1. Product description

Denim fabric is a strong, woven twill fabric usually made from cotton, with a characteristic diagonal ridge. In traditional denim (blue denim), the warp threads are dyed with indigo dye before weaving, and the weft threads are left bleached without the indigo dye. The ‘warp-faced twill’ shows more of the coloured yarns on the face of the fabric.

Originally, denim garments were sold as workwear due to their durability and practicality. Today, denim is one of the most fashionable and widely used fabrics globally. Stretch denim (which is made from cotton blended with Lycra/elastane) has become popular and denim fabric is now available in many colours. The traditional blue denim is made using indigo dye; other shades are created using sulphur dying processes.

The majority of value is added in the final stage of manufacturing, when various finishes, washes and distressing techniques are applied to enhance the product. These include sandblasting, stonewashing, enzyme washing, bleaching, acid washing, PP spray, grinding/scraping and whiskering.

The only denim products that are distinguished from other types of cotton garments by HS Code categorisation are denim trousers. When analysing denim imports and exports, therefore, this study refers to the following 2  sub-segments:

• HS Code 62034231 – Men’s or boys’ trousers and breeches made from cotton denim (excl. knitted or crocheted, industrial and occupational clothing, bib and brace overalls and underpants)
• HS Code 62046231 – Women’s or girls’ trousers and breeches of cotton denim (excl. knitted or crocheted, industrial and occupational clothing, bib and brace overalls and panties)

2. What makes Europe an interesting market for denim?

Europe is a significant importer of denim. In 2022, the value of denim imports into Europe, including intra-EU imports, amounted to €10.02 billion, up from €8.33 billion in 2017. This corresponds to over 830 million units of clothing in 2022. Over the last 5 years, the value of Europe’s denim imports has increased at an average rate of 3.76% annually.

The EU denim import market experienced a 13% dip in 2020 (compared to a decrease of 10.7% in the apparel market as a whole), largely attributable to a ‘comfort-first’ mindset amongst consumers during the COVID-19 lockdowns. The market rebounded in 2021 to exceed its pre-pandemic size. Between 2021 and 2022, imports soared by over 16%. This growth can be attributed to continuous product innovation and increasing demand for different types of denims, including sustainably manufactured denim.

In line with increased demand for value-added products, the average import price for denim trousers imported into the EU in 2022 was €12.05, up from €10.36 in 2017, with the biggest year-on-year increase in 2022. According to Statista, the global denim jeans market is forecast to be worth around $95 billion by 2030, up from $64.5 billion in 2022.

Men’s and boys’ denim accounted for a larger share (57%) of the segment ‘at €5.75 billion in 2022. Women’s and girls’ denim represents the remaining 43% with a total value of €4.27 in 2022. With an average annual increase of 4.2% since 2017, the women’s and girls’ sub-segment has been growing faster than the men’s and boys’ sub-segment, which achieved an average growth rate of 3.4% in the same period.

The EU is also a large exporter (and re-exporter) of denim apparel. In 2022, it exported denim apparel worth €6.6 billion (up from €5.5 billion in 2017). The EU denim apparel exports increased at an average annual rate of 3.9% between 2017 and 2022. The biggest exporters in 2022 were Germany (€1.4 billion), Spain (€1.2 billion), the Netherlands (€983 million), Italy (€815 million), Poland (€703 million) and Denmark (€330 million).

Currently, the value of EU denim product imports is split fairly evenly between denim products traded within the EU (intra-EU imports) and denim products imported from outside the EU, at 51.5% and 48.5% respectively.

In 2022, developing-country suppliers accounted for 47.3% of all denim imports into the European Union in terms of value (down from 49.6% in 2017), while suppliers from the rest of the world accounted for just 1.2% of the total import value (down from 3.7% in 2017). The value of EU denim product imports originating from developing countries amounted to €4.7 billion in 2022, and has increased at an average annual rate of 2.77% since 2017 (1percentage point lower than the denim segment overall).

Over the same period, denim product imports from within the EU increased at a rate of 5.79%. This indicates increasing intra-EU trade. However, these statistics mask the fact that some intra-EU trade involves products that are originally manufactured in developing countries, exported into the EU, and subsequently re-exported. These products are not in direct competition with imports from developing countries.

Imports of ’denim products into the EU have been dominated by Bangladesh, Turkey and Pakistan in recent years. Together, these 3 countries accounted for 71% of all denim imports into the EU in 2022. While Bangladesh saw an annual export growth rate of 5.9% between 2017 and 2022 – China’s denim exports decreased by an average of 8.6% per year. This reflects China’s shift in focus away from apparel and towards higher-value manufacturing.

These developments indicate that the high volume/lower price market is strong for denim products. On the other hand, Turkey – 1 of the world’s largest producers of high-quality cotton and a world leader in organic cotton production – is a major denim production hub, despite the country’s higher production costs. This indicates the parallel demand for flexible production and sustainable, high-quality and innovative denim products.

Of the top-10 countries exporting denim to the EU, Egypt and Sri Lanka experienced annual growth rates above 10% between 2017 and 2022. As Bangladesh continues to invest in sustainable innovation, its position as the strongest global player in denim is unlikely to be challenged in the years to come.

Europe’s intra-EU denim product trade is dominated by Germany, Spain, the Netherlands and Poland. These 4 countries make up almost 70% of all intra-EU denim exports. It is interesting to note that Italy (Europe’s main producer of denim products) experienced negative growth between 2017 and 2022. Poland’s staggering 20.5% annual intra-EU export growth rate between 2017 and 2022 is evidence of its continued growth as a manufacturing country and Europe’s fastest-growing economy.

3. Which European countries offer most opportunities for Denim?

Germany is the biggest importer of denim, followed by Spain and the Netherlands. Poland is the only Eastern European country in the top 10, and its imports are growing faster than any other top-10 country. Together, the top-6 countries account for 89% of denim imports into the European Union and have grown at an average of 4.4% per year over the last 5 years, primarily driven by growth in Poland.

The Netherlands is a distribution hub and the denim capital of Europe

The Netherlands is the third-largest denim import market in Europe. In 2022, its denim imports amounted to €1.2 billion (up from €981 million in 2017). This corresponded to approximately 95 million units of clothing. Over the last 5 years, the value of denim imports into the Netherlands has increased by an average of 3.29% per year. This was just below the overall segment trend, while import volume decreased by 1.93%.

Men’s and boys’ denim is the stronger sub segment with a 2022 share of 60%, but it is growing less quickly. Average unit prices for both segments are above the European average with the men’s and boy’s segment experiencing a 5-year price increase of over €3.

The country benefits from a favourable business climate which facilitates imports and exports. This, combined with its proximity to the sea and maritime trade routes, means it is an ideal avenue for importing products into Europe. For this reason, many foreign denim brands have established their headquarters in the Dutch capital, including Pepe jeans, Levi’s Vintage and Hilfiger Denim.

The Netherlands has positioned itself as a key player in the transition to sustainable denim. Two of the biggest denim trade fairs are hosted in Amsterdam and the city is also home to the only ‘Jeans School’ in the world run by the House of Denim – a not-for-profit dedicated to making denim more sustainable. The school offers a 3-year course that focuses on denim development. In 2018, mainstream fashion retailer C&A introduced the world’s first Gold level Cradle-to-Cradle CertifiedTM jeans.

Popular denim brands from the Netherlands include G-Star Raw, Denham, Scotch & Soda, MUD Jeans, Tommy Hilfiger Denim and others.

Read the full... https://www.cbi.eu/market-information/apparel/denim-trousers/market-potential