Levi's eyes higher mkt share via new product for women

'Affordable jeans for emerging markets' that seems to be Levis' new mantra. To cater to the growing middle class segments in emerging markets like China, Singapore, and Korea, the denim manufacturer is coming out with a brand called Denizen. The brand is said to be built around the needs of the new emerging middle class and is all about giving them jeans at affordable price points and up-to-date fits and finishes.

In an interview with CNBC-TV18's Executive-Editor Shereen Bhan, Levi's President and CEO John Anderson, talks about its plans for China where they have launched a new mass market brand - Denizen.

Here is the verbatim transcript of the interview. Also watch the accompanying video.

Q: How important is the market in China?

A: China is a very important market for us, as it is for many companies today. It is a fast growing market with a new emerging middle-class. We were doing some research and deciding where is the future consumer coming from. It became very apparent that there is this new emerging middle class that's occurring around the world.

These consumers aspire to get into global brands, but there is an affordability issue. We decided to bring out a brand, that is built around the needs of this new emerging middle class and that is all about giving them jeans at affordable price points and up-to-date fits and finishes.

And why not bring that brand to them from a company that invented jeans, the company that has the credibility. I think it is also very unique. It is the first time we have launched a brand outside the US and that is also reflecting that the world is changing today. No matter where trends start I think global companies have to understand that and respond to them.

Q: The pricing is very different, isn't it? I understand it is about USD 125-150 or even lower than that?

A: It is much lower than that. The pricing is positioned in China between USD 40-55, whereas our Levi's brand is positioned virtually from USD 65 above. It truly is a new price segment and branded apparel, that is emerging in China.

Q: I know you have experimented with the mass market in India through the Levi's signature route. This is a market where you have the middle-class booming, consumption is on an upswing. It will make sense for you to experiment with Denizen in India as well, wouldn't it?

A: Absolutely. That is what we are going to do. We are going to test the Denizen brand in India and we are going to have a look and see what the response to that is, because we believe it is a similar trend. There are a lot of similarities between India and China.

With the emerging middle class, we will be testing Denizen. In fact we plan to launch that in the next couple of weeks. We will see what it takes to launch a global brand in the Indian marketplace. We are going to launch Denizen in China first, then in Singapore and Korea and test market it in India. Hopefully we will learn a lot and be able to roll the brand out across India as well.

Q: What I find interesting here is that you have dropped the Levis brand and you have done a entirely new brand Denizen whereas in India when you actually experimented with the mass market you stuck with the Levis Brand name. Is it because you don't want to diffuse the image of Levis as a premium jeans wear maker?

A: That is right. First of all this is a consumer proposition and the Levi's brands are premium brands and that is what people look for leading edge innovation, new fashion trends.

So we didn't want to denigrate that brand at all. So we came out with a new proposition. And this emerging class isn't quite yet confident enough to take the leading edge brands. So based on what they were telling us, they want to have a way to get into the branded market and we don't want to take Levis brand down. So the Denizen brand is our response to that market demand, very exciting.

Q: Since you are talking about bringing down prices to almost between USD 40-50, what is going on at the backend? How are you being able to bring down costs without impacting and squeezing margins?

A: It is a design capability that we bring. If we look at the fabrics we use in the Levi's brand for instance, they are very expensive leading edge fabrics which share the latest quality. This brand won't quite have that. It will be a little bit behind it. It will still be very well made, still perform extremely well but you won't get that latest leading edge innovation coming there. In that way you can deliver a brand at a good price proposition there.

Q: Would it also mean sourcing much more from countries like India, Sri Lanka? Would that be the route forward in order for you to be able to bring down costs further?

A: That is part of it. Already in India we sourced for the Indian market out of India and China we would source for the China market out of China. We do think though, as you launch these brands, you get some scale, because these emerging brands you want to try to build high volumes. Through that high volume you start to get some productivity efficiencies there.

Q: So clearly the bet for you at this point is the emerging markets isn't it?

A: Yes and I think that is where all the growth is happening. If you look around the world today, there is no secret there are some economic challenges taking place out there. But two countries that are doing very well are India and China. So we are responding to that, we are responding to the consumer demands and we think these two brands are a great way to do that.