Denim Expert bagged the World Economic Forums New Champion Award for its "exemplary sustainable practices"

Denim Expert bagged the World Economic Forum's New Champion Award for its "exemplary sustainable practices"

While Covid-19 dealt a body blow to Bangladesh's apparel industry last year, one fast-expanding segment fared surprisingly well: denim. The country now holds the top supplier spot for blue denim apparel to both the US and EU.

The South Asian country has been the largest exporter of jeans clothing to the European Union (including the UK) for the past few years, according to Eurostat data. But in 2020 it was also the largest overseas supplier of denim to the US by value, elbowing out Mexico, according to US trade data.

Bangladesh exports of jeans to the EU generated US$1.6bn (EUR1.31bn) in 2019, the latest year for which Eurostat data is available. 

Exports to the US, meanwhile, grew by 3.47% year-on-year in 2019 to US$585.54m, according to US Office of Textiles and Apparel (OTEXA) figures. While this slipped 4% to US$561.3m in 2020, according to just-released trade data, Bangladesh leapfrogged rival Mexico, whose blue denim apparel shipments tumbled 41.5% from US$802.5m in 2019 to US$469.1m last year. 

Bangladesh's share of the US denim market now stands at 20% by value, compared to Mexico's 16.7%. In third place is Vietnam, whose shipments slipped 1% last year to US$368.2m; fourth is China, which dropped 52.3% to US$331.9m; and fifth is Pakistan, whose denim apparel exports to the US edged down 2.8% to US$251.8m.

In volume terms, Bangladesh holds the largest 23.8% market share after shipping 7.13m dozen pairs to the US last year.

Sustainable practices

Shasha Denims represents this growth story. Over the past year, the company, based in Baipayl, just outside Dhaka, has reinvested, expanded and in 2019 acquired EOS Textile Mills, then the Bangladesh unit of Italy's Berto EG Industria Tessile.

"In the last 12 months, we've sunk BDT200 crore [BDT2bn/US$23.5m] mostly into the value addition of machinery," Shams Mahmud, managing director, told just-style.  

Also, the company last year launched eco-friendly denim fabric sourced from recycled plastic waste for some Scandinavian brands, such as Legends. 

Even smaller players are thriving. For instance, Chittagong-based Denim Expert bagged the World Economic Forum's New Champion Award in November. 

The Geneva-based forum picked Denim Expert for its "exemplary sustainable practices and initiatives to promote inclusivity," including creating employment for transgender population and human trafficking survivors, says Mostafiz Uddin, the company's managing director.

"Up to 70% materials of our produced jeans are sustainable," adds Uddin, who has been promoting Bangladeshi denim globally since 2014 by staging trade shows.

Growth opportunities

Dr Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), stresses to just-style that even though Bangladesh is a leading exporter, it still has "tremendous opportunities" in a world denim market valued at over US$65bn prior to Covid-19. 

H&M, Inditex, Walmart, Uniqlo, Levi's, C&A, Tesco, Marks & Spencer, Old Navy, Calvin Klein, American Eagle and Gap are the key brands that already source Bangladeshi denim products, according to industry executives in Dhaka. They are attracted by a sustainable and compliant industry offering price competitiveness.

Dr Huq says sales could increase by diversifying product range away from bottoms into tops and lifestyle items such as faded jeans, sweatshirts, activewear and ladies' stretch denims. 

With more than 30 modern mills in the country supplying half of the current demand for fabric by export-oriented denim garment producers, backward integration is solid, offering reliability in supply chains, she adds.

Other Bangladesh manufacturers producing denim products include Pacific Jeans, Beximco, Pioneer, Ananta, Envoy, Square, Ha-Meem, the Standard Group and Argon.

Given this capacity Dr Huq recommends that the sub-sector expands its value addition by expanding design and development services. This would help the industry undertake "qualitative shifts" towards mid-priced and high-end segments, she suggests.

Capacity challenges

Such movement is especially important given some major manufacturers have struggled with denim sales during the Covid-19 pandemic. 

Last year, for example, the Ananta Group slashed its denim production capacity from 3 million pieces to 2.8 million. Although its export volumes had been increasing, slumping prices caused by the Covid-19 pandemic prompted Ananta, which has focused on more innovative products, to scale down its capacity.

"We won't do anything new before June," Sharif Zahir, managing director of Ananta Group, told just-style.

When the pandemic ends, Bangladeshi denim mills should, he suggests, focus on producing specialised denim fabric to compete directly with Chinese suppliers.

Denim shipments make up as much as 60% of Ananta's US$300m overseas sales – key buyers include Hennes & Mauritz (H&M), Levi's and Gap. 

Meanwhile, Anwar-ul Alam Chowdhury, managing director of Argon Denims, has frozen his mill's expansion because of the global Covid-19-related slump in demand for apparel. "What will we do with the capacity if growth is not there?" says Chowdhury. "We're now concentrating on capacity fill-up."