Focus on Denim

An up-to-the-minute look at key trends in the jeans industry.

Andrew Olah likes to joke that the denim industry is on rolling racks, starting in England, rolling to New England then the South, then Mexico and now Asia. Olah has been along for the ride having worked in the denim business his entire career. His experience marketing jeans has taken him around the world and alongside some of the greatest names in denim.

“Over the last 35 years, I have seen the global jeans industry evolve — and I am primarily talking about denim manufacturing, jeans production and washing,” says Olah president of Olah, Inc., and founder of the popular Kingpins denim trade event held in NYC, LA and Hong Kong.

“But it was neither global nor big when I started my career. As a kid it was very difficult for me to even buy a pair of jeans. There was one store in Toronto that sold them — and this was an equestrian store.”

The global jeans industry is now a $13 billion business and Olah has no problem finding a store that sells jeans. Olah, along with Brady Smith of Greensource, explained how the market has grown and changed over the decades at the recent
Textile Insight: Insight on What’s Next Roundtable Discussion Series. The seminar, co-sponsored by DuPont Teflon Fabric Protector and Oeko-Tex, drew a capacity crowd of designers, textile execs and retailers at the DuPont Corian Showroom in New York City earlier this month.

The speakers complimented each other in that Olah took a historical perspective on the marketplace and captivated the audience with a review of the evolution of the jeans business and significant innovations in product, manufacturing and design. Hill, representing a relatively newcomer to the jeans business, as VP-business development for Greensource, focused on the emerging organic business and the company’s relationship with WalMart. He is based in the company’s NYC showroom; Greensource is headquartered in Seattle.

Hill certainly got the attention of the audience when he mentioned that Greensource makes an organic denim Faded Glory jean for WalMart that sells for $14.

Indeed that’s what makes the denim industry so interesting these days is that on one hand there is organic selling ridiculously inexpensively at a big box store, while on the other, premium denim jeans are selling at boutiques for $300.

“Things are a lot different today than just five or 10 years ago,” said Hill, has 18 years in the apparel industry and nine years at Greensource. “Now you’ll find jeans from $10 to $240.”

“If you look at jeans consumption you will find that the average American has seven or eight jeans in their closets. You’ll notice that 500 million jeans are sold each year in the USA,” said Olah. “The figure in Europe is probably around 350 million and in Japan about 50 million.”

And there’s no lack of diversity. “From no wash to a 32 step wash. Fabrics range from simple to selvege,” noted Olah.

No major jean company outside of premium can survive without making jeans off shore said Olah, who estimates the premium business at about 12 percent of all jeans sold domestically.

“In 2011, Pakistan, India and Bangladesh will supply well over 1 billion yards of denim. China makes more. In Italy there are only a few textile mills left and outside of Los Angeles there are few jean factories left. Levis, once a global manufacturer of jeans redfined themselves as marketers and closed their factories. Turkey is the major supplier of jeans to Europe. There are only two or three denim producers left in Italy, none in Germany, France or Spain,” he explained.

“Garments made in Bangladesh have duty free access to Europe and Canada. Cost of production Bangladesh is probably the lowest in the world. While their skill factor in denim fabric and wet processing is low, there are plenty of technical experts without jobs in Europe and the USA who can help factories upgrade know- how. Japan is no longer a major supplier of denim even to their own market.”

Olah sees issues rising with India. “India being a democracy and developing nation will always have to face the labor reality any developing nation has. Higher wages, minimum wages etc in the long term will impact how much and how competitive India can be.”

He is also wary of Pakistan. “With 70 percent unemployment and having an enormous amount of domestic cotton looks absolutely capable theoretically to dominate the industry in all facets. But they face what seems like permanent political upheaval. Legler had a factory in Lahore in the 90’s and I used to regularly go Pakistan. This was well before 9/11 and even in those days Pakistan was not the easiest or safest environment in which to work.”

Another sourcing consideration is what’s happening internally. China’s and India’s domestic markets are growing quickly. “As their internal demand grows, it is possible if no new investments are made in denim fabric capacity that they could consume much of what they produce now that is aimed for export.”

Future Focus

The future for organic jeans is Greensource’s ability to engage the mainstream. Hill describes the average consumer as “Ronald,” a middle-age, white male who shops at WalMart for his jeans. “We want to win him over. Then we can move the needle on sustainability. “Ronald” sets the boundaries for us,” said Hill.

Greensource’s denim line is certified to the Global Organic Textile Standard, (GOTS). Hill explained the increasing importance of certification in the organic world and how GOTS is a label to be trusted.

While the role of sustainability is key, Hill admitted that when it comes to denim other factors definitely come into play. “Fit, brand, sex-appeal, rinse, style all are important,” stated Hill. “It is still all about the jean first, then comes sustainability.”
Greensource manufactures in Pakistan, a major
denim supplier. Other areas for denim include China, India and Turkey with Bangladesh getting stronger.
He sees Vietnam as a powerful potential player
in the future. “A hardworking, rebuilding ntrepreneurial nation like Vietnam has a great potential. Already in yarn it is nibbling at China and India’s competitive heels,” Olah commented.

Both Hill and Olah agreed that on a global basis textile quality is improving. “The future will be very interesting. We believe strongly that China has the capacity and inclination to make high quality products. Since this is the market segment we look at we are continually investing our resources there,” Olah concluded.


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A Denim History

Excerpts from Andrew Olah’s presentation

By the late 1960’s, jeans had muscled their way into the social mainstream in the USA and were being demanded in Europe and Japan. Levi’s, Lee and Wrangler, the major US jean suppliers “exported” their jeans.

I got my feet wet in denim when I was hired by the Legler group in 1977 to handle all their sales in Canada. I worked for Legler for 26 years. I consider Legler as a significant part of jeans history.

Investing heavily, Legler’s CEO Fredy Legler built the first denim mill in Italy in 1972. He sold his print factory and targeted the organization to focus on what the nascent “jeans” market by producing cotton twills, cords and denim.

In those days Legler sold 35 million yards of corduroy a year over three basic simple products. When I left Legler in 2003 we sold eight million yards of corduroy over 65 products.

The industry had turned “complicated.”
In 1980 I was invited to work for Kurabo in Japan who were the second denim producer in Japan. Kurabo started spinning cotton in 1888. From the moment they began to make denim in 1972, their business was fantastic. They could not keep up with demand.

Edwin Jeans, claims to have invented stonewashing in 1975 while Marithe and Francois Girbaud patented stonewashing in 1978 in Europe. These are significant parts of jean history since jeans were an American product but Europeans and Japanese were creating important elements to the product and affecting demand.

And then there was Hong Kong. While European, Japanese and American denim mills were being built in the 70’s the Chinese started to make their own as well. Obviously the major difference was that the Chinese did not build their denim mills for their own market. These mills were built exclusively for export. It’s also important to mention that as the Legler family changed their business from supplying textiles to the classical clothing industry, clothes my parents would wear, garment factories changed from making trousers to jeans.

My initial youthful exuberance towards the jeans industry exponentially grew by my experience with Brittania. They played a significant role in this industry being what it is today.

As a 21 year old textile sales person in Canada, I’d read DNR or WWD and see articles or pictures of long haired Rock & Roller guys, in their late 20’s talking about driving their jeans company from zero to $400 million, in five years. I was amazed that they were producing in an exotic place like Hong Kong which seemed to be in another planet.

But Brittania’s real claim to fame is that they created the textile and jeans industry in Asia (outside of Japan although they produced jeans in Japan and bought lots of Japanese fabrics).
Brittania essentially created the need for the US government to establish quotas on Hong Kong jeans. Brittania then moved to establish a jeans industry in Taiwan, Korea, Indonesia and of course eventually China. They barged their production needs throughout all of Asia. And as all successful companies, they were joined by their copy cat competitors. Asia started to become the major suppliers for jeans. Although in those days the products were not as sophisticated as what the Americans, Europeans and Japanese were providing.

Acid wash, accidently invented in Italy by Rifle jeans injected an entirely new life to jeans in 1986. I remember hearing about this in August of 1986 while I was sitting in Calvin Klein’s office. The product was shown at a Jeans show in German and by 1987 everyone throughout the world was selling/offering this finish. Once again a new element to our industry came from Europe.
Diesel jeans was started by Adriano Goldschmied and Renzo Rosso in 1978. Originally this brand sold “stock” goods but Renzo flipped the brand into a fashion brand by the early 90’s. As Diesel penetrated the U.S. market, our company was approached by Jerome Dahan and Scott Morrison who asked us to help them find fabrics that Diesel used or other European brands like Replay.

This was the start of the Premium Jeans business and like acid wash created an entirely new market for jeans. As an example in Europe, in the early 90’s Diesel, Replay, Ms Sixty were insignificant jean suppliers. By 2000 their cumulative sales were over $1.4 billion.

The same happened in the United States. Jerome started Seven and later Citizens and Scott Morrision started Paper Denim. The baby Premium jean business went from zero to $1.5 billion in six years.



A Denim History

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