Sometimes the answers for the future have been seeded in the past. Take the New Zealand cashmere industry for example. In the mid 1980s it was being touted as the next big thing.
So what happened?
Simple, the missing ingredient was a market or perhaps more accurately a coherent marketing strategy.
Cashmere has always been viewed as a premium product and discerning buyers have always been there. With that point established it begs the question: is now the time?
Every industry has its champions, especially in the beginning. They are critical because without them even the best ideas can falter before seeing the light of day.
Two such champions are Otago-based farmers David and Robyn Shaw. They believe NZ is perfectly positioned to produce world-class cashmere fibre. They also believe this premium, luxury fibre can offer excellent benefits to farmers and have proved it.
Equally, this amazing fibre offers incredible value to consumers, particularly those seeking to differentiate themselves with tasteful consumption of high-end, sustainable luxury.
Shouty conspicuous brands don’t enjoy the traction they once did.
Consumer behaviour is changing and so are once endemic fashion trends. It’s not quite so cool to be seen wearing products that are out of sync with today’s human challenges.
For example, fast fashion is likely to face headwinds because it is out of step with the big issues of our time.
In 2018, McKinsey and Company suggested, “In fashion, the shift to new ownership models is driven by growing consumer desire for variety, sustainability and affordability, and sources suggest that the resale market, for instance, could be bigger than fast fashion within 10 years.”
Tomorrow’s clothing will require environmental, ethical and sustainable credentials to win the hearts and minds of consumers. Products will need to be durable and last for more than one season. Throw-away is yesterday.
High-end lifestyle fashion companies like NZ’s Untouched World are already pioneering paths to the new consumer frontiers.
Untouched World understands today’s ethical consumers want beautiful, easy-to-wear, easy care fashion that will last for years. It also understands sustainability and environmental concerns are very real and here to stay.
It’s a disruption moment that will catch many brands snoozing. Trying to ethics wash fashion offerings is doomed to failure.
This is where NZ could and should be; a lifestyle clothing powerhouse and cashmere sits very nicely in the mix with Merino. NZ needs more companies like Allbirds and Icebreaker.
So – awesome, tick – this all sounds exciting.
Many would say it’s a no brainer but the irony in 2020 is demand for cashmere fibre is running ahead of supply. Cashmere is profitable too, with prices for top grade fibre reaching $150 a kilogram.
Famously known as white gold, once worn, a customer never forgets the experience. The product is beautiful to touch, it is extremely lightweight to wear, warm and long-lasting.
NZ Cashmere’s farm in Clinton produces fibre as fine as 13 microns. It represents the best of the best fibre available anywhere in the world.
For context, only one to two kilograms of Chinese fibre in every 100 kilograms produced reaches this penultimate grade and China doesn’t have the environmental credentials of NZ.
In fact, the opposite is closer to reality.
The Chinese cashmere industry faces significant impacts and constraints from environmental limits originating from climate change.
These issues and weaknesses are likely to play out in the minds of consumers as supply chains become increasingly transparent.
Consumer decisions will be driven by evidence of provenance, authenticity and planet-friendly. These critical elements will become key differentiators for fibre marketers and premium retailers.
Again, NZ is beautifully positioned to strongly differentiate on climate-friendly credentials and the latest regenerative initiatives will help marketers enhance that position further.
And the premium story isn’t just for cashmere consumers. It plays out very well for farmers too.
Shaw says conservative gross margins of more than $200 a stock unit are possible, if the forage input is counted. Goats graze differently, eat different pasture components and are complementary to sheep and beef.
Pastoral farming needs new strings to its bow and a super-premium fibre would meet this requirement perfectly. Even more so, if it can be grown in different geographical and topographical ranges than Merinos.
Cashmere represents just such an opportunity and is an attractive and practical choice.
Another significant benefit to farmers are the accrued benefits and knowledge stemming from almost 50 years of breeding goats for cashmere. As a result, farmers working with NZ Cashmere have access to advanced, world-class genetics.
The Dtreo system being used by NZ Cashmere is backed by an innovative and dedicated recording system developed specifically for cashmere goats by renowned NZ science and technology firm AbacusBio.
NZ Cashmere is partnering with Woolyarns to make high-quality yarns and Untouched World will turn them into beautiful, high-value garments. Both these enterprises are leaders in their respective fields and share common values around the future of fibre. They are also intrinsically NZ firms that champion produce from NZ farmers.
That means the story comes from the country’s heartland. It will resonate with consumers and once woven together, the stories of each enterprise reinforce the strength of the cashmere opportunity.
These initiatives are important to NZ’s future. They provide much-needed innovation in the food and fibre sector and offer a clear path to the creation of high-value exports.
They also represent opportunities to increase productivity across the supply chain and by doing so will create high-paying jobs in agricultural production, textile manufacturing, fashion design and marketing. These are the jobs NZ wants and needs to secure its future.
Most great ideas need large doses of perseverance and resilience to bring the entrepreneur’s vision to life. They also need some luck and timing. The Shaws’ stubborn commitment to cashmere fibre over the last three decades shows a couple with real belief and passion in an idea that to all intents and purposes is now perfectly suited to its time.
Cashmere is a luxury fibre with a ready and waiting market. That market is estimated to be worth USD $3.1 billion by 2022. Most NZ farmers hardly recognise the potential goats offer.
To put the number into context, the NZ Merino Company has been talking up the fine wool industry and rightly so.
The total value of wool exports in 2019 was $550 million. Wine produced $1.7 billion and kiwifruit brought home returns of $1.86b. What could cashmere be worth?
If NZ could capture 10% of the global cashmere market in the next decade that would equate to $450m a year. Not a bad contribution to the country’s export receipts and GDP.
In 1988, NZ goat farming peaked at 1,338,000 goats so it was well on its way back then.
In those days the market was nowhere near as lucrative as it could be today but reaching those markets remains a challenge.
Successfully taking advantage of this cashmere opportunity will require Government support, farmer buy-in, serious investment and industry-wide commitment.
The Shaws have put in the hard yards and now they need support. Building an industry is not an individual pursuit, it is a team effort.
Again, this is an area where NZ has more than demonstrated what it can achieve. It is a country that revels in underdog status and famously underpromises and overdelivers.
The old objections to goat farming no longer hold up. Times are changing. We’re seeing more regenerative options than ever before.
There are Wiltshire shedding sheep and there is plenty of talk around carbon farming and transitioning to value.
Ironically, out of the many innovations doing the rounds there are arguably none with the immediate potential of cashmere. It is an industry that ticks every box and comes with an accelerated path to generating premium returns in export markets. Farming cashmere offers farmers diversification, environmental solutions and a ticket away from price-driven commodity markets.
About 70% of the world’s cashmere production comes from China and cashmere enterprises there are near their limits. Knock, knock, it certainly looks and sounds like the timing is perfect. Manufacturers are waiting, designers are waiting and customers are waiting. Perhaps, it’s time to look past the sheep and climb onto the goat’s back. A similar approach worked before.
Who am I?
James Wilkes is the managing director of Christchurch based marketing firm Troika.
