U.S. Company Requires Seven-Year Contract
April 22, 2005
April 22, 2005 - Outdoor sock and clothing maker, SmartWool Corp., based in Steamboat Springs, Colo., has signed a seven-year $NZ40 million deal (nearly $US30 million) to buy about 400 metric tons of wool annually from New Zealand (NZ) Merino Co.
According to NZ Merino's chief executive, John Brakenridge, this is the company's largest contract in both volume and length of time. About 80 New Zealand farmers will supply the contract, which will take-up approximately half of the country's output of 23 micron merino wool.
Australian Wool Innovation (AWI) has contracted with NZ Merino Co. to obtain advice on how to better sell that country's merino wool. The contract specifies that New Zealand conduct a survey of Australian wool growers, as well as identify how a direct marketing arrangement could be introduced in Australia. AWI is hopeful that this $AU300,000 contract will enable them to utilize direct marketing in a way similar to what New Zealand has done with SmartWool.
According to Rita Kourlis Samuelson, wool marketing director for the American Sheep Industry Association (ASI), "In our domestic market, the U.S. military is similar to the SmartWool/New Zealand wool program in that it utilizes certain types of wool, for specific products, over-and-over again. The difference is that the military does not require the producer to sign a long-term contract. While, the military utilizes approximately 20 percent to 30 percent of the domestic wool clip, ASI is continuing to look at innovative ways to market the balance of the U.S. wool."
Staff contact: Rita Kourlis Samuelson, ext. 29