Australia Merino Wool Market Growth Analysis Report - Market Size, Share, Forecast Trends and Outlook (2025-2034)

The Australia Merino Wool Market was valued at AUD 2.58 Billion in 2025, and is projected to reach AUD 3.43 Billion by 2034, rising at a CAGR of 2.90%.

Key Market Trends and Insights:

• The Australian Capital Territory dominated the Australia merino wool market in 2024 and is projected to grow at a CAGR of 3.2% over the forecast period.
• By product, the worsted is projected to witness a CAGR of 3.4% over the forecast period.
• By application, innerwear is expected to register 3.7% CAGR over the forecast period due to demand for base layers, thermals, and undergarments

Market Size & Forecast:

• Market Size in 2024: AUD 2.58 billion
• Projected Market Size in 2034: AUD 3.43 billion
• • CAGR from 2025-2034: 2.90%
• Fastest-Growing Regional Market: Australian Capital Territory

Merino wool is being more heavily positioned as a luxury fiber, valued for its fineness, softness, and versatility. Australian farmers highlight quality through strict grading, genetic sheep advances, and environmental farming techniques. Premium fashion brands and high-end outdoor clothing companies are featuring Merino wool in their lines, adding value to the market. The premium positioning of Merino wool fuels increased prices and encourages investment in quality breeding and processing programs.

The Australia Merino wool industry is expanding export markets outside of traditional purchasers. In March 2023, WoolProducers Australia received AUD 800,000 ATMAC to assist with the development of a roadmap to diversify export markets and identify new overseas and local markets. These strategies are to decrease the dependence on one market, offset geopolitical risk, and realize rising demand in developing economies. Trade partnership arrangements and regional distribution hubs also accommodate this strategic diversification.

Recent Developments

May 2025: Country Road and Deakin University in Australia partnered to transform low-grade Merino wool into high-quality fabric. This collaboration supports eco-friendly Australian fashion by turning otherwise discarded wool into premium materials for clothing, benefiting both the environment and industry.

March 2025: Australia's CELYS and De Bondt partnered to launch KINDSOME, a sustainable baby yarn blending 60% Merino wool with 40% CELYS compostable polyester. This eco-friendly innovation combines softness, warmth, and sustainability, reinforcing both brands' commitment to high-performance, responsible textiles.

November 2024: Perth-based wool products company Merino & Co. secured a 1,400 sqm industrial facility in Wangara, nearly doubling its space, and invested in automated machinery, including weaving looms and sock-knitting machines. These upgrades aim to triple its garment manufacturing capacity and reduce production costs.

October 2024: The Woolmark Company launched a USD 4 million 'Insetting' program to link apparel brands with Australian woolgrowers adopting nature-based solutions to cut emissions. This initiative promotes sustainability in the wool industry by encouraging environmentally friendly farming practices while supporting woolgrowers in production.

Key Trends and Drivers

Sustainability Focus

Sustainability is a major stimulus for growth of the Australia Merino wool market. Both consumers and brands increasingly call for sustainable products, which creates drives for environmentally friendly production of wool. In October 2022, The Woolmark Company collaborated with the Italian yarn company Zegna Baruffa Lane Borgosesia to launch a campaign that promotes quality and sustainability of Merino wool. This movement not only satisfies consumer demand but also puts Australian Merino wool on the map as a superior, ethically sourced fiber.

Innovation in Wool Processing

Technological innovation in processing wool is revolutionizing the sector. Technologies, including low-grade wool upgrading, state-of-the-art scouring technologies, and mechanized equipment, are improving fabric quality and production efficiency. In July 2022, AUD 25 million was invested by Elders to establish two automated, centralized wool handling centers in Melbourne and Perth. These technologies lower waste, increase yarn durability, and preserve softness, improving the competitive position of Australian Merino wool internationally.

Animal Welfare and Ethical Farming

Animal welfare is a significant concern driving practices and consumer choices in the Australia Merino wool industry. Australian woolgrowers emphasize ethical sheep management, including pain management during shearing and breeding for healthier flocks. Certification programs and welfare standards ensure compliance and appeal to ethically minded consumers. For instance, in April 2024, AWEX launched the Australian Wool Sustainability Scheme, highlighting animal welfare practices to support ethical consumer choices.

Growing Demand for Natural Fibers

International consumer preference is moving toward biodegradable, natural fibers with increased awareness of synthetic fiber contamination. Merino wool's natural respiration, thermal balance, and biodegradability set it firmly against synthetic fabrics. This trend drives demand in luxury fashion and sports apparel markets, where performance and sustainability are valued. Australian Merino wool is well positioned by this shift aided by robust branding emphasizing its natural provenance, comfort, and environmental benefits.

Government and Industry Support

Government support by government departments and industry organizations to fuel innovation and sustainability is contributing to the Australia Merino wool market growth. Policy actions, research grants, and grants assist woolgrowers in embracing new technologies and sustainable systems. Associations also offer training, marketing, and R&D assistance, enhancing the industry's global competitiveness. Australian Wool Innovation invested AUD 550,000 into a five year plan for offering hands on training to woolgrowers against mulesing in February 2022.

The EMR’s report titled “Australia Merino Wool Market Report and Forecast 2025-2034” offers a detailed analysis of the market based on the following segments:

Market Breakup by Product

• Worsted
• Woolen

Key Insight: The worsted segment is the dominant force in the market, driven by its use in high-end apparel and performance wear. Worsted wool is made from long-staple Merino fibers that are combed to align fibers, creating smooth, strong, and fine yarns. This makes it ideal for luxury suits, formal wear, and premium outdoor gear. With a growing global push for sustainable fashion, worsted Merino wool continues to command high export value, particularly in Europe and East Asia.

Market Breakup by Application

• Apparel
• Innerwear
• Socks
• Home Textile
• Others

Key Insight: Innerwear is the fastest-growing segment in the Australia Merino wool market, driven by demand for base layers, thermals, and undergarments. Australian and international brands are expanding Merino innerwear lines targeting outdoor enthusiasts and urban consumers. In August 2024, XTM Performance launched a range of base layers made from 100% pure Australian Merino wool. Innerwear is gaining market share due to increased awareness of Merino’s skin-friendly nature and its role in functional, all-season comfort.

Market Breakup by Region

• New South Wales
• Victoria
• Queensland
• Australian Capital Territory
• Western Australia
• Others

Key Insight: Victoria is largely contributing to the Merino wool industry in Australia, with rising production and sustainable farming practices. In the 2023/24 season, Victoria produced about 65.6 million kilograms of greasy wool from 15.6 million sheep, holding 20% of the national total. The state’s cool climate and fertile soils enable the production of superfine Merino wool, often used in luxury apparel and high-performance activewear. Victorian Merino wool growers have also been active in adopting innovative shearing and wool classing technologies to enhance fiber characteristics.

Australia Merino Wool Market Share

Woolen Demand to Grow in Australia

The woolen segment plays a robust role in the Australia Merino wool market. Woolen yarns are made from shorter Merino fibers, resulting in a bulkier, softer, and fuzzier texture. This type is commonly used in knitwear, sweaters, scarves, and home textiles. Local producers are experimenting with blends and textures to boost domestic demand. In April 2025, the Heritage 365 collection launched by Cable featured 40 Woolmark-certified pieces of fine Merino wool, blending tradition, luxury, and sustainability. The woolen segment also appeals to slow fashion and artisan markets.

Rising Merino Wool Application in Apparel & Socks in Australia

The apparel segment is leading the Australia Merino wool market, accounting for the largest share of both domestic use and exports. Merino’s softness, breathability, and temperature regulation make it ideal for suits, knitwear, activewear, and outerwear. Global brands source Australian Merino for high-end fashion and performance garments. The shift toward natural, biodegradable clothing materials has further boosted Merino’s appeal, reinforcing apparel as the primary application for Australia's fine wool exports, especially in Europe, China, and the United States.

The socks segment holds a steady and profitable niche in the market. Merino wool’s breathability, odor resistance, and thermal regulation make it ideal for both casual and performance socks. Brands highlight the fiber’s ability to keep feet dry, warm, and comfortable. In July 2025, Lafitte introduced a Merino wool sock line made with 60% Australian Merino blend, Growth in hiking, outdoor sports, and health-conscious fashion has expanded demand for Merino socks globally. The high value per unit and make socks a reliable and expanding product category for Australian wool growers.

Australia Merino Wool Market Regional Analysis

CAGR 2025-2034 - Market by Region

• Australian Capital Territory: 3.2%
• Western Australia: 3.1%

New South Wales & Australian Capital Territory to Record High Merino Wool Demand

New South Wales (NSW) is the leading region in the Australia Merino wool market, due to its robust production activities. In December 2024, the Dohne Merino community in NSW showcased a range of garments made from 100% Australian Dohne Merino wool. Prominent wool-growing areas like the Central West and Northern Tablelands produce fine, soft wool favored by apparel and textile manufacturers globally. Wool from NSW is widely sought after for garments ranging from premium worsted suits to soft knitwear.

The Australian Capital Territory (ACT) contributes to the market through boutique and specialty wool production. Local farmers focus on producing superfine Merino wool for niche markets, including artisanal knitwear and luxury garments. The ACT wool industry benefits from proximity to research institutions and fashion hubs, fostering collaborations that highlight sustainable wool practices. ACT Merino wool is prized for its quality and traceability. Recent initiatives also support on-farm innovation and regenerative practices, reinforcing the region’s premium positioning.

Competitive Landscape

Key Australia merino wool firms emphasize sustainability and innovation to address increasing global demand and changing consumer values. They adopt sustainable approaches such as regenerative grazing, carbon in setting and producing non-mulesed wool, underpinned by certification schemes like SustainaWOOL and ResponsiWOOL to ensure ethical standards. Innovations in wool processing, such as the upgrading of low-grade Merino fibers and automation of wool handling, improve product quality and efficiency of production, supporting Australia's premium, sustainable reputation for wool.

Meanwhile, players in the industry actively diversify export markets outside of conventional markets such as China to emerging markets. Strategic alliances with universities, fashion companies, and government institutions provide product innovation and leadership in sustainability. Marketing also enhances brand awareness and informs consumers. All these measures guarantee that the Australia Merino wool industry is a world-class fiber which is associated with quality, ethics, and environmental stewardship.

Südwolle Group

Established in 2017, Südwolle Group has its headquarters in Germany, with expertise in sourcing and processing high-quality wool worldwide. The company is well recognized for innovations in wool blending and eco-friendliness and specializes in providing premium fibers for the fashion market based on environmental stewardship and sophisticated processing methods.

Brown Sheep Company, Inc.

Established in 1973, Brown Sheep Company operates from the United States. Renowned for its hand-dyed yarns and eco-friendly wool products. The company supports artisanal craftsmanship and continuously innovates in producing natural, high-quality wool yarns favored by knitters worldwide.

Indorama Ventures Public Company Limited

Founded in 1994 and headquartered in Thailand, Indorama Ventures is a global leader in petrochemicals and fibers. The company has expanded into sustainable wool and textile fibers, investing in eco-conscious technologies and circular economy solutions to reduce environmental impact while maintaining large-scale production capabilities.

Europa Wools Ltd.

Europa Wools Ltd., based in the United Kingdom and established in 1996, is recognized for supplying high-quality wool to textile manufacturers worldwide. The company focuses on innovation in fiber sourcing and blending, ensuring consistent quality and promoting sustainable wool production throughout its supply chain.

Other players in the Australia merino wool market are Xinao textiles inc., AJ & PA McBride, Waverley Mills, Merino Country, Ktena Knitting Pty Ltd, E thical Clothing Australia, and others.

Key Features of the Australia Merino Wool Market Report

• Comprehensive quantitative analysis of production, demand, and export trends.
• Detailed segmentation by product, application, and geographic region.
• In-depth profiles of key players and competitive landscape.
• Insights on emerging slow fashion and artisan market influences.
• Forecasts through 2034 based on historical and current market data.
• Evaluation of technological advancements in wool processing and sustainability.

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• Trusted insights backed by extensive industry and primary research.
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