New Zealand's new farmer-owned wool sales and marketing company is focusing on the luxury market.
"Our focus has to be on the top end of the market, on luxury," Wools of New Zealand (WNZ) chief Ross Townshend told about 40 farmer shareholders at Stratford, the fifth stop on the company's 17-venue roadshow.
Townshend, a foundation shareholder supplying the company with 20,000kg of wool a year from 2500 ewes on his north Waikato property, said as a commercial company, WNZ had to have a global focus so it could get value from its products.
He was responding to questions from Tarata sheep and beef farmer Bryan Hocken, who said he was running out of time to become a wool baron and was concerned at how difficult it was to buy a wool carpet in New Zealand.
"Our focus has to be global to get value," Townshend said. "We can't afford to be selling carpet at $40 a metre. We can't have volatility. We need stable prices and stable specifications so we have sustainability in our business and in the businesses that we supply."
He said WNZ's contract with Yorkshire-based Camira Fabrics, now in its third year, was the jewel in the company's crown. WNZ would supply Camira with 470 tonnes of wool at $5.35kg in 2014. Suppliers had to be accredited and their wool must have no vegetable contamination.
"What we need is nine or 10 Camira contracts," he said.
The company had to re-assess its strategy in the North American market, where only 3 per cent of carpet sold was wool.
Townshend said the company was running a marathon, not a sprint. "We need to manage it with discipline and strategy. We need your wool and your support."
Chairman Mark Shadbolt said WNZ wanted to be an innovative sales and marketing company for New Zealand strong wool.
Seven hundred shareholders had already committed $6 million of capital and 14.5 million kilograms of wool to WNZ and a further $10m over the next five years. Additional suppliers had committed another 5.5m kg of wool.
The company, with only 16 staff, needed to increase its base of committed suppliers.
Half of New Zealand's strong wool was sold in China and the company wanted to establish links between Chinese and western companies. "We want to provide a new pathway into these markets and to have steady prices.
"We need to find a way to determine the price of wool."
Price volatility remained the biggest problem for the wool industry and stability was needed. Wool cost $4.50 a kilogram to produce. "Less than that means a loss for farmers."
Shadbolt said the partnership with Camira had brought better prices for wool growers. "We'll get to higher prices in steps. The population needs to realise that wool is good to use."
A new partnership with Wool Services International (WSI) provided WNZ with scouring capability, he said.
WNZ innovations manager Steven Parsons said the company was focused on promoting its own wool, not any wool. "Consumers love the fact that we can identify who grows the product. People want to buy products from brands they trust."
- © Fairfax NZ News