Denim is a versatilefabric. Moving from work wear to fashion, denim is not only for the youth and forstyle icons, but for all age groups and genders. SBS Zipperanalyses the potential, challenges, andopportunities India, Bangladesh, and Pakistan hold as a sourcing hub for denim.

 

Developing with changing demands, it has become thecommon thread binding India, Pakistan and Bangladesh in a common goal. The Indiansubcontinent is growing fast for denim, be it denim fabric or finished productslike jeans. India and Pakistan have an edge in fabric manufacturing. Bangladeshimills are picking up fast. Manufacture of jeans has converged in Bangladeshwith practically all major brands from Levi's to Gap to Zara. This region is viewingthis development enthusiastically, confident to bring in huge business. Buyersare positive and looking at the region as a complete sourcing destination.

 

India is also emerging as a huge market for thefinal product with Pakistan and Bangladesh eyeing the business. India is a hugeend consumer market and nearly 75 per cent of denim fabric produced in thenation is used for the domestic market while the remainder is exported tocountries like Bangladesh, Turkey and more recently to South America andseveral African countries. India is known for its bulk production of denim indifferent weaves and counts. The nation is also a source of sustainable optionsin fabric with limited capacity in jeans production. According to the industry,India is among the front runners in sustainable options in denim, though thereare many other players around the world concentrating in this area.

 

Pakistan: Investing inR&D

Pakistani mills have invested on research and developmentin designs and finishes. Many big mills are giving tough competition to Turkey.Since Bangladesh has acquired the covetous reputation of being the jeansmanufacturing capital of the world, Pakistan is looking to set up jeansmanufacturing units in the country, getting skilled edge of both the countriesfor growth.

 

Many manufacturers are working on recycled yarn fordenim manufacture. The most exclusive isthe Back to Life fabric for H&M, the only company which runs a Post ConsumerWaste (PCW) programme partnered by denim manufacturers in Pakistan. H&Mcollects used jeans from customers and sends it to Pakistani mills forshredding, spinning and fabric production. Another exclusive product that themills are working on is for G-Star called RAW. This uses bionic yarn, made fromreclaimed pet bottles fished out from the ocean. The yarn is provided by G-Starand it is converted into fabric by companies in Pakistan.

 

Bangladesh: The nervecentre of jeans production

The wide consumption of denim has created a newopportunity for Bangladesh. Currently, Bangladesh is the third largest denimexporter to the United States of America, after Mexico and China with 11.3 percent market share, according to the US Department of Commerce. Brand Bangladeshwill source four in five denim products for the European market by 2020.

 

Accordingto Bangladesh Textile Mills Association, Bangladesh has 25 denim fabricmanufacturers, which produce 30 mn yards of denim a month against the monthlydemand of nearly 60 mn yards. It imports 50 per cent fabric from countries likeIndia, Pakistan and China. The share of imported fabrics decreases gradually asthe capacities of Bangladesh denim mills grows.

 

Bangladeshexported denim products worth more than $ 529.53 million to Europe betweenJanuary and June 2015, marking 23 per cent growth compared to the same periodlast year. Best quality and competitive price range have ensured that more than66 international brands including Charles Voegele, G-Star, Jack and Jones,Oliver, River Island, H&M, C&A and PVH have turned to Bangladesh in thelast couple of years for denim products. In 2013-14, export of denim productsto the United States of America and Europe rose by approximately 20 per cent.

 

Anothermajor reason is the focus on washing and finishing. Most jeans manufacturingfactories in Bangladesh have invested in washing plants. All major exporterswho ship and manufacture denim have the capability to do any kind of finish atpar with what is done in Hong Kong or South America. The growth of Bangladeshas a major denim centre and effort to support the industry with innovations inweaves and different constructions help garment manufacturers play around withwashes to create unique looks.

 

Withall requirements from yarn to finishing available in Bangladesh, buyers areincreasingly shifting their jeans business to the country. Gap had anticipatedthis movement a few years back and shifted a lot of the business to this regionwith fabric support from India. European brand S.Oliver diverted its Chinaorders to Bangladesh. Companies producing fashion denim garments for globalbrands such as Mango, Calvin Klein and Next recently increased productionlines, enhancing production capacities.

 

Theroad ahead for Bangladesh's denim industry is bright as global importers haverealised that Bangladesh is not only competitive in price but also can makehigh fashion denim.

 

India's Denim Market

TheIndian denim industry has shown continued growth over the last few years. Thecountry boasts of a denim manufacturing capacity of around 1.1 billion metersper annum. Denim manufacturing industry in India contributes 5 per cent of theglobal scenario reflecting overall performance of the textile industry. Themarket is projected to grow at a CAGR of 15 per cent to touch INR 27,200 croreby 2018. Denim is a key segment in the Indian textile industry that has hugepotential to grow. The Indian denim export market has grown at a CAGR of 4.78per cent from 2010 to 2013. Owing to its cost effectiveness, quality standardsand large pool of skilled work force, an increasing number of global denimmanufacturers are looking at India as an emerging denim export region.

 

Indiahas an integrated value chain for denim products starting from fibre to retail.Denim is primarily produced from cotton and India is expected to overcome theChinese as the single largest producer of cotton in the world. The denim fabricproduction capacity of the country is more than 1,000 million meters per yearand it is still witnessing new entrants.

 

Denimapparel production in India remains fragmented where only 20-30 per cent ofdenim apparel is manufactured in organised units. It is a 60-40 share where 60per cent of the production comes from unorganised non-branded producers. Therest is supplied by branded companies.

 

Denimhas a strong presence in both urban and rural regions. It is currentlyestimated at approximately INR 5,200 crore and is expected to reach approx INR10,920 crore by 2015. Production capacity is expected to grow at 12 per centannually to increase to 1,130million meters by 2015 from the existing 640meters.

 

It is significant thateach country has realised that the competition is not within the region and itis beneficial for all the denim players if business shifts to one region. Thecountries are no longer looking at each other as competitors but to workcohesively, respecting each other's strength and continuously working toimprove their individual capabilities.

Global Denim Market:

Theglobal denim market is predicted to reach US$ 64.1 billion by 2020. Asia-Pacificis forecast to emerge as the fastest growing market with a CAGR of 9.4 per centover the analysis period. Growth in the region is led by rising disposableincome, surging GDP rates, rising number of women in the workforce, rapid ratesof urbanisation, westernisation of lifestyles and rising fashion consciousness.

 

Challenges:

Overthe past few years, the global denim market faced considerable pressure. Globalrecession has left an impact on consumer spending. Expensive is out and affordableis in. The sale of jeans in United States of America has declined over pastseveral years, the popularity of low cost knitted athletic wear has gainedconsiderable market share. There was once a time where the purchase of a pairof jeans was a prized possession for a young consumer. Today smart phones andgadgets compete with jeans for customer's attention. It is true that theextreme high end of the jeans market remains robust, but the mass market fordenim around the world has stalled.

 

Synthetic fibres have also affected the denimmarket. In the effort to lower the cost of mass market denim production, manymanufacturers replaced cotton with polyester. Stretch fibres have been a forcein jeans for many years. Since cotton prices soared in past years, mills andapparel companies scrambled to find more economically priced fibres for use indenim. When cotton prices moderated, but so has the price of polyestersolidified gains by synthetics. All these factors lead to oversupply of denimworldwide.

 

Certainly,the jeans business is cyclical. The oversupply of denim worldwide further dampened price levels and appearedthat demand will fall further next few years, even though capacity reduced inaggregate around the world. Some countries will step up in constructions of newmills.

 

Opportunities:

Countriespredicted to see strong growth as global players are China, Turkey, Brazil,Vietnam, India and Pakistan. There will be great changes in Asia with Chinataking an increasingly greater role in the global denim market. Recent risinglabour cost may temper growth in apparel exports but the market for denim willremain in Asia. India, Pakistan and Vietnam are expected to enjoy stronggrowth. Though Vietnam is bit a wildcard, China continues to be more central tothe production of denim than Vietnam. China will lose out if the labour costcontinues to rise, while remaining moderate in Vietnam and even in Bangladesh. Indiaand Pakistan seem to be a central component of the textile industry in their respectivecountries.

 

Europehas a modest denim industry. The current capacity largely cantered in Italy, asthe Italian industries are increasing the sourcing of cloth from Turkey andNorth Africa. Eastern Europe may alsobecome the new sourcing option for Italian apparel companies. Primarily, Europeis a net importer of denim apparel. Turkey will be the strong supplier of denimin the future, with the European Union as the central market. The United Statesof 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 suitchanging consumer preferences and fashion trends.

 

Here is the list of biggest trends inJeans

•        Jeggings whichis a combination of leggings and jeans. A must-have among female customersespecially the young population.

•        Distressed denimwhich can be faded, ripped, tea-dyed, splattered with paint and acid washed togive the jeans a well aged-look. Popular among both men and women.

•        Light washeddenim to medium hued jeans.

•        Indigocoloured denim.

 

Denimis backed by a history of success. Jeans wear has survived fashion changes andeconomic challenges many times and denim has remained stable throughout theglobe.

 

References:

1. Tonello.com

2. Apparelresources.com

3. Suryalakshmi.com

4. Indiaretailing.com

5. Bharatbook.com

6. Agoa.info