Overview
New Zealand is well known for its natural beauty and eco credentials. The country has a tremendous reputation for quality products produced with sensitivity to the environment. However, in one sector the growth was lagging behind: down stream timber processing. New Zealand has one of the largest resources of quality timber. The characteristics of the variety planted are well suited to today’s demands for non-structural wood products. In addition, the country would see the amount of timber available for harvesting increase dramatically over the coming years. One problem, how to move from exporting entire logs at commodity prices to creating value out of this resource?
Approach
Industry development authorities in New Zealand engaged Ceres Ventures to address this problem and to play a catalytic role in creating down stream opportunities in the timber sector. To gain perspective, Ceres completed a review of the main industry trends, desktop and on site review of the resource and capacity constraints/resources in New Zealand and a full opportunity analysis for New Zealand timber in the European Union. This research pointed towards some opportunities, however, in order to validate these opportunities Ceres performed in depth interviews with leading companies and experts in this market space. With the main hypothesis verified, the next step was to create a strategy for unlocking this opportunity.
Challenge
Ceres discovered that there were some definite attributes to New Zealand timber well suited to the current trends in the furniture and other appearance wood products. This was especially true in the mass affluent market where a high value was placed on design focused, solid wood furniture reflecting the target market’s aspirations. However, to date, New Zealand companies were not experienced with the European market, retaining neither the access nor the knowledge required to operate. In addition, some deeply held “views of the world” as well as the time and physical distance did not facilitate access to the roughly 460 million consumers and $13.3 trillion of buying power in this market. There were no established players with the resources or motivation to seize on this opportunity. The opportunity exists, the resource was available but with out a catalyst the status quo would continue.
Strategy
Ceres’ solution was to accelerate the formation of a new company to create branded, design oriented solid wood furniture tailored to the mass affluent consumer in Europe. This company would utilize the best of the characteristics of the New Zealand timber resource while reflecting the positive view of New Zealand and its environmental credentials in a branded furniture range. With furniture as the leading edge of the strategy, the company would follow by building awareness and demand for utilizing New Zealand timber in high value added applications in appearance wood products. By designing in the wood as a solution to existing industry constraints, the focus would not be on a commodity input but a value added solution. Success for tignum would also create a catalyst for other New Zealand companies to engage in this market and open doors for New Zealand grown timber.
Results
By gathering the right partners and provided the right strategic framework, Ceres was able to initiate the creation of tignum a/s. Two successful entrepreneurs with extensive industry knowledge launched tignum in Denmark, one of Europe’s leading furniture clusters, Denmark. The company launched its range of furniture at the Cologne furniture fair (Europe’s largest) in 2004 and is now into its second season. The company attracted a first round investment from a large industry player and is now gaining momentum in not only the furniture market but also in other appearance wood products. And if you are looking for furniture with a “timeless design” in the best of the Danish tradition, be sure to give its web site a hit or better yet stop by its showroom in Arus.