Thursday, 19 April 2018 07:55

Icebreaker US sale has advantages

Written by  Pam Tipa
Nic Lees. Nic Lees.

Although the sale of an iconic New Zealand brand to overseas investors is somewhat sad, there are real advantages, says agribusiness commentator Nic Lees, of Lincoln University.

He was commenting on the $288 million sale of Merino clothing company Icebreaker to the US based global apparel, footwear and accessory business VF Corporation. The US company also owns North Face, Vans, Wrangler and Timberlands.

“Icebreaker has the potential to become a global brand in the same way as Patagonia or other brands including North Face,” Lees, senior lecturer in agribusiness management, told Rural News.

“To achieve this Icebreaker needs significant capital investment in terms of opening new stores, product development and marketing. 

“More importantly it needs the expertise and experience required to develop a global brand. 

“This is lacking in New Zealand. NZ companies have generally struggled to do this and many have been burnt when trying to establish themselves internationally; examples are Michael Hill and Pumpkin Patch.

“So the main benefits are the expertise, investment and distribution channels to become a global retail brand. The [question] is do we want Icebreaker to be a small NZ-owned company or part of a larger global business?”

Lees says concerns about foreign ownership are not as significant as people think. “Icebreaker brand is inextricably linked to NZ and Merino wool,” he says. 

“International expansion will increase the demand for NZ Merino wool which will benefit NZ Merino farmers.”

The brand will still be perceived as from NZ; brand image is what is being paid for in the purchase, he says.

“Like Apple computers, even though we all know they are made in China they are still seen as an American brand.”

With companies, often the value is in the brand and only the brand, he says. Developing an international brand requires huge investment in marketing. Even a company the size of Fonterra struggles to have major international retail brands, he says.

“The main concern is about profits going overseas. This is true though often NZ companies have significant debt which automatically [benefits] overseas lenders. 

“Ownership means that both profits and losses go overseas. Profits will only go overseas if the company is successful.”

But Lees says the headquarters and staff will still be in NZ. The company will pay taxes in NZ as will employees. The company and employees will spend money in NZ benefiting other businesses.

Having a global iconic NZ brand internationally will lift the profile of NZ and benefit other businesses that trade on that image, e.g. tourism.

“Icebreaker has led the way in showing NZ food and fibre businesses how to move from commodity products to high value brands. 

“The $288 million sale price will be $US that flow into NZ. This money will need to find a home and is likely to be invested in NZ.

“The sale provides an exit strategy for the founders and NZ companies have generally been unable to raise sufficient capital from NZ. An example is Synlait Milk that originally failed when it tried an NZ sharemarket listing.”

More like this

Energy farm to trial zero carbon solutions

Lincoln University has unveiled plans for what is expected to be a globally-unique Energy Demonstration Farm to help the primary sector meet its future zero-carbon obligations.



Limited feed puts ewes at risk

Severe feed shortages in parts of the country mean many ewes are on a nutritional knife-edge heading into lambing and could be at risk of developing metabolic disorders.

Jack’s unique solution

Jason Jack was left with severe spinal injuries after a wakeboarding accident when he was 29, but that hasn’t stopped him getting out and about in difficult environments.


A ticking time bomb

Our dairy industry risks being exposed to a ‘ticking time bomb’ of unethical players unlawfully passing off New Zealand-made and…

Nervous wait for winter

The unknown of what winter will bring is very much on the mind of the Hawkes Bay Rural Support Trust…

Be careful, Potatoes NZ!

Moves by the NZ potato industry to have anti-dumping tariffs imposed on European imports could play into the hands of…

China keeps dairy prices high

Whole milk powder (WMP) prices are now sitting above pre-Covid-19 levels and New Zealand farmers can thank a resurging Chinese…

Machinery & Products

Hydrogen excavator a first

While most motive industries are focused on hybrid or EV power plants, JCB has developed the construction industry’s first hydrogen-powered…

Jack’s unique solution

Jason Jack was left with severe spinal injuries after a wakeboarding accident when he was 29, but that hasn’t stopped…

HP and digital tech combo

The latest New Holland T8 GENESIS is said to capitalise on the productive combinations of Stage V horsepower and digital…

» The RNG Weather Report

» Latest Print Issues Online

The Hound

Spell check

Your old mutt was not surprised to see the NZ Dairy Industry Awards hastily remove the title of this year’s…

About time!

Your canine crusader has been a long-time critic of NZ governments – of all stripes – who, for the past…

» Connect with Rural News

» eNewsletter

Subscribe to our weekly newsletter