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Wool Stocktake : AWI Annual Report 2008-09
CEO's report Since joining AWI in March, I have been delighted to meet with and listen to many woolgrowers across the country. You have been telling me "we can grow wool, but what we need is help to market it to retailers and consumers overseas". I am pleased to say that AWI, your company, has listened to you and has changed significantly during the past year to enable it to do more marketing. AWI has cut many of its overhead costs to become a leaner commercially oriented company with a sales and customer focused culture. We have worked hard to develop a new Strategic and Operating Plan, effective from 1 July 2009. The company now has one voice, one brand, one direction. What s different in AWI s new approach to marketing? Firstly, our marketing is focused on products that are actually available in retail stores; secondly, the campaigns are targeted; and thirdly, the funds we invest are leveraged with our business partners marketing budgets. AWI s recent intervention in the Japanese market is a good example of how AWI now operates. In this campaign, we targeted the largest retailers in Japan; the marketed garments were available in 2647 retail stores across the country; and every dollar AWI invested was matched by $4.70 from the retail partners. All retail partners recorded incremental growth in sales of Australian Merino wool products. Overall, the campaign saw a 26 per cent increase in Merino wool demand -- bucking a forecast decline in national demand of approximately 14 per cent (due to the global financial downturn). Last year s Korean Marketing program worked on the same principle, with similar results. A modest campaign investment by AWI was more than matched by our partners, with Cheil Industries even recruiting former 007 Pierce Brosnan for its campaign. So forming relationships and collaborating financially and intellectually with other companies is a very cost- effective way of operating. One of the ways we have been building relationships with the major apparel and textile companies is by showcasing Merino collections at the key international trade shows, such as Spin Expo and Premier Vision for apparel and Heimtextil for interiors. We have then been doing follow-up work at retailer workshops with high street brands, which is where the real product marketing goes on. Products that we have been marketing this year include the shower clean suit in Japan, which sold out over the spring/summer season; the lightweight Merino CoolTM woven fabrics, which are redefining wool as a fibre that can be worn all year round; and the super soft Merino TouchTM knitwear which is now competing with the more expensive cashmere. We have also recently released a new Merino CasualTM collection which is AWI s response to the threat to wool s market share posed by synthetics. Another area of optimism and market growth is the expanding active/outdoor market. Ten years in the making, Merino PerformTM is the second-generation Sportwool innovation that is driving AWI s work in this area. Meanwhile new markets for broader micron and cross bred wool have been explored in the interior textile markets, using our many brand and retail partners in that sector. While AWI is driven by sales, there is now an integrated on- and off-farm R&D approach, with a tighter set of more focused R&D projects. Our teams are driven by sales, and backed by science. Our off-farm R&D team has been focusing on product technology and delivering knitwear and woven collections for the 2010 retail season. Meanwhile, our on- farm R&D team has been pushing forward in the key areas of flies, lice and worms, shearer and wool handler training, wild dogs, and extension groups. Of major importance of course is flystrike prevention. We are making headway in animal welfare R&D. A Sheep Breeding Value for breech wrinkle is one important step in the road to long term natural flock resistance. Trials of the intradermal treatment known as SkintractionTM have been encouraging and breech clips became commercially available by Leader Products in May. The introduction of the National Wool Declaration is giving the supply chain transparency about woolgrowers flystrike control strategies. On the financial front, AWI has been cutting its cloth to fit and live within its means, freeing up funds to enable more marketing of wool. We have been simplifying our support processes to take the complexity and cost out of the business. Since November we ve cut $25 million in costs and 100 staff from the time of integration of the two companies, and reduced the number of individual projects from 500 to 200. Further, our global sales network will work towards becoming self-funding. AWI has further work to be done, but we now have a blueprint of proven methods in place. This year we have reshaped to focus on marketing, while retaining the important aspects of our R&D. With everything we do we ask: will this help sell more Merino wool? Will this help increase the price of Merino wool? Will this help increase grower and licensee confidence in the future of the wool industry? Over coming months I look forward to more opportunities to discuss with you our plans to build demand for this wonderful natural fibre and re-ignite confidence in the long term viability of Australia s wool industry. Brenda McGahan CEO, Australian Wool Innovation 15 October 2009 UP FRONT
AWI Annual Report 2007-08
AWI Annual Report 2009-10