Global demand growing for New Zealand strong wool

Increasing international consumer demand for natural products could signal improved returns for New Zealand strong wool growers, says the New Zealand Merino Company (NZM), now a significant player in the export of all types of wool from New Zealand.

“The language around naturals versus synthetic is absolutely changing and brands have to have a natural offering, and the momentum is building around the world,” says NZM global supply manager Matt Hand.

“Previously they haven't had to have a natural offering necessarily, so you see carpet brands, for example, that are 100% synthetic. But now, if they want to remain relevant in the market to all of their consumers or potential customers, they have to have a natural offering and that's absolutely a big driver.”

NZM was formed as a vehicle to improve the fortunes of fine wool producers by setting up direct contracts between growers and manufacturers but it has since expanded to include medium micron and strong fibre as well.

“It started out because there was a lack of investment in building demand and creating market opportunities and a premium price for some of the best wool in the world. There's no doubt that NZM has succeeded in its marketing strategies for merino and mid micron wool and we using the same blueprint for strong wool as well.”

Contracts are proving popular with coarse wool producers and this year NZM sold 93.6% of the wool it handles by direct partnerships, up from 73.1% the previous year. Hand says by connecting growers directly with brands, they get greater certainty and are rewarded for quality and sustainability.

Suppliers to NZM have to sign up with its ZQ or SQRX programmes which set benchmarks for animal welfare, environmental sustainability and social responsibility. But Hand says most New Zealand farmers are already well on the way to meeting those standards.

“I've seen a lot of growers enter the programme who probably felt that it was challenging but found that it was it was actually really well aligned to what they were already doing and that made it an easy process for them.”

In the past 20 years world wool production has declined sharply; in the early 90s Australia produced a billion kilos of wool a year but that’s now down to 250 million kg.

“We've seen similar decline in New Zealand and in South Africa. What we're dealing with now is a unique, specialist fibre and we can't treat it like a commodity, we have we haven't been able to treat it like a commodity for a couple of decades. It's just taken a while for some of the industry to catch on.”

The key to reversing that decline is making wool profitable again and Hand believes the way to do that is by following the blueprint established for fine wool. Alongside the direct contracts is a commitment by growers to high quality standards and surety of supply.

“When a brand commits to a higher price they need to know they will get well-grown wool backed up by our integrity systems and certification models. The need to know there will be a continuity of supply when they plan new ranges and volumes of product.”

While he’s optimistic demand for natural fibres will increase, it won’t happen overnight, Hand says.  “One thing that we all have to accept is that as after we identify the opportunity, the potential for change, it takes a long, long time before it actually changes.

“It has to change at the consumer end to justify a brand or a product shifting to a new fibre and so it just takes time.”

And it won’t happen by itself, Hand adds. “My team and I have spent years of our lives, in factories overseas, working through the opportunities and problems with mills to create a range or a fabric and connect them with the right supply chain.”

“We need to follow through with more volume to keep these brands engaged and the only way we're going to get volume is if we put a profitable proposition to our growers.

“The whole point is to try stop the reduction in strong wool production in New Zealand to try to reverse that trend somewhat and to return those growers to profit and we absolutely we have turned that around for a lot of our growers in the last couple of years.”