Furore as Kāinga Ora rules out wool carpets
State housing provider, Kāinga Ora’s decision to rule out the use of wool carpets in social housing has been described as a slap in the face by sheep farmers.
The company, which moved away from the use of synthetic materials two years ago and embraced the production of wool carpets, says research shows that consumers now favour wool carpet much more strongly than at any time in the past three years.
Speaking at Bremworth’s annual meeting last week, board chair George Adams said the listed company now has the foundation needed to rebuild wool’s share of the flooring market and grow its business.
“While headwinds created by Covid-19 have constrained the macroeconomic operating environment, they have also helped to accelerate trends towards more natural fibres,” says Adams.
“Price is no longer the dominant driver of purchase decision, and a growing segment of consumers are rethinking their use of plastics and their impact on the environment,” he claims.
“In the short time since Bremworth began its transformation, the company has made significant progress in repositioning the brand and bringing consumers along on our journey towards becoming New Zealand’s leading, natural fibre flooring producer.”
Total revenue for financial year 2022 reached $95.5 million compared to $111m the previous year. Non-wool carpet revenue accounted for $19m of the reduction in revenue.
Woollen carpet and rugs revenue remained unchanged at $73m: NZ revenue rose $4.4m or 15%, while in Australia revenue was down $5m as the company moved away from high-volume commercial business to focus on premium residential customers. Net profit for the year rose 29% to $2.2m.
Adams says Bremworth now has a clear growth strategy to grow the wool flooring market, grow its share of the market, expand its presence and use design-led innovation to remain competitive.
But Covid presented a challenging operating environment.
Over the past year, the pandemic added further constraints to the manufacturing sector and Bremworth’s supply chain, particularly trans- Tasman shipping timeframes, he says.
“We are now seeing capacity return to the logistics industry.
“These delays likely saw consumers switch to alternatives. Like other businesses, inflationary pressures have manifested within our labour, materials and freight costs. Our approach to mitigating the impact of these cost pressures has been to insulate ourselves through the development of premium and design led products – where price is less important to the consumer than performance and value. In addition, we took a laser focus on our distribution and administration costs and reduced them by $3m across Australasia.
“And globally, demand for wool and wool prices remain at historically low levels, which make for a more challenging operating environment for our wool buying division.”
Meanwhile, chief executive Greg Smith told the meeting that the wool carpet sector was witnessing a global renaissance.
“While life continues to adapt to the Covid pandemic, we are also witnessing a global renaissance, a return to nature and natural fibres, and a recognition of our individual impact on the environment,” says Smith.
“There is growing consumer awareness that the environmental cost of plastic is too high.
“Bremworth is positioning itself as an advocate at the forefront of long-term change,” Smith says.
“As part of this evolution, we are developing products today that can be safely returned to the environment from which they came, and the results from the past year reassure us that our messages are resonating with consumers and the market is increasingly recognising the value that we offer.”
