After a year defined by disruption, denim’s strongest players emerged not by chance, but by design. From supply chain shifts to shocking trade policies, 2025 forced the industry to confront hard truths about resilience, logistics and value creation—revealing that control, flexibility, and continuous innovation are no longer optional, but essential for navigating an increasingly unpredictable global landscape.
Through last year’s unprecedented challenges, Artistic Milliners learned that owning and controlling its ecosystem is the most reliable way to ensure delivery when the world becomes chaotic. “2025 taught us that you cannot rely on a fragmented supply chain during a crisis,” said Baber Sultan, Artistic Milliners’ director of product development, research and trends.
Related Stories
Indeed, as the industry begins another complex and unpredictable year, it could use a lesson in learning from the past.
“We need to stay open-minded because anything can happen,” said Cristina Cerdeira, marketing manager of Tejidos Royo. “[2025] started with chaos around tariffs, and it seems we didn’t learn much from the Covid-19 experience. Investing in proximity sourcing and offering products with added value is the key to the future of denim.”
The denim companies that seemed to fare best in 2025 were the ones that understood the importance of continuing to innovate and keeping the communication lines open with their customers, according to Vivian Wang, Kingpins Show CEO. “A major opportunity lies in scaling verified, measurable sustainability—transforming traceability, responsible materials, and cleaner processing into real differentiation rather than just messaging.
Onur Duru, general manager of Bossa, added that strongest players were those who remained flexible in sourcing, protected lead-time reliability, and invested in capabilities that reduce uncertainty—especially in materials, logistics, and compliance.
“Resilience outperforms pure optimization,” he said.
Risk management
For 2026, the denim supply chain is keeping a close eye on several macro risks.
Geopolitically, the fragmentation of global trade landscapes remains a primary risk factor. Lizzie Kroeze, AGI’s director of product development and marketing for Europe, said ongoing tariffs and trade wars are impacting consumer prices and regional conflicts disrupt trade routes.
“The biggest concern I have for the denim market in 2026 is the potential for more geopolitical and economic instability,” she said. “The potential impact of geopolitical tensions on our industry and the fragility of the global economic environment is harder to predict. Inflation and uncertainty can shift brand and consumer priorities, and regional conflicts can impact supply chains in ways we cannot anticipate. We saw this most prominently in 2025 upon the announcement of the new U.S. trade tariffs and disruptions to trade routes resulting from conflicts in the Middle East and Ukraine, and we may see further changes in the year ahead.”
Artistic Milliners is hedging against tariff volatility by diversifying its production base across Pakistan, and North America, giving the flexibility to shift volume based on the prevailing trade winds.
“We approach macro risks not with fear, but with scenario planning and adaptability,” said Ibrahim Ethem Buyukpepe, Calik Denim’s acting general manager. “Climate impact, geopolitical uncertainty and logistics volatility reinforce the importance of diversified sourcing, local capabilities and agile production models. Our focus is on building systems that remain strong under multiple scenarios, ensuring continuity and trust for our partners.”
Much of the uncertainty comes from factors beyond the supply chain’s control, including natural disasters.
“Not only could we see reduced global cotton yields and infrastructure stress, but in recent years we have seen key sourcing hubs impacted by heat waves and flooding,” Kroeze said.
AGI Denim has a watchful eye on raw material volatility. In 2025, Kroeze said the mill saw cotton production in various regions, including organic and regenerative cotton, be impacted by extreme weather and supply chain disruptions which can lead to shortages, unpredictable costing and challenges in maintaining consistent quality.
Artistic Milliners is also preparing for climate-induced volatility in raw materials. “With cotton prices forecast to rise three percent and water stress increasing, we are mitigating risk through our Milliner Cotton Initiative and regenerative agriculture programs, targeting 4,000 acres,” Sultan said.
Additionally, mills are concerned about how shipping routes and freight costs could be impacted by geopolitical tensions and climate events, affecting lead times and landed cost.
“My biggest concerns are demand, uncertainty and cost volatility, particularly in raw materials and logistics,” Duru said. The Turkish mill is watching how companies adapt to U.S. tax and trace policies as well as the industry’s growing preference for partners that can deliver short lead times, transparency, traceability, and proven performance in quality and sustainability.
“I expect sourcing to continue shifting toward a more balanced footprint approach—where cost remains important, but sustainability, speed, risk management, compliance, and flexibility play an equally critical role,” Duru said.
Wang anticipates retailers and brands to keep looking for ways to keep their sourcing as nimble as possible. Regional and international exhibitors allow Kingpins Show’s attendees to keep their supply chain flexible. “It’s important to continue to keep building connections between all denim producing regions and the retailers and consumers who purchase their products,” Wang added.
Sourcing shifts
Nearshoring and reshoring have been interesting options for the international denim community for several years, Wang said.
“There are several clear benefits. It affords brands the ability to react quickly to changing trends and fulfill replenishment orders. In some cases, it allows them to take advantage of trade agreements like the U.S.-Mexico-Canada Agreement (USMCA) and the European Union’s existing Free Trade Agreements with Japan and South Korea, as well as FTAs under negotiation with India and Mercosur, the South American trade bloc,” she said.
“But it takes time to build the infrastructure to handle the production demand in these regions,” Wang said. “We see that work beginning to develop, particularly in Mexico. It will be interesting to see these kinds of opportunities develop in other regions.”
At Bossa, Duru said anticipates increased nearshoring and region-for-region supply, especially for European brands valuing proximity and agility. The Turkish supplier is cautiously optimistic about the shift. Though Turkey is a major supplier for the EU, the country is facing rising costs and competition from Egypt and North Africa, which Duru said are gaining importance through new investments in garment manufacturing.
Tejidos Royo expects U.S. tariffs will continue to impact Chinese sourcing, benefiting Southeast Asian countries. “At the same time, we see a clear trend toward nearshoring, with Mexico gaining traction for U.S. brands thanks to proximity and logistical advantages. In Europe, brands will keep prioritizing premium and sustainable products, relying on regional production to ensure speed-to-market and traceability,” Cerdeira said.
Buyukpepe said sourcing in 2026 will be guided by resilience, proximity and partnership quality rather than cost alone. “Brands will prioritize suppliers who can offer speed, flexibility and transparency,” he said, adding that “countries with strong infrastructure, advanced manufacturing capabilities and sustainability know-how—such as Turkey—will further strengthen their strategic importance.”
“The future of sourcing lies in long-term relationships with solution-oriented partners, not transactional buying,” he asserted.
Sultan describes 2026 as the year of the “bi-hemispheric” supply chain. “The era of relying solely on the East is ending. We expect a massive pivot toward ‘Nearshoring 2.0,’ where brands don’t just want cut-and-sew in the Americas, they want verticality,” he said.
The Pakistani company made major investments in 2025 to deliver speed, scale and consistency including acquiring a majority stake in Cone Denim and establishing the AM Mexico facility. The Parras, Mexico facility allows Artistic Milliners to shave several weeks off delivery timelines for U.S. clients.
“In a reactive retail environment, proximity is the ultimate competitive advantage,” he said. “We foresee brands splitting their sourcing matrices: utilizing Pakistan and China for volume and fabric innovation, while leveraging Mexico and Central America for speed-to-market and duty-free access to the U.S.”
Kroeze said sourcing diversification across the denim industry is a given as brands spread production to multiple regions to mitigate geopolitical and climate risks as well as disruptions in raw material availability and shipping.
“Sourcing diversification, both for manufacturers and for brands, is key to ensuring agility and resilience amid uncertainty,” she said.
However, increased sourcing diversification across different regions can pose a risk to quality and consistency across denim assortments. “That is why at AGI Denim we implement various risk management and sourcing strategies to offset a lot of this potential risk, and our robust end-to-end traceability infrastructure allows us to meet any data needs our brand partners may have,” she said.
AGI Denim’s brand partners are shifting large shares of their business to Pakistan and away from other manufacturing hubs, to ensure stable supply and to take advantage of our vertical set-up and traceability infrastructure, she said. They’re also showing a renewed interest in nearshoring, with U.S. brands looking towards Mexico and Central America, and European retailers focusing on Egypt and Turkey.
“The goal is to continue building agile, resilient supply chains to ensure quality of goods, on-time deliveries, regulatory compliance, and to meet growing demand from emerging markets,” Kroeze said.
Emerging markets
Wang anticipates another year of cautious spending—from suppliers to consumers.
“The changing U.S. tariffs landscape in 2025 put the brakes on a lot of the momentum and optimism that started the year. That caution threatens to spill over into 2026,” said Vivian Wang, Kingpins Show CEO. “Although we heard less about changing tariff rates towards the end of the year, it remains a point of nervousness.”
Matteo Urbini, Soko general manager, said it’s safe to expect the countries with the most competitive production costs and tariff advantages will capture larger market shares at the expense of others.
“Some garment makers will be very busy and may struggle to fully meet quality and service expectations,” he said. “At the same time, an uncertain market will discourage retailers from purchasing large inventories, creating the need for shorter lead times in the event of replenishments.”
AGI Denim expects “steady growth” in global denim demand, but the Pakistani mill anticipates seeing a shift in where that demand is coming from.
“While North America will stay the largest consumer of denim closely followed by Europe, both are mature markets facing stricter ESG regulations and some geopolitical and trade volatility that impact consumer sentiment as well as prices,” Kroeze said. “Here we will see consumer demand focus on premium, high quality, and responsible denim options as product longevity—both from a durability and a trend point of view—becomes key.”
However, China is on their heels. Kroeze said China’s demand for denim is expected to grow at a faster pace than North America and Europe and the Chinese denim market will come to rival the US, both in size and diversity. “The fastest growing demand will likely come from the Asia Pacific and Southeast Asia regions, as middle-class populations grow in countries like India, Bangladesh, Vietnam and Thailand, and Brazil and Mexico also offer significant growth opportunities especially in women’s denim,” she said.
The decline in purchasing power in Western countries continues to be a concern, Urbini said, but there are opportunities for strategic investment elsewhere. “India for the domestic market, Egypt for its growing export segment, and Bangladesh and Pakistan because they are indispensable,” he said.
Duru reports that global denim demand has been gradually increasing over the years and is expected to grow by around 5 percent by 2030. “In 2026, I expect global denim demand to remain stable to modestly positive, but uneven across regions,” he said.
While South and Southeast Asia are likely to see stronger growth, driven by a rising middle class and increasing denim adoption, he said North America is expected to remain relatively flat, influenced by the continued shift toward athleisure, high promotion sensitivity, and replacement-driven demand rather than true growth.
Cerdier added that Turkey is slowing down due to Asian competitors, while Western Europe is likely to remain stable, focusing on premium, sustainable and recycled denim rather than volume. “Market volatility will impact margins globally—through tariffs, inflation-driven price increases, raw material shortages, and longer lead times. This is a worldwide challenge,” she said.
“We’re cautiously optimistic, despite current headwinds,” Sultan said. “For 2026 specifically, we see a distinct bifurcation in demand. While the North American market remains our volume driver—bolstered by nearshoring—we anticipate increasing growth in the Asia-Pacific region as denim becomes a primary vehicle for high-fashion expression among Gen Z consumers there, as well as sustained growth in Europe.”
Sultan noted that the shift isn’t just regional; it’s psychographic. “Demand is moving away from purely utilitarian rigid fabrics toward what we call the ‘Lounge Edit,’ [or] denim that offers the visual authenticity of heritage goods but the tactile performance of activewear.”
Calik Denim anticipates denim demand to evolve from volume-driven to value-driven growth. Denim will continue to be a core wardrobe category globally, but with a stronger emphasis on comfort, versatility and authenticity, according to Buyukpepe.
“We expect steady growth in North America and Europe, supported by premium casual lifestyles and longer garment lifecycles, while Asia-Pacific will remain a key engine for innovation-driven and functional denim adoption,” he said. “Rather than sharp declines, we foresee regional recalibrations, where demand shifts toward better-performing, more sustainable products.”
Regulation reality
Despite companies’ efforts to remain committed to reducing their environmental impact, sustainability initiatives are increasingly bearing the brunt of rising costs and tightening budgets. The Kingpins team has heard about some large retailers and brands pulling back from sustainability efforts.
“This feels like taking the foot off the gas after years of progress,” Wang said. “That is obviously not true for the leaders in this space, who will continue the work they started years ago to make our industry cleaner and safer, and more equitable for workers. But companies following in the wake of that progress might stop prioritizing efforts like those.”
While uncertainty and caution could keep companies from exploring and adopting new innovations, the exec is encouraged by the latest round of innovative products and developments companies presented at Kingpins late last year, and the supply chain’s initiative to push forward and inspire brands and retailers to follow in their steps.
The bright side, Wang added, is that many forward-looking mills and suppliers have already invested in sustainable infrastructure, and their efforts are paying off in measurable energy, chemicals and water reductions.
Regulatory demands are giving industry stakeholders no choice but to maintain their foot on the pedal.
If there was one lesson to take away from 2025, Kroeze said it’s that regulatory compliance for sustainability and ethical production is no longer a “nice-to-have,” but a mandatory, non-negotiable cost of doing business in key global markets.
“In 2025 we saw the first wave of regulatory requirements impact the industry: brands selling in the U.S. had to comply with PFAS bans in several states; forced labor laws consistently halted the import of shipments that lacked verifiable data on the origin of their raw materials; and EU companies subject to the CSRD struggled with the volume and complexity of the data required,” she said.
This year, Kroeze anticipates primary bottlenecks to be less about physical production capacity and more about navigating operational and regulatory challenges that demand higher adaptability and transparency.
“The denim industry is facing an unavoidable wall of regulation, particularly in the EU and key U.S. states. Compliance is no longer optional. The Digital Product Passport (DPP), Green Claims Directive, the CSRD and CSDDD—even with their narrowed scope and reporting delays—and U.S. state EPR laws all require granular data that most companies currently do not track effectively,” she said. “This creates opportunities for manufacturers who already have the digital infrastructure to provide detailed supply chain documentation but also means that brands will shift production away from manufacturers that do not.”
Additionally, companies will have to balance consumer price expectations with the added cost and resource-strain of using better materials and data collection.
While the bottleneck of ESG regulatory compliance will have a big impact on how brands and manufacturers operate, Kroeze said AGI Denim has been preparing for this for several years and has the tools in hand to support its brand partners in any way they need.
Instead of viewing the DDP as a regulatory burden, Khaliq urges companies to use it as a storytelling tool. Artistic Milliners is using blockchain via Retraced and forensic verification from Oritain to prove the journey of its cotton. Khaliq added that brands that can transparently show that journey to the consumer—scanning a QR code to see the farm in Balochistan or the mill in Mexico—will win trust and loyalty.
“My biggest worry is the industry’s pace in adopting regenerative mindsets versus just ticking compliance boxes,” he said. “If we treat sustainability only as a reporting requirement for the EU rather than a fundamental operational shift, we will fail to secure the resources (water and soil) needed to keep making jeans 20 years from now.”
