Dec 12, 2008
Icebreaker shoots for Moon
Graeme Kennedy [NBR]Luxury Merino wool clothing company Icebreaker has the potential to lift global turnover fivefold to $500 million, founder-chief executive Jeremy Moon says.
Mr Moon expects sales of Icebreaker outdoor and lifestyle garments produced from the New Zealand-grown super-fine wool to top two million this year, up 40%, through 2000 stores worldwide.
Icebreaker will this year use 1000 tonnes of Merino — 25% of the total clip — and Mr Moon has signed larger forward contracts with specialised growers through 2012.
Mr Moon said his company’s growth was driven by high-quality product, strong marketing and an international business model with an offshore network of subsidiary trading companies and distributors.
The Wellington-based company exports 80% of product, which is designed in the US and manufactured in China.
Icebreaker topped the apparel sector in The National Business Review's monthly Exciting Companies series with a 78.8 rating in surveys conducted by Strategic and Market Research company New River. It was followed by Trelise Cooper at 73.8, Snowy Peak 67, Silkbody 60 and Rembrandt Suits 58.6.
Mr Moon’s venture began with a chance meeting with a Merino farmer after leaving Otago University with a master of commerce degree in Marketing at 24.
“He had a prototype fabric, which felt beautiful,” he said. “There was no demand for wool then — it had a bad name for being heavy, itchy and scratchy and people were wearing synthetics.
“But Merino is so different from ordinary wool it shouldn’t be called wool.Mr Moon spent three months writing a business plan to build an idea into an international brand and used it to raise $200,000 in seed capital — enough, he said, to launch Icebreaker in 1995.
His first product was light-weight thermal underwear, manufactured in Temuka and distributed through outdoor clothing stores.
Icebreaker went into the Australian market in 1998 and took the big step to Europe the following year.
“We had to work out what successful international companies in other countries did,” he said. “We looked at their business models and how to apply them back in New Zealand.
“It was not about doing everything in their own country but being clear on the roles of head office and overseas subsidiaries. We have built the bones of a global network and will add more in the future.”
Mr Moon said Icebreaker products including outdoor and skiwear, underwear, sweaters, jackets and headwear for men and women, were made by western companies in Shanghai.
A French firm cleaned the wool which was spun by Germans and manufactured by a Japanese-Chinese consortium.
He moved Icebreaker’s design department to Oregon two years ago due to a shortage of skilled designers at home.
The city is head office for leading brands such as Nike and Adidas and has a pool of 14,000 experienced apparel sector workers. His company employs 20 designers.
SILVER LINING ABSENT
Falling demand and rising costs are hitting the apparel sector, with 75% of New River survey respondents finding business difficult or very difficult.Retail, commercial and export markets are all hurling while importers are facing increasing costs of materials and manufactured garments due to the low New Zealand dollar.
“Apparel is mostly a discretionary spending area and is suffering,” the consultancy said. “High fashion is really feeling the pinch as the high end of society is not spending."
“A few pockets of buoyancy such as outdoor activewear and school uniform work are still steady and the low dollar is giving local manufacturers an easier time.”
The survey found 10% of respondents rated sector conditions buoyant, 15% neutral, 55% difficult and 20% very difficult.
Business conditions
Respondents’ rating of current business conditions in the Apparel SectorVery buoyant =0%
Buoyant =10%
Neutral =15%
Difficult =55%
Very difficult =20%
Top 10 Apparel
2008/2004/Company/ Excitement rating1 1 Icebreaker 78.8
2 5 Trelise Cooper 73.8
3 3 Snowy Peak 67.0
4 - Silkbody 60.0
5 - Rembrandt Suits 58.6
6 2 World 58.0
7 - Fox 57.5
8 - Pumpkin Patch 57.0
9 - Rox Jewel 56.5
10 - Huller 49.5
