5 minutes with John Brakenridge

Chief Executive of The New Zealand Merino Company

Tell us a little about The New Zealand Merino Company. The New Zealand Merino Company (NZM) was started in 1995 by Merino growers who wanted to ‘do things differently’ and lift New Zealand’s Merino wool out of the commodity basket through marketing and differentiation.

Today, NZM is recognised for its track record of innovation, both in the Merino and mid-micron sector and more recently strong wool, flipping a very traditional, production-led and commodity-based industry on its head to bring about a global marketoriented culture that creates, captures and delivers long-term value.

In 2006, NZM identified that highend consumer preferences were changing and as a response developed ZQ, now recognised as the world’s leading ethical wool fibre.

How has ZQ been a game changer?
ZQ stands for quality, environmental sustainability, animal welfare, social responsibility and connection, from the grower through to the consumer.

Direct, long-term ZQ supply contracts are set up by NZM, between progressive growers and a ZQ brand partner. These contracts mean growers can produce ‘fit-for-purpose’ fibre, are recognised for their values and ethical farming systems and have a stable income, allowing them to invest in their future. The contracts also give brands certainty in quality fibre supply and consistent production standards, traceability and longterm economic sustainability.

Last year, over 75 percent of NZM’s Merino clip was allocated to forward supply contracts.

How does NZM / ZQ position itself in the market?
It’s not what we sell – it’s how we are selling it. Customer intimacy and strong partnerships throughout the entire supply chain are core to NZM and ZQ’s business approach.

These strong partnerships allow us to gain insights into the real drivers behind decision making and shape our market interface. The experience a product delivers functionally – the rational reasons for buying a product – are important, but now, more so than ever, it’s about what’s behind the product that influences emotional purchase drivers.

How is the increasingawareness of sustainability driving growth globally?
We are seeing global interest in ethically sourced, sustainable wool fibre at an all-time high. A key driver for this has been consumers demanding sustainable apparel options, as awareness increases of the footprint that oilbased synthetic products, like polyester, leave on the planet.

A 2018 report by the International Union for Conservation of Nature revealed that over 35 percent of the projected 1.5 million metric tonnes of microplastics found in the ocean comes from synthetic textiles. The plastic microfibres shed from clothing are so small they can’t be seen by the naked eye and marine life are ingesting them. We are now finding traces of plastic microfibres in our food chain.

We are working closely with innovative global brands, who are moving away from these synthetic products and NZM is investing in research and development to highlight the impact of microplastics and showcase the benefits of natural fibres as a solution to the growing problem.

What is NZM doing in the strong wool space?
Following the path set by fine and mid-micron wool growers, NZM’s focus in strong wool has been to establish contracts with premium brand partners across the value chain and develop new uses and markets for strong wool. A Primary Growth Partnership with the Ministry for Primary Industries – Wool Unleashed (W3) – is accelerating these efforts.

Forward contracts secured with brand partners such as indoor shoe manufacturer Glerups, carpet brands Prestige Carpets and Best Wool, and US wool insulation brand Havelock Wool are unprecedented and have provided a significant advantage to what continue to be historically low market prices.

The factors that are influencing the growth in Merino, such as demand for sustainable and ethical fibres, are beginning to influence traditional markets for strong wool and create new categories.

New uses for wool are emerging such as the wool-composite technology developed for surfboards in partnership with Barron Surfboards and Firewire, a recently launched wool acoustic panel and technologies that address some of the barriers to using strong wool. These give us confidence in the future relevance of the fibre.

How do you stay ahead of the curve?
We recently opened Studio ZQ in central Christchurch, an innovative space inspired by collaborations with brand partners, such as the Woolite surfboard and shoe brand Allbirds, two of the more exciting wool innovations in recent years.

Studio ZQ has been designed as a natural fibre centre of excellence that embraces a systematic approach to innovation and business development and in doing so, improves the chance of building successful breakthroughs.

Innovation in Studio ZQ goes beyond only natural fibre products, it encompasses new ways of doing business and generating value, new systems and services and new interactions and forms of engagement between organisations and customers. Studio ZQ is targeting big, gnarly problems with no easy answer. It’s about solving deep pain-points for our customers and the planet.

How do you think sheep farming is placed for the future?
We’re extremely upbeat about the future for sheep farmers. Sheep farming is a hugely important part of our rural communities and the social fabric of New Zealand and we believe rather than moving from one monoculture to the next, New Zealand needs to take on an integrated approach to farming. Long-term ZQ wool contracts coupled with contracts for SILERE, NZM’s Merino meat brand jointly owned and operated by Alliance Group Limited, make fine wool sheep farming more profitable than dairy grazing and other sheep farming systems, based on analysis by both NZM and AbacusBio. Shifting New Zealand sheep production to meet these contracts through the production of fit-for-market, multipurpose sheep is a key focus for NZM. Through investment in production science, NZM is aiming to remove long-standing barriers to increase fine wool sheep production and enable its growth in non-traditional areas.

What signals is the market sending?
One of the barriers for growers totransition has been clear market signals. With Smartwool offering 3-5 year contracts over $20 for a 22 micron, Icebreaker instigating 10-year contracts and VF Corp, who owns both brands, keen to support more fine wool production in New Zealand, the signals are clear. Farmers are smart. If they have confidence in the market and carefully consider both genetics and management systems in a transition then a shift is entirely possible. This is reflected in the record numbers of fine wool rams sold to crossbred wool farmers this past season.

The total value of wool exports for the last year (July 2017 – June 2018) was $550 million. Fine wool accounted for around 6-7 percent of the volume of wool produced in New Zealand for the last year and over 25 percent of the value (B+L Economic Service).

If we can shift half of New Zealand’s strong wool clip into higher value fine wool contracts, while continuing to improve the demand for and value of strong wool contracts, we believe the economic upside for the industry could be around $2 billion.