The Australian wool industry is waking up from a long slumber.
A combination of economic, ecological and consumer trends, in addition to some misguided marketing strategies, put Australia’s wool growers, who provide about 85 percent of the world’s fine merino wool, into a downward spiral from which they have just begun to emerge. Australian Wool Innovation, the marketing arm of Australian wool growers, admittedly abandoned the U.S. market and curtailed promotional initiatives due to depressed supply and demand because of a 10-year drought in Australia.
“We know supply here is still very low, but the drought has certainly broken, and there’s plenty of water and plenty of grass, but there’s not plenty of sheep to eat it or drink it,” said Stuart McCullough, chief executive officer of AWI. “We are struggling to build sheep numbers up, even though the economics of growing wool have returned. We know supply is going to remain modest, but demand is expected to still be strong.”
Rob Langtry, AWI’s chief strategy and marketing officer, said: “The industry has had a rough decade or so. It’s been that long since we’ve seen the level of interest and the quality of interest in the fiber. We’re coming out of a period where a lot of our wool growers really weren’t earning enough money to stay in sheep. It is very gratifying to see the level of interest among consumers and among the fashion media coming back to natural fibers and coming back particularly to wool.”
Langtry feels the uptick has been seen in the last six to nine months and that it started on the women’s runways.
“There’s also a bit of resurgence in the edgier brands and a modern look that has emerged in tweed in men’s,” he said. “In knitwear, we’ve always been reasonably strong, but I’m seeing quite a lot of that mercerized, more finished type wool in knits.”
The most important reason for the positive forecast is the growth of the consumer market in China.
“Due to the advent and emergence of affluence in China and those folks going out and buying their first wool sweater, we expect that demand to continue to rise,” McCullough said. “We see it as terrifically important to stimulate the demand curve there. We have seen all the profits for wool growers coming from China.”
Another major sales initiative is to build back business in the U.S.
“The U.S. is a very important, high-value market to us,” Langtry said. “We have not been actively marketing wool ourselves in the U.S. for a decade. We’re now coming back in and developing partnerships with U.S.-based brands and also running campaigns such as relaunching the Woolmark Prize. We’re also engaging more with premium retailers such as Bergdorf’s. We’ve got a long-term education process on our hands in the U.S. and one of the things that will help is engaging in social media and building communities around natural fiber and around wool. In addition, we’re building up our staff resources in the U.S. as part of a more assertive, concerted effort on developing attention in the U.S.”
Langtry said AWI has been working equally as hard in the marketing side as it has in product development. It has seen much interest in its fledgling Wool Lab, which provides trend insights, such as introducing seasonal themes and developing new yarns. He said, “It has stimulated a lot of young designers’ interest in using wool who might have been using acrylic or polyester before.”
Most recently, The Woolmark Co. launched “Wrapped in Merino,” a social media campaign purposed to create the “world’s longest social scarf.” The campaign, which runs on Facebook and as a microsite, aims to connect people in social media as they collaboratively design a giant virtual scarf. Participants create their own section of the scarf, adding their photo and customizing the scarf design, before sharing it with their friends through Facebook, Pinterest and Twitter. At the end of the campaign, the scarf will be submitted to RecordSetter for inclusion in its list of world records. The campaign comes as Woolmark Co.’s social media community, We Love Wool, reaches the 100,000-follower milestone.
The International Woolmark Prize awards outstanding and emerging designers for their creativity in merino wool. The contest aims to develop the next generation of fashion designers and to highlight wool’s eco credentials.
Wool prices have been volatile in recent years. Wool is currently selling for about $5.13 a pound, compared with $5.34 a month ago, $6 a year ago and $2.29 about 10 years ago.
“Prices have had a fairly dramatic effect on wool growing,” Langtry said. “From an Australian point of view, from 200 million sheep in our paddock a decade ago, last year we dropped down to our lowest, which is about 69 million. We’re slowly seeing a bit of a turnaround with slowly growing confidence and we may get up to 71 million to 72 million this year, and that would be the first time we’ve grown in quite some time. The thickness of the fiber has trimmed down, partly due to market needs and partly because of environmental conditions. The general interest in more natural fibers being used in apparel is beneficial to us. But these are very uncertain economic times out there. For us to think about any outlandish increases in our prices would be ridiculous. I think we’ll see a very steady growth in what our farmers get for the wool based on a steady increase in interest around the world.”
After years of low rainfall levels and farmers choosing to utilize their land for agricultural crops that may not have had as much profit potential but proved more stable, AWI sees supply and demand coming back to an equilibrium.
“It’s important that we try to encourage growers to stay in the industry,” McCullough added. “We think the marketing strategies we have and the way we plan to roll them out will be appropriate for those markets and stimulate enough demand to be just slightly greater than supply, and that’s about all you can want.”
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