalled.
Synthetic fibres have also affected the denim market. In the effort to lower the cost of mass market denim production, many manufacturers replaced cotton with polyester. Stretch fibres have been a force in jeans for many years. Since cotton prices soared in past years, mills and apparel companies scrambled to find more economically priced fibres for use in denim. When cotton prices moderated, but so has the price of polyester solidified gains by synthetics. All these factors lead to oversupply of denim worldwide.
Certainly, the jeans business is cyclical. The oversupply of denim worldwide further dampened price levels and appeared that demand will fall further next few years, even though capacity reduced in aggregate around the world. Some countries will step up in constructions of new mills.
Countries predicted to see strong growth as global players are China, Turkey, Brazil, Vietnam, India and Pakistan. There will be great changes in Asia with China taking an increasingly greater role in the global denim market. Recent rising labour cost may temper growth in apparel exports but the market for denim will remain in Asia. India, Pakistan and Vietnam are expected to enjoy strong growth. Though Vietnam is bit a wildcard, China continues to be more central to the production of denim than Vietnam. China will lose out if the labour cost continues to rise, while remaining moderate in Vietnam and even in Bangladesh. India and Pakistan seem to be a central component of the textile industry in their respective countries.
Europe has a modest denim industry. The current capacity largely cantered in Italy, as the Italian industries are increasing the sourcing of cloth from Turkey and North Africa. Eastern Europe may also become the new sourcing option for Italian apparel companies. Primarily, Europe is a net importer of denim apparel. Turkey will be the strong supplier of denim in the future, with the European Union as the central market. The United States of America will likely continue to be a secondary market for Turkish exporters.
Globally, manufacturers are more focused to offer newer designs, styles and fits to suit changing consumer preferences and fashion trends.
Here is the list of biggest trends in Jeans
• Jeggings which is a combination of leggings and jeans. A must-have among female customers especially the young population.
• Distressed denim which can be faded, ripped, tea-dyed, splattered with paint and acid washed to give the jeans a well aged-look. Popular among both men and women.
• Light washed denim to medium hued jeans.
• Indigo coloured denim.
Denim is backed by a history of success. Jeans wear has survived fashion changes and economic challenges many times and denim has remained stable throughout the globe.