The denim segment has always reigned as one of the leading segments in the fashion industry. The blue denim has been a wardrobe staple and a fashion essential for decades. Globally, the denim industry is expected to grow at a CAGR of over 6.5% during 2015 to 2020, with the market value expected to increase from $113 billion to $153 billion. In terms of pricing behaviour, the growth is expected to be the highest in the Premium and Super Premium categories of the denim products with smaller base numbers. The Latin Americas and Asia are expected to lead the growth in the segment.
India’s Denim Market
Despite a slowdown in apparel exports and domestic market growth, the denim market in India is clocking a consistent CAGR of 15% – 18% per year. Denim is also witnessing the fastest growth rate as an apparel fabric. The current installed capacity of almost 1,200 million meters is expected to increase to 2,000 million meters in next three to four years owing to the huge demand for the fabric.
While India’s share in the overall denim manufacturing capacities is around 10%, at present its share in the global jeans trade works out to 2.5%. India, with its resource advantage of all types of cottons and MMF fibres, and thanks to the introduction of state-of-the-art technology, manufacturing plants, and the entry of top global brands, surely has the potential to grab a higher share in the global market. According to industry estimates, a CAGR of 10% over the period of next 10 years for denim share in international trade is possible
n terms of retail sales, due to the popularity of denim in India, denim wear market is expected to grow at a CAGR of 15% in the near future. The industry’s future looks promising due to the following factors:
Rising disposable incomes
Rapid growth of the retail sector
The westernisation trend prevalent in the nation
Booming internet retailing sector
Young population demographics (15-29 year olds) with higher spending power
A wide range of consumer segments that consider denim as an apparel of choice owing to its comfort and style
Favoured preference for denim amongst youth owing to its versatile association
Increasing usage of denim products by women and youth in smaller cities and rural India
India’s Denim Story
India is a big market with a lot of untapped potential for the denim industry despite the fact that the industry has been growing robustly over the past few years. For a majority of the Indian youth, denim is not just a casual wear, but more of a fashion statement. Almost 85% of the market is dominated by men, with 10% contribution from the female segment and the kids segment contributing about 5% of the market.
Male segment: The growth in the male segment of denim wear is quite significant despite enjoying the lion’s share in the total pie. Until a few years ago, denim was popular with men in the urban centres only. However, it has gradually become popular in the semi-urban and rural markets too. Growing awareness and an increasing sense of global fashion have led to the development, coupling with the continuous change in style statements. Denim is considered the most versatile of fabrics for men with multiple applications like casual wear, workwear, and everyday use.
Female Segment: Among all types of denim wear, jeans or trousers are the most popular articles among Indian women. Women in different age brackets of all shapes and sizes like to wear denim as it is comfortable, functional, and durable. Also, women who are not at ease with western wear have taken up to wearing jeans by pairing them with Indian ethnic wear like kurtis. This mix and match style is gradually picking up, particularly among women in small towns who come from a traditional background and is likely to fuel the growth of the segment.
The fashion element which is so inherently present in women’s clothes has been taken care of through the introduction of ‘flexible / stretch’ fabric for different applications. The segment is expected to grow the fastest.
Kids segment: It is the smallest segment in the domestic market, but is expected to grow faster than other segments primarily due to the availability of the products led by the innovations in the industry for hygienic and flexible fabrics.
However, the retail segment in the section has its own challenges since the larger market is dominated by unorganized sector due to pricing point disadvantages applicable to organised retailers. With parents and children becoming more conscious about kids fashion and trends, the kids wear segment in India is garnering a lot of attention of late. The advent of e-commerce in the apparel segment has resulted in the easier availability of products, though the pricing of products remains a challenge. The increase in purchasing power of the parents is expected to take care of this issue and propel the growth of the segment further.
Demand Drivers and Popularity
The denim industry took root in India in 1986 and has since grown immensely.
India dominates the denim production in the Asia Pacific region and the total capacity for denim fabric manufacturing in India is 1200 MMPA. About 65% to 70% of the total production is consumed locally.
India has about 32 denim fabric mills with manufacturing capacity ranging from 10 MMPA to 110 MMPA. Though the market is currently dominated by men’s wear, other segments are also catching up fast. A huge chunk of denim consumption in the Tier II and III cities is accounted for by unbranded denims. However, as market penetration increases and disposable incomes rise in the semi-urban and rural areas, the general demand is expected to shift towards premium quality products and thereby, branded denims may occupy a higher share in the market in the years to come.
Quite a few yarn manufacturers have come up with innovative solutions to bring in a fresh change to this otherwise static industry. This has led to the introduction of new varieties of denims such as blended cotton yarn and biodegradable yarn made from wood pulp to attribute unique properties like softness, flexibility, and comfort in denim wear. Due to the changing dynamics of the products, the denim industry continues to remain an evergreen fashion favourite among the youth.