He first made the prediction about five years ago when interviewed by Southern Rural Life about the relatively new alpaca industry.
Mr Nailard attended the Australian National Alpaca Show in Adelaide last month and was impressed with the high quality of animals and products there, including high-fashion clothing items.
He said even though the alpaca industry was still relatively new in both countries, New Zealand was proving it could hold its own against the neighbours with animal and product quality.
However, while New Zealand's national herd was about 15,000 registered alpacas (with more unregistered), Australia had about 120,000 registered alpacas (and more unregistered).
Alpaca Association New Zealand marketing and promotions committee chairwoman Hermione Richards said the breeding structure in New Zealand was proving successful and producing some of the best-quality animals in the world.
"We are very much comparable to the quality being produced in Australia, just on a much smaller scale," Ms Richards said.
She said Australia was trying to get a fleece industry up and running, but even with 120,000 animals this was proving to be difficult.
"This is why it is not a viable option in New Zealand at this stage, as we have so few animals and with a huge variation in quality and colour."
She said alpaca products were a luxury item and sought after, but there was not the quantity of fibre available in New Zealand for this to be done at a commercial level at present.
Australia has had a bad year for fleece producers, although there were still outlets for alpaca meat and pelts.
Australian Alpaca Fleece Ltd (AAFL) is the major buyer of the Australian fleece clip and sends it overseas for processing.
The company's suppliers were told earlier this year no alpaca clip would be accepted for classing and valuation.
AAFL blamed the global crisis for a reduction in world demand for all natural fibres, including alpaca, and unsustainably low prices, both of which led to the temporary suspension.
It started accepting fleeces again in September.
However, while the Australian Alpaca Association worked hard to find alternative opportunities for its breeders, the suspension had a negative impact on producers.
"An average medium-age quality female [in Australia] used to sell for $A4000 [$NZ4850] to $A5000 [$NZ6000] and now fetches between $A1000 [$NZ1200] to $A1750 [$NZ2100]", Mr Nailard said.
As most of our fibre production was processed at mills within New Zealand, breeders were not affected and there were still new entrants coming into the industry, he said.
The "Made in New Zealand" tag was this country's main advantage and was an excellent marketing tool.
"Retail outlets are more willing to take product, and clients at retail and public level trust the product more than they did three years ago," Mr Nailard said.
There was also more interest in alpaca products from tourists, he said.
Most New Zealand breeders earn their income from livestock sales, and many, like Flagstaff Alpacas, have explored other avenues, diversifying into knitting yarn, baby blankets, and duvets, and there is a demand for fleece for luxury carpet and soon-to-be-launched alpaca socks, which will be available at rural trade outlets.
Another reason for the increased demand and acceptance is better-quality fibre developed through breeding.
"There is now more professional shearing and skirting of the fleece, better processing and better dyeing processes," Mr Nailard said.
Woollen mills were thinking "boutique" and "niche market", he said.
"Mills have got more space as the main wool clip is being sent to China for cost reasons, and the mills are starting to look at niche fibre like alpaca fleeces.
"More breeders are also putting their product into co-operatives and working together to take advantage of more mature marketing than they did five or six years ago."
Ms Richards said top-end quality prices for fleeces going to the boutique niche market could fetch $50/kg, while poorer-quality fibre, which might be used in duvets, might fetch about $1/kg to $2/kg.
"There will be more markets further down the line," he said.
He could not see an alpaca meat industry being established in New Zealand in the foreseeable future.
"We give our alpacas names. No protocol for slaughter has been established in New Zealand and it would be expensive to do so.
"My guess is New Zealand is not quite ready for that."