Cashmere prices are set to rocket for autumn 11, thanks to growing demand in developing countries and two bitter Mongolian winters that have killed off a quarter of the region’s goats.
The price of cashmere is expected to rise by between 30% and 40%. The price of lambswool is also expected to rise 25%, due to growing demand for the commodity in the countries where it is produced. The hikes are set to erode margins for premium brands and manufacturers, and are expected to lead to a double-digit increase in the retail prices of product made using either of the materials.
The price hikes follow the 60% to 70% rise in the cost of cotton in 2011, and have been driven by growing demand for all three commodities - wool, cashmere and cotton - from the increasingly prosperous domestic markets of China, India and other countries in which they are produced.
The price of cashmere has also been forced up following two particularly harsh winters in Outer Mongolia, and Inner Mongolia in northern China, which together account for about half of the world’s cashmere supply. Mongolia’s population of cashmere goats fell by more than a quarter last year alone, after the animals died in the -45C temperatures or were eaten by Mongolians in need of an additional food source.
It is expected to take around four years for the region’s cashmere goat population to return to its previous levels.
Victoria Stapleton, founder and creative director of cashmere retailer Brora, which sources all of its cashmere from Inner Mongolia, said: “It’s a serious issue. Ironically, it’s the harsh winter of Mongolia that makes it a place where the cashmere goat can grow the soft downy fleece needed for our cashmere supply. However, the weather has been too extreme. In basic terms we are talking about the finest, longest fibre yarn going up from $90 to $150 [£56 to £94] a kilo over the past 12 months.
Ian McGratten, managing director of cashmere yarn spinner Todd & Duncan, said: “We won’t know exactly how much the prices will go up this year until [the producers] start to comb the goats in April and May, but cashmere [prices have] increased by 40% since the same point last year and they are continuing to go up at that sort of level.”
McGratten was undecided about how Todd & Duncan would manage the price hikes, but said consumers would be unlikely to tolerate continuing significant price increases.
Benny Hartop, managing director and owner of Scottish cashmere and wool brand Hawick Knitwear, added: “Spinners tend to hold their prices for the season, but we’ve been seeing 30% increases from autumn 10 to autumn 11 already. We’re trying to absorb some of the increases. We are going to aim to share it 50/50 with our customers.”
Stapleton was concerned the price hikes would push Brora product north of £200 for the first time, as this was a “psychological barrier” to shoppers. “I’m expecting a [Brora] cashmere jumper that was £189 last winter to be more like £209 next winter,” she said.
“I simply can’t afford to cut our margins. The only thing we can do is make sure all our customer-facing staff have a good, comprehensive explanation so [shoppers] don’t think we are just being greedy.”
The price increases will be most severe for luxury brands and retailers that buy in the highest-quality Alashan cashmere. However, mid-market retailers offering cut-price cashmere will also be affected by the knock-on effect on global prices.
Inner Mongolia produces around a third of the world’s cashmere and is associated with the highest-quality varieties of the yarn.
The harsh winter conditions in Inner Mongolia mean its Alashan cashmere is softer and more downy than other varieties. It is also extremely white, meaning it absorbs dye particularly well.
Other key cashmere-producing territories include Outer Mongolia, other parts of China, Afghanistan and Iran. However, the product from these markets is not as good quality and is mostly used by mid-market retailers offering value cashmere product.