It is truly amazing how denim, which was conceived as a rough and tough workwear fabric, has captured the imagination of consumers around the world, and is now considered among the most fashion-sensitive with innovation driving business. A recent research report by Global Information Inc. predicts that the global denim market will be worth US $ 56 billion by 2018. Even in Asian countries, which are among the latest to join the denim craze the market is fast growing, in India alone the domestic market of denim products is growing at 15% CAGR, with expectation of market to be worth Rs. 12,200 crore by 2015. Feeding this denim market with a wide choice of fabrics are five key countries – China, India, Pakistan, Bangladesh and Turkey.
Team AO analyses how these countries are placed today on production and market positioning… The research is based on wide range of interactions with buyers, denim fabric producers, jeans manufacturers and denim associations in major denim centres, not all have been quoted…
While the US was the largest producer of denim few decades ago, Asian countries have now edged it aside. The key success factors for the denim industry growth in the five Asian countries of China, India, Pakistan, Bangladesh and Turkey are different, but equally important. While cotton availability has propelled the Chinese and Indian industry, proximity has played a major role in the success of Turkey. In the meanwhile, preferential market access has been the biggest factor for the growth of Bangladesh along with huge investments in large infrastructure. Significantly, though Italy still controls the design segment, but being too expensive, Turkey has emerged as one of the influential producers of denim fabrics due to its innovation and R&D on finishes and washes.
The phenomenal growth of the market for denim is attributed to the fact that denim jeans have become a necessity and wardrobe staple as it offers comfort and a longer life span compared to other types of apparel. Jeans can be worn on different kinds of social and even official occasions. Over the years, denim has revealed its capability to overcome age and gender barriers. In the US, denim is the most extensively produced and used apparel. The growth of denim category is further fuelled by the growth in premium denim market.
In the selection of fabric for different market segments, handle, finish and price are the major differentiating factors. Of course, innovation always fetches a higher premium and demand, and all denim fabric manufacturers are making effort to innovate. While the low-end (basic) fabric segment is 100% about construction with open-end yarn from 4-8 ounce, the mid quality range depends on content of fabric construction of 20s, 30s, 50s counts with basic finishes and the high-end fabric is distinguished by complex constructions with use of additional specialized yarns like tencel, model, lycra, etc. and having specialized finishes and coating-line. The premium segment is innovation all the way, with unique designer inputs and available in small niche quantities.
On a global level Turkey is known for its premium products, Bangladesh and Pakistan are positioned for their value products and India is positioned in mid to premium segment. China has traditionally been known for large volumes of basic fabric.
Bangladesh is an emerging force in denim
In fact, slowly but surely Bangladesh is emerging as a force in both denim garment and fabric manufacturing. Just two years ago the total denim fabric capacity of the country was around 180 million metres per annum, while today according to latest estimates it is over 320 million metres per annum, a nearly double the increase in the capacity. Yet, according to research agency BRAC EPL Research, shortfalls in denim requirement of 40% still remains and this shortfall is being met by mills mostly in China, India and Pakistan.
“About five years back we were dependent on imported denim fabric from China, India and Pakistan. Today we have about 20 very good mills which are producing denim at par to China, Pakistan and India in terms of quality as now every mill is investing hugely on state-of-the-art imported machineries especially on the weaving and processing side. The way we are going five years down the line you never know that we start producing the denim quality which Turkey is producing today!” says Ranjan Chowdhary, Managing Director, Nassa Group. Interestingly, the 20 big companies into the business of denim fabrics today started their productions between 2004 and 2006.
[bleft]While less than a decade ago, the country was only about basic five pocket jeans, today the facilities being constructed by denim players has made it possible to feed even the differential needs of brands like M&S, C&A, Zara, Next, Lindex, Nautica, Tommy Hilfiger, Wrangler, Lee to mention a few.[/bleft]
It has been a successful journey for Bangladesh, moving from basic to more high-end and one of the biggest contributors has been the willingness of the industry to invest in fabric mills, garment machines and washing and finishing facilities. In fact, though the strength of this country is still its ability to produce volumes with 70% of produce being mass oriented, top manufacturers are moving towards fashion products with around 30% of total jeans exported coming under the category of fashion.
Syed Naved Husain, Group Director & CEO, Beximco Ltd. which is producing 20 million metres per annum shares, “If one wants to use dum-dum denim then it’s cheaper to import from companies like Arvind in India or Crescent in Pakistan, but we are not doing basic five pocket denim and have invested a lot on our weaving and washing setup. In our weaving we have put lots of dobbys, multi coloured looms, seer sucker. Today, we are selling our denim products to brands like Zara, H&M, s.Oliver and the likes.”
In fact, now every mill is investing hugely on state-of-the-art imported machineries especially on the weaving and processing side. Majorly the companies are selling their denim fabric locally or for captive consumption. “Comparing to the last decade we can say Bangladesh has grown both business share and new product diversification rapidly. We are now producing a lot of sustainable products in denim. We are the first denim mill in Bangladesh which is going to launch selvage denim, which is a clear indication that Bangladesh is now at par to any denim producer in the world,” says Showkat Aziz Russel, Managing Director, Amber Group (Partex Denim).
| DENIM COMPANIES STRENGTH BANGLADESH BASIC TO MID-END RANGE | |
| Company | Capacity in Mn. Mts./Annum |
| Noman Group | 43.2 |
| Ha-Meem Group | 42.0 |
| Partex Denim | 41.7 |
| Envoy Textiles | 32.9 |
| Mahmud Fabrics | 30.0 |
| Sasha Denim | 22.0 |
| Opex | 22.0 |
| Pacific Denims Ltd. | 21.9 |
| Beximco | 20.0 |
| Argon Textiles (Evince Group) | 16.5 |
| Nassa-Taipei Denims Ltd. (Nassa Group) | 16.5 |
| Jamuna Denims Ltd. | 16.4 |
| Mahmud Denim | 15.5 |
| Bengal Indigo Ltd. | 15.0 |
| One Denim Mills Ltd. | 13.0 |
| Royal Denim | 12.0 |
| Desh Denim Mill Ltd. (RKD Group) | 11.0 |
| Chittagong Denim Mills Ltd. | 9.9 |
| Titas Spinning and Denim Company Ltd. | 5.5 |
China cutting production of denim fabrics
Significantly, China, which produces close to 2.5 to 3 billion metres of denim annually, has been cutting down on their production of denim fabric, preferring to concentrate on high-end textiles and jeans production, as they are strategically moving up the value chain. One of the major reasons, besides rising cost of production that has diverted China away from Denim fabric is the major environment issues that have hit the Chinese industry in the past few years. Many campaigns have been run to dissuade buyers from buying either fabric or garments from the country and the effects are now visible. Brands like Armani, Calvin Klein, Marks & Spencer and Zara are being linked to devastating water pollution in the Chinese textile industry. Though the Chinese still rule the basic market, and a majority of Bangladeshi jeans manufacturers in the basic five pocket jeans categories are procuring fabric from China at competitive rates, the country is fast losing out on the denim market, despite capacities.
Turkey taking advantage of proximity
Turkey has strategically positioned itself as a high-end – premium supplier of denim fabric and denim garments. Companies such as Bosa, Orta, Isko are important players in the development of good quality fabrics and many high-end brands, such as Diesel, Gstar, Levis, Zara, Mango, H&M, Jack & Jones, etc. are currently doing bulk productions in the country. Converting the denim fabric into jeans is becoming a challenge as brands want the products really fast. As of today, Turkey can supply garments in 2-3 weeks provided that fabric is in stock. This is very attractive but the constraint of higher garment prices makes it sometime unaffordable for some brands. While you can get a bulk basic jean in China and Bangladesh for as low as US $ 4, Turkey jeans prices can hike from US $ 10 and above depending on quality and lead time. “Turkey is for sure making giant steps, mainly thanks to an approach deeply oriented towards innovation and research for quality excellence,” says Marco Lucietti, Marketing Director of Turkey-based ISKO, an innovative denim fabric producer.
| TOP TWELVE PLAYERS IN PAKISTAN MID-END TO HIGH-END RANGE | |
| Company | Capacity in Mn. Mts./Annum |
| Artistic Milliners | 48 |
| Artistic Fabric Mill | 40 |
| Soorty Textiles | 38.4 |
| Hantex Textile Mill | 38.4 |
| Kassim Textile Mills Ltd. | 36 |
| Naveena Export Ltd. | 33 |
| Azgard Nine Ltd. | 32.4 |
| Artistic Denim | 31.2 |
| Mekotex | 26.4 |
| Siddiqsons Denim Mills Ltd. | 22 |
| Pak Denim Ltd. | 20 |
| Indigo Denim | 17 |
Denim, a growth segment for Pakistan textile industry
Pakistan is presently exporting 700 million metres per annum. The first organized denim mill was setup in 1992 and now there are a number of players of which about 16-17 are organized denim players, with 10 of them having production capacity ranging between 35 and 40 million metres per annum, concentrated largely in Karachi. Artistic Fabric Mills, Pak Denim Limited, Al-Ameen Denim Mills Limited, S M Denim Mills Ltd., Denim International, Classic Denim, Rajby Industries and Kassim Textile are some of the mills producing high quality denim which it claims to be at par to what Turkey and Chinese manufacturers are producing and the top companies are now investing heavily on R&D. “Earlier we were just focused on bottom fabrics, but now we are equally giving importance to denim top wear fabrics. Kassim is also doing a lot of blending with tensel, lycra and innovations in finishes like coating, over dyeing and printing,” shares Agha Dastageer, Technical Manager, Kassim Textiles – Bangladesh. With Bangladesh emerging as a major market for Pakistan denim fabric manufacturers the company has recently established an office in the country. Other countries that import Pakistani denim fabric include Turkey, Sri Lanka, Jordan, Kenya, Morocco, Tunisia, Syria and Latin American countries.
| DENIM COMPANIES STRENGTH INDIA | ||
| Company | Capacity in Mn. Mts./Annum | Product Quality |
| Arvind Mills Ltd. | 120 | Basic to high-end |
| Aarve Denims & Export Ltd. | 85 | Basic to mid |
| Nandan Exim Ltd. | 70 | Basic to mid |
| Kanchan Group | 60 | Basic denim |
| Etco Denims Pvt. Ltd. | 50 | Basic denim |
| Raymond Uco Denim Ltd. | 47 | High-end denim |
| Bhaskar Industries Ltd. | 42 | Mid to high-end |
| Suryalakshmi Ltd. | 40 | Mid to high-end |
| Shri Lakshmi Cotsyn Ltd. | 40 | Basic denim |
| Oswal Denims (Nahar Group) | 40 | Basic to mid |
| Partap Spintex Ltd. | 40 | Basic to mid |
| Sangam India | 40 | Basic to mid |
| SEL Manufacturing Ltd. | 40 | Basic to mid |
| Vinod Denim Ltd. | 36 | Basic denim |
| K G Denim Ltd. | 30 | Mid-upper to high-end |
| Malwa Industries Ltd. | 30 | Mid to high-end |
| Mafatlal Denim Ltd. | 30 | Mid to high-end |
| Modern Denim Ltd. | 30 | Mid to high-end |
| Jindal Worldwide Ltd. | 30 | Basic denim |
| Century Textiles & Industries Ltd. | 21 | Basic denim |
| Rainbow Denim Ltd. (Rama Group of Companies) | 20 | Basic to mid |
| R & B Denim Ltd. | 20 | Basic denim |
| Blue Blends (I) Ltd. | 18 | Basic to mid |
| LNJ Denim (LNJ Group) | 18 | Upper mid to high-end denim |
| Ginni International Ltd. | 16 | Mid to high-end |
| Soma Textiles & Industries Ltd. | 15 | Basic to mid |
| Ashima Ltd. | 11 | Basic to mid |
India positions itself as second largest producer of denim fabric
With 27 denim manufacturing companies, the Indian denim textile industry has been growing at a consistent rate of 10-12% over the last decade and is expected to grow at similar compounded rates over the next several years. The Denim capacity build up in India, is often in “steep-steps” implying that large capacities are added in a short period of time. In the last 3 years the capacity build up has been in the region of 200 million metres plus and the current installed denim fabric capacity is about 1 billion metres per annum. Nearly 50% of the denim fabric manufacturing units are located in Gujarat, another 30% is located in Punjab and Rajasthan and the rest is in Maharashtra.
India today has a competitive edge in denim fabric manufacturing due to availability of raw material (cotton and Manmade fibres), technology and latest equipment. The typical positioning of India in denim fabrics has made it to face competition at both extreme ends. In value products, it faces competition from Bangladesh and Pakistan. It is really challenging for the Indian manufacturers to match the price points offered by the manufacturers of Bangladesh and Pakistan. In premium, designer category, it faces stiff competition from Turkey.
Arvind Mills, the largest denim manufacturer in India is very much aware of how to stay competitive and shares that India can hold forth in many categories. “All levels of denim fabric are being made in India – catering to mass market as well as boutique and designer denim brands. Yet, as of now India denim has not evolved a unique signature like Japanese or Italian denim; however, it is very likely that in future we will see an Indian denim signature based on our rich heritage of crafts,” says Aamir Akhtar, CEO Arvind Denim. The Mill is feeding the basic to high-end market and has not gone for any expansion since the last five years with 60% of its exports going to Bangladesh.
[bleft]Most of the jeans manufacturers agree that Indian mills are upscaling their product offerings and the need to import fabric is mostly with relation to nominated fabric. Arvind, LNJ and KG Denim are having the best of R&D facilities and are in a position to offer appropriate fabric for the mid- to higher-priced brands.[/bleft]
Nearly 75% of the denim fabrics produced in India is used domestically, while the remaining is being exported to countries like Bangladesh and Turkey. Other emerging export markets for denim fabrics from India are South America and several African countries. “Vietnam and Cambodia have potential for exports, as they have become large garmenting centres, due to significant investments made in the garmenting business there, and the fact that these countries have signed bilateral agreements with the EU /USA,” says Rajiv Dayal, MD, Mafatlal Industries.
Where a fabric manufacturer is exporting, depends on many factors. “Bangladesh will be self-sufficient for the low- and mid-end of the fabric business in a few years, for producers like us who also target this segment, but work with large global customers who nominate and buy fabrics from their preferred suppliers; there will not be any significant loss of volumes. In the meanwhile, Turkey is slowly becoming an expensive garment producer and their significant capacities are moving into Egypt/Africa and other regions. Therefore, it is no more imperative to sale big volumes in turkey. Again this dynamics of capacity and costs are specific to the business segment one operates in. Producers like us who are in mid- to high-end of the business will have practically no impact. Also we need to keep in mind that India is more cost-competitive than Turkey,” reasons Paritosh Agarwal, Managing Director, Surya Lakshmi Cotton Mills.
Ahmedabad based Nandan Exim Ltd. (Chiripal Group) is on its way to becoming the second biggest denim fabric producer in India in 2015 by which time it hopes to reach 112 million metres per annum. The company makes more than 2000 different types of denim fabric varieties ranging between 6 to 14 ounces. “We have tied up with various international brands to ensure that our new capacity is fully utilized. In the next few years we hope to reduce reliance on the domestic market and concentrate more on the export markets. This in turn will take our global market share to 30-35% with the rest accounted for by the Indian market,” says Vishal Chiripal – Director of Chiripal Group.
The domestic market is estimated at US $ 1 billion with current demand of about 65-70 million pairs a year and expected to reach US $ 2.1 billion by 2015, as from the current market of 0.35 pair of jeans per Indian, it is expected to reach 1 pair of jeans per person. No wonder all the mills are looking to feed the needs of various market segments within domestic retail. Exporters working in the global market are also primarily sourcing from Indian Mills. While Century Denim is popular at the bottom layer; Arvind, KG and Raymond are sought after by high-end fabric seekers.
Jeans manufacturers align with mills catering to their market segment
Orient Craft, which has the capacity to make around 10,000 pieces of denim bottoms and around 20,000 pieces of denim shirts per day, depending upon the style, is sourcing its fabric mostly from Arvind, KG Denim, Ashima, Raymond’s and Chiripal. The company is supplying to mid mass and premium buyers like J.Crew, ANF, AEO, GAP, VF to name a few and for Indian market they have worked with Zovi, Benetton, Levis, etc. “We get almost every fabric in India but there are times when the buyer’s nominate the fabric which runs through many garment factories and multiple countries so we have to buy from them. Also indigo varies from mill to mill and buyers are very specific on the tone, this again limits us to counter develop the fabric, we do offer counter developments from the local mills and then wash it matching to the original standard but it is the buyer who decides whether to change the original source or not. We also source some very high-end fabrics from Mills in Japan like Kahira, Kurabo and Isko to name a few,” says Alok Kumar, VP, Orient Craft.
Induro Lifestyle Resources, which manufacturers 1.2 million pieces per annum with future expansion plans to ramp it up to 2.4 million pieces feeds the mid-mass and premium segment of the market working with national brands such as Lee, Wrangler, US Polo , Ed Hardy , Arrow, Cherokee , Moussimo, Flying Machine. The company is now starting with Pepe, Benetton, LP, Fcuk and Celio. For premium products the fabrics are sourced from Arvind, Raymonds, Malwa and KG Denim. “Raymonds is good for stretch and special finishes on the fabrics, Arvind too is good for innovative and blended fabrics like using bamboo and other man-made fibres with natural fibres. Bhaskar, Mafatlal, Suryalakshmi are good for mass and mid-mass segments,” informs Kishan Kumar, MD, Induro Lifestyle Resources.
