Mr. Ira Livingston Managing Partner: LIC LLC for Cotton Incorporated VI BRAZILIAN COTTON CONGRESS 15 August 2007
Presentation: Cotton in Brazil Brazilian Consumers Cotton Incorporated History Moving Forward
Brazilian Cotton Situation: Production Mill Use Trade Per Capita Demand
Brazilian Cotton Production (Millions of 480-lb. bales, 1996 2007) 7 6 5 4 3 2 1 0 96 97 98 99 00 01 02 03 04 05 06 07 Near-record production boosted by record yields Source: USDA
Brazilian Cotton Mill Demand (Millions of 480-lb. bales, 1963 2007) 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 63 67 71 75 79 83 87 91 95 99 03 07 Mill Demand lags production, but still near a record Source: USDA
Brazilian Cotton Trade (Millions of 480-lb. bales, 1996 2007) 3.5 3.0 2.5 2.0 1.5 1.0 0.5 Exports Imports 0.0 96 97 98 99 00 01 02 03 04 05 06 07 Major shift over decade from net importer to exporter Source: USDA
Brazilian Per Capita Retail Demand* for Cotton (kilograms, 1992 2004) 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 Cotton Man-Made Fiber 92 96 00 01 02 03 04 Cotton demand higher, but MMF increasing Source: ICAC
Global Lifestyle Monitor IV Brazil Report Consumer Insight
Overall Background Since 1998, Cotton Incorporated and CCI have conducted the first Global Lifestyle Monitor, which investigates a wide range of lifestyle issues related to clothing, shopping and textiles. This research has been important in adding value and increasing understanding of consumer attitudes and behaviors for surveyed countries. The research looks in detail at lifestyles, clothing purchasing habits, and clothing interest and attitudes. This analysis helps understand: The issues behind cotton product demand. What motivates consumers to choose cotton over synthetics. Synovate was again selected to conduct and coordinate the Global Lifestyle Monitor.
Overall Methodology Interviewing Market Methodology Brazil China Colombia Germany Thailand India Italy Japan United Kingdom Face to face: Sao Paulo, Rio de Janeiro, Belo Horizonte, Recife, Porto Alegre Telephone: Beijing, Guangzhou, Shanghai Face to face: Bogota, Cali, Barranquilla, Medellin Telephone: national Face to face: Bangkok, Chiangmai, Chonburi, Hadyai, Korat Face to face: Mumbai, Delhi, Bangalore, Kolkata, Chennai Telephone: national Telephone: Tokyo, Osaka Telephone: national NOTE: Korea and Taiwan were not included in the scope of the survey in 2003 or 2006. Hong Kong is also not included in the scope in 2006. Thailand is being surveyed for the first time in 2006. Source: Synovate
Methodology Brazil >Conducted by Synovate from March 3 rd to March 14 th, 2006. >500 respondents were surveyed Store Examples Used During Interviewing: Department stores (e.g., Lojas Americanas) Chain stores (e.g., C&A, Pernambucanas ) Hypermarkets/Warehouse Clubs (e.g., Extra, Carrefour) Chain/Specialty shops outside of department stores (e.g., Benetton, Forum, M. Officer) Sports/Sporting good stores (Bayard) Catalogs/mail order (e.g., Kay's, Gus) Base: Total Respondents: 1999 (n=500); 2001 (n=500); 2003 (n=500); 2006 (n=500) Source: Synovate
Shopping and Fashion - Brazil
Shopping and Fashion - Brazil Stores And Places Used To Buy Clothes For Yourself 77% 70% 64% 64% 63% 56% 59% 45% 37% 30% 28% 30% 46% 43% 36% 28% 28% 33% 27% 29% 30% 23% 24% 25% 24% 24% 23% 22% 19% 21% 18% 15% Chain stores Small, independent clothing stores Department stores Chain/specialty shop outside dept stores Hypermarkets/ warehouse clubs Street markets/ fairs/bazaars Factory outlet stores Off-price/ discount stores Significantly higher than GLM III at the 95% confidence level Significantly lower than GLM III at the 95% confidence level Source: Synovate
Shopping and Fashion - Brazil Clothing Store Attributes 38% 43% 48% 43% 52% 40% 37% 39% 19% 19% 24% 28% 16% 16% 34% 31% 20% 19% 19% 18% 19% 16% 17% 16% Selection or variety of items Good/low prices Method of paying/ lay-away Promotions Carry quality clothes Sales/bargain sales Source: Synovate
Shopping and Fashion - Brazil Love/Somewhat Like Clothes Shopping Neither Like Nor Dislike 1999 2001 2003 2006 1999 2001 2003 2006 80% 78% 85% 77% 16% 16% 11% 15% Males 66% Males 62% Males 73% Males 65% Males 26% Males 28% Males 19% Males 23% F Females 89% Females 88% Females 89% Females 88% M Females 9% Females 8% Females 6% Females 7% F M Significantly lower than GLM III at the 95% confidence level Significantly greater than women at the 95% confidence level Significantly greater than men at the 95% confidence level Source: Synovate
Shopping and Fashion - Brazil Average Spent on Clothes In Past 3 Months Buy Clothes At Least Once A Month 1999 2001 2003 US $194 US $164 2006 US $142 1999 2001 2003 2006 US $82 34% 43% 30% 33% M Significantly greater than men at the 95% confidence level Source: Synovate Males 29% Females 38% Males 38% Females 48% Males 18% Females 39% Males 24% Females 40% M
Shopping and Fashion - Brazil Top Items Purchased In Past Three Months* 59% 67% 72% 51% 56% 65% 65% 61% 39% 38% 52% 52% 46% 68% 45% 45% 46% 36% 01 03 06 01 03 06 01 03 06 01 03 06 01 03 06 01 03 06 T-Shirts Jeans Underwear Shorts Shirts Pants * Question not asked in GLM I - 1999 Significantly higher than GLM III at the 95% confidence level Significantly lower than GLM III at the 95% confidence level Source: Synovate
Shopping and Fashion - Brazil Place Where Consumers Get Ideas For Clothes 50% 47% 42% 36% 70% 59% 52% 46% 62% 60% 42% 41% 36% 36% 37% 37% 35% 37% 32% 31% 31% 32% 28% 30% 24% 23% 20% 22% 22% 16% 18% 15% Family members What you already own and like In store displays/window shopping Friends and colleagues you see regularly Television Salespeople in stores Store fliers/ mailbox inserts Magazines Significantly higher than GLM III at the 95% confidence level Source: Synovate
Shopping and Fashion - Brazil Intent to Purchase More/As Many/Fewer Clothing Items Than in Past 12 Months* More As Many Fewer Denim/jeanswear Sports Clothing Casual Clothing Home Fabrics Formal Clothing Work clothes/ smocks/overalls 01 03 06 01 03 06 01 03 06 01 NA 03 06 01 03 06 01 03 06 9% 4% 6% 35% 31% 47% 28% 29% 39% 33% 27% 34% 18% 26% 32% 19% 18% NA 27% 39% 29% 24% 38% 29% 31% 43% 34% 24% 18% 17% 22% 17% 5% 6% 5% NA 23% 19% 16% 24% 18% 16% 22% 19% 21% 13% 8% 24% 24% 22% 8% 8% 4% NA * Not asked Question not asked in GLM I - 1999 Significantly higher than GLM III at the 95% confidence level Significantly lower than GLM III at the 95% confidence level Source: Synovate
Quality and Fibers - Brazil
Quality and Fibers - Brazil It Is Important That My Clothes Are Made From Natural Fiber Such As Wool And Cotton 1999 2001 2003 2006 Agree strongly Agree somewhat 22% 19% 28% 21% 46% 42% 45% 23% 24% 21% 18% 43% Neither agree nor disagree Disagree somewhat 13% 16% 15% 19% 20% 17% 16% 18% Disagree strongly 25% 25% 20% 19% Source: Synovate
Quality and Fibers - Brazil Preferences To pay more for better quality clothes OR To sacrifice a little quality to get a better price 1999 2001 2003 2006 1999 2001 2003 2006 61% 61% 58% 55% 39% 39% 42% 45% To know the fiber content of a garment OR To know the brand name of a garment 1999 2001 2003 2006 1999 2001 2003 2006 67% 71% 68% 63% 33% 29% 32% 37% Source: Synovate
Quality and Fibers - Brazil Fiber Best Suited For Today s Fashions 78% 73% 66% 68% 43% 44% 44% 32% Natural Fibers (Net) Cotton 21% 18% 18% 18% Denim/ jeanswear 5% 6% 5% 6% 6% 5% 1% 2% 4% 2% 4% 5% 3% 4% 2% 2% 1% 3% 2% 2% Blend of cotton & polyester Silk Lycra Linen Synthetic 11% 10% -- ** Wool ** Less than 0.5% Source: Synovate
Quality and Fibers - Brazil Attributes Describing Cotton % 72 79 78 72 67 71 71 71 65 66 69 63 58 61 61 69 61 66 55 52 55 60 59 39 50 50 53 47 47 49 48 52 43 48 41 Soft Comfortable Keeps you warm Traditional Wrinkles NA Breathes Attributes Describing Polyester % Keeps you cool Is a quality fabric Is sporty 13 9 9 9 9 9 9 NA Soft Comfortable 29 29 23 13 22 15 13 15 21 8 11 11 11 11 12 Keeps you warm Not asked Significantly lower than GLM III at the 95% confidence level Source: Synovate Traditional Wrinkles NA Breathes 46 33 36 29 11 15 16 12 9 Keeps you cool Is a quality fabric 27 29 25 29 Is sporty
Quality and Fibers - Brazil Fiber Avoided When Purchasing Clothing (Among Those Who Said They Avoid Particular Fibers) 22% 12% 26% 17% 20% 20% 17% 15% 17% 13% 10% 13% 13% 12% 12% 13% 3% 7% 3% 3% Wool Lycra Silk Nylon Cotton Source: Synovate
Cotton Incorporated - Overview
Cotton Incorporated : Producer Challenges Launched 1970 C.R.& P. Act Promotion & Research Market Share Change Mill Use vs. Exports
1995 1997 1999 Cotton's Share of Market Apparel & Home Fabrics 75% Percent 1961-75 Trend Cotton's Share 61% 47% 33% 19% 5% 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 Source: NPD and Trade Data * Excludes Carpet
1995 1997 1999 1993 Cotton s Share of Market Apparel & Home Fabrics 75% Percent 1961-75 Trend Cotton's Share 61% 47% 33% 19% 5% 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 Source: NPD and Trade Data * Excludes Carpet
Brazil Moving Forward
BRAZILIAN COTTON INDUSTRY MUST CONSIDER Basics for Success: Other Factors Consumer Attitudes Jeans Sales Apparel Distribution Promotion to Consumer Competitive Fibers Shift of Downstream Mfg. to China 3x Port Capacity @ Port of Santos -2017 Sao Paulo Bans Large Outdoor Billboards 2009 International Year of Natural Fibers (UN)
Identify Leadership Select Partners Producer Groups Government Support Mills/Manufacturers Retailers Consumer Research Marketing Promotion Recommendations:
Mr. Ira Livingston LIC LLC VI BRAZILIAN COTTON CONGRESS 15 August 2007