NZ Merino signs 5-year deal with Italy's Reda for $45mn

04 Jun '16

3 min read

New Zealand's wool marketer, the New Zealand Merino Company, has signed $45 million deal to supply fine wool to Italian luxury fabric manufacturer Successori Reda over a five-year period.

This is the longest-ever contract for the New Zealand Merino Company which markets the country's wool to customers on behalf of suppliers. The extended contract is expected to relieve farmers of boom-or-bust commodity volatility. Previously, NZ Merino's longest contract period covered three years, it said in a press release.

Successori Reda is a textile leader which has been in the industry for 150 years, concentrating on high-end suit fabrics and more lately active product ranges.

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.

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.

"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."

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.

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."

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.

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. (SH)

Fibre2Fashion News Desk – India