Denim Wars

An Expert's View about Custom Manufacturing in Pakistan

Posted on: 21 Feb 2013

Imports of denim products in USA

DENIM WARS: THE BATTLE FOR US DENIM APPAREL IMPORT MARKET Research Department Pakistan Readymade Garments Manufacturers & Exporters Association (PRGMEA) Table of Contents Summary ............................................................................................ 3 Denim Apparel .................................................................................... 4 Men’s Jeans ......................................................................................... 6 Ladies Jeans......................................................................................... 8 Denim Skirts ..................................................................................... 10 Denim Jackets & Coats ..................................................................... 12 Denim Fabric...................................................................................... 15 2 | P a g e DENIM WARS: THE BATTLE FOR US DENIM APPAREL IMPORT MARKET Summary: • The US import market for denim apparel is extremely tough and competitive. This market is characterized by extremely competitive pricing structures and is dominated by China, Mexico and Bangladesh. • During 2011, China has started losing 3% average share of this market but its position in women’s categories is improving. Latin American countries are benefiting from this and are increasing their share. Most of the Asian suppliers including Pakistan do not seem to be taking benefit from this scenario. • Pakistan currently holds 3% market share of total US denim apparel imports in terms of value and quantity. Pakistan’s denim apparel exports to US seem to be stagnant over the years in study. • Although Pakistan’s share of ladies trousers category improved during 2011 but overall, Pakistan’s average prices are rising faster than global prices. This is a serious cause for concern as the US market is extremely sensitive to price hikes. • Pakistan does not export denim fabric to USA. • Suppliers of denim apparel from Pakistan are now faced with a dual challenge. On one hand they need to compete in fabrication and designing, while on the other, they need to keep their prices in check. • Pakistani suppliers need to come up with a proactive and coherent strategy if they want to achieve a considerable gain in this market. • Alternatively, Pakistani suppliers should also look to export denim fabric to Mexico, Nicaragua and Indonesia in order to fill their idle capacities. 3 | P a g e Denim Apparel: The US import market for denim apparel is worth approximately $4.25 billion, in 2011 the market is expected to increase by only 1% in value while the quantity is expected to drop by 14% to 44 million dozen. Together, China and Mexico holds 55% of this market followed by Bangladesh with 10% share, while suppliers from 26 countries compete for balance 35% of the market. Pakistan currently holds 3% share with exports around $140 million. In 2011, Pakistan’s exports are set to increase by 7% in value, while quantities may decrease by 15%. Interestingly, market share of China decreased by 3%, in 2011 while Mexico, Nicaragua, Lesotho and Indonesia improved their respective shares. Average Prices: During 2011, prices increased by approximately 17% globally. While the highest average increase of 26% was recorded in exports from Pakistan. Average price from Bangladesh increased by 25% and from Egypt by 22%. Price increase of 17% and 16% were recorded in average prices from China and Mexico respectively. China, 29% Mexico, 26% Others, 28% Bangladesh, 10% Egypt, 4% Pakistan, 3% The Denim Apparel Pie 2011 4 | P a g e Blue Denim Apparel Valuei?? nU?? S$a?? ndQ?? uant ityi? nD? ozen? Country Nov -11 2010 2009 Value in US$ 100% 3,948,1 20,000 100% 4,250,480,000 100% 4,059,1 90,000 World Qty in Doz 100% 40,680,409 100% 51,451,479 100% 48,814,984 US$ / Dozen 97.05 82.61 83.15 Value in US$ 29% 1,143,840,000 32% 1,348,370,000 30% 1,201,260,000 China Qty in Doz 29% 11,713,335 31% 16,054,723 29% 14,010,672 US$ / Dozen 97.65 83.99 85.74 Value in US$ 26% 1,025,300,000 24% 1,017,890,000 25% 1,017,260,000 Mexico Qty in Doz 24% 9,850,381 22% 11,362,881 22% 10,754,120 US$ / Dozen 104.09 89.58 94.59 Value in US$ 10% 384,375,362 10% 404,676,054 9% 359,206,754 B’desh Qty in Doz 13% 5,209,545 13% 6,860,094 12% 6,037,713 US$ / Dozen 73.78 58.99 59.49 Value in US$ 5% 177,924,643 5% 191,351,173 5% 195,949,864 Egypt Qty in Doz 4% 1,761,606 4% 2,312,507 5% 2,486,980 US$ / Dozen 101.00 82.75 78.79 Value in US$ 3% 130,594,602 3% 132,601,543 3% 124,368,852 Pakistan Qty in Doz 3% 1,405,117 4% 1,804,327 4% 1,833,705 US$ / Dozen 92.94 73.49 67.82 Country 2011 (YoY) 2010 (YoY) W Increase / decrease in Value 1% 5% orld Increase / decrease in Quantity -14% 5% Increase / decrease in Value 7% 7% Pakistan Increase / decrease in Quantity -15% -2% Denim Apparel: Decline in Quantities 25% 15% 5% -5% B'desh China Nicaragua India Sri Lanka Pakistan -15% -25% 5 | P a g e Men’s Jeans: Import market for men’s jeans accounts for 53% or $2.3 billion of total denim apparels into the US. Mexico leads in this segment with 39% share followed by China (13%) and Bangladesh (12%). Pakistan’s share is around 4% in value and quantity. During 2011, imports in this segment increased by 7% in value and the quantities declined by 10%, in contrast Pakistan’s exports decreased 2% in value and 21% in quantity. Countries which improved their share in this segment include Nicaragua, Lesotho, Mexico, Indonesia, Italy and Romania. While the average global price increased by 18%, average price from Pakistan increased by 25%. Bangladesh 27%. Average price from Mexico increased by 16% and from Bangladesh by 27%. Despite this price increase, Bangladesh’s average price is approximately 15% lower than prices from Pakistan. 6 | P a g e Category 347-D: Blue Denim Trousers, Men's/Boys Valuei?? nU?? S$a?? ndQ?? uan tityi? nD? ozen(? 14.90? Sqmp?? erd?? ozen) ? ntry Cou N ov -11 2010 2009 Value 000 in US$ 100% 2,101,456,000 100% 2,152,394, 100% 2,006,020,000 World Qty in Doz 100% 21,447,686 100% 26,022,970 100% 24,198,795 US$ / Dozen 97.98 82.71 82.90 Value in US$ 39% 823,690,000 37% 786,342,000 38% 752,333,000 Mexico Qty in Doz 39% 8,339,097 36% 9,266,848 35% 8,469,202 US$ / Dozen 98.77 84.86 88.83 Value in US$ 13% 278,157,000 17% 374,103,000 17% 339,007,000 China Qty in Doz 12% 2,534,181 16% 4,134,457 15% 3,692,027 US$ / Dozen 109.76 90.48 91.82 Value in US$ 12% 260,190,000 12% 263,966,000 11% 223,724,000 B’desh Qty in Doz 16% 3,413,992 17% 4,406,366 16% 3,796,037 US$ / Dozen 76.21 59.91 58.94 Value in US$ 6% 119,459,000 4% 76,017,000 3% 50,301,000 Nicaragua Qty in Doz 6% 1,381,422 4% 1,036,829 3% 690,998 US$ / Dozen 86.48 73.32 72.79 Value in US$ 4% 75,558,000 4% 84,207,000 4% 79,685,000 Pakistan Qty in Doz 4% 860,967 5% 1,194,820 5% 1,224,955 US$ / Dozen 87.76 70.48 65.05 Coun try 20 11 (YoY) 20 10 (YoY) W Increase / decrease in Value 7% 7% orld Increase / decrease in Quantity -10% 8% Increase / decrease in Value -2% 6% Pakistan Increase / decrease in Quantity -21% -2% Men's/Boys Trousers: Growth in Quantities 150% 100% 50% 0% Lesotho Indonesia Nicaragua Italy Hong Kong Pakistan -50% 7 | P a g e Ladies Jeans: This is also one of major categories of US denim apparel imports with 45% share of the total market. China currently holds about 47% share of this segment. Despite Chinese imports losing ground in 2011 in other segments, the Chinese were able to enhance their share in this segment. Surprisingly, Pakistan managed to gain an additional 1% market share in this segment during 2011. Other countries which also managed to do well are Guatemala, Turkey and Swaziland. During 2011, average price from Pakistan increased by 27% compared to 17% increase globally. Due to this price rise, goods from Pakistan became 5% dearer in comparison to the average global price. 8 | P a g e Category 348-D: Blue Denim Trousers, Womens/Girls Valuei?? nU?? S$a?? nd?? Quantityi?? nD?? ozen(?? 14.90S?? qmp?? erd?? ozen) ? Country N ov -11 2010 2009 Value 00 in US$ 100% 1,785,575,000 100% 2,023,896,000 1 % 1,961,758,000 World Qty in Doz 100% 18,433,699 100% 24,385,710 100% 23,242,935 US$ / Dozen 96.86 83.00 84.40 Value in US$ 47% 836,679,000 46% 938,663,000 42% 817,075,000 China Qty in Doz 48% 8,808,916 47% 11,451,006 42% 9,649,614 US$ / Dozen 94.98 81.97 84.67 Value in US$ 11% 199,049,000 11% 228,821,000 13% 261,291,000 Mexico Qty in Doz 8% 1,496,764 9% 2,072,918 10% 2,258,474 US$ / Dozen 132.99 110.39 115.69 Value in US$ 6% 113,801,000 6% 128,302,000 6% 118,782,000 B’desh Qty in Doz 9% 1,627,210 9% 2,220,628 8% 1,928,039 US$ / Dozen 69.94 57.78 61.61 Value in US$ 5% 94,900,000 5% 102,044,000 5% 91,878,000 Vietnam Qty in Doz 5% 1,007,781 5% 1,271,675 6% 1,360,158 US$ / Dozen 94.17 80.24 67.55 Value in US$ 3% 54,355,000 2% 47,077,000 2% 43,050,000 Pakistan Qty in Doz 3% 534,412 2% 588,379 2% 576,802 US$ / Dozen 101.71 80.01 74.64 Coun try 20 11 (YoY) 20 10 (YoY) W Increase / decrease in Value -4% 3% orld Increase / decrease in Quantity -18% 5% Increase / decrease in Value 26% 9% Pakistan Increase / decrease in Quantity -1% 2% Ladies Trousers: Growth & Decline 80% 60% 40% 20% 0% Guatemala Turkey Swaziland B'desh China Pakistan -20% -40% 9 | P a g e Denim Skirts: Denim skirts account for approximately 1% of total denim apparel imports of USA. In this category also, China managed to retain its market share but overall, global imports declined by 15% in value and 16% in terms of quantity from the preceding year. Pakistan’s performance in this segment remained dismal during 2011. Pakistan’s denim exports to US declined 36% in value and 48% in quantity. Pakistan also lost 1% of market share both in value and quantity. While average global prices of denim skirts only increased by 3%, average price from Pakistan recorded 24% increase. Due to this price rise, Pakistan became 14% dearer than the average global price. 10 | P a g e Category 342-D: Blue Denim Skirts Valuei?? nU?? S$a?? ndQ?? uantityi?? nD?? ozen?? (14.90? Sqmp?? erd?? ozen) ? Country Nov -11 2010 2009 Value S$ in U 100% 45,36 9,000 100% 57,898,000 100% 68 76, 9,000 World Qty in Doz 100% 684,064 100% 891,686 100% 1,218,615 US$ / Dozen 66.32 64.93 62.93 Value in US$ 48% 21,595,000 47% 27,425,000 50% 38,569,000 China Qty in Doz 47% 324,555 45% 398,842 50% 612,219 US$ / Dozen 66.54 68.76 63.00 Value in US$ 16% 7,397,000 16% 9,094,000 16% 12,242,000 B’desh Qty in Doz 18% 121,562 21% 185,132 21% 251,314 US$ / Dozen 60.85 49.12 48.71 Value in US$ 6% 2,775,000 11% 6,118,000 7% 5,518,000 C’bodia Qty in Doz 6% 43,085 11% 100,622 6% 78,553 US$ / Dozen 64.41 60.80 70.25 Value in US$ 6% 2,667,000 5% 2,985,000 4% 2,716,000 Vietnam Qty in Doz 6% 39,348 6% 50,909 4% 43,946 US$ / Dozen 67.78 58.63 61.80 Value in US$ 1% 532,000 2% 909,000 1% 856,000 Pakistan Qty in Doz 1% 7,019 2% 14,849 2% 18,799 US$ / Dozen 75.79 61.22 45.53 Coun try 20 11 (YoY) 20 10 (YoY) W Increase / decrease in Value -15% -25% orld Increase / decrease in Quantity -16% -27% Increase / decrease in Value -36% 6% Pakistan Increase / decrease in Quantity -48% -21% Skirts: Winners & Losers 300% 200% 100% 0% Indonesia Sri Lanka China Cambodia Egypt Pakistan -100% 11 | P a g e Denim Jackets & Coats: These two categories account for 0.38% of total denim apparel imports of USA. China remains the largest supplier with 47% and 58% share of jackets and suit-type denim coats respectively, by value. In the denim jackets category, Pakistan has steadily lost its market share since 2009 and currently holds 1% share in value. During 2011, Pakistan’s jackets exports to US declined by 15% over the preceding year while the overall imports increased by 8%. Mexico and Indonesia substantially increased their share in 2011. 12 | P a g e Category 334-D: Blue Denim Jackets Valuei??? nU??? S$a??? ndQ??? uantityi??? nD??? ozen(??? 34.50S??? qmp??? erd??? ozen)? ry Count N ov -11 2010 2009 Value in US$ 100% 14,65 4,000 100% 14,866,000 100% 12,296,000 World Qty in Doz 100% 100,513 100% 115,774 100% 117,223 US$ / Dozen 145.79 128.41 104.89 Value in US$ 47% 6,902,000 50% 7,486,000 49% 5,978,000 China Qty in Doz 40% 39,894 45% 52,043 39% 45,604 US$ / Dozen 173.01 143.84 131.08 Value in US$ 19% 2,822,000 20% 3,023,000 31% 3,826,000 B’desh Qty in Doz 31% 31,291 32% 36,853 44% 52,016 US$ / Dozen 90.19 82.03 73.55 Value in US$ 13% 1,875,000 5% 779,000 7% 868,000 Mexico Qty in Doz 9% 8,871 4% 5,196 5% 6,165 US$ / Dozen 211.36 149.92 140.79 Value in US$ 5% 774,000 2% 290,000 1% 122,000 Indonesia Qty in Doz 7% 7,119 2% 2,841 2% 1,939 US$ / Dozen 108.72 102.08 62.92 Value in US$ 1% 141,000 1% 180,000 3% 388,000 Pakistan Qty in Doz N/A N/A N/A US$ / Dozen N/A N/A N/A Coun try 20 11 (YoY) 20 10 (YoY) W Increase / decrease in Value 8% 21% orld Increase / decrease in Quantity -5% -1% Increase / decrease in Value -15% -54% Pakistan Increase / decrease in Quantity N/A N/A Jackets: Increase in value 300% 250% 200% 150% 100% 50% 0% -50% Mexico Indonesia Vietnam Guatemala Sri Lanka Pakistan 13 | P a g e Category 333-D: Blue Denim Suit-Type Coats Valuei??? nU??? S$a??? ndQ??? uantityi??? nD??? ozen(??? 30.30S??? qmp??? erd??? ozen)? Country Nov -11 2010 2009 Valu e in US$ 100% 388, 000 100% 467,000 100% 567,000 World Qty in Doz 100% 2,271 100% 3,352 100% 2,760 US$ / Dozen 170.85 139.32 205.43 Value in US$ 58% 226,000 59% 275,000 47% 268,000 China Qty in Doz 50% 1,137 70% 2,335 63% 1,730 US$ / Dozen 198.77 117.77 154.91 Value in US$ 10% 40,000 13% 62,000 21% 117,000 Italy Qty in Doz 2% 38 4% 140 4% 118 US$ / Dozen 1,052.63 442.86 991.53 Value in US$ 7% 27,000 1% 6,000 0% - Hungry Qty in Doz 1% 23 0% 4 0% - US$ / Dozen 1,173.91 1,500.00 - Value in US$ 6% 24,000 4% 20,000 0% - Mexico Qty in Doz 20% 457 5% 167 0% - US$ / Dozen 52.52 119.76 - Value in US$ 2% 9,000 0% - 4% 24,000 Pakistan Qty in Doz 13% 293 0% - 9% 243 US$ / Dozen 30.72 - 98.77 Coun try 20 11 (YoY) 20 10 (YoY) W Increase / decrease in Value -9% -18% orld Increase / decrease in Quantity -26% 21% Increase / decrease in Value - -100% Pakistan Increase / decrease in Quantity - -100% Suit-type Coats: Market Share China, 59% Others, 17% Pakistan, 2% Hungry, 11% Italy, 11% 14 | P a g e Denim Fabric: Pakistan does not exports denim fabric to the US. The US denim fabric import market comprises of both low and high-end imports. China and Mexico hold a share of 25% and 13% respectively and are suppliers to the low-end market, while Japan, Italy and Turkey after to high-end market segments. This segment has recorded 7% decrease in value and 25% decrease in quantity during 2011. 15 | P a g e Category 225: Blue Denim Fabric Valuei?? nU?? S$a?? ndQ?? uantityi?? nS?? quareM?? eters ? Country N ov -11 2010 2009 Va lue in US$ 100% 70,32 2,000 23 100% 82, 3,000 100% 73,745,000 World Qty in Sqm 100% 21,071,969 100% 30,771,121 100% 31,004,208 US$ / Sqm 3.34 2.67 2.38 Value in US$ 25% 17,366,000 22% 18,362,000 21% 15,554,000 China Qty in Sqm 36% 7,529,037 36% 11,147,240 35% 10,967,241 US$ / Sqm 2.31 1.65 1.42 Value in US$ 21% 14,683,000 17% 14,365,000 18% 13,109,000 Japan Qty in Sqm 10% 2,204,372 8% 2,325,791 8% 2,392,954 US$ / Sqm 6.66 6.18 5.48 Value in US$ 25% 17,906,000 25% 20,417,000 18% 13,550,000 Italy Qty in Sqm 12% 2,622,448 15% 4,496,834 15% 4,680,831 US$ / Sqm 6.83 4.54 2.89 Value in US$ 13% 8,889,000 8% 6,940,000 12% 9,001,000 Mexico Qty in Sqm 18% 3,749,946 12% 3,711,119 16% 4,807,360 US$ / Sqm 2.37 1.87 1.87 Value in US$ 10% 6,858,000 10% 8,507,000 9% 6,362,000 Turkey Qty in Sqm 6% 1,167,831 6% 1,918,073 5% 1,438,365 US$ / Sqm 5.87 4.44 4.42 Coun try 201 1 (YoY) 201 0 (YoY) W Increase / decrease in Value -7% 12% orld Increase / decrease in Quantity -25% -1% Denim Fabric: Market Share China, 25% Japan, 20% Others, 23% Italy, 19% Mexico, 13% 16 | P a g e
Posted: 21 February 2013