With increasing disposable income and inclination towards western fashion trends, emerging economies are shifting their purchasing patterns towards denim jeans as a part of their casual wear. Higher quality, durability, comfort level, low maintenance, and easy availability are the main reasons for growing demand for denim products amongst the youth. Despite rising acceptance of denim products across all age groups, demand for men is forecasted to surpass that for women. Evolution of e-commerce has increased accessibility thereby improving distribution channel and facilitating consumption.
Bangladesh and China are the two South East Asian Countries which have been leading the US denim exports charts for the last few years alongwith Mexico. China was struggling few years back due to surging labor prices however now the country is recovering.
Global denim market is estimated to grow at about 6.4% annually from $57 billion in 2016 (US accounts for 24% of this size) to $75 billion in 2021. USA is one of the top consumers of denim jeans with an estimated demand of 450m pieces per year, followed by European Union (EU). US’s top three suppliers of denim jeans include China, Mexico and Bangladesh. Largest supplier of denim garments to EU is Bangladesh followed by China. Demand growth for the next six years is expected to largely emanate from Asia (12%), Latin America (15%), North America (10%), Europe (4%), Mexico and China. Top denim fabric importing countries include Bangladesh and Mexico.
Top denim fabric exporting countries include China, Pakistan, Turkey, Hong Kong, Italy, India, Spain and Brazil. Supply growth of denim fabric is expected to supersede the increase in demand due to sizeable capacities coming online around the globe posing pressure on bargaining power of fabric and garments manufacturers.
Bangladesh: Bangladesh is recognized as one of the most significant centers for denim apparel production around the globe. It ranks as the second largest denim garments exporter after China. Bangladesh currently imports almost half of its fabric requirements from India, Pakistan and China. However, growing consumption of denim and expected increase in global demand has created opportunity for Bangladesh to enhance the productivity and efficiency of its denim mills thereby reducing its reliance on imported denim fabric. Overall denim capacity is witnessing significant increase and will impact players who are currently exporting to Bangladesh. On garments front, industry players are increasing capacity in order to maintain current market share in global trade and to boost total denim exports to $7b by 2021. The country enjoys advantage in terms of one of the lowest cost of doing business with expenses being lower by around one-third as compared to Pakistan. The future of the denim industry appears to be bright for Bangladesh’s economy on the back of competitive pricing, low labor cost and focus on product innovation.
Bangladesh is the largest exporter of denim products to the EU, with 27% of the market share— third largest to US market with a 14% market share .
According to Office of Textiles and Apparel (Otexa) of the US, from January to September, 2018, Bangladesh earned $419.21 million from denim exports, up by 14.20%, which was $367.10 million in the same period last year.
According to Eurostat, statistics directorate of the European Commission, the latest data, for January to August, 2018, Bangladesh earned €917.14 million exporting denim goods to European Union Countries—which is 4.23% higher, compared to €879.84 million in the same period a year ago.
India: Despite declining denim apparel exports, the denim sector in India is growing at a consistent CAGR of 13% to 15% per year led by escalating local demand. India’s share in global denim jeans trade account for 2.5% with 10% share in global denim manufacturing capacities. The Indian denim industry enjoys the advantage of suitable cotton, induction of state-of-the-art production plants and large local market where increasing consumption of denim products is being witnessed. Indian denim industry is primarily aiming to increase its share in exports, which currently stands at around one-third of total production. The total denim fabric capacity of the country stands at 1.2b meters/annum reporting utilization levels of 75%, of which only 28% is exported. Although the urban and rural Indian markets contribute to the overall share of denim, the average number of denim items owned by Indian consumers is much lower (0.3) in comparison to other markets like the US (9), the UK (8) and Brazil (7). This demonstrates the huge potential that still remains untapped in the domestic market.
China: Statistics reveal that Chinese denim exports are following a declining trend owing to increase in labor cost in XintangHub of Textile Manufacturers in China- thereby making their denim products expensive compared to other regional players. However, demand growth is expected to remain healthy due to sizeable millennial generation who reside in middle-class cities. Additionally, the same is evident from denim jeans sales growth of 5% registered during 2016 valued at $11.8b. Chinese per capita ownership of denim garments stand at 7 items slightly lower than U.S (9) and Mexico (12).