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Int. J. Business and Globalisation, Vol. 3, No. 2, 2009 111
Copyright © 2009 Inderscience Enterprises Ltd.
The international marketing of New Zealand merino
wool: past, present and future
Joseph D. Mitchell and Luke J. Smith
University of Canterbury,
College of Business and Economics,
Private Bag 4800, Christchurch 8, New Zealand
Leo-Paul Dana*
GSCM-Montpellier Business School,
University of Canterbury, New Zealand
Private Bag 4800, Christchurch, New Zealand
E-mail: leo.dana@canterbury.ac.nz
*Corresponding author
Abstract: This paper contributes to the limited literature on the international
marketing of merino wool. Its purpose is to identify changes in the international
marketing of New Zealand merino. The New Zealand merino industry has
survived various changes through transforming merino fabric from a graded
commodity into an international brand. This success of the industry in recent
years has been due to the progressive differentiation of merino fibre from wool.
The apex of this differentiation strategy was the formation of The New Zealand
Merino Company, a body that facilitates symbiotic marketing.
Keywords: international marketing; symbiotic marketing; New Zealand;
merino wool; agrigoods; exports.
Reference to this paper should be made as follows: Mitchell, J.D., Smith, L.J.
and Dana, L-P. (2009) ‘The international marketing of New Zealand merino
wool: past, present and future’, Int. J. Business and Globalisation, Vol. 3,
No. 2, pp.111–122.
Biographical notes: Joseph David Mitchell was, at the time of this research,
a graduate student of business and economics. He has been working under
Leo-Paul Dana at the University of Canterbury.
Luke Joseph Smith was, at the time of this research, a graduate student of
business and economics. He has been working under Leo-Paul Dana at the
University of Canterbury.
Leo-Paul Dana holds degrees from McGill University and from the Ecole
des Hautes Etudes Commerciales. He has been tenured at the University
of Canterbury since 1999, and is currently on Leave at GSCM-Montpellier
Business School. He formerly served as Visiting Professor of Entrepreneurship
at INSEAD and Deputy Director of the International Business MBA
Programme at Nanyang Business School, in Singapore.
112 J.D. Mitchell et al.
1 Introduction
The marketing of New Zealand merino wool has undergone significant changes
throughout its illustrious history; this is especially true since the mid-1990s. The industry
has encountered multiple issues including low clip prices and a decline in international
demand for wool; however the industry marketing body, The New Zealand Merino
Company (TNZMC) and merino wool brands such as Icebreaker and Designer Textiles
International have successfully marketed New Zealand merino to an increasing
array of both local and international apparel clients. Furthermore, these companies
have positioned New Zealand merino as a market-leader in quality. Despite the
success of these groups in the face of several difficult issues, relatively little academic
literature exists regarding recent changes to the international marketing of New Zealand
merino wool.
Given this, the objective of this paper is to explore the changes that have occurred to
the international marketing of New Zealand merino, particularly since the formation of
TNZMC. The specific research questions to be addressed are:
• What themes characterise the current international marketing of New Zealand
merino?
• Are these themes similar to those of previous years, and if not, what changes have
been made to the international marketing of New Zealand merino?
• How do the different stakeholder groups conceptualise the changes in marketing?
• What do these stakeholders perceive to be likely future trends within the industry?
2 Literature review
2.1 History of New Zealand agricultural exports
The first recorded agricultural exports from New Zealand date back to 1853, when
exports primarily comprised of wool (approximately 68%), timber (approximately 30%)
and fish (Statistics New Zealand, 1990). Mineral exports subsequently became very
important, and meat and dairy products in the early 1880s, as refrigeration was
introduced. New Zealand’s primary exports have been wool, dairy and meat, with these
products representing the majority of New Zealand’s exports earnings since the earliest
recordings.
Historically, many of New Zealand’s agricultural exports, particularly sheep
and dairy, have been to nations imposing quotas on imports, and these restrictions
have had a significant impact on New Zealand exporters. Under an agreement reached
at the 1932 Ottawa Conference, New Zealand and other Commonwealth exporters
received preferential treatment in trade from Britain. This remained intact until the UK’s
accession into the European Community in 1973.
2.2 Changes in agricultural exports; past and present
New Zealand’s agricultural exports have evolved considerably over the last decade; these
have been some of the most significant changes since the first frozen meat exports were
The international marketing of New Zealand merino wool 113
made in 1882. Dairy and meat exports have increased, while wool exports have declined
to now only equal approximately NZ$ 1 billion.
Total sheep numbers have fallen from record highs in 1980 to equal 39.5 million in
the last census. Land use and agricultural exports have increasingly focused on niche
agrigoods, with olive products, venison, wine and merino wool achieving significant
market growth in the last decade (Bolger, 2007).
2.3 History of New Zealand wool exporting
The first farming of sheep in New Zealand began in 1834, but it was not until the period
1850–1890 that the industry truly began to develop. Wool exports were initiated in the
1850s, and wool quickly became New Zealand’s primary export, until it was temporarily
surpassed by gold during the 1860s mining boom (Carter and MacGibbon, 2003).
Wool exports grew from the 1860s, with a significant proportion being exported to
the UK (Greer, 2003). This was not just the case for wool exports, as the UK has been the
predominant importer of all New Zealand’s exports for the majority of New Zealand’s
history.
As the New Zealand wool industry continued to evolve, in the 1900s wool industry
leaders began to advocate the need for an industry representative body. In 1936, owing to
this increasing realisation of the importance of wool exports to New Zealand’s economy,
politicians drafted and passed the Promotion of Wools Act 1936. The Act set up the
Wool Publicity Committee (WPC), New Zealand’s first major national organisation
responsible for collectively overseeing the nation’s wool exports and interests (Carter and
MacGibbon, 2003).
In the following year New Zealand, South African and Australian industry
representatives met at a conference in Melbourne, which led to the formation
of the International Wool Secretariat later that year. The body was charged with
marketing the three countries’ wool collectively in the global market (Carter and
MacGibbon, 2003). Wool exporting, facilitated by the International Wool Secretariat,
continued until during World War II, when a lack of safe trade access eventually caused
a stockpile of 10.4 million bales, equal to approximately two years’ product at the time.
Exporting resumed in 1946, following the conclusion of World War II (Carter and
MacGibbon, 2003).
The New Zealand Wool Commission (NZWC) was formed in 1952, as an industry
representative. Fluctuations in the global wool market, compounded with mercantile
practices within the New Zealand economy lead to surplus stockpiling of export wool in
the late 1960s, reaching a level of 705,956 bales in 1968 (Carter and MacGibbon, 2003).
Resultant pressures from this stockpiling ultimately lead to a long-term devaluation in
wool prices. Despite these pressures, wool was still earning approximately one third of
New Zealand’s export income (Carter and MacGibbon, 2003). Wool exporting was
further negatively affected in the mid 1970s, as the global wool market began to feel the
effect of demand-lead growth for cotton and synthetic fibres (Carter and MacGibbon,
2003). As a direct result of this fall in global demand, sheep numbers in New Zealand
eventually fell by more than 15 million in the 1990s, from the record highs of the
early 1980s.
In 1994 the New Zealand Wool Board (NZWB) finally made the strategic decision to
sever ties with the International Wool Secretariat, which had largely taken control
of New Zealand wool exports and promotions by that stage. Analysts suggested the
114 J.D. Mitchell et al.
volatility of international wool prices and a downturn within the industry were triggers
for this attempt to regain autonomy. The industry continued through a time of transition
in the 1990s, with wool marketed under the NZWB’s Wools of New Zealand (WNZ)
banner organisation (Gray, 1996).
In 1995, when faced with a declining industry and the commoditisation of their
product, New Zealand merino farmers created the entity known as New Zealand Merino.
Gretchen Kane explained to our research team, that through New Zealand Merino,
farmers were able to control their own ‘destiny’ and develop a strategy based on three
goals: to lift New Zealand Merino fibre out of the ‘commodity basket’, to identify and
differentiate New Zealand Merino from its competitors, and to internationally target the
highest end of the international fashion market.
Another key landmark in the history of the New Zealand wool marketing took place
in 1999, when the NZWB, under pressure from growers to provide tangible outcomes
from their compulsory levy, commissioned a report by management consulting
firm McKinsey & Company. The report made multiple recommendations, including a
pursuit of niche markets, further research and development, and the disestablishment
of the NZWB. Following the publication of the report in 2000, the industry accepted
the recommendations of the report and disbanded the NZWB (Burgess, 2008).
The New Zealand merino industry shares a similar history highly to that of the wider
New Zealand wool industry.
2.4 History of the New Zealand merino wool industry
The history of the New Zealand merino wool industry is highly integrated with that of the
wider meat and wool industry, and changes to these broader industries have heavily
affected the merino wool sector. A primary example of this relationship is the influence
of the frozen export meat trade. Du Plessis (1931, p.17) suggested that prior to the
inception of frozen meat export trade in 1882, the sheep New Zealand farmed were
‘almost exclusively merino’. William Saltau Davidson’s innovation of frozen meat
shipment technology is recognised to have had a major impact on merino wool
production; opening up a large array of markets for non-merino sheep meat. By 1927
only 2% of wool produced in New Zealand was classed as merino (Du Plessis, 1931).
Since the inception of the merino wool industry in the late 1830s, the New Zealand
merino wool industry has evolved considerably. Firstly, New Zealand merino sheep are
now farmed almost exclusively on South Island high country stations and farms
(Burgess, 2008). Recent research suggests this is the result of both positive economies of
scale achievable on larger runs and the susceptibility and exposure of merino sheep to
foot-rot on lowland runs (Burgess, 2008). Secondly, the number of merino sheep farmed
in New Zealand since the inception of the industry has fluctuated over time, with recent
estimates suggesting the current population is approximately 2.94 million (Greer, 2003).
Most New Zealand merino wool is exported, and accounts for approximately 5% of total
wool exports, however this is increasing.
As acknowledged earlier, the history of New Zealand’s merino wool industry is
inextricably linked to that of the history of the broader wool market. Until 1994,
New Zealand merino wool was marketed under subsidiaries of the NZWB, when merino
growers broke away from WNZ, under the new banner of New Zealand Merino
(Gray, 1996). For the vast majority of the history of the industry, from 1850 to 1994,
merino wool has been sold through a limited variety of channels: through brokers at local
The international marketing of New Zealand merino wool 115
and international auctions, through meat processing companies who then on-sell the
wool, or directly to private buyers (Burgess, 2008). Gretchen Kane told us that auctions
are acknowledged to have accounted for the vast majority of these sales. However,
he elaborated, since the formation of the TNZMC in 1994, over 85% of the total
New Zealand merino clip is now sold under the New Zealand Merino brand.
2.5 History of New Zealand merino marketing
Greer (2003) and Carter and MacGibbon (2003) note that much of the history of the
marketing of New Zealand merino wool has been characterised by the sale of nominally
differentiated clips through collective groups. One example is the International Wool
Secretariat (Carter and MacGibbon, 2003).
From 1834 to 1935 New Zealand merino wool was mostly marketed and sold simply
as fine grade wool, through general wool auctions at both local and international
locations. Such exchanges and promotions were characterised by a limited degree of
interconnectedness among members, as acknowledged by Carter and MacGibbon (2003).
In response to this strategic concern, the New Zealand government passed the Promotion
of Wool Act 1936, which set up the WPC, to operate in a similar function to the current
TNZMC; promoting wool in new and existing markets, and furthering wool research.
In the year following the creation of the WPC, a conference attended by New Zealand,
Australian and South African delegates in Melbourne highlighted possible benefits that
could be sought from collective promotions. Subsequently in 1937 the International Wool
Secretariat was set up by delegates, to collectively market wool internationally.
During the three decades following the creation of the International Wool Secretariat, the
group organised a series of high publicity promotions that appeared in leading
publications such as Vogue, Time and the New Yorker (Carter and MacGibbon, 2003).
In January 1945 the NZWB was created as a strategic body to address the interests of
wool growers, including finer grade growers such as merino. The Board took several
proactive steps from the 1950s to 1980s, including setting up the NZWC in 1952, and the
New Zealand Wool Marketing Corporation in 1972, to promote New Zealand wool and
grower interests. Both organisations were met with degrees of hostility from other
member countries in the International Wool Secretariat, who viewed their creation as
efforts undermining of the role of the International Wool Secretariat (Carter and
MacGibbon, 2003).
New Zealand wool growers, including those producing merino, encountered a decline
in demand for their fibre during the mid-1970s, in favour of cotton and synthetic fibres
(Greer, 2003). The resultant pressure forced a contraction in New Zealand sheep numbers
and set in place a sequence of events that influenced a decision by merino growers to
form a separate group to WNZ in 1994, to exclusively market merino grade wool.
The resultant creation of New Zealand Merino (later TNZMC) in October 1994
represented the greatest milestone in the history of the marketing of New Zealand merino
wool to that date, and occurred parallel to the NZWB’s exit from the International Wool
Secretariat in 1994 (Gray, 1996). Both decisions were said to be attempts to reposition
New Zealand wool, differentiating it from and making it less susceptible to downturn that
the global wool market had experienced (Gray, 1996).
New Zealand Merino, overseen by Chairman John Perriam, worked with its
$3 million budget to increase security of merino growers, and in 1997 negotiated the
first direct, forward-supply contract to leading international knitwear manufacturer
116 J.D. Mitchell et al.
John Smedley Limited (Gray, 1996). The contract represented the first major non-auction
sale of New Zealand merino wool (Kane, 2007). This would later be followed by the
negotiated sale in 2005 of over 2 million kilograms of merino wool to New Zealand
merino label Icebreaker, at a 30% premium to the market price at the time (Television
New Zealand Interactive, 2005).
The next major milestone in the history of New Zealand merino wool marketing was
the publication of the Report to New Zealand Woolgrowers on Improving Profitability in
June 2000, commissioned by the NZWB and produced by McKinsey & Company.
The report advocated, among other initiatives, the replacement of levy-funded marketing
with a self-funded commercial model; an increasing focus on niche markets;
further research and development, and the disbanding of the NZWB (McKinsey &
Company, 2000).
The NZWB accepted the recommendations of the report, and later in 2000 disbanded
(Burgess, 2008). The recommendations also had an influence on the New Zealand merino
wool industry; with New Zealand Merino quickly adopting the report’s recommendation
of greater commercialisation of marketing activities, and renaming as TNZMC Limited.
Since 2000, TNZMC has continued research and development, marketing, and the use of
its distinguishing forward-contract business model. The company now facilitates the sale
of 85% of the New Zealand merino clip to a variety of buyers, including leading brands
such as John Smedley, Oxxford Clothes, Daks and Icebreaker (The New Zealand Merino
Company, 2007).
3 Methodology
There was no primary unit of analysis, as the study explored both the New Zealand
merino and broader wool markets. Data were collected from quantitative and qualitative,
primary and secondary sources, which allowed for verification and data triangulation
(Yin, 2003).
Data were initially collected from secondary sources including: the websites of
New Zealand Merino Incorporated, TNZMC, the New Zealand Ministry of Agriculture
& Fisheries (MAF), and the Australian Wool Innovation group, periodicals and reports,
industry reviews, press releases, magazines, yearbooks and newspaper articles.
Once sufficient secondary research was gathered, gaps in the literature were identified,
and opinions were then sought from a variety of industry stakeholders.
Primary research was then gathered by way of structured interviews and
questionnaires. Twelve personalised questionnaires were conducted with a variety of
stakeholders in the industry including merino growers (farmers), senior employees and
junior employees from two different merino wool apparel distribution companies,
a marketing representative from the TNZMC, one representative from merino wool brand
Icebreaker, one Member of Parliament and also international merino wool buyers.
The surveys and questionnaires were individually constructed to cater for the commercial
differences among participating respondents and each questionnaire consisted of
16 questions.
The international marketing of New Zealand merino wool 117
4 Findings
4.1 Significance of the founding of New Zealand Merino/TNZMC
Without question, the most significant change or milestone in the history of New Zealand
merino wool marketing is acknowledged to be the foundation of New Zealand Merino,
now TNZMC Limited (Gray, 1996; Greer, 2003; Kane, 2007). TNZMC, based in
Christchurch, can best be defined as an integrated sales, marketing and innovation
company for the New Zealand merino wool industry, and is “the leading marketer and
seller of New Zealand merino” (Kane, 2007).
The decision by merino wool growers to detach from WNZ in 1994 and establish
New Zealand Merino is recognised as the first time in the history of the New Zealand
merino wool industry that finer grade merino wools were marketed separately from
non-merino wools (Greer, 2003). The aforementioned strategies of the entity have all
been successfully implemented through differentiating and branding its fibre, marketing
and innovation, developing new value-added sales models, and creating a mechanism to
link its grower suppliers to the brand names that ultimately purchase merino wool
(Kane, 2007).
Writers in the field assert that the formation of New Zealand Merino was particularly
significant, as the foundation coincided with growing trends among farmers to switch
to finer-micron merino wool flocks during the early 1990s (Walton and Hutching, 1992).
Greer (2003) acknowledges that the formation of a collective New Zealand
Merino/TNZMC body has been a critical factor in the growth of merino wool brands such
as Icebreaker and Snowy Peak.
4.2 Reinvention of merino wool since the founding of New Zealand
Merino/TNZMC
The international decline in demand for wool since the 1960s, and the subsequent
contraction in the international market, had a significant effect on New Zealand merino
wool growers and resulted in WNZ and later New Zealand Merino/TNZMC creating
new international marketing strategies and repositioning their brands (Burgess, 2008).
The New Zealand Minister for Agriculture noted:
“Over the last 10–15 years the wool industry has undergone significant
changes. In the period 1990–2005, wool production decreased by 32%.
Wool exports fell from 10% of exported merchandised trade to just 2.2% for
the year ending 2005. Other wool producing countries are facing similar
problems.” (Mallard, 2006, p.1)
These market pressures significantly influenced the New Zealand merino wool industry
and resulted in TNZMC engaging in new market development activities and adopting a
detailed strategic direction, whereas previously critics had suggested that no strategic
direction existed. Presently, TNZMC is responsible for the sale of approximately
$80 million of fibre annually, representing 85% of the New Zealand merino wool clip of
8000 clean tonnes (Kane, 2007).
118 J.D. Mitchell et al.
4.3 New Zealand merino wool: graded commodity to national brand
The marketing of New Zealand merino wool has evolved considerably throughout the
history of the local industry, transforming from a loosely graded commodity to a national
brand, increasingly reliant on the complex emotional brand associations. New Zealand
merino wool has changed from a basic commodity determined by auction values,
to a fashion and performance fabric used by leading apparel labels such as Nike,
Dax, Polo Ralph Lauren and Icebreaker. John Smedley, founder of John Smedley
Company told our research team, “We use exceptionally fine microns, for which the
New Zealand merino is perfect for. It certainly has a brand value”.
Early writers in the field of wool marketing note that traditionally wool, including
merino, was marketed solely on the basis of size, quality and the strengths of the fibre
(Du Plessis, 1931). Burgess (2008) suggested that across the majority of the history of the
New Zealand merino wool industry, merino wool has been sold cheaply at auction as an
undifferentiated commodity. However, largely due to an increasing market-based
imperative to pursue niche markets and differentiate wool since the 1980s there has been
an almost exponential growth in the branding of New Zealand merino wool.
The reputation of merino wool has “strengthened in certain markets largely as a result of
the New Zealand Merino brand partners who use the fibre, brand development and
reinforcement (New Zealand Merino and Zque), and the emphasis placed on quality,
consistency and sustainability through fibre supply contracts” (Kane, 2007).
However, changes to the style and content of wool promotions, including merino
wool, can be traced back to 1953. Prior to that time the main aim of marketers had been
to advertise the known and acknowledged merits of the wool fibre and associate wool
with high fashion. From the mid-1950s onwards, marketers began to concentrate
increasingly on retail training and engagement with manufacturers, importers and
retailers to promote over-the-counter retail sales (Carter and MacGibbon, 2003).
In September 1996, two years after the establishment of New Zealand Merino, the
organisation released the New Zealand Merino™ brand, as a means of differentiating and
adding value for growers and processors (Greer, 2003). The importance of brands has
been an emergent theme in the evolution of the marketing of New Zealand merino wool,
with brands such as Zque, Icebreaker and Mokapuna Merino leveraging the brand equity
established by the original New Zealand Merino™ brand. The purpose of the
New Zealand MerinoTM brand goes beyond differentiation by highlighting the key
attributes of the fibre. Instead a positioning strategy based on scarcity value is employed
(Kane, 2007). This creates a suitable approach for competing against major volume
producers which can be found in other merino wool producing countries.
4.4 Differentiation from New Zealand wool
The separation and differentiation of New Zealand merino wool marketing from the
general New Zealand wool brand is highlighted by multiple stakeholders within
the industry as being a critical determinant of the success of the companies such as
Icebreaker and the broader New Zealand Merino wool brands (Gavenas, 2006;
Gray, 1996). Reviews of the merino wool market note that the wider wool market has
been declining since the 1960s and woollen fabric is associated with negative product
attributes such as itchiness, roughness, bad smell and allergy issues, attributes merino
wool branding has intentionally attempted to distance itself from and counter in their
The international marketing of New Zealand merino wool 119
marketing (Mallard, 2006). Because of these negative brand associations a leading
New Zealand branding expert Brian Richards recommended Icebreaker remove all
references to ‘wool’, and subsequent brands have followed suit. Consistent with this
intentional counter-branding, Icebreaker CEO Jeremy Moon is known to quip: “wool is
our enemy”. The result of this differentiated branding strategy has been a proliferation of
merino wool brands and an increase in the perceived value of New Zealand merino wool
overseas.
4.5 The importance of relationship marketing
The decision of WNZ to stage an exit from the International Wool Secretariat in July
1994 initially exposed the New Zealand wool industry, including merino, to a lack of
channel partners. This decision, and the lack of funding for TNZMC, heightened the need
for the marketing body to develop strategic relationships with high-end fashion brands,
gain greater customer knowledge and leverage their brand equity (Gray, 1996).
Likewise, New Zealand merino wool brands such as Icebreaker and Fruition have worked
determinedly to build close relationships with outdoor clothing retailers and other
channel members, and attribute this greatly to the success of their respective brands
(Goundrill, 2007).
4.6 Icebreaker
In 2001, Icebreaker appointed SB Global Logistics as their warehouse supplier
(Bateman, 2007). Initially Icebreaker’s business was limited to 300 Stock Keeping Units
at one time (Bateman, 2007). Presently, Icebreaker’s volume has grown to be five times
its initial size and has incorporated a much larger variety in product offerings
(Bateman, 2007). The main reason for this growth comes down to one thing: international
sales. Icebreaker has grown the idea of merino wool as a good, performance fabric
in the international market. This idea is heavily supported by the packaging which
displays recommendations from magazines and individuals not just from New Zealand,
but from all over the world. Another reason why Icebreaker has become so successful
internationally is the worldwide range of dealers that they have managed to secure.
From Austria to Italy, Korea to the USA, Icebreaker can be found in over
22 countries (NZTE, 2005).
The international growth and success of Icebreaker means that New Zealand
merino wool as a brand has grown stronger internationally. The fibre became associated
globally as a fibre of the highest quality as it is durable, comfortable and odour-resilient
(Icebreaker Merino, 2007). According to a personal communication from Chan (2007)
Icebreaker’s growth and success also means that other New Zealand merino wool
companies have more confidence in distributing their goods overseas.
4.7 Brand awareness
New Zealand merino wool is still relatively unknown in world markets, but this is
changing due to the utilisation of the fibre by major New Zealand companies such as
Icebreaker (Gavenas, 2006). Despite being relatively unknown, New Zealand merino
wool has developed a reputation as being rated amongst the world’s best. This has fuelled
a growth in superfine merino wool production. New Zealand merino wool’s reputation is
120 J.D. Mitchell et al.
not only strong amongst customers but also amongst buyers as well. Buyers generally
concur that New Zealand’s quality is on a par with Australia’s merino wool and tout it as
definitely having brand value.
The recent trend, especially amongst Western countries, to take a more affirmative
approach when dealing with environmental issues has worked favourably for
New Zealand merino wool. Gretchen Kane suggested to us, “New Zealand has captured
consumer emotions internationally as a clean, green, tourist destination”.
This is capitalised on through merino wool brand promotion. In presentations and
various promotions New Zealand imagery was used to help sell merino wool as a brand.
Arguably one of the most powerful tools that New Zealand Merino was able to use to
differentiate merino from competitive fibre or product offerings was to bring guests from
overseas (either existing or potential brand partners) to New Zealand to experience
‘Merino country’ and the hospitality of the growers for themselves (Kane, 2007). In this
way brand awareness can be generated and an understanding as to why New Zealand
merino wool should command a premium price is spawned.
4.8 Perspectives on the future of the industry
One of the most dominant ideas that emerged during the interviewing stage of research
was that the future of New Zealand merino wool is ‘in the hands’ of the New Zealand
growers (Kane, 2007). This comes largely down to the value that farmers see in farming
vs. alternative land use. Related to this is the contract system which TNZMC currently
has in place that encourages “sustainable pricing and the development of long term
markets”, (Kane, 2007) for New Zealand merino wool. Brian Hansen, a board member of
Merino, told us that sustainability will increase, this will occur to increase the value of
using land for farming.
Ross Beech, Chairman of Merino, told us his two primary predictions for the
New Zealand merino wool industry. Firstly, the public profile of New Zealand merino
wool will increase and with this a greater awareness of the fibre’s attributes will emerge,
these are predictions which are supported by the work of TNZMC. Secondly,
New Zealand will capture a large share of the active outdoor market and a greater share
of the luxury fibre market. These predictions are supported by the secondary research that
was conducted.
5 Conclusion
Findings from the interviews and secondary research suggest that the New Zealand
merino wool industry has successfully responded to the challenges it has faced by
transforming New Zealand merino wool from a commodity to an internationally
recognised brand. The industry reacted to low clip prices and a decline in international
demand for wool in favour of cotton and synthetics through positioning New Zealand
merino wool as a high-end label brand. Critical to the success of this evolution was the
conscious decision by industry stakeholders to differentiate merino wool from other wool
grades and form the industry marketing body TNZMC. A leading example of the success
of the New Zealand merino wool industry in recent times is the success of outdoor
clothing brand Icebreaker, which is now sold in over 20 countries. Explorations of the
future of the industry with key stakeholders suggest that New Zealand merino wool is
The international marketing of New Zealand merino wool 121
well-placed to become a significant share of the active outdoor and luxury apparel
markets.
Our study examined the evolution of the international marketing of New Zealand
merino wool, and how the industry has responded to the multiple challenges it has
encountered. The study found that one of the critical determinants of the industry’s
success was the intentional branding and differentiation of New Zealand merino wool.
Future research opportunities exist for studies exploring the international marketing
of merino wool from other major wool exporting nations such as Australia and
South Africa, to allow for a comparison with the New Zealand industry. Alternatively,
future studies could conduct further research into the New Zealand merino wool industry
to confirm the findings of this study.
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