Wednesday 01 June 2016 11:23 AM
NZ Merino inks 5-year, $45M contract with Italy's Reda, supplier to Armani, Gucci
By Tina Morrison
June 1 (BusinessDesk) - 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.