Cotton consumption not where industry wants it, but it is back on track.
Ron Smith 1
Cotton fabric has regained some of the market share that was lost during the Great Recession (2008) and in the steep rise in cotton prices that occurred in 2011 and 2012.
But it’s still not where cotton folks would like it to be.
“We’ve seen growth for the last seven years,” says Jon Devine, Cotton Incorporated, Cary, N.C., who spoke at the Economic Outlook session of the Beltwide Cotton Conferences at San Antonio. “But we are still down from 10 years ago.”
“Things are getting better, but we’re still down 3 percent to 4 percent from a decade ago.” Even with seven years of growth, cotton use is still down 4 million to 5 million bales from 10 years ago.
Mill use has improved for cotton fabrics, Devine says, but it is dependent on the apparel market and the fads and fancies associated with that market. “Apparel accounts for 75 percent of mill use. Other textiles account for 20 percent and non-wovens pick up the other 5 percent.”
BACK ON TRACK
An important component of the more positive outlook is the world economy. “The global economic outlook is back on track,” he says, and global mill use is on trend this year, following the last two years of below trend — lingering consequences of the cotton price spike.
But 10 years ago, cotton demand was spinning along, so to speak. China was joining the World Trade Organization (WTO) and investing in cotton manufacturing. The fiber industry, including cotton, was seeing above-average growth, and China was becoming the “world’s factory for apparel.”
When the recession hit, limiting disposable income, apparel took a nosedive. Adding to cotton’s woes, the 2011 and 2012 price spikes sent mills looking for other options, and man-made fibers gobbled a chunk of market share. China also increased its capacity for polyester.
Over the last two years, market watchers have expressed concern for China’s over-investment in polyester spinning, Devine says. Contrast that to 10 years ago, when some were concerned about China’s over-investment in cotton spinning — which was “wiped out by the economy and then the high price of cotton.”
Passage of time should result in a significant boost for cotton fiber use, Devine says. “But time is not the only factor. Time would indicate 1.5 million bales of additional cotton consumption each year.” It’s not time that’s limiting cotton consumption, he says, but rather the global economy.
REASONS FOR OPTIMISM
“Now we see reasons to be positive, including a forecast for global economic growth.” The world economy is trending higher, after moving lower after the recession. An improved economy means increased demand for products, including clothing and cotton fiber.
Other positive factors include the growing world population. “People are still having babies,” Devine says. “A growing population helps the global economy, and contributes to increased cotton consumption. More consumers boost demand for all kinds of products, including apparel and cotton.”
Lower cotton prices make the fiber competitive, he says. “Things are getting better for cotton, compared to polyester.”
The U.S. remains an important driver for apparel demand. “The U.S. has only 4 percent of the world population,” Devine says, “but it accounts for 20 percent of the world’s consumption of cotton.” The nation’s economy is generally doing well — consumer confidence is up, as is spending, and the unemployment level is low. “Virtually all economic data show positive signs,” Devine says.
Wage growth remains the primary weak point. If wage growth doesn’t pick up in the next year, he says, a spending slowdown could occur. Another concern: “The U.S. population is growing older because of the Baby Boomer bulge. Retired people don’t spend as much, and they spend less on clothing.”
LESS DISCRETIONARY INCOME
Changing buying habits may also affect cotton consumption. Apparel purchases face competition from other categories. Spiraling health care costs, coupled with weak wage growth, result in less discretionary income. A massive national student loan debt can also limit spendable income for students and parents.
The apparel market is changing, too, Devine says. Millennials may not be as interested in buying clothing as their predecessors were. “Electronics are more interesting. Also, many are looking at buying ‘experiences’ rather than products — for example, opting to spend money at restaurants or bars instead of on goods.” A wage growth rate of only 2.5 percent may also limit discretionary income.
Retail fabric sales patterns are changing. “Retail is not dead in the U.S.,” he says, “but it is evolving.” On the plus side, more stores are opening than closing. But the stores that are being shuttered at many locations — JCPenney, Sears, Macy’s, The Gap, Chico’s, The Limited, and similar brands — play a significant role in apparel sales. “A lot of apparel and a lot of cotton fiber sales take place in these stores.”
Stores that are opening — Dollar General, Family Dollar, Dollar Tree, T.J. Maxx, Marshalls, 7-Eleven, Aldi, and other low-cost brands — are considered value retailers. “The U.S. macro-economy may be doing well,” Devine says, “but we still have economic distribution issues. Those affected are shopping at these value retailers.”
Traditional stores are doing all right, according to recent surveys that show most people buy clothing at free-standing stores, including stand-alone locations such as Walmart. Malls still play an important role in apparel sales: The survey shows that two-thirds of mall shoppers go to malls for clothing and shoes.
ONLINE SPENDING
Online spending has shown significant growth over the last five years, Devine says. “Younger folks are spending online, and that trend is expected to continue.”
Virtually all apparel bought in the U.S. today is imported, and the fabric import level “is below peak —we have a lot of ground to make up.” Overall apparel consumption is down, and while cotton may be suffering, the overall apparel market is also suffering. When retailers aren’t making money, he says, they aren’t likely to spend a lot of money. “With 2016 imports down 25 percent from 2006 and 2007, we have a lot of ground to make up.”
Cotton spending growth averaged only 2 percent per year over the past decade, Devine says. Retail prices increased only 2 percent, so that increase is an unlikely contributor to slow sales growth. Fabric imports decreased over the last two years by 10 percent to 15 percent for cotton and man-made fibers.
A WEIGHT ISSUE
The slow fiber market involves more than unit sales. Average weight per unit also makes a difference, and retail cost is a factor. “Retailers cut costs by putting less fiber in a garment,” Devine says. The switch from baggy jeans to skinny jeans, for instance, means less fiber in the garment.
New apparel categories, such as athleisure, feature lighter, cooler garments — and use less fiber. The move from jeans to yoga pants also takes cotton out of the market. “All this adds up to a lot of fiber,” Devine says. “This is another issue we will pay attention to.”
Still, he sees continued growth in the apparel market. The trend for the European Union is positive overall — not necessarily as strong as for the traditional economies like France, Italy, and Spain, which are expected to be stagnant — in comparison to the developed Eastern Bloc countries with stronger markets economies and growth potential. Those economies will increase demand for fiber apparel, including cotton.
Globally, Devine anticipates that the next 15 years will offer decent growth for fiber in the U.S. and Europe. Japan’s growth will decline due to its aging population. “One-third of Japan’s population will be over 65 by 2030,” he says.
By 2030, however, global apparel spending is expected to be up 50 percent, with emerging markets expected to be more significant than U.S. or the EU. “India is expected to show the strongest percentage growth, but they have a long way to go to catch up to developed markets and China.” It could be 2040 to 2050 before India catches up.
India’s gross domestic product is accelerating, thanks to a young and growing population that will surpass China in 2024. This bodes well for cotton, Devine says. “In India, we are seeing a fashion shift to western styles, and that will help cotton — more jeans purchases. India also has a strong, positive history with cotton apparel.”
CHINA IS FLAT
China’s gross domestic product is flat at a 5 percent to 6 percent growth rate, he says, and population issues also have an impact, some stemming from the country’s one-child policy and an aging population. China could see “depopulation by 2030,” Devine says. “But incomes are rising rapidly, and should continue to rise.” China has also seen a shift in economic policy from investment to consumption, which points to increased spending.
Sustainability has become a crucial component within the global apparel market, as brands answer consumer demands for environmentally-friendly manufacturing. Environmental issues are of less concern in the U.S. and Europe than in developing countries, Devine says. “In Asia, pollution hits them in the face every day.” That could be a lever to move away from synthetic fibers.
The apparel industry — and cotton — is complicated and multi-faceted, affected by fashion fads, farm production issues, and global economic factors. “The short term and the long term outlooks are positive,” Devine says.
Cotton has seen some tough years, but the market is moving in the right direction, he says. Continued population growth, consumer demand for cotton, and a more competitive price versus polyester should keep it that way.
Πηγή: Southwest Farmpress
Η διεύθυνση του άρθρου: http://913977.ynfawz0v.asia/post/new-apparel-category-offers-lightweight-cooler-garments-which-means-less-fiber-BE