International denim industry wazir advisors

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International denim industry wazir advisors

  1. 1. International Denim Industry: Growth Opportunities Prashant Agarwal Co-Founder & Jt. Managing Director Wazir Advisors, India1 InDIGO 2012, New Delhi, 31st August 2012
  2. 2. Discussion Points A. Global denim industry B. Major emerging trend C. Addressing the growth challenge2
  3. 3. Discussion Points A. Global denim industry B. Major emerging trend C. Addressing the growth challenge3
  4. 4. Denim - One true ‘global’ apparel  The global consumption of denim garments is estimated at ~US$ 55 Bn  The demand has grown at a rate of 2% from 2004. • Global recessionary trend few years ago stalled the demand growth; but it has picked up again now  The demand is expected to grow at 3-5% over next 5 years and attain a size of US$ 65 to 70 bn. by 20164
  5. 5. The everlasting attractiveness of Denim Availability across price points- affordable to luxury Wal Mart True Religion Relaxed Fit Jeans Julie Super T $ 9.96 $ 341.00 Prints Flares Low-rise Slim fit Metallic Organic Embroidered Continuous innovation in design Stretch Colored Sand Blasted Slub and style Boot-cut Jeggings Cropped Wide consumed appeal- fuelled by celebrity endorsements5
  6. 6. Denim value chain is spread across the globe Fabric Garment Cotton production Retail Sales manufacturing manufacturing China Brazil China Japan China Italy USA India Australia Turkey India Turkey USA Japan USA Uzbekistan Italy Brazil Mexico Columbia Pakistan Mexico Europe Pakistan Turkey Tunisia Egypt USA Spain Morocco Bangladesh6
  7. 7. Key success factors for denim industry growth in a country Cotton Availability : China, India Market proximity : Turkey, Mexico Design focus : Italy, turkey Preferential market access : Mexico, Bdesh International investments : Egypt, China Large infrastructure : China, Brazil, India7
  8. 8. India’ s Advantage Sufficient availability of cotton Low cost of production Presence of large denim players Adoption of global technologies & manufacturing know-how8
  9. 9. Discussion Points A. Global denim industry B. Major emerging trend C. Addressing the growth challenge9
  10. 10. Global Demand-Supply Situation  Denim demand is growing at a rate of 3-5%  Whereas, supply is growing by 6-8%  Over a next couple of years an excess supply situation will be created  Similar situation has aroused earlier also10
  11. 11. What will that mean?  Low bargaining power of suppliers - Buyer’s market  Price undercutting and fierce competition  Diminished returns on investment - Growth of the “fittest”  Emergence of acquisition targets11
  12. 12. Discussion Points A. Global denim industry B. Major emerging trend C. Addressing the growth challenge12
  13. 13. 3 pronged approach for growth  Value Addition  Creating a niche – no competition on prices A. Focus on design and  Product diversification development  Design premium B. Synchronized growth of fabric and garment capacities13
  14. 14. 3 pronged approach for growth A. Focus on design and development B. Synchronized growth of fabric and garment capacities  Denim garment manufacturing has not yet received due attention from industry  Can create a full package supplier positioning14
  15. 15. 3 pronged approach for growth  Consolidation phase  Tie-ups for • Market access A. Focus on • Technology C. JVs and design and transfer M&As development • Design knowhow • Other synergies B. Synchronized growth of fabric and garment capacities15
  16. 16. 3 pronged approach for growth  Consolidation  Value Addition phase  Creating a niche  Tie-ups for – no competition • Market access on prices A. Focus on • Technology C. JVs and design and  Product transfer diversification M&As development • Design  Design premium knowhow • Other synergies B. Synchronized growth of fabric and garment capacities  Denim garment manufacturing has not yet received due attention from industry  Can create a full package supplier positioning16
  17. 17. A right time for Indian and Turkish denim player to explore business synergies… India’s strengths Turkey’s strengths • Cotton availability • Design knowhow • Manufacturing all type of denim • Proximity and preferential access fabrics to EU • Large infrastructure • Manufacturing value chain • Lower cost of production geared up for fast turnarounds • Domestic market • Premium positioning Business possibilities: • Supply chain integration • Arrangements to supply price sensitive products from India • Tie-ups for exploring Indian market17
  18. 18. Thanks for your time and attention! Prashant Agarwal Co Founder & Jt. Managing Director Wazir Advisors, India prashant.agarwal@wazir.in +91 98711 9500818

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