From scratchy blankets to luxury suits, NZ wool goes up-market to survive

Bremworth

19/11/2014 21:00

By Naomi Tajitsu 
    WELLINGTON, Nov 20 (Reuters) - Italian luxury textiles house 
Loro Piana recently made its annual trip down under to select 
two bales of the finest merino wool, one from New Zealand and 
the other from Australia, for its premier line of suits, which 
sell for tens of thousands of dollars. 
    Along the edge of the ultra-fine fabrics, the LVMH-owned 
 LVMH.PA  clothier stitches a tag denoting provenance and 
vintage, not unlike the label on a bottle of fine wine. 
    "Any time we mention New Zealand wool and build brands that 
mention New Zealand origin, we're adding value, so it's 
absolutely in our interest to say where our product is coming 
from," Deputy Chairman Pier Luigi Loro Piana told Reuters. 
    Loro Piana's fabrics are a far cry from the scratchy 
sweaters and blankets made decades ago in the heyday of New 
Zealand wool, as the world's second-biggest exporter after 
Australia goes upmarket to resuscitate an industry in decline 
since the 1980s. 
    The luxury market, especially in China, has opened new 
opportunities although volumes remain small and excess supply 
has undermined some of the price gains of recent years. 
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 Graphic on New Zealand wool:  http://link.reuters.com/feb53w    
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    New Zealand exported around $583.6 million in wool products 
in 2013 according to Statistics New Zealand, down from $1.52 
billion in 1989, around the time sheep farmers began converting 
their land into more lucrative dairy farms. 
    Once the main export from the South Pacific country, where 
sheep still outnumber humans six to one, wool production has 
slumped under an assault from synthetic fibres. 
    "Wool was pretty damned important in my father's day," said 
Roger Barton, a fifth-generation sheep and beef farmer in the 
rolling hills of the Wairarapa region, an hour from the capital, 
Wellington. 
    On his father's farm, wool generated around 60 percent of 
gross income, a figure now down to 15 percent as growing global 
demand for protein lifts returns on lamb. 
    "Wool is just not on the radar because it's too small a part 
of the total economic package inside the farm gate. The priority 
now is on meat ... It's pretty frustrating," Barton said.    
    But a growing focus on natural fibres has opened the door 
for New Zealand exporters to sell what they say is the finest, 
whitest and strongest wool in the world, lifting prices from the 
near-rock-bottom levels hit in 2008. 
    "Everyone hated wool 20 years ago because it was the 
old-fashioned thing," said Jeremy Moon, founder of New Zealand 
merino sportswear label Icebreaker. "We set out to create a new 
experience for people which was different from their perception 
of wool, which was something that was scratchy and itchy." 
    The firm touts the breathable, temperature-regulating and 
antibacterial properties of wool from merino sheep, whose dense 
fleeces protect against harsh conditions in the high country. 
    Icebreaker's sales have grown to $165 million from $24 
million in 2004, enabling it to expand into Europe, North 
America and soon to Asia.  
     
    CARPETS FOR MASERATI DRIVERS 
    A tentative recovery in the luxury goods market lifted fine 
wool prices to a record high of NZ$17,500 ($13,770) per tonne in 
2012, but demand has failed to keep up with production, knocking 
prices down to NZ$15,200 this year, according to Beef and Lamb 
New Zealand. 
    In Australia, the world's largest merino producer, a similar 
oversupply has knocked the benchmark price down to $9,140 per 
tonne last month from around $15,000 in mid-2011, according to 
Australian Wool Innovation Ltd.   
    Despite its growing brand recognition, merino accounts for 
only 5 percent of New Zealand's wool clip. The rest is from 
cross-bred sheep, which fetches roughly one-third the price.  
    Cross-bred wool, too coarse for clothing, is exported in 
bales mainly to China, to be made into carpets, bedding and 
insulation. But some manufacturers are now targeting the higher 
end of these markets to lift margins. 
    After years of supplying to hotels in China, carpet 
manufacturer Cavalier Corporation  CAV.NZ  is expanding into 
residential sales in the world's No. 2 economy. 
    "I'd like to be in every up-market villa and apartment in 
China in the next few years," said Managing Director Colin 
McKenzie. "The new money, the Maserati drivers - that's where we 
need to be."     
(1 US dollar = 1.2708 New Zealand dollar) 
 
 (Editing by Lincoln Feast and Alan Raybould) 
 ((naomi.tajitsu@thomsonreuters.com; +6448027979; Reuters 
Messaging: naomi.tajitsu.thomsonreuters.com@reuters.net)) 
 
Keywords: NEWZEALAND WOOL/