Prices rise on Cotton 'the Moral fabric '

"[Based on what] our customer research indicated, it was difficult to miss what was going on in the market," says Michael Kobori, vp of social and environmental sustainability for Levi's, which introduced its "Eco" jeans -- made from 100 percent organic and recycled cotton -- four years ago.

First there's the Byzantine issue of sourcing enough organic cotton when most of the world's cotton farmers still use chemical fertilizers and pesticide. Then there's the cost of organic cotton, which is moderately higher. Because, as Basson says, "you're going to pay about 20 percent premium just on the yarn," brands are faced with the Hobson's choice of either raising retail prices or cutting into their profit margins -- neither a very attractive option during these price-sensitive times.The key, Basson says, "is volume and price. The consumer will pay a little more, but not a lot more. There's always a balance between what the customer will pay to support something they believe in." Adds Levi's' Kobori: "Organic cotton does cost more, but consumers are willing to pay for it if we deliver on expectations of style and quality."





Levi's embrace of organic fiber is adjunct to a broader eco-friendly initiative that includes "Better Cotton," sold via in-store marketing components such as window displays and care tags that advise consumers to wash their jeans in cold water, line dry them and donate old pairs to charity to keep them out of landfills. "Communicating what Better Cotton is and how it's sustainable is very important," Kobori says.

The immediate problem is that the price of all cotton has risen significantly in the recent past and Levi's must consider hiking its prices in markets like India and China. At present, the firm sells its Levi's brand of jeans priced within the range of Rs 1,799 and Rs 4,000. Price of standard cotton variety hit an all time high this week at Rs 34,000 per candy. One candy equals to 355 kg of cotton. In October 2009, price of cotton stood at Rs 23,000 per candy.

The company said it expects to make India one of its top 10 markets in the next five years. "India is one of the fastest growing market for us. It is one of the top 18 focused markets for us and it will be among the top 10 ten markets in the next five years," Levi Strauss & Co President & Chief Executive Officer John Anderson said. The company said it is betting big on the EMI programme launched last year for buying its jeans. "It is an innovative scheme which was launched specially for the Indian market. It is doing very well and we will continue it," Anderson said.