NZ wool floors show crowds

TIM CRONSHAW
Last updated 09:28 01/02/2013

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The reaction of customers to Wools of New Zealand's (WNZ) carpet wool at the world's largest flooring show has reinforced to its leaders they are on the right track with capital raising a minimum of $5 million.

A share offer to commercialise WNZ into a sales and marketing company was extended to February 25 after the capital raising reached more than $4.1m last year from 500-plus strong wool farmers committing 12 million kilograms of annual wool production.

WNZ chairman Mark Shadbolt said growing interest by spinners and manufacturers in WNZ carpet ranges at the world's largest flooring trade show, Domotex, this month had been encouraging. The trade show was attended by 40,000-plus visitors.

Wool volumes under contracts had increased, contracts extended and new customers identified, he said.

"Two years ago we sold four [containers] of lambs wool and this year we sold 14.

"Based on the volumes of finished product it will at least double that and continue on," Shadbolt said.

Some of the containers were sold by a group of Banks Peninsula farmers, who have their own peninsula brand and are aligned to Laneve branded wool under the WNZ programme.

WNZ has a design and brand team, but is still waiting for a structure as farmers decide whether to commit to the capital raising.

Shadbolt, a member of the peninsula group, said it was a working example that WNZ could succeed in lining up direct contracts with retailing partners for the long-term sustainability of the wool trade.

"This time last year we hadn't moved a container of wool and we successfully moved several containers under fixed-price contracts and have just agreed on a new 12-month [extension]. That particular customer has [told us] to keep sending the quality of wool and we are happy to have that relationship."

Shadbolt said the feeling at the Domotex show was that wool was in a resurgence phase.

The Laneve brand has 29 carpet ranges in the marketplace from nine manufacturers compared with four ranges from three manufacturers this time last year.

WNZ trust directors said this proved the strategy built around contracts and brands was working.

The aim remained to raise $10m and produce 20-plus million kilograms of wool to pursue international marketing and sales strategies.

Shadbolt said the signs were encouraging that farmers would commit the remaining $800,000 by the closing date to reach their first target of $5m despite farmers being under pressure from lower wool and lamb returns.

A survey of farmers showed 88 per cent agreed the wool industry needed a marketing-style strategy. The survey identified that farmers were short of funds and frustrated by the failures of previous attempts to mobilise wool groups.

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So far, about half of the subscribers committing to the offer have bought one or more shares for every two kilograms of their annual strong wool production with the rest choosing the minimum share offer of $5000 at $1 each.

The average farmer has pledged a one-off contribution of $7400 for shares and an annual contribution of 15c a kilogram over the next five years.

The annual contribution is about $3100 a year based on average 21,000 kilogram subscription and this works out to be a total over five years of more than $22,000 including the share purchase.

Shadbolt said it was a manageable commitment for farmers wanting a viable future for wool. The focus would be on high-value carpets and rugs, upholstery fabrics and bedding products.

The capital raising includes $1.8m of loans to be repaid and the buying of WNZ and other brands from a trust.

- The Press

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