While sustainability has traditionally been a key driver of innovation in the denim industry, companies in 2026 are increasingly moving beyond production and product design to embrace data collection and AI.

Artificial intelligence has been a buzzword in the denim sector for several seasons. Vivian Wang, CEO of Kingpins Show, anticipates more companies in the denim supply chain to apply it to different aspects of their business in 2026.

“Many of our exhibitors have experimented with AI in one way or another, from design assistance and tracking market trends to raw materials and sourcing modeling and assortment planning,” Wang said. “It is all very interesting, but I think we are still in the early, exploratory stage to see how AI will best fit in the denim supply chain.”

Investments in end-to-end digital supply chain traceability and data management to track a garment from seed to store are critical for conducting business in 2026 and beyond, according to Lizzie Kroeze, AGI’s director of product development and marketing for Europe.

On the one hand the technologies ensure compliance with upcoming legislation for brand partners and provide evidence needed to back up sustainability claims, which in turn builds consumer trust, she said. On the other, it also allows brands and manufacturers to mitigate some of the other predicted supply chain bottlenecks such as streamlining customs clearance to avoid delays.

“I think the single biggest opportunity we should capitalize on this coming year is to leverage data traceability and digital transparency to gain a competitive advantage. Rather than viewing the new ESG requirements as compliance burdens, brands and manufacturers alike can use this to build trust and loyalty with their customers and to justify premium pricing,” Kroeze said. “Data shows that consumers are increasingly willing to spend more on ethically made and sustainable products and offering full product traceability is one way to set denim assortments apart from the rest.”

AGI has been preparing for these new data requirements for several years by building an internal data infrastructure and investing in strong partnerships and long-term contracts with partners so it can more proactively and efficiently mitigate any challenges that come our way. “By working closely with all industry stakeholders, we can plan and invest strategically to ensure minimal impact from raw material scarcity, logistical challenges, and trade route disruptions,” Kroeze said.

In sustainability, there is no one-size-fits-all solution to invest in.

“I would prioritize end-to-end traceability combined with low-impact processing solutions—focusing on reducing water, energy, and chemical use,” said Onur Duru, general manager of Bossa. The exec added that competitive advantage will come from the ability to credibly prove performance and environmental impact, while simultaneously reducing operational risk and strengthening customer confidence.

Ibrahim Ethem Buyukpepe, Calik Denim’s acting general manager, said the Turkish mill sees challenges like raw material consistency, water and energy efficiency and regulatory compliance as a pivotal moment to accelerate innovation and to invest further in alternative materials, process innovation and smart manufacturing. The goal is to turn potential constraints into competitive advantages.

“Our strategic investment focus remains on material innovation combined with process sustainability,” he said. “This includes developing next-generation fibers, biodegradable and low-impact denim solutions, as well as scaling technologies that significantly reduce water, chemical use and carbon footprint—without compromising performance or aesthetics. These investments future-proof both our business and our customers.”

Tejidos Royo anticipates unpredictable raw material prices—especially cotton and sustainable fibers—to be a key challenge this year.

“Volatility in raw materials, combined with stricter ESG regulations, will put pressure on margins and require greater investment in sustainable alternatives. That’s why we are modernizing our mills and focusing on recycled fabrics to stay ahead of regulatory changes and market expectations,” said Cristina Cerdeira, Tejidos Royo’s marketing manager.

In 2025, the family-owned Valencian textile company announced it was relocating two of its factories in Picassent to Alcudia de Crespins and upgrading its industrial infrastructure. The 13 million euro investment includes renovating and building new industrial facilities for weaving, dyeing and finishing.

Investments in textile recycling is one way to regain some control. The Spanish mill is already investing in recycled fabrics—a move not just driven consumer awareness but also by upcoming European regulations set to take effect by 2030. “Companies that move early will have a clear competitive advantage,” she said.

Beyond recycled fabrics, which Cerdeira said will soon become standard, she said the industry should focus on offering added value.

“There is too much denim that lacks differentiation,” she said. “We are working on technical denim that provides extra protection for users—such as flame-resistant and cut-resistant fabrics for undercover police or workers who need comfort and safety. Even for urban consumers, we can offer denim that ensures protection in case of falls. This is the future: combining style with functionality.”