Icebreaker's billion-dollar vision

  • News
  • November 8, 2017
  • Andy Kenworthy
Icebreaker's billion-dollar vision

Icebreaker has been sold to US-based footwear and apparel retailer VF Corporation, which also owns the likes of Timberland, Vans, Wrangler, Lee Jeans, and The North Face. We're republishing this story about Icebreaker founder Jeremy Moon and chairperson Rob Fyfe's vision of a $1 billion brand.

Originally published March 12, 2014: To understand what made high-flying Rob Fyfe jump on board with Icebreaker is to understand what the brand has been quietly gearing itself up to become: a world-class player on par with the likes of the North Face and Marmot, aiming for a billion-dollar turnover within the next 10 years.

To understand what made high-flying Rob Fyfe jump on board with Icebreaker is to understand what the brand has been quietly gearing itself up to become: a world-class player on par with the likes of the North Face and Marmot, aiming for a billion-dollar turnover within the next 10 years. 

Rob Fyfe completed seven years as the charismatic CEO of Air New Zealand in 2012 at the age of 51, after being widely credited with re-invigorating the airline’s culture and keeping it flying smoothly through some extremely turbulent times in the industry’s history.

Nobody expected Fyfe to fritter away his declining decades improving his luscious tan and his golf swing, despite his frequent protestations that he had nothing left to prove and that he was now more excited about spending time with his family than inside a major corporate suite. But when he announced that he was stepping up to chair the board at Icebreaker, some might have thought it was slipper time for the silver-haired city slickster after all. Selling woolly jumpers? Really?

However, to understand what made the quintessential Kiwi high-flyer jump on board with Jeremy Moon’s 18-year-old outdoor clothing project is to understand what Icebreaker has been quietly gearing itself up to become in the last few years: a world-class player in the clothing market on the scale of North Face, aiming for a billion-dollar turnover within the next 10 years.

It would have been understandable if you missed this. The company has grown steadily out of Moon’s obsession for the finely woven merino wool garments he came across in the South Island as a backpacking marketing graduate. But there was a sense that the noise Icebreaker was making in New Zealand business circles a few years ago seems to have faded somewhat. Had it gone off the boil? There was even one nameless industry insider who suggested Icebreaker may have effectively fallen between the two stools of business growth – being so big now that it wasn’t attractive as a venture capital offering or buy-out since most would feel the easy juice had already been squeezed out, but too small to really take on the global big boys in the outdoor clothing sector such as North Face, Jack Wolfskin, Berghaus and Patagonia, let alone the legion of streetwear companies offering faux-outdoor branded and unbranded apparel to the masses.

Fyfe explains all. A key to the purity of the motivation for Fyfe’s work with Icebreaker is that the first thing that attracted him was the product itself.

“I was a convert. It’s such a great product and so comfortable against the skin,” he says. I don’t feel comfortable asking him about his underpants, even over the phone, but I think I know who makes them.

He is also a minor shareholder, but it doesn’t sound like he drifted into this while casting round for something to do, to get some free merchandise or to protect his own investment.

“The challenge Jeremy gave to me was that Icebreaker has grown continuously, the market has changed and the company’s orientation has changed. He asked me, ‘how can you help me adapt the company for the growth ambitions we have for the next five to 10 years?’” 

Life cycles

If Icebreaker seemed to have gone into its shell a touch, it was clearly with the intention of re-emerging as a more resplendent beast.

“It’s a time of quite significant transformation for the company,” says Fyfe. “Look at where we are in our life cycles as an organisation. Icebreaker really created the superfine merino wool category. Nobody on a significant basis was using merino wool in the way that Icebreaker began to use it as a base layer product, directly next to the skin. People had this idea that it was coarse and itchy. Jeremy discovered how good this material was.

“The first decade was about establishing the fibre, how well it performed next to the skin and outperformed all the fibres it competed against, and building a strong franchise. In the past six years the company tripled in size in terms of turnover and now more than 80 percent of sales are in the northern hemisphere.”

So while Icebreaker’s $90 t-shirts were never going to saturate the New Zealand market or even eclipse local outdoor wear players such as Kathmandu and Macpac, they have increasingly gained a foothold in the premium segment of this sector in more than 30 countries around the world. In that time, Fyfe says, other clothing companies in the outdoor and skiing market have also wised-up to the benefits of merino as a high-spec natural fibre, which is changing the game on the retailers’ doorsteps.

“They are moving into this space and there is a lot more competition,” he says. “We are no longer walking into retailers and trying to convince them why they should stock merino products as opposed to the synthetics they have been stocking. We need to convince them why they should stock an Icebreaker merino product rather than one from another company.”

The company has first-mover advantage, but it now needs to gain more size to maintain the momentum to stay ahead. The idea, then, is to go XXL. The company is turning over just under $200 million at the moment. The plan is to double that in the next few years, and then go for the billion within the next 10 years.

Which is where Fyfe comes in.

“It is at this transition where a lot of companies have problems,” he explains. “When a business starts out, the founder is in the position where they can reach out and touch every aspect of the business. Initially this can be the core of the great success of the business, and Jeremy is typical in this regard. He was out there knocking on doors to retailers, he was intimately involved in the design process, he was recruiting people around the organisation, working with the marketing people looking at what images to use to promote it, he was doing it all. It was incredibly valuable, and the force of his personality was vital to opening up a lot of these markets – it came from the personal relationships he was able to build in those countries.

“But as the company grows that hands on approach moves from being your greatest strength to being one of the greatest inhibitors. You become the bottleneck because everything has to come through you. One of the great strengths of Jeremy was to look ahead and see this. He brought me and others onto the board and we completely revamped the leadership of the business, which has allowed him to step back into a more executive leadership role and allow specialists in each area to do the day-to-day work. It is not easy for a founder to do, so full credit to Jeremy for seeing the challenge and the opportunity.”

This meant new heads for marketing, e-commerce, retail, HR, Australasian sales and IT, as well as new business processes aimed at dealing with the sort of scale and complexity the firm is aiming for. The new team is also taking a close look at the relative emphasis it puts on e-commerce, its growing range of Icebreaker-branded stores and its distribution network of third-party retailers.

“The big call that the board has made along with Jeremy is to front-load that investment to enable the business to grow. There is a lot going on at the moment that is not delivering a direct return, but needs to happen if we are going to make that growth,” says Fyfe.

Kiwi authenticity

So no plans for the traditional Kiwi offshore offload, then?

“No,” says Fyfe. “That’s been very, very conscious. When Jeremy and I talked about the possibility of me being on the board, that was one of the key aspects of interest for me. Jeremy continues to be the major shareholder in the business with a few other smaller shareholders. He shares with me a strong passion for New Zealand and a strong belief that New Zealanders and New Zealand companies can perform on the world stage and that there are attributes of New Zealand in a branding sense that are incredibly attractive around the world – the imagery that people associate with New Zealand, the innovation and ingenuity the kind of people we are.

“We strongly believe that Icebreaker can leverage from and benefit from those traits of New Zealand and New Zealanders. We both believe that if Icebreaker was sold offshore it would be a poor outcome for New Zealand and for Icebreaker, so we’re strongly committed to it remaining a New Zealand company and hopefully a model for others to follow.”

Both he and Moon get offers about once a week from various potential investors from around the world, but turn them all down flat.

So how will the bigger, better Icebreaker appear to outsiders in the near future? Fyfe reckons the most obvious sign of the firm’s advancement will be seen in the increasing number of Icebreaker-branded stores hitting high streets around the world, as well as a broadening range of clothing to take advantage of the appeal of outdoor sports-style streetwear using Icebreaker’s high-spec merino fabrics.

Controversially for some old school Icebreaker purists, the company’s research and development bods are also looking at more opportunities to combine merino with high-tech synthetic fibres such as spandex and water-resistant nano-technologies to enhance fit and performance. Fyfe says we will be seeing more of this as Icebreaker seeks to further outgrow its ‘woollies’ image to create more garments for both very hot and very cold climates.

“There are so many new areas to play in,” he says cheerily. Clearly a man who loves his work. And his underpants. 

Jeremy Moon's big vision for Icebreaker

A few months ago, Icebreaker opened up a new store format in Washington and Chicago, and a new head of Europe, Kiwi Dion Taylor, started with the company. Things are changing fast for Icebreaker but its founder Jeremy Moon is still on board with a bigger vision than ever.

How is Icebreaker evolving these days?

We go through phases – we tend to shed our skin in two- to three-year cycles. Right now we’re evolving from a wholesale business to a omni-channel business, built around how our customers want to interact with us. The team dynamics are also very different. Initially Icebreaker was all about me and my passion for merino and New Zealand and nature – now it’s about an amazing team with this as a common passion.

What’s been your biggest business lesson?

Business is all about people. You’ve heard it before and it’s true. There are inflection points; hitting $10m in sales, $50m, $100m and so on. The future of the business at each inflection point is determined by the ability of the team to imagine the future and to do what it takes to create the next phase of play.

How do you own your space internationally?

Start with distributors in market, then set up wholly owned subsidiaries within five years, staffed by locals. Our German business is run by Germans. Canada is run by Canadians. We only hire Icebreakers – passionate, active, fun, smart, ambitious people who want to create a world-class world-scale business that reconnects people with nature.

Where do you see Icebreaker in 10 years’ time?

Icebreaker will be a world-famous international brand, based in New Zealand, in business for many millions of passionate customers who are converting the world to New Zealand merino. I’m determined for Icebreaker to reach its potential globally and not just be another New Zealand company that ‘almost made it and sold out to a big multinational’.

If you could go back and do one thing differently, what would that be?

I’d hire world-class people and invest earlier in stronger systems. 


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