Key markets for Australian Wool outside China

AWI examines some key markets outside China and their recovery or otherwise from the pandemic that the world is now continuing to recover from. As mentioned before, China is the first destination for 80% of raw wool exports from Australia and half of this wool stays in China, meaning 40% of all Australian wool is sold at retail in China.

Japan continues to struggle, and the UK has not recovered its imports back to pre-pandemic levels. But all other major destinations have recovered, with the USA leading the way with a 42.6% lift in wool imports over the last 12 months. US Wool apparel imports continued the positive trend in December of 2022, up 16.7% on December of 2021, and closing out the 12-month calendar year of 2022, up 42.6% on the previous 12 months (2021). US consumer confidence has plateaued to start the year at approximately 97, down from the benchmark of 100. Despite these numbers, US is holding stable as a consumption market in comparison with some of Wool’s other major markets. Backing this overall recovery story in The United States is the continued growth of Merino in active outdoor wear as well as the growth in sales outside the traditional colder seasons. One example is Ralph Lauren, it benefitted from a flight to quality, which saw some groups of consumers – especially those in middle- and higher-income segments – focus on buying good quality that lasts rather than buying cheaper, more disposable items. GlobalData rates their current performance as positive and their future assessment as positive.

However, the other 60% heads to consumers in countries such as Japan, Germany, France South Korea, UK, Italy and the USA. The below graphic from the ITC import/export trade data shows the recovery in wool imports over the last 12 months.

Another wellknown brand reporting good sales is Puma. For the year ending 31 December 2022 Puma delivered an impressive performance with sales rising 18.9% on a currency adjusted basis despite being up against strong comparative growth of 31.7%. The Americas were Puma’s best performing region, with currency adjusted sales rising 28.3%. Despite this, uncertainty continues to hang over international markets due to various factors including interest rates, the threat of recession and the war in Ukraine. Consumer confidence in China is very hard to judge given the lack of trade data coming from that country. What we do know is that according to the National Bureau of Statistics in China, consumer confidence continued to fall toward the end of the 2022 calendar year as COVID restrictions continued before being lifted. The optimism many commentators had for wool in 2023 is yet to fully play out as different countries around the world respond to the post COVID era with other economic indicators now having significant influence over the demand for wool.

Source: AWI