Price pressure is a constant in denim, and in 2015 it came from a new direction. As the euro and the Turkish lira fell against the dollar, mills in Turkey became cheaper for European buyers. In July 2015, WWD reported from Lahore on how Pakistani manufacturers were responding, and Azgard9 was one of the companies it spoke to.
Azgard9 CEO Ahmed Shaikh described a mill that supplies jeans to chains such as Zara and Mango, and the steps it was taking to stay competitive. "European brands now have an option to go to Turkish mills, which are better and faster," he said. His answer was not only to wait for cheaper inputs. Lower cotton and oil prices helped, but the bigger lever was product engineering: re-engineering fabric constructions and changing washing techniques. Together, these steps reduced the cost of Azgard9's denim jeans by 5 to 7 percent.
The wider picture in the WWD report was one of growth. The All Pakistan Textile Mills Association estimated that woven apparel exports grew 9.1 percent in value and 5.8 percent in volume in the nine months through April 2015. Part of that growth came from the European Union's GSP Plus programme, granted in January 2014, which gave woven and knitted apparel from Pakistan a 9.6 percent duty saving.
The same approach showed in Azgard9's own numbers that autumn. In the quarter to 30 September 2015, net sales rose by around Rs500 million on the year before, and the directors pointed to product development, better marketing and lower operating costs, especially in energy.
Key facts
- SourceWWD, July 2015, reporting from Lahore
- Cost saving5 to 7 percent on the cost of Azgard9's denim jeans
- Howre-engineered fabric constructions, new washing techniques, cheaper cotton and oil
- Customers namedZara and Mango
- Market contextwoven apparel exports up 9.1% in value (APTMA, nine months to April 2015); EU GSP Plus duty saving of 9.6%
- Q1 FY2016 net salesRs2.77 billion, against Rs2.27 billion a year earlier
Designing efficiency into the fabric and the process is still how Azgard9 works with its brand partners: better denim that costs less to make, and uses less to make it.
