Picture: 123RF/Thanapol Kuptanisakorn
Picture: 123RF/Thanapol Kuptanisakorn

Mohair, the silk-like yarn spun from the hair of the Angora goat, symbolises luxury and sophistication. The fabric is a regular on the shelves of international fashion houses including Gap, Zara and Topshop. SA’s R1.5bn mohair sector is central to that value chain: about 50% of global production is supplied by 800 local farmers, most in the financially strapped Eastern Cape.

But while SA’s mohair producers have weathered the economic challenges thrown up by the country’s sluggish economy, manufacturers in the sector have not been so lucky. They are feeling the pinch of low economic growth and depressed consumer spend, says Denys Hobson, founder of Cape Town-based Cape Mohair.

A further challenge is posed by retailers, who are upping their margins by squeezing manufacturers — forcing them "to lower their prices to a level that is just not sustainable", says Hobson — and looking to import cheaper products from the East.

"The quality [of the imported product] is not always what it could be," he says. "So the consumer feels the effect of [poor] quality, and the manufacturing staff [feel] the effects of no work or smaller pay packets."

Mohair manufacturers’ woes are a reflection of the struggles of the local manufacturing sector more generally. According to industry body Manufacturing Circle, almost 400,000 manufacturing jobs have been lost in SA since 2008, and the sector’s contribution to GDP declined from 15% to just under 13% by 2016.

Hopefully the slowing down of one economy is bolstered by the picking up of others
Denys Hobson

But the unfavourable economic conditions haven’t discouraged corporate activity in the mohair sector. Venture capital firm Anuva Investments recently bought a 46% interest in Cape Mohair. The company, with an annual turnover of R30m, sells mohair blankets and specialist medical socks — about 500,000 pairs a year.

The company says mohair’s cellular structure allows the socks to draw moisture away from the skin. This, along with the anti-allergenic and antibacterial properties of the fibre, makes the product popular among those with poor circulation, eczema and other skin ailments, and diabetics.

Anuva co-founder Neill Hobbs says the deal is aimed at "generating long-term shareholder value by matching capital with carefully selected business opportunities".

The venture capital company paid for the stake through a combination of cash and assets, chipping in new working capital alongside state-of-the-art sock machinery bought out of a competitor’s insolvency.

That company, Impahla, went into liquidation after decades of supplying high-volume, low-margin clothing and socks to the retail market.

Hobson says Anuva initially approached Cape Mohair to manage the sock plant. "It soon became clear that moving our sock-manufacturing operations into the newer plant made business sense, despite the respective product ranges and target markets being different," he says.

The timing was also good, given that Cape Mohair’s specialist socks have proved resistant to the economic downturn. At the time of the acquisition, the company was struggling to meet demand, so the deal provided it with a chance to move to bigger premises and buy more equipment.

"Our Epping factory had become too small for our needs, while the Impahla plant had loads of spare capacity," says Hobson.

The deal has also opened expansion possibilities. "Being able to diversify geographically into other economies is now a real possibility and hopefully the slowing down of one economy is bolstered by the picking up of others," he says.

Such international exposure has meant SA’s mohair producers, unlike its manufacturers, have been more insulated from local economic woes.

Riaan Marais, spokesperson of Mohair SA, says the local industry’s biggest challenge in recent years has been the ongoing drought, which has forced a number of farmers to buy in feed for their goats.

"Some regions received much-needed rain in the 2018/2019 seasons, but we are still a long way from fully recovering," he says.

What it means

Consistently firm international demand has helped to alleviate the effects of severe drought

Most of the locally produced raw product is exported to Europe and Asia, says Marais. That demand has remained solid, resulting in high prices that "have helped farmers keep their businesses stable despite the drought".

"Despite the negative economic environment, our product is still in demand and fetching good prices."

The more pressing issue for Mohair SA at present is ensuring the sustainability and consistency of raw product supply. In the next few months, it hopes to launch an internationally recognised code of best practice, the Responsible Mohair Standard, or RMS. It has developed this with international organisations and luxury brands.

"Sustainability is key," says Marais. "Consumers are becoming more aware of where the products they buy are coming from. Therefore, mohair producers need to ensure their compliance with RMS. Once the RMS is launched all farmers will be audited, and if they comply they are certified sustainable."