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Elders target premiums in wool contracts

Rural News
Elders target premiums in wool contracts

Elders will announce deals with US carpet manufacturers in early 2010. National export manager Craig Wilson told Rural News the company has made excellent progress in the last few weeks. "˜I'm conscious that from some of the statements made in recent months, we might be sounding a bit like a broken record but we're getting very close. "˜We're currently working through the detailed logistics of supply, which varies depending on the manufacturer.' Wilson says US company CCA Global Partners is holding its annual retail convention at the beginning of February and Elders' Just Shorn branded carpet will be displayed there. He says trying to sign deals with US carpet manufacturers during the recession has been tough, particularly when the Elders strategy is for manufacturers to pay more for wool then they currently do. "˜The Just Shorn concept is based on selling wool and carpet at premium prices. The idea is if the consumer pays an extra 5-6% for their carpet then that will flow back to the growers.' He says Elders is targeting the high-end market as a way of achieving this premium. Wilson says Elders main competitor for New Zealand wool, Wool Partners International, is not trying to get that extra premium, which may be why it has been able to announce deals with 18 US carpet manufactures in the last few months. "˜We believe that you have to ask for that premium from day one. It's very hard to ask for it later. Trying to achieve this in a depressed market, when some manufacturers are dealing with a double digit reduction in sales, is not easy. "˜We're asking them to make a serious commitment, which requires them to make quite an investment in both time and money, so it's not surprising that it's taking some time.' Wilson says that while Elders is working with CCA to sell its wool, it does not have an actual supply contract with the company. "˜CCA is a buying group that facilitates purchases by their members. "˜We have a memorandum of understanding with them but supply contracts are signed with actual manufacturers.

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