Reports, reviews and rhetoric about the strong wool sector’s woes have dominated headlines for decades, seemingly to no avail with prices plumbing a new nadir earlier this year. Yet behind the scenes, a group of Kiwi entrepreneurs have been working on a project that just could, feasibly, turn the tide. Andrew Swallow reports.
In most regions of the United States and Europe these days, nearly all buildings must meet minimum energy consumption standards, set by Governments seeking to reduce carbon footprints and improve people’s living and working environments.
Those standards have made insulation not just desirable, but a legal requirement, and increasingly individuals, businesses, and public sector organisations are looking for sustainable, environmentally friendly and healthy products to meet that need. It’s a massive market and one that “makes our product very attractive,” Ed Langston of New Zealand wool processor-marketer, Wool Life says.
He and Wool Life founder and co-shareholder, Stephen Fookes, have spent the past three years market testing a woollen equivalent of the polystyrene balls used for insulation in cavity walls in the US. Called Insulknops, they can also be used in furnishings such as bean bags, duvets and pillows.
Initially made on contract overseas, in January this year a processing plant at Te Poi, eastern Waikato, was commissioned. It has a capacity – effectively a clean wool requirement – of up to 3000 tonnes a year. That’s about 2.5% of NZ’s total wool production, and they see that as just the start. Long-term they believe the markets they’re targeting are big enough they could account for up to a third of the NZ clip.
Covid lockdowns here and overseas hampered the plant’s commissioning but in October the first shipping container full of NZ-made Insulknops – about nine tonnes of product – was shipped to the US, with a second on the way. Fookes says they’re aiming to ship 800t next year: about 70% for insulation and the rest for the higher-value furnishing market.
The plant is an essential part of their strategy to control the channel to market, from farm-gate to consumer. Test marketing with contract-made Insulknops from NZ wool over the past three years allowed them to establish a network of installers in the US.
The installers are existing insulation businesses supplying blown-in synthetic products so having the wool alternative broadens their service, not that Wool Life is relying on installers to sell it. Rather, Wool Life will collect orders through its website and sales management system in the US, and allocate them to the most appropriate installer. Traditional batting made of pure wool will also be available.
DIY installation is an option too because unlike many of the synthetic alternatives, there are no health and safety regulations for wool insulation that demand certified installers. So far about 40% of orders have opted for DIY installation Fookes says.
Besides wool’s natural, sustainable, and environmental attributes, another selling point for Insulknops is higher thermal rating than most synthetic equivalents.
In the US, where air conditioning is a major power user, that’s important to keep buildings cool as well as the more traditional aim of keeping heat in, he points out.
Wool’s ability to absorb and release moisture as humidity changes is another plus for Insulknop insulation.
“It remains dry to the touch and that reduced opportunity for condensation to form helps the surfaces it’s in contact with last longer.”
The aim is to ship 800t next year: about 70% for insulation and the rest for the higher-value furnishing market.
Air quality is another focus for US consumers due to poor air quality outside buildings and concerns about release of volatile organic compounds (VOC) from many synthetic building materials, including insulation, inside.
Wool insulation not only doesn’t emit such vapours, but it has the ability to absorb them improving air quality, Langston says.
Acoustic insulation properties are also good, which is an increasingly important selling point in hotels, industrial buildings and business properties.
Investment options
How Wool Life’s relationship with wool producers will be managed is in the process of being finalised, with a range of investment options possible offering a share of returns, including a supplier-shareholder arrangement. Other suppliers will likely be on some form of contract. The important thing is that the wool is traceable farm-gate to consumer and that the farm’s practices will meet the expectations of premium-paying US consumers.
“We will be profiling the farms… at the moment all our wool’s coming from the South Island but we have sourced from the North Island before,” Langston says.
“We’re open to wool’s from throughout the country.”
The specification of wools required is quite broad. For insulation coarse, second shear wool with a 60-80mm staple is ideal, while for pillows and duvets something a bit finer, such as lambs’ wool, is better.
“Some products need higher bulk wools such as Perendale or Corriedale but in general the Romney and Romney cross wools are all in the category we can utilise,” Fookes says.
To date wool’s been bought direct from farms and contract scoured. Prices paid to suppliers have been “better than they would achieve at auction”, Langston says. Fookes adds that long-term sustainability of supply is one of their key concerns, so they want to ensure suppliers get a return that ensures they remain focused on producing wool, as well as lamb.
At the other end of the supply chain their pricing strategy is not to try to compete with synthetics but to maintain a substantial premium because for US consumers price signals quality.
“They have choices over a 300% price range.”
The scale of the market also means there’s no need to use price to try to take a large market share. Insulating just 5% of new build homes in the US alone would use 10% of the NZ wool clip, Fookes calculates.
“If you add retrofit insulation of homes to that at the same percentage [ie 5% of retrofits using wool] it would use 35% of the New Zealand wool clip alone, without adding any of the high value uses such as bedding.”
That’s another massive market. Fookes says 480 million pillows were sold in the US last year for a combined US$7 billion, starting at about $5 each through to hundreds of dollars for feather, down and, you guessed it, wool ones. Wool Life’s market research and test marketing indicates that wool sits at the upper end of the market in the $US100 range. This, along with other bedding products, has a huge margin, that should be shared with growers, they say.
Duvets and other bedding products under development will also target the top end of the market.
In both pillows and duvets, wool wins over synthetics on moisture absorption, fire risk, and gas emissions, and over premium natural products such as down in sustainability – no ducks or geese need die – and bug resistance.
Fookes says they’ve targeted the US market initially because it’s a free economy, with scale and good supply systems, yet wool’s advantages have never been strategically exposed there in any quantity.
“The interesting thing in the US is very few people are aware of the advantages and attributes of wool… In Europe they’re much more aware of wool.”
New Zealand and several other markets besides the US are planned and a range of other pure wool-made insulation products will be progressively introduced globally.
More products and markets
Besides the massive building insulation and furnishing/bedding markets, Wool Life has a couple of other markets in its sights, including insulation of perishable goods such as foods, medical or veterinary supplies.
To transport these across the US takes two or three days which, with current synthetic insulation, necessitates refrigeration or dry ice and gel packs which are heavy and bulky. Fookes says they’re advanced in their research and commercialisation of a wool-based alternative.
Another market they plan to target, possibly with lower grade lines such as necks, bellies and pieces which don’t work for the Insulknops process, is weed matting for horticulture. As a natural alternative to synthetics currently used, and because wool works as both weed suppressant, moisture retainer, and fertiliser, Fookes believes they’ll be able to market it for a considerable premium to plastic weed mat.
Who are they?
Stephen Fookes will be known to many with an interest in wool, having been chief executive of the New Zealand Wool Testing Authority from 1976 to retirement in 2008, and has represented New Zealand nationally and internationally on a range of wool textile initiatives and boards.
With NZWTA he worked with about 27 countries to improve their wool manufacturing and processing capabilities, and established a global infrastructure for improving textile processing.
Since 2009 he says he’s concentrated on developing new wool textile products, especially for interiors and buildings, and in 2017 teamed up with several “key strategic wool interests” here and in the United States to establish companies, Wool Life USA, and Wool Life NZ, focusing on direct-to-consumer supply strategies, which is where Ed Langston comes in.
Langston is a director of several NZ-based companies, including gift meal provider Angel Delivery, and describes himself as “working in a number of industries in team, culture, and brand and market development”. He says he’s been researching opportunities to use wool in packaging and housing in NZ, the US and Europe since 2010 and that the key to unlocking these opportunities is to control the production and resourcing and base it in NZ.
