Terry towel – the major growth category for Indian companies

Terry towel is one of the strong product categories for Indian textile companies as Indian giants have a major share in the world’s leading market. Global home textile industry is expected to increase to US $ 60 billion by 2025 from US $ 52 billion currently. In India, the home textile industry is expected to almost double from current level of US $ 8 billion by 2025-26.

In global home textile segment, cotton terry towels is the single largest commodity with a massive market share of 14 per cent.  According to the Office of Textiles and Apparels (OTEXA) US, in CY 2019, India supplied about 39 per cent of the import of cotton towels to the US, which has grown significantly from the level of 30 per cent in CY 2009. The hospitality and spa industry, a major consumer of towels, is badly impacted in last one year and is still under pressure. It impacted the market for towel segment negatively but the good thing is that despite this setback, the segment has ample opportunities for India and Indian giants are geared up to grab these opportunities.

For towels, the export demand in India is mainly driven by the US, the largest market, accounting for 60 per cent of India’s home textile exports. Compared to a 9 per cent increase in India’s home textile product export of US $ 5.7 billion in FY 2021, exports to the US increased by 14 per cent, while exports to the other major markets of the UK and the EU reported a year-on-year decline during the year.

On the other hand, despite the duty disadvantage of 9 to 10 per cent, India’s towel export to US is around 20 per cent of Europe’s total towel sourcing.

In the Western world, terry towels generate majority of sales in the towel segment. Even in India, the largest global suppliers from the country are now looking aggressively at domestic branded terry towel market. The high growth potential with good margins is the attraction.

However, in volume terms, the terry towels are currently contributing around 20 per cent of the domestic sales in India. The remaining 80 per cent comes from Honey Comb/ Huccabuck (Gamchas)/ Non-Terry towels.

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Amit Jain, Founder, A&M Consulting, Delhi who is an IITan and worked at senior position in companies like Welspun India, Trident Group and Bombay Dyeing says, “My personal experience in dealing with this category also suggests tremendous potential.  One of the best known domestic home textile brands, terry towel category grew at a CAGR of 15 per cent with net margin growing at 5 per cent CAGR.”

Amit is of the opinion that in domestic market this season, it will be subdued due to fear of third wave of the pandemic and lesser corporate gifting. From FY ’23, it shall increase exponentially due to expected economic growth. While in export, it shall be buoyant, especially in US, in spite of the pandemic. The negative sentiments towards sourcing from China shall help Indian exporters.

Market dominance by Industry leaders

Apart from the global leaders Trident and Welspun, the towel segment is dominated by organised players In India. Trident is one among the top five global terry towel giants of the world and it also claims to be the largest player in terms of terry towel capacity in India.

Himatsingka Seide Limited also operates as one of the world’s largest integrated terry towel plants for producing bath products with a capacity of 25,000 tonnes per annum.

Welspun India Limited has 19 per cent market share in US towels market (CY ’19). The company has capacity of more than 80,000 MT in terry towel segment.

Sharadha Terry Products, Mettupalayam has been conferred ‘The Best vendor award’ by top retailers like Macy’s for last several years which is a testimony to its quality commitment, product innovations.

These companies cover nearly entire range of towels be it in terms of different raw material, process during manufacturing or use and so on. To mention a few, piece dyed dobby towels, piece dyed jacquard towels, yarn dyed dobby towels, yarn dyed printed towels, yarn dyed jacquard towels, printed and jacquard towels, embroidered towels, micro cotton towels, quick dry, low lint, high absorbant, super soft, CF Sheen, bleach resistant, cosmetic resistant, beach towel, hand towel, kitchen towels etc.

Giants’ having increased domestic focus; the branded terry towel market in India shall grow in years to come. Honey Comb/ Huccabuck Towels too shall grow through better branding and marketing.

Demand for branded towels is growing in India as giants are on their toes. Welspun came up with the campaign of the year which showed the significance of a good towel to make a good impression. Its campaign Desh ka Towel developed on the basis of consumer research in Indian market, to offer affordable solutions.

“We are also promoting the ‘Welspun Quik Dry Towels’ that is aimed not only at consumers but also towards the trade community to build confidence and brand enthusiasm,” the company says in one of its reports.

Top companies in towel export

Source: TEXPROCIL (Figures in Rs. Crore)

Innovation and developments

Moving beyond cotton, strong players in the towel segment are aggressively focusing on innovations.  Antimicrobial finish is very much there.

Besides the production of Bamboo charcoal infused stay fresh range of towels, the Welspun’s Vapi plant also offers bleach safe towel and it implemented eco twist version of towel made from super low twisted yarns. This saved energy and reduced weight during manufacturing apart from offering great hand feel to consumers.

On the technical front, Welspun India carried out terry towel skill gap analysis in partnership with Werner International in cut and sew area. This helped in identifying training plans and work task process analysis.

Trident’s focus is on naturally soft towels using innovative spinning technology and it avoids the use of PVA which is not environment-friendly.

Sustainability at the core

Sustainable products and practices are being pushed further by the global buyers and are impacting the specification of the products

The hospitality towels are blended with 15-20 per cent polyester while towels made from recycled cotton blended yarns are in demand. Sustainable fibres like Hemp are also being blended with cotton.

Growing concern for health and hygiene is one factor increasing the demand of disposable towels. At the same time, antibacterial, antifungal and antiviral finish are becoming normal rather than being exception and this shall dominate from now onwards. Further, with the thrust on technical textiles, technology shall improve the absorbency of these towels.

With increasing yarn prices and global economy looking for less water consumption across the value chain, the non-terry towel market share shall improve globally.

Looking further

With new capacities being added at Himatsingka Seide Limited, the Indian share in US market shall improve in years to come. The negative sentiments towards China and imminent legislation on banning Xinjiang cotton will further boost India’s chances.

However, the hospitality and SPA segment across the globe is still under huge stress. The market is moving away from big properties to boutique ones, even the segment of home stay/ cottages is booming. Once hospitality and SPA segment becomes active as they used to be during pre-Covid, demand of towels will grow multiple times.

Though expansions for giants is like a routine, but it is good to see that these companies are expanding in towel segment. For example, Himatsingka Seide Limited recently successfully ramped up capacity utilisation at its new terry towel plant from 35 per cent to 65 per cent. “This stabilisation of the terry plant at Hassan Karnataka progressed well and will strengthen our presence in the global home textile space as we now offer a robust product assortment in our home textile solutions vertical,” the company said.