Sharechat Logo

NZ Merino inks 5-year, $45M contract with Italy's Reda, supplier to Armani, Gucci

Wednesday 1st June 2016

Text too small?

The New Zealand Merino Company, which markets the nation's wool to customers on behalf of suppliers, has signed a five-year, $45 million deal to supply fine wool to Italian luxury fabric manufacturer Successori Reda, its longest-ever contract.

The fixed-price contract for 2,500 tonnes of fine wool in the 15.8 to 19.2-micron range effectively locks up supply for all of the qualifying wool that New Zealand will produce over the five-year period, said NZ Merino chief executive John Brakenridge. Previously, NZ Merino's longest contract period covered three years.

For Reda, which reportedly supplies fabric to luxury brands including Giorgio Armani, Gucci, Tom Ford and Hugo Boss, renewing its contract for New Zealand wool enables it to secure supply of high-quality fibre that meets its specifications, and provides end consumers with a link back to growers, enhancing its brand. New Zealand sheep farmers benefit from the deal by gaining higher fixed-price certainty to underpin production, avoiding the potential volatile spot market pricing for commodities.

Reda "get the volume of high-quality wool they require and growers get the certainty of good prices for their wool for longer," Brakenridge said. "It just really removes the whole commodity volatility. New Zealand primary sector needs to do this because volatility destroys markets."

Formed in 2001 to boost returns for the merino sheep industry, Christchurch-based NZ Merino has inked deals with manufacturers such as Danish slipper company Glerups, Australian carpet market Godfrey Hirst, UK knitwear company John Smedley, and Italian brands Cariaggi, Reda and Loro Piana at market premiums.

"We are bringing more and more business out of commodities and into this relationship between growers and the end brands," Brakenridge said. "That's very good for us as a business and it's very good for the growers in this country."

Based in Biella in northern Italy, Reda is a 150-year old company which exports to America, Europe, Asia and the Middle East. It's renowned globally for wool suiting fabrics and has diversified into activewear, with their fabrics used in sportswear, as lining for ski boots and helmets, in boardshorts, and waterproof jackets and footwear.

Superfine New Zealand Merino wool woven by Reda is also used in the production of the Allbirds Wool runners, a minimalist sneaker co-developed by former New Zealand All Whites footballer Tim Brown, hailed by Time magazine as "the world's most comfortable shoes".

Reda's global procurement director Fabrizio Botto Poala said the deal with NZ Merino addressed significant supply issues for the company, allowing it to continue expanding its product range, and guaranteed quality and traceability.

BusinessDesk.co.nz



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

MARKET CLOSE: Blue-chip stocks Meridian, A2 lead market lower
NZ dollar rises on Brexit hopes, rate cut reassessment
Three not failing, just needs a new owner - MediaWorks CEO
Major investors back new CBL class action targeting directors
Rip Curl purchase a done deal on Kathmandu proxies alone
Comvita chair Neil Craig eyes the exit once he finds a new CEO
Mercury raises guidance on increased storage, high spot prices
Eroad reports strong 3Q sales growth, eyes ASX listing
MediaWorks puts TV business on the block
NZ dollar benefits as preliminary Brexit deal improves risk appetite

IRG See IRG research reports