Global Market for Denim and Jeanswear Single_brochure

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Global market review of denim andjeanswear forecasts to 20182012 edition

Author: Writing Solutions

Published by just-style.com

November 2012

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Table of contentsChapter 1 IntroductionGlobal denim and jeanswear market

Challenges and opportunities

Consumer spending dip

Global cotton woesHistory of denim

Chapter 2 North AmericaUnited States

Canada

Brands

Levi Strauss

VF Corporation

Gap

American Eagle Outfitters

True Religion

Manufacturers

American Cotton Growers (ACG)

International Textile Group

Chapter 3 AsiaJapan

South Korea

China

India

Regional rivals

Manufacturers

Arvind Mills

Aarvee Denim & Exports

Black PeonyHaining Bafang Weaving


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Chapter 2 North AmericaTable 2: Total jeanswear sales in United States and Canada, 2007-2018 (US$bn)

2007 2008 2009 2010 2011 2012F 2013F 2014F 2015F 2016F 2017F 2018F

North

America

Canada

US Source: just-style, industry interviewsMay not sum to total due to roundingThe 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


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Chapter 3 AsiaTable 4: Total jeanswear sales in Asia by major market, 2007-2018 (US$bn)

2007 2008 2009 2010 2011 2012F 2013F 2014F 2015F 2016F 2017F 2018F

Asia

China

Japan &

South

Korea

India

Source: just-style, industry interviewsMay not sum to total due to rounding

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.

JapanFrom 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 EuropeTable 3: Total jeanswear sales in Europe by major market, 2007-2018 (US$bn)

2007 2008 2009 2010 2011 2012F 2013F 2014F 2015F 2016F 2017F 2018F

Europe

Germany

UK

France Source: just-style, industry interviewsNote:- German, France and the UK are leading markets in Europe but do not represent the whole market.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 6 ConclusionsTable 7: Total jeanswear sales by regions and major countries, 2007-2018 (US$bn)

2007 2008 2009 2010 2011 2012F 2013F 2014F 2015F 2016F 2017F 2018F

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 KoreaMay not sum to total due to rounding

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 cost-

effective 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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