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Beyond the Bale : March 2019
FIBRE PRICE INCREASES DURING THE PAST TWO DECADES MARKET INTELLIGENCE REPORT MARKET INTELLIGENCE 61 RISE IN PRICE OF WOOL VERSUS OTHER FIBRES GLOBAL APPAREL 2019 OUTLOOK Based purely on price levels, there are many fibres within the apparel sector which can be used as a substitute or cheaper alternative to wool. Below we assess wool’s value against the three major petrochemical synthetics: acrylic, nylon and the widely used polyester – and the most used natural fibre, cotton. This is solely a price comparison based on market values at the input (raw material) level. The decade from 1999 to 2009 (see the left hand side of the graph on the opposite page) clearly saw the wool price languishing and generally subsisting in the doldrums. Through the first few years of the decade, the wool price was vulnerable to weakness due to numerous factors including the ongoing disposal of the wool stockpile and the economic uncertainty caused by the 9/11 terrorist attacks. Then the SARS virus in Asia caused further economic wobbles, which was followed by the hard-hitting GFC of 2007-08. While all these events had their effects to dampen the price of wool, in addition the industry remained disengaged with consumers with very little marketing of the fibre. Removing two or three spikes, wool sat in price band widths comparable to synthetics and cotton, so these other fibres remained as a competitor for wools’ market share. In contrast, the most recent decade, 2009-2019 (see the right hand side of the graph), has clearly been wool’s breakout period, where it has transformed from a competing fibre to the synthetics and cotton to now be a fibre of choice for brands at or near the top of the fashion pyramid. Over the past decade, wool has again found its place in the upper echelon of retail The latest data released from China shows a surprising 3.5% increase in apparel goods (clothing) exported from that nation for the 2018 calendar year. The analysis and news company Market Pulse states: “Impressive results by the French luxury conglomerate LVMH (Moët Hennessy Louis Vuitton) kickstarted 2019 with note of optimism. The latest results turned the tide in favour of luxury goods, with investors momentarily shaking off fears of a slowdown in growth in China along with the anxieties surrounding Brexit and US-China trade spats. The Chinese market seems alive and well, with both Burberry and Tiffany reporting an increase in sales in mainland China.” The news and research portal for the apparel and textile industry Just-Style states: “US apparel giant Ralph Lauren has delivered better-than-expected results for the third quarter, suggesting the firm's brand-building, product, digital and global expansion are finally on the right track.” On a global level, the 2019 January edition of Just-Style Outlook included the senior partner at McKinsey & Company and co-leader of McKinsey's Apparel, Fashion & Luxury Group, Dr Achim Berg stating: “In our McKinsey Global Fashion Index, we forecast growth (2019) of 3.5% to 4.5% for the fashion industry overall – a slight slowdown versus 2018. Apparel growth, in turn, will hold steady at 4% to 5%. The polarisation across price segments continues: the value segment will achieve growth of 5-6% – the industry's highest rate – followed by the luxury segment at 4.5-5.5%.” Dr Berg goes on to add this statement: “After decades in which the way of working in the apparel industry changed little, innovation and transformation are now the name of the game. Volatility, uncertainty and shifts in the global economy continue to be the top challenges for global fashion executives.” In this article we look at the performance of wool during the past 20 years in comparison with other fibres in the market – and the reasons why the past decade has seen a marked improvement in wool’s performance compared to the previous decade. Snippets of news from the global apparel market. garments and developed into some of the most technical garments available, thus increasing returns for producers. On any comparative analysis, wool has outstripped all alternative volume-fibres and the figures in the table below highlight and quantify the gains that wool has recorded over the past 20 years, with most of that in the past decade. Significant marketing, research and education activities currently being undertaken by all sectors of industry and AWI and its subsidiary The Woolmark Company – such as the latest ‘Live & Breathe’ campaign, life cycle assessments, and the health and wellness benefits of wool – will add a new component to any valuation of wool against fibres mainly used in fast fashion clothing. Quantifying the green credentials of wool from creation to disposal through the entire life cycle and assigning a fair and accurate index or market value is a priority. These efforts, by provoking thought and a change of consumer buying behaviour, is statistically already apparent in the preceding charts. The wool industry’s superior positioning as being an environmentally-sensitive farming model in addition to a robust provenance declaration is clearly adding value to the natural fibre component that consumers are demanding at the luxury end of the apparel market. Furthermore, wool needs to be less laundered than other fibres and is kept longer in the wardrobe – and consumers are becoming more and more aware of the environmental damage caused by microplastics. This is where wool is winning against synthetics and price and demand can advance further.
In the Shops - March 2019