Part 1: Where the industry has been…the past.

Founder and Managing Director of New Zealand Cashmere, David Shaw, developed a strong interest in cashmere fibre during his university days back in the 1980’s when cashmere was being touted as an industry with a future. The idea of farming goats had initially been  investigated by the Ministry of Agriculture in the 1970’s and  gained momentum in the early 1980’s when Dawson International ( a global textile conglomerate) moved into Australia and New Zealand offering 5-year supply contracts. By 1985 500,000 goats were being farmed peaking in 1988 at 1,338,000.

At the time farmers were looking for diversification after suffering tough times in some of their traditional markets. The government of the day made investing in a range of agri-businesses very attractive by offering tax advantages, which often included major write-offs in the first year. Significant investment flowed from major players like Kiwi Cashmere, Cashmere Pacific, Woodstock and Arpac. These firms all invested in feral based animals and sophisticated breeding techniques. Large numbers of Australian animals including complete flocks were imported into New Zealand to speed growth. By the mid 1980’s 1 in 6 farms across New Zealand ran some goats.

In 1987 the commercial environment changed dramatically with Black Monday. The New Zealand stock market crashed along with markets around the world. During this period there was also change of government in New Zealand who changed the rules around goat farming. The Chinese Government also changed their cashmere export rules at this time creating even more headwinds for the fledgling New Zealand cashmere industry. The combined effect from all of these events put the cashmere industry on ice and stalled what should have been, could have been and would have been a premium export opportunity for New Zealand farmers.

Part 2: Where the industry is going…the future.

Since the 1980’s much has changed in the world of fashion and farming and much of it plays straight into the New Zealand Cashmere story. Standing out from the crowd is getting harder. High-end fashion consumers paying a premium more than ever want to connect with a brand story they can engage with and feel good about. Natural, luxurious and beautiful New Zealand Cashmere has the potential to bring this dream to life. Sustainability, the environment, corporate social responsibility and animal welfare are all headlining consumer concern.

New Zealand Cashmere has been spending time with and listening to consumers and it’s clear that beyond the fast fashion stores many discerning consumers are looking for something unique, something that makes them feel special and something that matches their values. The global cashmere market is expected to reach USD $3.1 Billion by 2022. The industry has been growing at a CAGR ( Constant Annual Growth Rate) of 3.86% and that is expected to continue for at least the next 5 years. When compared to other farm revenue options the cashmere opportunity demonstrates real potential.

The cashmere opportunity for  New Zealand producers  is bookended between an avalanche of demand from consumers wanting more and more cashmere and climate change challenging traditional cashmere growing regions like Mongolia. A region that is facing the real and increasing threat of desertification. According to Federica Levato of Bain & Company, consumers are now pushing price and supply. She believes the main demand driver is the “casualisation of the market”. However you view the current state-of-play, it looks like the timing is close to perfect for investing in a new, New Zealand Cashmere story.