Global market review of denim and jeanswear forecasts to 2018 2012 edition

Global market review of denim and jeanswear forecasts to 2018

2012 edition
Author: Writing Solutions Published by just-style.com

November 2012

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Table of contents
Chapter 1 Introduction Global denim and jeanswear market Challenges and opportunities Consumer spending dip Global cotton woes History of denim Chapter 2 North America United States Canada Brands Levi Strauss VF Corporation Gap American Eagle Outfitters True Religion Manufacturers American Cotton Growers (ACG) International Textile Group Chapter 3 Asia Japan South Korea China India Regional rivals Manufacturers Arvind Mills Aarvee Denim & Exports Black Peony Haining Bafang Weaving

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Prosperity Textile Xingtai Blue Diamond Dyeing & Weaving Weiqiao Textile Zibo Lanyan Group Chapter 4 Europe Other markets Netherlands Italy Sweden Turkey Spain Brands Diesel Mustang Jeans Nudie Jeans Pepe Jeans Manufacturers Tavex Isko Calik Denim Orta Andalou Chapter 5 Latin America Brazil Argentina Mexico Colombia Manufacturers Denimatrix Kaltex Parras Vicunha Txtil Santana Textiles Chapter 6 Conclusions

List of tables
Table 1: Total jeanswear sales worldwide by major region, 2007-2018 (US$bn) Table 2: Total jeanswear sales in United States and Canada, 2007-2018 (US$bn) Table 3: Leading jeanswear brands in North America, 2011 total sales (US$bn) Table 4: Total jeanswear sales in Asia by major market, 2007-2018 (US$bn) Table 5: Leading jeanswear manufacturers in Asia, 2011 total sales (US$bn) Table 6: Total jeanswear sales in Brazil, 2007-2018 (US$bn) Table 7: Total jeanswear sales by regions and major countries, 2007-2018 (US$bn)

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Chapter 1 Introduction
Global denim and jeanswear market
Table 1: Total jeanswear sales worldwide by major region, 2007-2018 (US$bn)
2007 Total North America Europe * Asia ** ROW Source: just-style, industry interviews *Includes Turkey **China, India, Japan and South Korea 2008 2009 2010 2011 2012F 2013F 2014F 2015F 2016F 2017F 2018F

Denim jeans have come a long way from their humble origins and are now recognised as a truly global fashion item. Italian designer Giorgio Armani once said that, Jeans represent democracy in fashion, and the industry has since followed his lead and embraced them as a design classic. They are affordable, long-lasting and can be produced in varying degrees of thickness and quality to meet different price-points and are thus an essentially classless as well as timeless piece of apparel. The comfort, style and versatility jeans offer make them suitable for any informal occasion, with outmoded prejudice against them for their working class roots having now largely died out. Indeed, they have been one of the main beneficiaries of the global decline in formal business attire and are now commonly worn by office workers in many industries, with the late Apple founder Steve Jobs a famous denim aficionado. Jeans can be manufactured cheaply and efficiently in emerging markets and easily adapted to suit changing tastes and the capricious dictates of the global fashion industry. Popular high street demand for skinny, slim fit, boot cut or flared jeans can be quickly and easily accommodated. More recent innovations in denim trousers include trends for unusually coloured or distressed pairs, elasticated waistbands and cuffs, jeggings and shape enhancing jeans for women such as Levis Curve ID range, all of which are now widely available. In 2011 the value of the global denim jeans market stood at US$54bn. The industry appears to be in recovery mode after falling victim to a dip in consumer spending over the last four years as a result of the global economic downturn. Overall global denim now appears to be performing reasonably well and we expect sales to hit US$xxxxbn in 2012 and grow to US$xxxxbn by 2018. North America remains a core market for denim, with xx% of consumers polled by Reuters saying they enjoyed wearing denim clothing and total sales standing at US$xxxxbn in 2011. However, jeans are now well established in Europe and Asia, home to fashion capitals

Chapter 2 North America

Table 2: Total jeanswear sales in United States and Canada, 2007-2018 (US$bn)
2007 North America Canada US Source: just-style, industry interviews May not sum to total due to rounding 2008 2009 2010 2011 2012F 2013F 2014F 2015F 2016F 2017F 2018F

The macroeconomic events of the last four years have created a stagnant retail environment in North America but things now appear to be looking more positive. Bloomberg reported a xxx% month-on-month increase in consumer goods purchases in the US for July 2012, citing US Department of Commerce data. Apparel retailers Gap and TJX, owner of the T.J. Maxx discount clothing chain, were among those posting growth. Gaps sales rose xx% during the month while Macys, which owns the Macys and Bloomingdales string of department stores, saw a xxx% increase. However, the US also saw a xxx% increase in unemployment month-on-month in July to xxx%, according to the countrys Bureau of Labour Statistics, which muddies the waters somewhat. In terms of jeanswear specifically, we are expecting the North American market to continue its fightback against recession and rise from US$xxxxbn in 2011 to US$xxxxbn this year before growing steadily to US$xxxxbn by 2018. Other than through the outlets of dedicated jeanswear brands like Levi Strauss and the VF Corporation-owned Lee and Wrangler, the majority of jeans in North America are sold through mass-market retailers with a high street presence such as Gap and American Eagle Outfitters or by large, diversified supermarkets like Walmart. Big fashion houses like Tommy Hilfiger, Calvin Klein and Ralph Lauren, and discount outlets also, sell denim clothing in their stores and the rest largely originate from up-and-coming designer boutiques. The last few years have been tough for all clothing companies in the US, especially at the premium end of the jeans market where we operate. People are thinking twice before treating themselves, understandably, but we are confident. Executive, True Religion

Chapter 3 Asia
Table 4: Total jeanswear sales in Asia by major market, 2007-2018 (US$bn)
2007 Asia China Japan & South Korea India Source: just-style, industry interviews May not sum to total due to rounding 2008 2009 2010 2011 2012F 2013F 2014F 2015F 2016F 2017F 2018F

Asia has become a major player in the global denim market in recent years for a number of reasons. The continent is home to fashion industry trendsetters Japan and South Korea, two emerging economic superpowers with billion-plus populations in China and India, as well as a number of highly competitive and swiftly industrialising Next Eleven nations like Vietnam, Taiwan, Indonesia, the Philippines, Pakistan and Bangladesh. These countries have booming populations and are experiencing increasing consumer sophistication and affluence as a result of several decades worth of market leadership in manufacturing and a prominent role in the evolution of the information technology industry. Asias prosperity also stems from its access to a diverse range of natural resources across its vast geographic expanse and, in the textile sector, its low-cost sewing industry and humid climate, which is ideally suited to the cultivation of cotton. Asias denim market was valued at US$xxxxbn in 2011 and we expect it to increase marginally this year before growing to hit US$xxxxbn by 2018. Japanese and South Korean jeanswear sales fell from a pre-crisis high of US$xbn in 2008 to US$xxxbn in 2010, but have since shown signs of recovery and should finish 2012 at US$xxxbn. The two markets should see combined sales of US$xxxbn by 2018. China also saw a dip in sales between 2008 and 2010, but will continue to grow steadily, rising from US$xxxbn in 2010 to US$xbn by 2018. Jeanswear sales in India have held steady at just US$xbn for the last four years, but should rise to US$xxxbn by the end of 2018.

Japan
From a design point of view, the leading player in the Asian jeanswear sector is unquestionably Japan and has been since the late 1940s when companies such as Edwin began importing jeans from the US, analysing them and establishing their own dying and spinning processes based on their findings. The countrys denim industry is currently worth around US$xxxxbn and produces 80-90m jean products per year, according to the Japan Jeans Association. While most of Japans jeans are destined for the local market it also exports to the US,

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Chapter 4 Europe
Table 3: Total jeanswear sales in Europe by major market, 2007-2018 (US$bn)
2007 Europe Germany UK France Source: just-style, industry interviews Note:- German, France and the UK are leading markets in Europe but do not represent the whole market. 2008 2009 2010 2011 2012F 2013F 2014F 2015F 2016F 2017F 2018F

The European jeanswear market is currently the worlds largest, valued at US$xxxxbn in 2011. We expect it to continue to grow, despite the continents broader economic troubles, to US$xxxxbn this year and to US$xxxxbn in 2018. The biggest single market for denim in Europe in recent years has been Germany, home to European giant Mustang Jeans and also seemingly the strongest economy in the EU, closely followed by the UK, then France, Italy, Spain, the Netherlands and Belgium. German jeanswear sales remained consistent at around the US$xxxbn mark throughout the financial crisis, whereas the UK, almost Germanys equal prior to the downturn, dipped to a low of US$xxxbn in 2009. The UK is ultimately forecast to surpass Germany, however, and should see annual sales of US$xxxbn by 2018, such is the popularity of the material with British consumers. Third-placed France meanwhile is likely to show more restrained growth and rise from US$xxxbn in 2011 to US$xxxbn by 2018. Although the three leading Western European markets are not known as producers of denim fabric, they are large, sophisticated consumer societies and leading arbiters of taste. Germany, the UK and France together represent xxxxxmn consumers and styles of jeanswear that sell well on the high streets of their capital cities are likely to influence shoppers elsewhere in Europe and around the rest of the world. The three countries also place a cultural premium on creativity and show a marked interest in boutique fashions, meaning that young up-and-coming urban designers can quickly build a cult following outside of the mainstream. Once the current economic clouds clear and consumer spending recovers, Western Europes denim retail sector should begin to see signs of the growth we are predicting. The ongoing sovereign debt crisis in the Eurozone has undoubtedly hindered consumer spending across the continent since 2008, especially in Southern European countries, which have been hardest hit by the economic downturn. Greece, Italy, Spain and Portugal, incidentally, all supported significant blue denim production industries prior to the crisis because of their favourable climate for cotton cultivation, which have also suffered as a result of recent macroeconomic woes. Much jean manufacturing has since migrated to Turkey and Central and Eastern European bases like Romania and Albania as well as cotton-rich hubs in North Africa such as Egypt,

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Chapter 5 Latin America

Latin America is becoming an increasingly important base for the production of jeanswear. Brazil and Argentina are home to several major denim manufacturers who are increasingly reaching north into Central American territories like Mexico, Guatemala and Nicaragua to establish plants and warehouses and therein cut freight carrying costs and ease the passage of exports into the lucrative North American market. The regions equatorial climate is well suited to cotton farming and has enabled the likes of Brazil, an increasingly important economic superpower, to play host to complete supply chains.

Brazil
Table 6: Total jeanswear sales in Brazil, 2007-2018 (US$bn)
2007 Brazil Source: just-style, industry interviews 2008 2009 2010 2011 2012F 2013F 2014F 2015F 2016F 2017F 2018F

Brazils total jeanswear sales were valued at US$xxxbn in 2011 and are set to grow to US$xxxbn by 2018. The countrys US$xxbn textile industry employed xxxm people and saw US$xxxbn in investment last year, following on from US$xbn in 2010, according to the Brazil Textile and Apparel Association. The trade body lists Brazil as the second-largest producer and third-biggest consumer of denim in the world and labels the country the only complete textile chain in the West as a result of its producing xxxm tonnes of cotton, of which xxxxxxx tonnes is consumed domestically rather than exported. The likes of Guatemala and Nicaragua in Central America could also be said to host complete supply chains, however. Brazil is home to denim manufacturing giants Vicunha Txtil, Santana Textiles and Textil Canatiba.

Argentina
Argentina is also a notable centre for denim in the region. Santana operates several mills in the country while VF Jeanswear Argentina, a subsidiary of US giant VF Corporation, cuts and sews Lee and Wrangler products at its Aimogasta plant in La Rioja and carries out washing and finishing work at the Benito Juarez facility in Buenos Aires. In April 2012, the latter agreed a deal with the Argentine governments Department of Commerce to supply the public with jeans priced at just US$xx as part of the national Jeans for All affordable clothing programme, which is also intended to stimulate domestic manufacturing.

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Chapter 6 Conclusions
Table 7: Total jeanswear sales by regions and major countries, 2007-2018 (US$bn)
2007 Total Region North America Europe * Asia ** ROW Country US Canada China Japan & South Korea India Germany UK France Brazil South Africa Source: just-style, industry interviews *Includes Turkey **China, India, Japan and South Korea May not sum to total due to rounding 2008 2009 2010 2011 2012F 2013F 2014F 2015F 2016F 2017F 2018F

The global jeanswear market is expected to grow by almost US$xxbn in value over the next six years. We are forecasting a rise in total global jeans sales from US$xxbn in 2011 to US$xxxxbn in 2018, fuelled by improving economic conditions in traditional western markets and growing demand from emerging countries in Asia and Latin America. Denim sales in North America should grow from US$xxxxbn to US$xxxxbn over this period, in Europe from US$xxxxbn to US$xxxxbn and in Asia from US$xxxxbn to US$xxxxbn. Dynamic markets from the rest of the world like Brazil and Mexico will account for the remaining third, rising from US$xxxbn in 2011 to US$xxxbn by 2018. Cotton price fluctuations caused by weather patterns impacting harvests will continue to have an influence on international production costs but demand should rise sufficiently to ensure steady growth. From a production point of view, mass market retailers will continue to source their denim from the most costeffective manufacturers around the world. However, there is unlikely to be much variation in which regions these mills are located in because of the need for a temperate climate for cotton to grow in. Countries in Central and South America and Southern Europe, particularly those based around the Mediterranean like

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