A World of Softness. Buxton Midyette VP Marketing & Promotions

A World of Softness Buxton Midyette VP Marketing & Promotions

Introduction MicroModal / Supima Background Supima History Benefits Marketing Supima/MicroModal apparel Supima Design Competition Conclusions Overview

This is a marriage of the world s softest fibers

Supima Background

Extra-Long Staple (Supima) Short Staple (Regular Cotton)

Definition of ELS Cotton In the U.S., cotton must be 34mm or 1 3/8 inches or longer to be defined as an Extra-Long Staple (ELS) cotton or Luxury Cotton.

Supima Represents the Top 1% of the World s Cotton

ELS COTTONS Egypt (Giza 45, 88) Peru (Tanguis/Pima) Barbados (Sea Island) U.S. (Pima)

Supima History

1911: Pima is born

Pima s Industrial Heritage 1920 Goodyear Tire Co.

1954- The Start of Supima

Supima Grown only in Southwestern U.S., mainly CA Highly environmentally regulated 100% Machine picked

Supima Production Areas Eureka Redding Winnemucca San Joaquin Valley 93% Reno NEVADA Santa Rosa Carson City Oakland Sacramento San Francisco San Luis Obispo Santa Barbara CALIFORNIA Los Angeles Fresno Bakersfield San Diego Las Vegas San Bernadino Salt Lake City Provo Yucca Cedar City ARIZONA Phoenix UTAH Flagstaff Tucson Grand Juction COLORADO Durango Santa Fe Denver Raton Albuquerque NEW MEXICO Las Cruces El Paso Colorado Springs Ft. Stockton Oakley Amarillo Lubbock Odessa KANSAS Lawton Salina Wichita Oklahoma City Ft. Worth TEXAS Austin Waco Kansas TopekaCity Ponca City OKLAHOMA Dallas Tulsa Houston 7% San Antonio Corpus Christi

Supima Advantage #1

Softness

Length Supima is up to 35% longer than regular cotton

Length Longer Fibers Produce Smoother, Cleaner Yarn Supima Regular Cotton

Supima Advantage #2

Strength

Strength Supima is up to 40% stronger than regular cotton

Strength Stronger fibers allow fabrics to be both durable and comfortable.

Strength Test

The Supima MicroModal Challenge

Supima Advantage #3

Lasting Color

Fineness Supima fiber is consistently finer than regular cotton fiber: This makes it ideal for dyeing.

Fineness Thinner fiber absorbs dye better

Lasting Color Supima Regular Cotton

Supima / Modal Marketing

Lacoste + Malandrino Harem Pant $175 38% MicroModal / 57% Supima / 5% Elastane

Gradient Stripe Hoodie $72 MicroModal / Supima / Polyester

Twill Tape Romper $118 50% MicroModal / 50% Supima

Alex Cotton Blend Jersey Tunic $245 50% MicroModal / 50% Supima

Gradient Stripe Hoodie $74 MicroModal / Supima

Maritime Stripe Maxi Dress $138 MicroModal / Supima

Splendid Signature Terry Romper $89 43% MicroModal / 43% Supim / 14% Polyester

Thermal Venice Stripe Hoodie $70 MicroModal / Supima / Polyester

Ella Moss Garland L/S Lace Dress $178 Shell: Cotton / Nylon Lining: 50% MicroModal / 50% Supima

Supima Design Competition

Participating Design Schools

Supima Design Competition Two Finalists, graduating seniors, from each school Each Finalist will produce five looks Shirting Denim Knit Twill Corduroy Runway Show to take place at Lincoln Center during New York Fashion Week September 2012 Winner receives $10,000

Fabric Sponsors

Supima Design Competition

Conclusions

This is a marriage of the world s softest fibers

About Business and market analysis for the global fibre, textile and apparel industries

Spun-off from the Economist Unit in 1992

Four publishes four regular titles: Global Apparel Markets Performance Apparel Markets Technical Textile Markets Textile Outlook International

Textile fibres for a sustainable future: cotton, synthetic or cellulosic? by Robin Anson Managing Director, Tribute to Edelweiss, St Wolfgang, Austria, July 3, 2012

The global economy

Recession...

World, USA and EU: GDP growth rates, 2007-09 (%) 6 4 2 4.0 1.2 2007 2008 2009 1.9 2.9 0.5 0-0.3-2 -2.4-4 -3.5-4.2-6 World USA EU Sources: Economist Unit (EIU)

... followed by recovery...

World, USA and EU: GDP growth rates, 2009 and 2010 (%) 8 6 2009 2010 4 2 4.1 3.0 2.0 0-2 -4-6 -2.4-3.5-4.2 World USA EU Sources: Economist Unit (EIU)

... but in the EU there will be a second dip in 2012...

World, USA and EU: GDP growth rates, 2010-12 (%) 5 4 4.1 2010 2011 2012 3 2 2.5 3.0 2.1 2.2 2.0 1.7 1.6 1 0-1 World USA EU -0.5 Sources: Economist Unit (EIU)

... and slow growth in 2013

World, USA and EU: GDP growth rates, 2010-13 (%) 5 4 4.1 2010 2011 2012 2013 3 2 2.5 3.0 2.6 2.1 2.2 2.1 2.0 1.7 1.6 1 0.8 0-1 World USA EU -0.5 Sources: Economist Unit (EIU)

Our industry also recovered in 2010

World trade in textiles and clothing, 2000-10 US$ bn 700 600 500 478 525 583 612 525 602 Western Europe Clothing 400 300 352 China 200 100 USA 0 2000 2005 2006 2007 2008 2009 2010 Source: Textile Outlook International from WTO data

World fibre demand, 2006-10 mn tons 100 80 60 73.6 69.3 65.1 64.2 65.4 Silk Wool Cotton Cellulosic Synthetic 40 20 0 2006 2007 2008 2009 2010 NB: Excluding olefins and acetate tow; cotton and wool data are consumption figures to minimise impact of inventory swings Source: Fiber Organon

But the upturn helped to trigger a surge in raw material prices...

Cotton prices, 1991-2011 US$/lb, monthly averages 250 200 Mar 2011 150 100 50 0 Jan 1991 Jan 1996 Jan 2001 Jan 2006 Jan 2011 Source: Cotton Outlook

... causing severe disruption to the market

Impact on EU and US clothing imports Surge in clothing import prices......slow growth or decline in clothing import volume

USA and EU: growth in clothing import volume and price, 2011 (%) 25 20 15 10 Size (left hand scale) 7.5 EU Price Volume 12.8 US Growth (right Ahand scale) 5 0 0.8 Volume -5 Price Volume Price -3.6-10 EU USA Sources: Euratex; US official statistics

But the trend in manmade fibre apparel was different volumes and prices kept growing

USA: growth in clothing import volume and price by fibre type, 2011 (%) 20 15 10 5 0-5 -10-15 Size (left hand scale) 17.0 Price Cotton Volume -11.8 Cotton apparel Price Volume 9.7 Price US A MMF apparel Growth 8.3 (right hand scale) MMF Volume Source: US official statistics

USA: share of clothing imports in volume terms by fibre type, 1991-2011 (%) 65 60 55 50 45 40 35 30 Size (left hand scale) Cotton apparel Man-made fibre apparel US A Growth (right hand scale) 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 Source: US official statistics

USA: growth in clothing import volume and price by selected leading supplying country, 2011 (%) 30 20 10 0 23.6 Size (left hand scale) 19.7 16.5 15.0 Price Volume 12.1 11.2 10.2 Growth (right hand 8.1 scale) 6.5 3.6 4.6 US A 9.5-10 -10.3-4.1-7.0-7.4-6.2-4.6 Pakistan Honduras Bangladesh India China Indonesia Cambodia El Salvador Vietnam Source: US official statistics

EU: growth in clothing import volume and price by selected leading supplying country, 2011 (%) 50 40 30 20 10 0-10 -20 22.3 5.0 Size (left hand scale) 20.5 19.6-9.1 5.4 Price 12.1 11.9-7.1 Volume 7.9 6.4 Growth (right hand scale) 3.1 1.4 Bangladesh Pakistan Indonesia Cambodia India Turkey Vietnam China 2.5 14.2 39.7 EU Source: Euratex

Since then the cotton price has fallen...

Cotton prices, 1991-Jun 2012 US$/lb 250 200 150 100 50 0 Jan 1991 Jan 1992 Jan 1993 Jan 1994 Jan 1995 Jan 1996 Jan 1997 Jan 1998 Jan 1999 Jan 2000 Jan 2001 Jan 2002 Jan 2003 Jan 2004 Jan 2005 Jan 2006 Jan 2007 Jan 2008 Jan 2009 Jan 2010 Jan 2011 Jan 2012 June 2012 Source: Cotton Outlook

But there are few signs of a return to normality

USA and EU: growth in clothing import volume and price, q1 2012 (%) Jan-Mar 2012 20 10 8.7 7.6 EU Price Volume US A 0-10 -20 Price -12.0 Volume Price -3.9 Volume EU USA Sources: Euratex; US official statistics

USA: growth in clothing import volume and price by fibre type, q1 2012 (%) 20 Jan-Mar 2012 USA 15 Price Volume 10 9.5 7.9 8.1 5 Volume 0-5 -10 Price Cotton Price MMF Volume -15-11.8 Cotton apparel MMF apparel Source: US official statistics

Impact of the cotton price hike downstream?

Interesting work on pass-through by Jon Divine and Alejandro Plastina of ICAC...

9 Asian countries USA USA

Isn t this all in the past now? Surely, the cotton price hike was a one-off...

ICAC press release July 2, 2012...

World Cotton Trade to Decline Significantly in 2012/13 After a 20% jump to 9.2 million tons in 2011/12, the volume of cotton traded internationally is expected to drop by 18% to 7.6 million tons in 2012/13. The leap in global cotton trade in 2011/12 does not reflect improved demand for cotton. In fact, global cotton mill use is estimated down by 7% to 22.7 million tons, the smallest in eight years. High and volatile prices and a slowing global economy drove demand for cotton yarn down. Increased cotton trade in 2011/12 is due to a neardoubling of shipments to China to 5.1 million tons. Chinese mills have turned to imports to compensate for the shortage of domestic cotton caused by the rebuilding of the national reserve. In addition, large quantities of cotton were imported by the Chinese government specifically to help rebuild that national reserve.

In fact raw material prices will climb again over time because there are long-term problems

Fibre demand per head is growing

World end use consumption of textile fibres per head, 1960-2011 12 10 8 6 4 2 0 1960 1975 1990 2005 2011 Source: International Cotton Advisory Committee (ICAC)

So is world population 1.4 bn more people by 2030

The result?

World fibre consumption, 1960-2030 mn tons 150 100 50 0 1960 1970 1980 1990 2000 2010 2020 2030 Source: ICAC

That s good news for the textile and clothing industry. But where will the extra fibre come from?

Sustainability issues

Dilemma: food vs fibres? % change Fib re s Fo od Popu latio n Arable land Source: Franz Martin Haemmerle

Harvested area of cotton rangebound Source: Franz Martin Haemmerle

So, to grow more cotton, yields must rise

Yields are rising Source: Franz Martin Haemmerle

But there is a big cost to the environment: more intensive farming more fertilisers, more water genetically modified (GM), Bt cotton

And how long can yields keep rising? India's cotton yield may fall to 5-year low... even as the area under Bt has grown to 93 per cent of the total area under the cash crop Business Standard, Wednesday, 26 October 2011

Water consumption Cotton production based on irrigation requires 15-35 times more water than cellulose fibre production based on wood pulp Only 45% of cotton growing is based on natural rains (Source: Franz Martin Haemmerle)

Can the planet spare the amount of water needed? Source: Franz Martin Haemmerle

Cotton production heading for a plateau Planted area down to 28 mn ha Yield up to 925 kg/ha Maximum theoretical cotton production 26 mn tons a year

If fibre consumption keeps rising, cotton s share must fall

Share of cotton in world fibre consumption, 1960-2020 % 100 80 60 40 20 0 1960 1975 1990 2005 2020 Source: International Cotton Advisory Committee (ICAC)

Non-cotton fibres will have to fill the gap

World textile fibre consumption, 1960-2020 mn tons 120 100 Cotton Non-cotton 80 Western Europe 60 China 40 20 0 USA 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 Source: International Cotton Advisory Committee (ICAC)

Question: what fibre type can fill the gap?

Polyester?

Problem: consumers want fibres with absorbency, moisture management etc 33-37% has to be cellulose based, says Franz Martin Haemmerle

The cellulosic gap Syntheti c % shares Cotton The cellulos ic gap

Where will the cellulosic gap be greatest?

South Asia is the most dependent on cotton

Share of mill consumption by fibre type 2010 Japan, SK, Taiwan China, HK S East Asia South Asia Western Europe China All Asia USA 0 20 40 60 80 100 Wool Cotton Man-made fibre More dependent on cotton

But can it fill the gap?

Cellulosic fibre output by leading producer 2007-11 mn tons 3 2007 2008 2009 2010 2011 2 1 1.6 1.4 1.6 1.7 1.9 India is no match for China 0.4 0.4 0.4 0.4 0.4 0.3 0.3 0.3 0.4 0.4 0.3 0.3 0.3 0.4 0.4 0 Source: Fiber Organon China Western Europe Indonesia India 3 countries plus W.E. = 90% of global output

Cellulosic fibre capacity and growth, Mar 2012 and Dec 2013 mn tons 3 2 1 6.7% growth India capacity growing but no match for China 36.1% growth 6.3% growth 0.0% growth March 2012 December 2013 0 China India Indonesia Western Europe Source: Fiber Organon

Filling the cellulosic gap by 2030 will certainly be a challenge!

Finally, something interesting for Lenzing planners to think about...

What are we looking at?

A cellulosic material made from fermented wine...

called Micro be from Bioalloy in Australia

How is it made?

You will wish you hadn t asked!

acetobacter is added to vats of wine to turn it into vinegar fibrous cellulose forms on the surface of the wine in the vats the resulting fibrous cellulose is draped over a mannequin the material shrinks to fit the mannequin s shape the mannequin is deflated and the garment remains

Is this serious?

Artist Donna Franklin has designed a collection of stitchless dresses, T- shirts and swimwear

Wet strength?

OK, it s not perfect yet! More info at http://bioalloy.org/o/projects/microbe.html

Thank you!