Wool to ride over economic challenges driven by generation Z and their love of quality and longevity

Kristen Frost
By Kristen Frost
May 11 2022 - 4:00am
AWI director Georgia Hack believes there is significant demand growth in the luxury apparel sector and that is good news for producers.

Demand from millennials and generation Z for high-end luxury goods is tipped to save wool demand destruction as the world faces reduced economic growth and high-end inflation.

And a much lower supply than in the past will be an offsetting factor, experts say.

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Australian Wool Innovation (AWI) director Georgia Hack, during the recent webinar 'Ask the Chair', said demand for the luxury sector in apparel is a worldwide phenomenon, and that's good news for Australian wool producers.

"There is significant demand growth in the luxury apparel sector," Ms Hack said.

"We are seeing it in Australia and we are seeing it more broadly in luxury brands and their growth and use of wool is growing. I can't see that slowing down anytime soon."

And she said the average consumer is now more eco-conscious.

"We know the consumer, particularly the millennial and the younger generation Z are definitely buying in a different way to some of the older consumers," Ms Hack said.

"This comes from their conception of value and value to them is defined by quality and longevity."

She said those two factors, plus the continuation of innovation of the fibre, particularly in the sportswear sector, will ensure continued growth and demand.

Managing director of Mecardo Robert Herrmann said if history is anything to go by, the industry would normally face subdued demand due to a lack of gross domestic product (GDP) growth.

"History would tell us, when advanced economy's GDP growth was growing, that would mean prices and demand was strong.....and with more disposable income to spend, wool was a beneficiary of that," Mr Herrmann said.

"It would be fair to be concerned that demand might be an issue now, but with a lack of supply, or the much lower supply than we have seen in the past, that will be an offsetting factor."

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He said now, as populations have grown and the demographic has changed with the economic center of the world shifted to Asia, it is a completely different situation.

And the world, he said, is much more attune to sustainability.

"More than ever natural fibres and ethical production is incredibly important," Mr Herrmann said.

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"So if we have a smaller supply of product, even though we might have economic challenges, we may find that we only need a smaller demographic of people who are concerned about the environment, and love wool for its characteristics.

"We may then see that the demand for wool tends to ride over some of those economic challenges this time better than it would have in the past."

AWI director Noel Henderson said even during the height of Covid-19, demand increased for the finer end of the market, in particular Responsible Wool Standard (RWS) certified wools.

"More people are knocking on our door wanting to buy wool," Mr Henderson said.

"They have some fairly strict criteria though - most of the buyers for that type of wool want RWS certified wool."

He said recent reports received out of China indicate its growing middle class and beyond that, into the high-end demographic, are starting to consume more luxury-end type products.

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"They are not only buying the traditional European brands, but their own designers are coming through developing their own high-end brands and buying more of the luxury fine, RWS certified wool," Mr Henderson said.

"This is something at the moment that is very strong."

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Kristen Frost

Kristen Frost

National Sheep and Wool Writer

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