Icebreaker sales set to outpace wool production
There may not be enough New Zealand merino wool available to fuel Icebreaker’s growth plans under its new owner.
The merino-clothing company’s chairman, Rob Fyfe, said the sale of Icebreaker to United States retail giant VF Corporation could double its sales in a few years.
‘‘[Icebreaker] will grow faster than the production of wool here in New Zealand. That is a big challenge,’’ Fyfe said.
Icebreaker clothing was typically 80 per cent merino, he said.
Most of its base layer garments were 100 per cent merino, but some of its outerwear and underwear used lycra, tencel and nylon to add flexibility and strength.
Fyfe said the vast majority of the wool it used in clothes came from New Zealand farms, all of which met the New Zealand Merino Company’s (NZM) ZQ Merino animal welfare standards.
He said in rare occasions of asupply shortage, Icebreaker had to ‘‘top up with small amounts of wool from other sources’’, but that wool had to meet the same level of welfare standards.
Europe had a standard similar to ZQ called the Responsible Wool Standard, he said.
He said NZM might need to certify farms in other countries to ensure Icebreaker could source ethical wool from overseas if Kiwi farms could not meet demand.
NZM chief executive John Brakenridge said the industry was investigating farms in other countries to extend its ZQ Merino certification to.
He said some of those farms could be in Australia but he would not name other countries, citing commercial sensitivity.
Brakenridge agreed that if Icebreaker’s sales grew quickly, farm capacity might restrict its growth. ‘‘We would have to work our way through that. We would be able to accommodate it … [with] a few select farms around the world so shortfalls can be met.’’
Brakenridge said Icebreaker’s sale was not bad news for the New Zealand merino wool industry.
Before the sale, Icebreaker secured 10-year contracts and pricing agreements with New Zealand farmers to provide more than half of its current wool needs.
Brakenridge said VF viewed those contracts as high-value assets, giving farmers certainty.
He said the lengthy contracts allowed the merino industry to invest heavily to find new ways to breed and increase the flock.
Fyfe said the amount of merino wool in its garments would reduce over time because it was exploring other natural fibres to use.
He said based on the 10-year contracts with farmers and their current capacity, Icebreaker did not anticipate any issues with sourcing wool from New Zealand for the next five to 10 years.