A Covid-era shift towards working from home, the rise of ‘Zoom’ towns in the USA and growing consciousness worldwide of the environmental credentials of products are all trends that the Strong Wool Action Group sees as potential opportunities.
SWAG CEO Andy Caughey told the Federated Farmers Meat & Wool Council late last month that the group’s aim is to identify ways to be a disruptor in product categories in the international marketplace in the same way that Kiwi footwear brand Allbirds shook up the likes of Nike and Adidas for sports shoes.
SWAG is a short life company established to initiate transformational changes that will help increase the demand for products rich in strong wool and return the industry back to profitability,” Andy said.
By the end of this year our role of facilitating change will be complete and we’ll transition across to industry structures that will provide ongoing support to the projects we’ve initiated”
Last year, in the face of the ongoing slump in strong wool fortunes to the point it was costing farmers more to get it off the sheeps’ backs than the clip earned, a government/industry partnership Wool Industry Project Action Group was set up. Its final report had three key recommendations:
- Gain a clear understanding of changing consumer demands for wool based products which justify building out new business investment cases.
- Establish the capability necessary to get the sector match fit and ready for the opportunities ahead.
- Establish a governance and coordination capability that will be enduring.
The Strong Wool Action Group is taking on that mission. It has a board of 12 directors includes farmer, marketers and representatives from the meat and wool processing industries.
“Within the SWAG Board there is a considerable depth of knowledge and commercial experience through the value chain which we draw upon,” Andy said.
For once, funding is not a hurdle. SWAG’s budget of $3.5 million includes strong government support as well as more than $750,000 from a cross section of industry bodies and companies, including five of the meat companies, who Andy said recognised that strong gross margins from both sheep meat and wool is a key to the long-term viability of sheep farming.
The initial focus for SWAG has been in gaining market insights.
“Currently, we’ve been exporting our strong wool overseas in containers in greasy and scoured form but we don’t really have a clear understanding of which countries, companies and end products the wool is going into,” Andy told the Feds leaders.
“We need to understand the value chain our strong wool takes, and importantly to get into the heads and minds of modern consumers, so know what they want now and anticipate their requirements into the future.”
The first target market is the USA, because this country has 45% of the world’s carpet manufacturing capability. SWAG has commissioned San Francisco-based design-led company IDEO to conduct consumer research.
“From the supply side we’ve got this wonderful fibre grown here in New Zealand; and we recognise its unique sustainability credentials while on the demand side we’ve got consumers in the market who want to live more sustainable lives. What we’re working towards is building a bridge between understanding these consumer drivers, what types of products they are seeking and matching that against what we can offer in New Zealand strong wool.”
IDEO’s interviews and research has shown an increasing number of Americans are working from home due to the pandemic. Many of them have found they can do their jobs and run businesses using the internet and Zoom, which has resulted in an urban to rural drift as couples and families leave inner city apartments and head to outer suburbs, the countryside and so-called ‘Zoom towns’ in the provinces.
This growing group of consumers are reconnecting with nature and natural products again.
“And because they’re spending a lot of time in that home environment, they’re increasingly aware of furnishings and the health of their home surroundings. They’re increasingly aware of chemicals in home furnishings , and the importance of home acoustics…so they’re treating themselves to some home office luxuries.
“We looked at the top 12 items sold on-line in the United States during the start of the Covid period. At No 5 was blankets, No 6 was yoga mats and rugs were at No 10. These are products that should be made using our strong wool.”
Synthetics dominate the very large USA carpet sector but they use a lot of chemicals to make them stain resistant, water repellent and flame retardant – these are natural properties that strong wool has inherently.
Discarded carpets now comprise three and a half percent of America’s landfills so compostable wool carpets would provide a much more desirable alternative.
“As well as a growing microplastics issue, when the synthetic carpets are discarded they’re leaching PFAS chemicals (per- and poly-fluoroalkyl substances) – into ground water contaminating the drinking water of consumers.
“By working with manufacturing partners we can offer products that are safer not just for environment conscious consumers but all consumers.”
Andy stated that it is ineffective to market wool generically. “We need to build brands and work with brands who can be ambassadors for New Zealand strong wools. Brands will be how we disrupt categories and will be how we re-position wool in the minds of consumers.”
The success of Allbirds shows what’s possible. “here is a small start-up that completely disrupted the sportshoe category and built a very strong, direct-to-consumer model. AllBirds launched in 2016 and is now worth almost $2 billion and is influencing the environmental approach of the big shoe brands. “That is category disruption!.”
Our main focus is on carpets and floor coverings represent about 70% of the current strong wool uses, 20% on recently commercialized products in different catergories such as acoustic panels, Lanaco’s wool masks, and Woolchemy’s use of wool in sanitary products and nappies.
The third category is focusing on ‘moon shots’ – supporting new uses and near commercialised products to understand and create the most suitable pathways for a successful launch into the market.
SWAG has recently appointed a business investment manager who will build commercial models in preparation for investment backed by detailed business analysis and the IDEO findings.
“The government has said if certain criteria are met, they will look at match funding,” Andy said.
“By July or August, we’ll be pitching to government but also to other entities that could be interested in investing. It might be a start-up, a joint venture, or a collaboration with an existing company in New Zealand.
“By the end of the year it’s our intention to have at least four companies invested with funding to launch into the marketplace.”
SWAG is also active in building an accreditation platform for strong wool and workforce capability, to help encourage the industry so we have the capacity to train enough wool graders and shearers for the future.
Another focus is on data capture that will help growers make sound decisions on their wool production and sheep breeding programmes in anticipating future requirements.
And before SWAG finishes its work by years end, , the aim is to have in place enduring industry structures that will support the industry in the drive to move forward.
“we recognise we no longer have a wool levy, there’s no umbrella organisation to represent the interests of wool growers and processors throughout the country. At the moment there is no single organisation providing direction or encouraging cooperation .”
What sort of organisation could be put in place to address some of these industry failures, to fill in those gaps and how would it be funded?
“We’re not an industry good organisation but we are here to do the industry good with the driving desire of returning the strong wool industry back to a position of generating sustainable long term returns for growers. Ultimately the strategy derived from the consumer led insights work will inform the requirements and funding options for those structures.
Who is Andy Caughey?
Wool – and the marketing of wool – is the thread that runs right through Andy Caughey’s upbringing and career.
He grew up on a sheep and cattle farm in West Otago, which specialised in raising Perendales. After completing a degree in Agricultural Commerce at Lincoln, he took on jobs in the export of primary products, initially with Wilson Neil doing horticultural products, then with Windward Skins.
On his OE, he headed for Scotland with the aim of getting involved in the wool industry there. In between marrying a Scot, he was approached by Merino NZ to be part of its initial market push to build a brand strategy linking back to merino growers.
“My time was spent supporting the value chain in Europe and North America. It took me down to Italy where I worked along the value chain, from luxury brands , to weavers, spinners and top makers.
Other roles included working in the USA with an outdoor clothing brand and managing a textile mill in the UK before setting up his own business.
Brexit rather than Covid brought him back to NZ and thanks to the power of the internet, he continues to run his UK-based clothing business while driving the SWAG mission.