Prices continue to drop due to difficult international market conditions, but a new company believes there are still opportunities for increasing demand and price for New Zealand strong wool.
Wool Partners International (WPI) chief executive Iain Abercrombie did not want discuss the company's business plan other than to say it is constantly under review. But he did
say there is a growing consumer emphasis in North America and Western Europe on natural and renewable products. Pure wool carpets and rugs made from NZ strong wool fit the criteria perfectly.
Despite the gloomy economic outlook for 2009 and massive job losses around the globe, there are still wealthy people who will continue to spend on luxury items.
Personal attitudes and intelligent decision-making by consumers seeking products that are environmentally sustainable are good for NZ strong wool.
Abercrombie says the long-term objective for WPI is to increase strong wool prices at the farm gate. However, the short-term focus is to meet international interior designers, flooring retailers and manufacturers.
He says wealthy people employ professionals for interior design ideas and advice so interior designers have a major influence when it comes to people buying carpets or rugs.
Developing long-term supply partnerships with wool growers and securing long-term commitments to NZ wool from manufacturers is the other part of the equation.
He and Tim Lonsdale from Wools of NZ are visiting the world trade fairs-Domotex in Hanover, Germany, between January 17 to 20 and Surfaces in Las Vegas, United States, between February 3 and 5.
The fairs are the world events for the flooring industry. Business representatives can meet face-to-face with key decision-makers who want to do serious business in the flooring market.
Both trade fairs are ideal for meeting leading retailers, architects, designers, installation experts, builders and manufacturers, as well as other related professionals that are influential in the buying process for consumers.
Abercrombie says the key task for WPI is to develop supply relationships with international users of NZ strong wool.
The company plans to capitalise on the technical expertise within Wools of NZ and to continue to use and develop the Fernmark brand.
Feedback from Wools of NZ brand partners has clearly stated the brand is well established and highly recognised internationally for quality and performance.
"We see Fernmark's value as an accreditation (quality) and provenance mark. We are looking to launch a companion brand with strong lifestyle imagery that will be supported by the Fernmark guaranteeing quality and authenticity".
Being able to prove the carpet or rug has been made from NZ wool is becoming more important.
He says the task ahead for WPI will be difficult and will require a continuing commitment from both end users and strong wool growers. Even with the rapidly declining sheep population, (now around 34 million), NZ is still the world's largest supplier of carpet wool, producing more than 100 million kilograms clean.
However, there is fierce competition from synthetic fibre manufacturers in the carpet and rug markets, particularly from nylon and polypropylene. And while NZ strong wool prices have dropped about 2-3% annually over the past five years, prices for staple and bulked continuous filament nylon have risen by 6-7% annually.
Synthetic carpets and rugs have also gained market share internationally despite the wool price relativity being significantly lower.
Carpets and rugs made from NZ wool are still recognised for their high quality specifications and performance. They remain at the luxury end of the consumer market, indicating there is room for NZ strong wool prices to increase by 30-50%.
"We believe wool should maintain a premium over nylon and that it's important to restore the price relativity between wool and nylon fibre".
Abercrombie explains there is a desperate need for consumer sales information identifying the natural benefits of wool carpets and rugs. There is also an urgent need to differentiate NZ carpet wool from synthetic fibres.
WPI will focus on delivering technical support to customers for NZ wool so their products meet consumer expectations for performance, style, colour and texture.
The intention is to offer customers branded wool deliveries and technical support for yarn processing, weaving and tufting. The company will also provide design and colour forecasts for brand marketing initiatives in key international markets.
Back-to-back supply contracts will be offered to farmers and manufacturers in order to maintain a consistent supply of wool types and price stability. This will also allow full traceability from farm to carpet.
Abercrombie believes WPI is more than just a wool trading company. The aim is to increase demand and value through brand marketing initiatives and forming partnerships along the value chain.