Millennials driving demand for wool

Reda chief executive Ercole Botto Poala says millennial consumers want to buy an experience that respects their environmental philosophy. Picture / Getty Images

The head of 150-year old Italian textile mill Successori Reda, who has spent the past week in the merino growing regions of the South Island with his top executives, says wool is having one of its best ever moments, driven by millennial demand for sustainable products.

"This moment for sure is a good moment for the wool growers," said Reda chief executive Ercole Botto Poala.

"Wool is a fibre that is perfect for this moment, for the future consumer. The millennial consumer doesn't just want to buy a product or a brand, they want to buy a story and an experience that respects their environmental philosophy. Honestly, I think today is one of the best moments [for wool]."

Merino wool prices have been hitting new highs as consumer demand for sustainable, natural products and recognition of the performance attributes of the fibre have seen its use spread from high fashion through to activewear and footwear. That has created somewhat of a margin squeeze for Reda, which is having to pay higher prices for the raw fibre that it can't pass on to retailers of the finished product.

"Of course the wool price now gives us some trouble because the retailers they don't want to increase the price so the industry that is in the middle, they should absorb the difference," Botto Poala said. "But in any case it is positive because when the wool price is going up it means that markets are looking for wool."

Reda is based in the Northern Italian town of Biella, nestled at the foot of the Italian Alps and the hub of the Italian wool processing industry for more than 1,000 years.

The Botto Poala family business, established in 1865, is the biggest buyer of quality, sustainable merino wool in the world, handling 2.5 million kilos of fibre a year that it produces into 7.5 million metres of cloth.

Its traditional market of producing fine suiting fabrics for companies including Hugo Boss, Ermenegildo Zegna, Canali, Armani, Ralph Lauren, and Gucci makes up about 85 per cent of its business and is expected to continue to grow slowly over the next five years, while the activewear market is smaller but growing fast and new areas are emerging like woolen shoes made by companies such as Allbirds, he said.

Owning farms enables the Italian mill to control the chain of production and it also has wool contracts with other growers through merino marketing company The New Zealand Merino Company.

Demand for wool is expected to continue to grow, although Botto Poala noted that continued price rises could prompt the consumer and the market to find alternatives.

In 1993 Reda bought the first of three farms that it now owns in New Zealand, Otematapaio Station and Rugged Ridges Station in Benmore, Otago, and Glenrock Station in Tekapo, where its sheep are shorn by Peter Lyon Shearing, the country's biggest merino shearing contracting business.

Owning the farms enables the Italian mill to control the chain of production and it also has wool contracts with other growers through merino marketing company The New Zealand Merino Company which gives it not only fibre supply, but access to the wool growing story on the farms which it uses for branding and publicity.

"When we buy we don't buy only wool, we want to buy storytelling," Botto Poala said. "We need more and more interesting storytelling about the wool. Today everything is digital, people want to know everything about everybody and they want information.

"You have the story, you need to tell the story, the true story, it is a great opportunity."

Reda bought some 35 of its top executives on the trip to New Zealand, the first time it has organised an event of this scale, to show them the farms, experience the country and mull the future of their company.

Botto Poala said he left yesterday feeling "very very" optimistic.

"I feel that here I can find everything I need to grow in the market," he said.

Reda buys the bulk of its wool from Australia, some 80 per cent, and suppliers in both countries have to meet sustainability and animal welfare requirements.

"We buy only from the best," Botto Poala said.