Romancing the sheep

By Carolyn Enting

Saturday 1st December 2001

Take a North Canterbury sheep farmer, add a generous dose of entrepreneurial spirit, some Ngai Tahu insight, a dash of resistance from the Wool Board peppered with some high-fashion brands and you have all the ingredients for a good yarn

No ordinary sheep farmer, Peter Radford is more likely to be spotted at Chanel in Paris than drenching sheep on his Canterbury farm. In fact, he concentrates just on the business end and leaves the farming to a manager.

Since he started The Escorial Company in 1999 Radford has successfully developed a multimillion-dollar business with a fibre called Escorial, from the fleece of his specially bred imported sheep. And he has done it by building an exclusive worldwide brand sought after by Europe's fashion royalty, rather than by just growing good wool. His impressive client lineup includes top fashion names Chanel, Yves Saint Laurent, Brioni and Comme des Gar�ons.

You would think the local wool industry would be f�ting their hero, the local boy done amazingly well. Instead, he was almost forced to leave New Zealand and take his growing business offshore.

The problem: the New Zealand Wool Board for a long time refused to recognise his Escorial brand and, according to Radford, was effectively encouraging the passing off of non-Escorial wools as his exclusive fibre.

Radford felt the Wool Board's endorsement would solve a problem he had with some Italian manufacturers trying to pass off related wool as Escorial. For its part, the Wool Board says there was never any question about not recognising the brand, it was a question of timing. The Wool Board was contracted to Merino New Zealand, marketers of fine wool, at the time. Because of that, the board's Roger Buchanan says it was in a difficult position also endorsing Escorial.

Last year the entrepreneurial farmer decided he'd had enough. He threatened to set up business overseas and stop calling Escorial a New Zealand product.

Last-minute intervention by two MPs and one fashionista in Prada shoes saved the day. Deputy Prime Minister Jim Anderton, MP John Wright and Jennifer Souness (formerly of Industry New Zealand) helped negotiate with the Wool Board, and Escorial was officially recognised in April 2001.

Since then, relations between Radford and the board have improved but the marketing agreement between the two lasted only a few short months. As of July 1 this year, board levies apply only to research and development and farm activities, not marketing and distribution. Little use to Radford, who now pays his levies for small payback. Still, Wool Board recognition was key to establishing the Escorial brand on its home turf. Ironically, while the New Zealand Wool Board took some convincing, Escorial looks to be granted separate classification status, as cashmere has, by the US Department of Customs for exporting the product to the US.

How close New Zealand came to losing Escorial horrified Souness, now managing director of Creative Business Development. "Because I have worked in the luxury market [in Italy] I understood the possibilities this could open up for other New Zealanders if we assisted [Radford] and didn't let him slip away." It is hard for many New Zealanders to understand the luxury market because we don't have one, she says. "New Zealanders won't pay $US10,000 for a suit, but that doesn't mean we can't create one and sell it offshore."

One company that did understand the potential was Ngai Tahu Holdings, which holds a 25% share in the business. The Radford family and two other wool growers are the other major shareholders.

Ngai Tahu invested around $3 million in 1999, securing pre-emptive rights to acquire stock as it became available because it had confidence in the fibre's development. The tribe now has a "respectable" flock of its own and as growers receive "an extremely high percentage return on its investment", says Sir Tipene O'Regan, Ngai Tahu boss and chairman of The Escorial Company. He gets to wear suits by Italian menswear company Brioni, too.

Both Radford and Sir Tipene are cagey about financial details. They say the business returned a healthy profit by the end of the first year. The company is currently restructuring to give all growers a shareholding, a move Radford believes will strengthen it and help with the challenge of "locking down the genetic scrum", as Sir Tipene says.

Sir Tipene says Escorial's success is largely due to Radford's extraordinary vision. "The remarkable thing he has achieved is to successfully brand a particular fibre that can be identified by its genetic origin, and that has achieved a remarkable presence in the luxury goods market."

Brought up on an Otago sheep farm, Radford comes from a family with an equestrian background. His former polo career gave him entry into wealthy circles and an insight and understanding of the luxury market.

When he realised his product was not understood by the New Zealand market, he headed off with his wares and cold-called his way around Europe.

"We have had our tough moments, I can tell you, but we took the long view and just kept going," says Radford.

Today Escorial is heralded as the "world's new cashmere" by Comme des Gar�ons' revered Japanese designer, Rei Kawakubo, and it has the fashion world panting. Priced up there with cashmere, which fetches approximately $300 a metre, a Brioni Escorial suit costs anywhere from $US6000 to $US40,000.

A unique fibre, Escorial is up to 50% lighter than cashmere. Brioni shows off its crease-resistant qualities by literally tying the sleeves of jackets in knots and then shaking them out, wrinkle-free.

"Men like things that perform," says Derrill Osborn, spokesman for retail giant Neiman Marcus, which sells Brioni in nearly all its US stores. "Escorial has the feel of fragility but the body and guts of an armoured vehicle. Men love it because it travels well."

Creating the romance

Cashmere has been one of Radford's biggest problems. Even though only 40-50 tonnes of Escorial is produced each year (less than 1% of the world's cashmere production, Radford says), the discovery that Escorial was a superior fibre put the producers and distributors of cashmere products into a spin, and they refused to place Escorial.

"We had to get much closer to brands than we thought we had to be." The fibre's rapid success is due to the manner and style in which Radford presented it to his target market.

Recognising the sheep's unique history, which can be traced to the Spanish palace El Escorial (see box, page 58), Radford branded his product accordingly.

"We try to impart the heritage and breed of the suit," says Osborn. "There is a great romance to the whole story." And Radford is extremely careful about who he gives his product to.

"I spend more time deciding this than anything else. I have been very careful," Radford says. By association with companies at the top end of fashion, Escorial is seen as something special.

It was no instant success. Radford first began working with the wool in 1991, making knitwear with Auckland company Glengyle. Known then as Saxon Merino, the knitwear was ahead of its time and not appreciated for what it was. In 1995 Radford decided if they were going to make it, they had to put it under a distinctive brand and take the product to Europe where there was a better understanding of luxury fabrics.

In Paris two years later Radford secured the interest of Brioni, which obtained the sole rights to use Escorial for menswear. Neiman Marcus sold out its first order of Brioni's Escorial suits and jackets in two months. In two years, sales have doubled.

For those who know the industry, Radford's entry into this closed circuit is nothing short of remarkable.

Wither and die

Unlimited tracked Radford down before he headed off to Germany, Italy, the UK and New York, on what he calls his "regular track".

An incredibly difficult man to pin down, Radford spends approximately one-third of the year in Europe. When in New Zealand, his typical working day is spent on the telephone, starting at midnight and finishing in the morning when most of us are getting up.

Until now, Radford has proved elusive to the local media. He didn't need to tell his story as he has no market here. But now he wants to encourage others to have a go. And these days Radford is counting dollars, not sheep.

The retail value of Escorial knitwear and Brioni and Chanel co-branded apparel was in excess of $US100 million last year; this will greatly increase in 2002, he says. Like any true entrepreneur, he's not stopping there. He's working with companies in Germany and Italy to bring his new brand Mahgreb into the retail market next year. But that's another story …

The King's new clothes

In the 16th century, miniature sheep were brought to Spain by Moorish invaders from Mahgreb in North Africa. Philip II, King of Spain, is said to have instantly decreed the ultra-soft wool be used for royal garments only. The sheep were kept at the Madrid palace of El Escorial and in 1765 Charles III of Spain gave 90 animals to his cousin the Elector of Saxony.

If it wasn't for Scottish woman Eliza Furlonge, the breed would have been wiped out completely. In 1830 she bought 100 sheep from the German flock, drove them across the countryside to Hamburg, shipped them to Scotland and then on to Tasmania.

Thanks to the Napoleonic wars, the sheep were wiped out in Spain and the Germans ate theirs, leaving Tasmania with the last remaining pure-bred flock.

In 1834 Furlonge sold the flock to the Taylor family of Tasmania, who have farmed them ever since and now sell their clip through the Escorial brand.

Peter Radford first found the sheep on a visit to Tasmania in 1965, on a bank scholarship to study the Australian sheep and wool industry. He was struck by how different the wool was to anything he had seen; this prompted him to import the sheep almost 20 years later.

"The sheep were not seen as commercial because they were so small and they didn't clip the volumes of wool people were looking for," says Radford.

A man with vision, Radford bought five ewes out to New Zealand in 1984. His flock now tallies 12,000. There are 50,000 sheep in total in Australia and New Zealand. To protect the brand's exclusivity, each grower supplies only Escorial. Every pure-bred sheep is numbered and the bloodlines kept in a global register in Tasmania.

Branding tips: the lessons Peter Radford learnt

Branding and product placement is important. Ask the question: shall we let them have it?
Look at things from different angles. Forty years ago New Zealand wines were categorised as white or red. Now there are many varieties. It is the same with wool, yet until recently it has been marketed in generic terms.
Build a brand by building relationships. Clearly identify the brand essence and stay focused.
Research is important. You have to study the market and then decide on your entry point, who you are going to talk to and where you are going to go.
Continued product development is essential. Without a large research and development budget, you will wither and die.
You have to have passion. What customers pick up on is your passion for what you are doing and the fact that you've travelled 12,000km to see them.
Never lose sight of your goal. Break it into segments and complete them step by step. That way each week you can see what you have achieved.

Carolyn Enting

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