Glerups extends wool contract with NZ Merino through 2017

Friday 30th October 2015

Glerups, the Danish woollen slipper maker, has extended its contract with New Zealand woolgrowers to meet increased demand for its product.

The company inked a 2017 contract through the New Zealand Merino Company for 120 tonnes of wool for about $1.5 million, during a visit to New Zealand this week, and expects to return next year to secure a 2018 contract, said Glerups supply chain manager Jesper Glerup Kristensen, the son of the company founder Nanny Glerup. It also extended its 2016 contract by 20 tonnes to 100 tonnes, up from 80 tonnes this year.

Glerups, which started as a hobby business by Nanny Glerup in 1993 using wool from her Gotland sheep, now exports about 150,000 pairs of the $189 slippers to 20 countries each year. The company's sales are expanding at a 20 to 25 percent annual pace and it expects to produce between 180,000 to 190,000 of the slippers next year, Kristensen said.

"We are seeing growth in all our markets. We are only scratching the surface and penetrating many of our markets at this moment," he said. "We believe we have high potential."

Glerups switched this year to buying wool from New Zealand farmers rather than on the open market to enable it to build long-term relationships with its suppliers and provide it with certainty on the cost and quality of its supply. NZ Merino was able to secure the deal after signing a contract in December last year to manage the wool clip of Landcorp, the state-owned farmer, which wants to improve returns and reduce price volatility by securing agreements with end-use customers.

"There is a lot of value in this for both Glerups, NZM and the farmers," Kristensen said. "Contracting the wool gives us the rest to concentrate on our business instead of looking out for currency rates every second day and never knowing our costs. The beauty of this is that it works both ways for the farmers too. And it works perfect in our production - NZM puts a lot of work in supplying us the right quality continually season to season."

In the early formation of the company, Nanny Glerup knew all the Danish farmers who sold her their Gotland wool, and the company is keen to retain the "from farm to foot" philosophy and have a relationship with the farmers who produce its wool, he said. Glerups continues to use a small amount of wool from Gotland sheep, which originate from the Swedish island of the same name.

While in New Zealand, Kristensen visited New Zealand farmers who supply his wool, including a Maori farming group from Atihau Wanganui Corporation.

BusinessDesk.co.nz

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