Business & Industry
Jun 1, 2015
Naturally soft and warm
Merino, probably the best type of wool one can find. New Zealand produces and exports the wool of more than 50 million sheep, transformed in yarn and clothing. Twenty years ago, New Zealand Merino Company decided to change the traditional wool industry into a global-market-oriented culture that creates, delivers and captures long-term value.
New Zealand Merino Company (NZM) is headquartered in Christchurch in New Zealand's South Island. The organization was started in 1995 by Merino growers who wanted to lift New Zealand's Merino wool out of the commodity basket through marketing and differentiation. As demand and prices for coarse wool declined, many farmers transitioned to raising Merinos for their finer, more valuable fiber.
However, New Zealand's Merino farmers were still struggling due to the fluctuating prices that are characteristic of any commodity market. In total, the country produced 8,000 metric tons of clean Merino per year — just 2.7 percent of the world's 290,000 clean-ton Merino supply. Against this backdrop, the New Zealand clip had no identity of its own and was often blended with fiber from other countries. Moreover, the growers had only a limited understanding of the market for Merino fiber, and little ability to influence it. As a result, they faced unsustainable prices, an increasing cost of production, and diminishing returns.
Through extensive market research, along with grower involvement, NZM was able to define a unique identity for its offering. It also crafted a marketing story that would support a price premium at retail that could be shared among players in the supply chain. NZM would further support this price premium by investing heavily in research and development and market development activities that would help retailers and brands boost demand for products made with New Zealand Merino wool.
Today, NZM is the New Zealand Merino industry's leading integrated sales, marketing and innovation company. It was established with a vision to differentiate Merino fibre in high-value markets worldwide and deliver sustainable value for growers.
NZM's strategy is to target New Zealand Merino fibre, meat and co-products to premium brands and consumers in high-value international niche markets. Its fibre brand partners are leaders in luxury and performance apparel markets in the US, UK, Europe, Japan and China, where higher returns are realised through branding and communicating the natural and exclusive qualities of Merino fibre.
The company handles around 80% of New Zealand's fine wool clip. This equates to $150 million in fibre sales, of which, last year 70% were through long term contracts as opposed to boom bust commodity transactions. ZQ Merino, its fibre brand, is recognised globally as a guarantee of the best Merino fibre available, and is backed by an accreditation programme ensuring ethical and sustainable farming methods.
In addition to its core fibre business, NZM has identified opportunities to drive future export earnings through Alpine Origin Merino Ltd and its SILERE branded meat initiatives (a joint venture with Silver Fern Farms). It has secured distribution in the USA and China.
NZM has experienced significant growth in export earnings. In the last financial year, international sales totalled $151 million, a 26% increase on the previous year, and accounted for 92% of NZM's revenue.
Through the company's activities and business model it has delivered on average $10 to $15 million of additional value annually for New Zealand Merino growers.
While traditional wool is widely perceived as being scratchy, hot, heavy, and smelly, New Zealand Merino wool has numerous natural advantages:
The complex natural structure of Merino fibers gives them the unique ability to both absorb and repel moisture. When it comes to shower/rain resistance, a Merino garment can hold up to 30 percent of its own weight in water without feeling damp. It can also absorb vapor from the skin during activity, increasing the time before sweat condenses to a liquid form and makes a garment uncomfortable.
Coarse wool fibers push into the skin and irritate nerves close to the surface; fine Merino fibers bend against the skin and do not aggravate the nerves.
Merino provides natural temperature control by absorbing and releasing moisture. For example, in cool, wet conditions, the Merino fibers generate a small but perceptible amount of heat as water vapor interacts with their chemical structure. This heat prevents the wearer from becoming chilled.
The natural crimp (wave) and resilience of Merino fibers make Merino garments warm and comfortable to wear by trapping air next to the skin.
Unlike synthetics, wool is naturally flame retardant.
In contrast to synthetics, Merino wool has a unique ability to minimize the build-up of body odor during activity.
Merino is naturally resistant to shrinkage and wrinkles.