PCCA - Plains Cotton Cooperative Association Logo PCCA Commentator Magazine Masthead. Vol. 37, No. 1 | Spring 2004

Building a New Image for American Cotton Growers

Value-Added Denim Styles Well Received by Mill’s Customers

The image of American Cotton Growers (ACG), the Textile Division of PCCA, is undergoing a makeover few U.S. apparel companies would have thought possible two years ago. Known as a supplier of only basic styles of denim for only one customer for more than 20 years , ACG today is being transformed into a supplier of value-added denim fabrics. The initial results are encouraging and are one factor in ACG’s return to a full production schedule for the second quarter of 2004.

The move to value-added styles is important for two major reasons. First, they result in better margins now that basic denim prices have been driven to rock-bottom levels. Second, the removal of import quotas for textiles and apparel on Jan. 1, 2005, likely will result in more offshore sourcing of basic denim.

ACG Flags

American Cotton Growers, Littlefield, Texas

“Due to its long-term, exclusive relationship with Levi Strauss & Co., ACG was not well known by many U.S. apparel companies, and it was not known for innovation,” says Jack Mathews, ACG’s vice president of fabric sales and marketing. “We have gradually transformed that image, and we’ve done it very effectively,” Mathews adds. “Our value-added styles have been well received by many of our customers.” What differentiates a basic denim style from a value-added style?

“Basic styles are not differentiated by their design,” Mathews explains. “They are, in effect, commodities, and their only distinguishing factors are quality, service and price. In the competitive market for basic denim business, it all comes down to price.”

Value-added styles are distinguished by one, all or any combination of the following characteristics: dye shade, yarn characteristics, construction, weave, and finish, according to Mathews. In other words, they are used in garments that apparel companies sell for a higher price. To identify trends involving those characteristics, ACG personnel go straight to the marketplace and participate in collaberative development efforts with the denim mill’s customers. They also attend fabric and apparel trade shows.

Obviously, it is extremely competitive, but we have most major trends covered with our value-added styles.Jack Mathews

“We visit literally hundreds of apparel stores each year to see what is on the retail shelves,” Mathews says. “We don’t depend entirely on what we see on the streets because those jeans could be last season’s styles or older. We talk to the store managers and employees to find out what the hottest selling styles are.” After identifying the trends, Mathews studies what he calls the three Fs: fabric, fit and finish.

“We will buy a pair of jeans and take them apart so our product development staff can evaluate how the fabric is constructed,” he says. “Fit is the same thing as silhouette, and finish can include features such as tinted, sandblasted, or hand sanded. Showing a new fabric in the correct finish is important.” Developing styles that fit the trends is a critical process.

“Some of our customers and potential customers are called on by 10 or more denim mill representatives from all over the world,” Mathews explains. “Obviously, it is extremely competitive, but we have most major trends covered with our value-added styles.”

Denim

Photo by Lynette Cockerell

ACG typically introduces 15 to 25 new fabrics each season based on Mathews’ research and follow-up by the mill’s product development department. The stretch denim fabrics reported in the previous issue ofCommentator exemplify those efforts. For fiscal year 2004, value-added styles comprise approximately 45 percent of ACG’s denim sales.

“Our philosophy is to produce a mix of basic and value-added styles,” says Mathews. “Finding the right balance will be the key to financial success,” he continues. “We have to think like we are in the jeans business, not the denim business. In terms of our image, we have made substantial progress in just the last two or three years.”

Mathews believes a product mix of 25 percent basic and 75 percent value-added may be the ideal balance for ACG. Based on recent success and with work on styles for the fall 2005 and spring 2006 season already underway, ACG is well on its way to a complete image makeover.