Strategy before structure: Merino man’s advice

And premium returns to farmers will happen only when the strong wool industry is helping retailers to grow their sales. But he issues a warning that the industry faces total demise unless it finds a suitable commercial model.

“There’s been a preoccupation with structures rather than strategy,” Brakenridge told Rural News.  “Some important things in determining success for strong wool would be to have a very strong strategy that is not compromised, that is driven by a commercial entity with scale, that as much as possible can work vertically.

“It should be able to participate in anything from fibre procurement to assisting how the product is promoted in the market. That doesn’t mean you have to own everything; it means – as an entity like ours – to have constructive input right the way through the value chain, right out to retail with a commercial entity.

“Linking through to that vertical strength is a mindset that we are only going to get more money back for growers if we are adding value and helping someone to grow their sales, their margins and their reputation. If we can be helping someone at retail to do that, then at that point we can justify a premium that can come back through to the growers.

“There are all those things, you lay out your strategy – but ideally you need a commercial model that has some scale to do that.”

Brakenridge was asked by Rural News what lessons the crossbred industry could learn from the success of Merino. He doesn’t hold with the argument that the product simply isn’t as good.

“If you go back to where we started, people were pretty much saying that about Merino too,” he says. “The active outdoors market was all polyester, polypropelene and cotton.

“It is much easier today to say Merino is a superior product with superior markets but, to a degree, Merino has marketed itself into that position. 

“The argument is, why can’t crossbred market itself into a far better position than it has now? In fact there’s a strong argument to say that if it doesn’t it’s going to be completely irrelevant.

“The fundamental premise of investment in marketing and research and development is equally applicable to crossbred wool and you need that to happen.”

Brakenridge thought Wool Partners got incredibly close to getting off the ground as a good model and he was surprised it didn’t move forward. He says most farmers are aware of beyond farmgate. 

“But I think people underestimate farmers and what they have to have is something that is commercially compelling…. Again don’t put so much structure in front of them but, instead, more strategy on what you are going to do, how you are going to add value and how that value is going to be returned to farmers. For years people have tended to go out more with structures rather than strategy.”

Any proposal put forward should be tested against such as: is it a commercial model, does it transact wool, does it do it in a way that it can provide returns in a measurable returns and value back through to growers?

“It needs to be focused on markets and on what are the attributes and benefits of wool and how this is communicated through the growers,” says Brakenridge.