Wool growing as a business has been tough going in recent times but that is about to change as two major wool entities shore up a merger.
Wools of New Zealand (WNZ) and Primary Wool Co-operative are on the road promoting the benefits of their proposed merger ahead of the groundbreaking vote in November.
Primary Wool chair Richard Young told farmers at a meeting in Darfield the merger will mark the start of an exciting chapter for the wool sector.
“This is structural change that will act as a launch pad for NZ to truly realise the full potential of wool,” Young said.
“There’s been too much fragmentation for too long, woolgrowers have been in the doldrums for long enough, we need to reimagine what the future can be and strategise the pathway to get there.
“Our strength apart has been good but together we can change the game.”
Primary Wool Co-op is purchasing 100% of CP Wool that will then combine with WNZ to become one trading entity under the brand Wools of New Zealand.
Consumer awareness of the natural and sustainable qualities of wool is growing rapidly with the movement towards a more sustainable world.
“This initiative can shift the dial and deliver better outcomes, not only for growers but for all stakeholders in the value chain,” he said.
“As shareholders, you will be able to positively influence our sector and your endorsement will enable the opportunity in front of us to come to life and give our sector a chance to regain some of its past glory.
WNZ chair James Parsons says the two entities have been working together for the past 12 months to answer the demands of growers for consolidation and develop a strategy to lift strong wool sales volume and farm gate returns.
He says linking growers to consumers through a more integrated supply chain with the scale of both companies will help break the industry model that has failed growers for many years.
“We haven’t created the wealth we set out to create 10 years ago, we haven’t had that brand value on strong wool as an ingredient,” Parsons said.
“As growers we sell an ingredient – greasy wool – we have only been branding the ingredient.
“The consumer gets a product and the loyalty is not so much what goes into it as an ingredient but on the branded product.
“It’s been a complex commodity supply chain from grower to broker, exporter, scourer, importer, spinner, carpet manufacturer, retailer, consumer.
“It’s a struggle to push the ingredient right along the supply chain, we need to change the model, shorten the chain, to a value capture strategy.
The merged organisation’s strategy will be underpinned by a shift from wool as a raw commodity to grower-owned and branded consumer wool products.
“When WNZ keeps the ownership of the product right along the value chain, we can capture the value back to the grower,” he said.
WNZ chief executive John McWhirter says the problem is growing inventory versus declining demand.
“With 10,000 supplier growers and 10 buyers, that’s a very ugly situation,” McWhirter said.
Total NZ production sits at 736,530 bales, with 44,713 bales unsold, effectively unaccounted oversupply.
“Buyers can sit back and relax, as they can buy what they want knowing there’s 45,000 bales sitting out there – 45,000 bales is the size of the problem,” he said.
“We have a plan to increase demand by more than 45,000 bales, this will create buyer tension – in the next 12 months we can be on the same path as the housing market.
“We are going to increase demand for wool by creating viable commercial business models that will endure over time.
“We will own the brand and be no more than one step removed from the consumer.
“We need to convince people they want wool, so we have priced our carpet so that we are in the volume market.”
WNZ became the first carpet brand to have grown its own wool fibre and taken a finished product to market when it put proof to its concept, launching a partnership with NZ’s largest flooring retailer, Flooring Xtra, in July.
The combined trading entity and fully-integrated supply chain business will ultimately enable strong wool to realise its potential.
“This is not just about WNZ, this is for you, the growers, for everyone, as we build a $200 million global brand,” he said.
