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Icebreaker inks $100M 10-year supply contract for NZ merino wool

Friday 10th November 2017

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Merino outdoor clothing company Icebreaker has signed the longest ever supply contract with growers of New Zealand merino wool, worth $100 million over 10 years.

The Auckland-based company, which announced this week that it is being bought by US-based VF Corporation, has inked agreements with New Zealand woolgrowers in collaboration with wool marketer The New Zealand Merino Company to ensure it has long-term supply of the fibre. Pricing will be at a premium to market prices to recognise long-term grower loyalty and to enable Icebreaker to use farm imagery and storytelling in its global marketing campaigns, Icebreaker said in a statement.

The company's link with New Zealand merino wool goes back to 1994 when founder Jeremy Moon tried on some prototype thermal merino clothing that had been developed by a merino sheep farmer on Pohenui Island. Today its clothing is sold in 47 countries through wholesale, branded retail and e-commerce platforms and merino wool is in hot demand by manufacturers worldwide.

For Icebreaker, the new contracts give it security of supply of the fibre and provide end consumers with a link back to growers, enhancing its brand. New Zealand sheep farmers benefit from the deal by gaining certainty to underpin production, avoiding the potentially volatile spot market pricing for commodities.

NZ Merino Company chief executive John Brakenridge said the contract is a further endorsement of its business model.

"In partnership with Icebreaker and our growers, we have pioneered forward wool fibre contracts to provide greater price certainty and stability," Brakenridge said. 

Last year, The New Zealand Merino Company heralded the signing of a five-year $45 million deal to supply fine merino wool to Italian luxury fabric manufacturer Successori Reda, which was at the time its longest-ever contract.

(BusinessDesk)

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