Promotion the key to wool's return

The Council of Wool Exporters and Wool Partners International may not agree on much, but there is some common ground in the view that farmers must once again fund the promotion of their beleaguered fibre.

The evidence certainly supports that view.

Crossbred wool growers stopped paying Wool Board levies about 10 years ago and the price of their fibre began falling sharply about two years after that.

In perhaps the greatest ignominy, there were reports crossbreed carpet wool was now 40% cheaper than synthetic and some synthetic carpet makers were adding wool to their blend to reduce the price.

Despite this and with the sector financially on its knees, there appears to be little effort to unite the industry.

Instead of sector leaders talking to each other, many talk down and at each other.

Politics and turf protection appear to be getting in the way of rational debate and decisive action.

The industry appears to have split into three groups - Wool Exporters and its allies under the United Wool Marketers Group; Meat and Wool New Zealand and PGG Wrightson under Wool Partners International (WPI); and Elders Primary Wool.

Elders appears to be getting on and doing its own thing, evident by the recent partnership with global carpet manufacturer and retailer CCA Global Partners, and following that up last week with a support and supply agreement with Romney New Zealand.

This week, Elders announced a deal with US company Everett Deneane to sell Nepalese hand-woven rugs made from New Zealand Romney wool.

Ironically, the CCA agreement was a blueprint of New Zealand Merino and what WPI was trying to achieve - supply wool to market specifications for which suppliers receive a premium.

All groups agree farmers will have the final say on the direction of the sector by who they supply their wool to, but some observers say central to that happening is to once again get passionate about the product and to establish a direction.

Demand would only grow once consumers and retailers knew the story about wool, knowledge that had shrunk after a decade of no promotion.

And it seems farmers will have to pay for that.

There was broad agreement that consumers were becoming concerned that products should be natural, ethically and sustainably produced and environmentally friendly.

That tied in perfectly with wool.

WPI chief executive Iain Abercrombie believed wool's time had come.

"Wool has gone the full circle and wool's time has come around again."

However, a decade of no promotion had created huge obstacles.

Mr Abercrombie said one of his staff recently went to a Christchurch store to buy carpet only to be lectured by the salesperson about the evils of wool and the wonders of synthetic.

Recently, he saw a billboard in the United States advertising synthetic carpet with a picture of a child and a lamb.

"They've [synthetic carpet makers] taken the attributes of our product and marketed it, and now they have the moral high ground and claim to have a superior product. We've been left languishing."

New Zealand Merino showed what could be done by transforming fine wool from a commodity product into a brand and linked that back to New Zealand's clean, unspoilt high country.

The success of WPI relied on four pillars: united growers; consolidating the clip; collaborating industry; and market innovation.

He said he could understand farmer cynicism given the falling market and the way the industry had been managed, but believed WPI offered farmers a stake in the business and a say in the way it was marketed.

"The history of wool once it left the farm was that it was in the hands of traders who have kept farmers away from the market and farmers that have supplied wool do not know where it goes and what it is used for."

His company intended to make greater use of supply contracts and to move away from the auction which he said was suited to supplying exporters with product at the cheapest possible price.

But improvement would take time, with better prices three to five years away.

Wool Exporters executive manager Nick Nicholson said until growers agreed to start funding promotion, there would be no turnaround.

Crossbred wool growers worldwide were the only sector with the "resources to create the initial pool of money" and they should contribute, he said.

Then the rest of the industry would follow.

Mr Nicholson estimated $US50 million ($NZ96 million) was needed for promotion which, on a per capita basis, meant $US12.5 million should come from New Zealand industry.

It was essential to educate retailers and customers on the merits of wool and that should be done by all crossbred wool producers.

"There is only one brand and it is wool and the competitors are synthetics and cotton."

Mr Nicholson agreed there had been little interaction between exporters and growers, which had created division, but said exporters were not the farmers' enemy and were surviving on margins of 1% to 1.5%.

So, did crossbred wool have a future?

Absolutely, parties spoken to said.

"If there wasn't a future for wool my guys wouldn't still be sitting here," Mr Nicholson said.

Mr Abercrombie agreed, saying its attributes would sell it if people knew about them.

Elders managing director Stuart Chapman also believed wool had a future, but that required changes to the way it was sold.

"That means telling people of the values and virtues of wool, selling that and create a brand that recognised that."

 

Add a Comment