Wool supply is drying up

Clothing makers eye alternatives as drought hits

A JUMP in the price of Australian wool on the back of drought is rattling through the global clothing supply chain, with some mills passing along costs and retailers cutting down on wool or raising prices.

Italian cloth-maker Botto Giuseppe, which supplies luxury brands Giorgio Armani SpA and Max Mara, says it has increased prices on average by about 8 per cent in the past year on wool fabric, while high-end Swiss-based sportswear label Mover has put up the retail price of its merino wool T-shirts by 15 per cent.

“The wool price has increased consistently over the past three years,” said Silvio Botto Poala, chief executive officer of Botto Giuseppe.

Meanwhile, Swedish fast fashion company H&M has cut down on the amount of wool it uses in production to avoid price rises on items such as wool-blend sweaters and coats.

Pendleton, a sixth-generation-owned, Oregon-based textile company known for its plaid woollen shirts, said it would put up some of its prices next year due to higher wool prices.

“We won’t go into less expensive wools, we will just have to take a sharper margin and we’ll have to increase the price,” said John Bishop, chief executive of the company.

Wool has become increasingly popular for use in sportswear due to its temperature-regulating properties and a surge in demand for sustainable fabrics, particularly from younger consumers, manufacturers and farmers say.

But the jump in demand has coincided with a sustained drought in the east of Australia, which supplies more than 90 per cent of the world’s exported high-quality wool used in clothing.

Lack of rain has turned pastures barren, driving farmers to bring in expensive feed.

Benchmark prices for highquality Australian wool were trading at more than $21/kg in August, up from $16 a year earlier.

The effects of drought are now clearly visible to wool growers and buyers. Fleeces of animals affected by drought are thinner and often tainted by dust, said buyer Andrew Blanch, managing director of Italian textile maker-owned New England Wool.

Clients of Chinese wool mills are also starting to baulk at the high prices, leading to a stand-off between buyers and sellers and some bales being left unsold, said Michael Jones, from wool storage and export house, AWH.

As a result, prices have retreated 15 per cent since September.