Why Zegna is Getting Into the Sheep Farm Business in Australia

(Bloomberg) -- Achill, a 6,100-acre farm about 40 minutes east of Armidale, Australia, is not the first place you’d think a $1.3 billion brand such as Ermenegildo Zegna would make an investment. But the 10,000 sheep on the property have been bred to produce some of the finest merino wool on earth. By definition, that means it is at most 18.5 microns wide, or roughly four times thinner than a human hair. (In the world of wool, only baby cashmere and Vicuña, at a minuscule 11 microns, are slimmer.)

Since Zegna began as a textile business in 1910, all of its fabrics have been made with Australian wool; the company even sponsors a competition that awards some of the finest fibers grown on the continent. That wool is then used in Zegna’s high-end apparel, including the $25,000 Vellus Aureum suit, of which 60 to 80 are made to order per year.

“I only have one of them myself,” says Gildo Zegna, the chief executive officer of the company and grandson of the founder. “But it’s the softest material I’ve ever worn.”

In 2014, in an effort to better control its source material, Zegna formed a partnership with Charles Coventry, a fourth-generation farmer who runs the Achill property, buying a 60 percent stake as part of a strategy it calls “sheep to shop.” The company is the first Milanese luxury clothier to take such an ownership role in the research and development of the wool it uses, though it does seem to be part of a growing trend: Both Louis Vuitton and Hermès have reportedly bought saltwater crocodile farms in Queensland and the Northern Territory to protect the brands’ supply of skins.

Zegna says the company’s goals are for more long-term benefits, however. Coventry’s small herd is just one of the 55,000 wool-growing properties in Australia, and at the moment, it provides only a fraction of the 550 tons of wool that Zegna requires every year. The hope is that the farm will become a primary supplier for its suits, which are sold in more than 500 stores internationally.

“It gives us legitimacy,” Zegna says. “This new breed of sheep is a good investment for us.”

The early returns are promising. The brand’s new Trofeo wool denim suit is made from superfine merino—a blend collected from Achill and other Australian suppliers—that retains all the properties of rich, warm, soft wool but with the look of indigo-dyed denim. And at this year’s award ceremony, an Australian wool grower shattered the record for the finest wool in the world, measuring at 9.8 microns.

To contact the author of this story: James Gaddy in New York at jgaddy@bloomberg.net.

To contact the editor responsible for this story: Emma Rosenblum at erosenblum2@bloomberg.net.