A legal stoush between Mohawk Industries-owned Godfrey Hirst — with revenues of $US11 billion last year — and Bremworth turned a corner about three weeks ago.
Godfrey Hirst abandoned its claim for damages at a High Court hearing. It brought the case against Bremworth saying the company’s claims around wool carpets being "better for the environment" and that a switch from synthetics to all wool carpets is "changing for good" are misleading.
Bremworth says this was despite Godfrey Hirst making similar claims, including that it took pride in making the most environmentally friendly carpet on the planet.
Bremworth adopted a new strategy in which it shifted to only producing wool carpets in mid-2020.
Chief executive Greg Smith told 300 delegates at a red meat sector conference in Christchurch that it had looked at all the signs to see where consumers were heading and realised it could not compete in the cheap market.
"What did it all mean? It meant dropping around $60 million in revenue to reinvent the business, to rebalance the business and grow again. That takes courage and that’s the No 1 reason I joined Bremworth, because there’s a ton of businesses with words on the wall, but not many places are prepared to take that type of decision and drop that type of income and grow again."
The father of five children said Bremworth had reinvented itself as a premium design soft flooring and furnishing business with a focus on sustainability and like-minded consumers.
"Not everyone’s happy with what we did. Not only did we make the big decision to drop the synthetics, we actually made it very clear why we were doing that, why we were going good. So we were very aggressive in extolling the virtues of strong wool and very aggressive in showing exactly what goes into synthetic carpet and our competitors really didn’t like it. In fact on my first day at Bremworth they sued us."
He said that had since changed, with damages dropped against them.
"We are still going to court in September 2023, but somehow it’s believed that mining subterranean carbon and the byproduct of that being plastic is more sustainable than sheep on hills on grass. So we look forward to that and won’t shy away from that and that’s the challenge we all have in front of us today to be bold, to be courageous and make a line in the sand."
Bremworth had gone from the darling of the sharemarket in the 1980s to the early-2000s with a share price at about $5 and dividends being paid 75% of profits to, at its worst, 15c.
"That’s a tough pill to swallow, but the majority of shareholders have stuck with us and we hope to reward them over the coming years with the dividends they’ve been denied and with the value of the share price going up as a result of our success."
About $10 million had been spent in marketing the past two and a-half years to talk about why strong wool was "awesome".
This was partly financed by the sale of plant, land and buildings at Papatoetoe for about $24 million and through profits.
Mr Smith said its would continue to invest more money over the next two years in New Zealand, Australia, and North America because perceptions of wool were changing to it being more sustainable and natural.
It would continue to make it clear that synthetics were man-made, he said.
He said it was important to make profits because meaningful change would not be made otherwise.
It was committed to a $4.9 million sustainability programme and had just released a compostable rug that could be returned to the Earth. Ultimately, it could be upcycled into carpets, rugs or other products such as insulation and underlay, he said.
Another focus was on energy efficiency and carbon reduction.
Mr Smith said better returns for farmers were important, as wool supply was its No 1 threat, with strong wool being stored in sheds because of low prices.
Before "big oil" came in with synthetic carpet, wool was being picked off barbed wire fences at one stage because of its value.
He said wool carpet went on the backfoot when synthetic carpets were marketed as being cheaper and able to be recycled as it was plastic, and then became softer with more lustre.
Bremworth entered the synthetic market, but could not keep up with sole-business brands.
"But nothing lasts forever and fast forward a decade and consumers are waking up to the fact that plastic based products are a problem and plastic doesn’t go away or break down, it only breaks up and as a result it pollutes our waterways, our oceans and gets into our food chain."
Mr Smith said companies he had previously worked for — Icebreaker and Michael Hill Jeweller — were started by business founders prepared to challenge the norm, when their industries faced enormous change and challenges.
He said the red meat sector should not be afraid of being bold, while it faced challenges with the movement away from farming and real food towards plant-based products.
