Demand Creation Keeps Consumer Eyes on Cotton
February 9, 2011 Cotton Council International (CCI) and Cotton Incorporated hosted their biennial Sourcing USA Summit in California in November, bringing together 450 members of the top management from global cotton buying and selling companies to discuss issues affecting the future of our industry.
Summit keynote speaker and noted futurist Jack Uldrich described the exponential rate of change happening in certain technologies, particularly in the way people are learning to monitor changes via social networks. He encouraged the cotton industry to look to social networking within its constituency as a strategy to remain viable and profitable.
A CCI and Cotton Incorporated initiative, “Cotton’s Revolutions,” is designed to do exactly that. Cotton’s Revolutions is a strategic initiative designed to create a business/social network of executives from the entire global cotton textile supply chain, helping the industry anticipate issues and developments that will affect their businesses in coming years.
One long-term issue for the cotton industry is how much higher prices will cause a lasting substitution of synthetic fibers for cotton. CCI, through its global COTTON USA promotions, and Cotton Incorporated have spent decades and significant capital building consumer preference for cotton. Who could have foreseen this tidal wave that could threaten to undermine years of demand creation? How much cotton will be replaced by alternative fiber in the textile supply chain and how will consumers react to that substitution?
Consumer demand is the key
Meanwhile, CCI will continue to work on demand creation. At the November 2008 Sourcing USA Summit, the futures price of cotton was just $0.39 and the “A” Index was $0.55. During the most recent Summit, futures prices were almost four times higher than that.
Will cotton ever return to those levels of two years ago? No one is sure, but we do know that without adequate demand over the long term, the price of any commodity tends to fall–sometimes dramatically. That is why CCI and the U.S. cotton industry will continue to invest heavily to build consumer demand, even when the market is trying to ration demand through higher prices.
There is no reason why cotton should not maintain, or even increase, its market share of the growing global fiber market going forward.
CCI maintains that cotton should not try to compete with synthetics on price. As with a superior technology, fashion or food, cotton should compete based on consumer preference, meeting consumer needs in ways that are superior to what the competition offers. With this philosophy, and with research and consumer demand-building carried out by CCI and Cotton Incorporated globally, the industry can ensure that this natural, renewable and versatile fiber is not just a commodity trading at historic highs, but rather, a preferred product for which the consumer is willing to pay a sufficient price to maintain a full supply pipeline, from field to fabric and beyond.
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