CBI | Market Intelligence Product Factsheet Cloves in Germany | 1

CBI Product Factsheet:

Woven and Knotted Woollen Carpets in Europe

CBI | Market Intelligence Product Factsheet Woven and Knotted Woollen Carpets in Europe | 2

Introduction

Woven and knotted woollen carpets, machine-or hand-made, are a big product group in the European market, offering opportunities to exporters in Developing Countries. After fluctuations in demand as a result of the economic crisis, Developing Country exporters can benefit from a moderate increase in the demand for woollen carpets. An extra driver behind this recovery is the increasing interest in products made of natural fibres. By focusing on sustainable materials like natural fibres it is possible to attract a growing group of conscious consumers. Value addition by diversifying your product design, as well as using special skills and production techniques, can make your products stand out from others when targeting the higher segments of the Western European market.

Product description

Woven and Knotted Woollen Carpets are textile floor coverings, made of woven or knotted woollen yarns. The production can be done by machine or by hand. Hand-woven rugs are produced all over the world but are given different names (kelim, soumak, jajim are a few examples). Refer to Annex I for the classification of woven and knotted woollen carpets.

Quality

Functionality

Most woollen carpets are purchased to enhance the atmosphere of the home. Therefore, their most important quality is decorativeness. Carpets can also be purchased for their warmth and/or noise reduction. In general, a carpet must be durable, given that it will be walked over. The most important quality aspect is the fineness of the weaving, which is reflected in the fineness of the design. The finer the yarns, the higher the quality and sales price. The finishing of a carpet is important. A well-finished carpet lies flat and straight on the floor and its shape is reasonably regular. The carpet should not be washed out*, unnaturally shiny or too bright and harsh. Colours should not fade or bleed. Sizes are usually provided in feet (1 foot = 30.48 cm). Typical sizes are: 2’x3’, 4’x6’, 9’x12’, 6’x9’, 3’x3’, 5’x5’, 10’x14’, 10’x10’. Buyers may also ask for their own sizes. *Not to be confused with a vintage, stonewashed look, also see 'Design'. Material

Most woven and knotted carpets are made of wool (or other fine animal hair like alpaca, llama or yak) but can also be made of cotton, silk or recycled materials. This product factsheet focuses on wool as the main raw material. This is wool from animal hair, as opposed to synthetic wool, which is made of polypropylene, an artificial man-made fibre. Synthetic woollen carpets are much cheaper than carpets made of natural wool. Design

Woollen carpets come in a wide variety of designs, styles and patterns. Colourful or plain: the variety can match every personal taste. Please refer to the Trends section for more information on the latest fashion trends for woollen carpets. Currently, there is demand for modern carpets with a vintage look, which means that the fabric is stonewashed. Stonewashed traditional carpets are also in demand. However, stonewashing should be considered carefully, especially when using acid to create the stonewashed look, because it is not an environment-friendly process.

Labelling

Labels for transport normally include information on the producer, consignee, composition of the product and the size

of the product, number of pieces, bale/roll identification and total number of bales/rolls, and net and gross weight.

The most important information on the product or packing labels of woollen carpets is: Composition, size, origin and

care labelling. For more information and illustrations of product labelling, please refer to CBI's market information on

Buyer Requirements. The most important information on the product or packing labels of woollen carpets is:

Composition, size, origin and care labelling. For more information and illustrations of product labelling, please refer to

Labelling of home textiles under Legal requirements.

Buyers may also request you to attach their brand- or logo label on the product. The buyer may send you the actual

labels or, if possible, would ask you to produce the particular label according to their specifications and design. It is

advisable to clearly specify in your terms & conditions what labelling is included in the FOB price.

CBI | Market Intelligence Product Factsheet Woven and Knotted Woollen Carpets in Europe | 3

Packaging

Woollen carpets are transported as rolls, wrapped in plastic film and jute/hessian sacking. Before they are put into a

container, they are rolled up with the face inside and often packaged in transparent plastic film bags. Sometimes two

carpets are rolled up together, but this may make the roll too heavy. Runners are often protected at the ends with

hardboard disks to stop them from slipping and thus telescoping. When in doubt, check the requirements with your

buyer.

Carpets must not be handled with bag or plate hooks as the film packaging can be easily torn. A carpet carrying

mandrel should be used for handling rolled carpets.

It is advisable to clearly specify in your terms & conditions what packaging is included in your FOB price.

What is the demand for woven and knotted woollen carpets in Europe?

Developing countries’ share of European woven and knotted woollen carpet imports is increasing slightly. As Europe’s largest importers of woven and knotted woollen carpets, Germany and the United Kingdom are interesting target markets. Also consider the Czech Republic with its growing market for woven and knotted woollen carpets from Developing Countries.

Trade statistics

Because the available Prodcom data do not differentiate between woollen carpets and carpets of other materials, the production and consumption statistics give an indication for woven and knotted carpets in general. Figure 1: European imports of woven and knotted woollen carpets, by main origin, € million

Source: Trademap

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50

100

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Intra EU Developing Countries Rest of the world

CBI | Market Intelligence Product Factsheet Woven and Knotted Woollen Carpets in Europe | 4

Figure 2: Main European importers of woven and knotted woollen carpets by main origin, 2014, € million

Source: Trademap

Figure 3: Absolute developing country import growth 2010-2014 (€ million) (countries in range of largest importers)

Source: Trademap

Between 2010 and 2014, European imports of woven and knotted woollen carpets declined with an average annual

growth rate of -6.5%, from € 605 million to € 462 million. These imports are expected to stabilise, after the decrease

slowed down to -1.3% in 2014.

Imports from developing countries followed a similar pattern. However, rather than continuing to decline they showed

modest growth of 0.7% in 2014. Developing countries are responsible for 53% of European imports of woven and

knotted woollen carpets, amounting to € 246 million. Due to their positive development, developing countries’ share

in European imports of woven and knotted woollen carpets is expected to grow slightly in the coming years.

With € 132 million Germany is Europe’s leading importer of woven and knotted woollen carpets, followed by the

United Kingdom with € 97 million. These countries are also leading when it comes to imports from developing

countries, especially Germany which sources ¾ of its woven and knotted woollen carpet imports in developing

countries!

Interestingly, Czech imports of woven and knotted woollen carpets from developing countries increased considerably

from € 1.1 million in 2010 to € 13 million in 2014. This is caused by a considerable €12 million increase in carpet

imports from Turkey.

India is Europe’s leading supplier of woven and knotted woollen carpets with € 91 million in 2014. Other leading

suppliers from developing countries are Turkey (€ 37 million), Iran (€ 36 million), Pakistan (€ 25 million), China (€ 19

million), Nepal (€ 17 million) and Morocco (€ 6.9 million).

In Germany and the United Kingdom, South Africa and Thailand are also among the leading suppliers.

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120

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CBI | Market Intelligence Product Factsheet Woven and Knotted Woollen Carpets in Europe | 5

Figure 4: European exports of woven and knotted woollen carpets by main destination, € million

Source: Trademap

Figure 5: Main European exporters of woven and knotted woollen carpets by main destination, 2014, € million

Source: Trademap

European exports of woven and knotted woollen carpets consist mainly of trade within Europe.

The leading European exporter of woven and knotted woollen carpets is Belgium with € 82 million, followed by

Germany with € 65 million.

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Tips:

Germany and the United Kingdom are Europe’s largest importers of woven and knotted woollen carpets. With its

particularly strong presence of developing country suppliers, Germany is an especially interesting target market.

With its growing market for woven and knotted woollen carpets from developing countries, the Czech Republic

may also be promising.

Benchmark your products against the competition from India, as well as Turkey, Iran, India, China, Nepal and

Morocco. Several factors can be taken into account, such as market segments served, perceived price and quality

level and countries served. One source that could be used to find exporters per country is ITC Trademap.

CBI | Market Intelligence Product Factsheet Woven and Knotted Woollen Carpets in Europe | 6

Figure 6: European production of woven and knotted carpets, 2009-2013, € million

Source: Prodcom

Figure 7: Apparent European consumption of woven and knotted carpets, 2009-2013, € million

Source: Prodcom

European production of woven and knotted carpets peaked in 2011 (€ 4.1 billion), resulting in an average annual

growth rate of -0.2% between 2009 (€ 3.9 billion) and 2013 (€ 3.9 billion).

Similarly, European consumption of woven and knotted carpets also peaked in 2011 (€ 4.1 billion), resulting in an

average annual growth rate of -0.6% between 2009 (€ 3.9 billion) and 2013 (€ 3.8 billion). This means European

demand for and production of woven and knotted carpets are relatively balanced.

Belgium is responsible for 29% of European woven and knotted carpet production with € 1.1 billion, followed by the

United Kingdom (€ 769 million) and the Netherlands (€ 766 million).

With € 1.3 billion the United Kingdom is responsible for 35% of European demand for woven and knotted carpets,

followed by Germany with € 760 million. These countries are also Europe’s main importers of woven and knotted

carpets.

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CBI | Market Intelligence Product Factsheet Woven and Knotted Woollen Carpets in Europe | 7

Macro-economic indicators

Figure 8: Real GDP, 2014-2016, % change from previous year

Source: Eurostat (2015)

Figure 9: Real private consumption expenditure, 2014-2016, % change from previous year

Source: Eurostat (2015)

Predictions of GDP and private consumption expenditure are important indicators for the European home decoration

and textiles market. The sector is closely linked to economic conditions; when money is tight consumers postpone

replacing non-essential items in the home until there is room in their disposable income again.

Between 2014 and 2016, European GDP and private consumption expenditures are expected to increase. This means

that consumption of luxury and decorative products is likely to rise. Especially in emerging markets, an increase in

GDP creates room for this type of spending. Due to saturation, growth in consumption will be moderate for mature

markets.

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2014 2015 2016

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CBI | Market Intelligence Product Factsheet Woven and Knotted Woollen Carpets in Europe | 8

Figure 10: New housing, 2014-2016, in 1,000 units

Source: Eurostat (2015)

Developments on the housing market could affect the European home decoration market. Between 2014 and 2016,

an increase in new-built housing is expected in Europe, especially in France, Germany, Poland, the United Kingdom

and Italy. As these houses need to be furnished and decorated, this increase could indicate a growth in consumption

for the home decoration and textiles sector, especially in the aforementioned countries.

Please refer to CBI Trade Statistics for Home Decoration & Home Textiles for more information on the sector in general.

What trends offer opportunities on the European market for woven and knotted woollen

carpets?

Sustainable materials

In Europe there is a growing group of conscious consumers. By focussing on sustainable materials like natural fibres it is possible to attract these consumers.

Co-creation

European buyers are trying more and more to discern themselves from their competitors. Therefore they are focussing on their own image and design. As a result they may not (only) look for products from your collection but also for producers with whom they can develop their own products. Therefore it is extra important to show your special skills and production techniques, as well as the variety of raw materials you work with.

Smaller quantities and shorter lead times

As a result of the economic crisis (insecurity) and the increasing pace with which buyers change their collection, a lot of buyers are looking for shorter lead times and lower minimums in production. For small to medium sized producers this is a distinct advantage since they are more flexible in production and usually can supply smaller quantities than bigger producers.

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2014 2015 2016

Tips:

If you have a special raw material that is in line with the increasing demand for environmentally friendly products,

include this feature in your promotion. For more information on this topic, please refer to CBI’s Trend Special on

Marketing your sustainable materials.

Besides the use of wool as the main raw material, natural dyes are often used in this industry. Exporters can

promote the use of natural dyes as a premium.

Tip:

To promote yourself as an attractive partner for co-creation, make sure that your collection of products properly

displays the possibilities you have with respect to different materials and production techniques.

CBI | Market Intelligence Product Factsheet Woven and Knotted Woollen Carpets in Europe | 9

Please refer to CBI Trends for Home Decoration & Home Textiles for more information on general trends in the sector.

What requirements should woven and knotted woollen carpets comply with to be

allowed on the European market?

Please refer to CBI Buyer Requirements for Home Decoration & Home Textiles for the requirements applying to woven and knotted woollen carpets. An additional requirement relevant to woven and knotted woollen carpets is the Woolmark brand. This provides consumers with guaranteed fibre content and an assurance of quality. Woolmark licensees can use the Woolmark logo on their products as an independent quality endorsement.

Furthermore there are numerous labels and standards that are relevant for carpet producers and home textiles producers in general, like STEP, Goodweave, Care & Fair, GOTS and BSCI. More information is available in the above mentioned CBI Buyer Requirements document.

What competition do I face on the European woven and knotted woollen carpets

market?

As the competition for woven and knotted woollen carpets does not differ significantly from the Home Decoration & Home Textiles sector in general, please refer to CBI Competition for Home Decoration & Home Textiles and CBI Top 10 Tips for Doing Business with European Buyers for a general overview.

What do the trade channels and interesting market segments look like in Europe for

woven and knotted woollen carpets?

Market channels

Traditionally, the trade channels for carpets were separate from other home textile products, however, carpets have now

established themselves in the mainstream trade channels. Rugs and carpets have become lifestyle products. Whereas top

class kelims were previously only sold in speciality shops, they can currently be found in department stores. Also large retail

chains, like Ikea, currently sell (hand-made) rugs and carpets.

Please refer to CBI Home Textile Channels and Segments for a general overview of market segments, as market segments

for woollen carpets do not differ significantly from this general overview. Also, refer to this document for more detailed

information and to learn more about the qualities used in the different segments.

Tip:

When you are flexible in production and capable of supplying smaller quantities emphasise this in your promotion.

More tips:

Have a promotion strategy in which you relate your product’s story. Ensure your promotion strategy is in line with the European demand and fashion.

In general, the low-end market is dominated by products from China and India, and it will be almost impossible to compete with this type of cheap mass-production. Therefore, opportunities are mostly to be found in the middle and high-end markets, implying that you will need to pay particular attention to design and high-quality.

Exporters from developing countries can profit from the growing European market for hand-made carpets. The

renewed interest in hand-made products is one of the drivers behind this growing market. Developing

countries can supply the European mid-high market by promoting their local character, identity, and

craftsmanship.

European consumers are increasingly interested in products that are produced in a sustainable manner. Therefore, paying attention to social responsibility, especially refraining from using child labour, is important in this market. Also see the next chapter on Requirements. The certifications mentioned there can help you to prove to your buyers that your products are not made by children.

CBI | Market Intelligence Product Factsheet Woven and Knotted Woollen Carpets in Europe | 10

Market segments

To illustrate the different segments in the European market for woollen carpets, examples are presented in Table 1. In the

low-end segment, simple and inexpensive carpets are common. In the middle segment, there is more emphasis on design

and finish, while prices are still reasonable. In the high-end segment, designer quality is common and private labels are the

standard.

Table 1: Segments in the woollen carpets market

Low: inexpensive and simple Middle: fashionable and medium

prices

High: designer quality

Source: www.tesco.com

Source: www.shardaindia.com

Source: www.rugsandcarpets.com

Tips:

In emerging European markets for carpets, the position held by wholesalers/importers is still strong. For the time

being, the importer/wholesaler will remain your best choice there.

E-commerce is growing in importance. Consider targeting online retailers, in order to reach a broader range of

customers. This means, however, supplying small batches/individually packed items, being prepared to pre-stock

and offering more just-in-time supply concepts. Since e-commerce is expected to grow explosively in the coming

years, this is a strategy for exporters that can scale up in a short time span.

In sourcing e-tailers, exporters can consider several options: brick-and-mortar retailers adding e-commerce to

their concept; wholesalers developing an on-line platform; e-tailers in other sectors moving into home textiles.

You are advised to keep an eye on these developments.

If you are interested in supplying smaller quantities directly to retailers, please refer to CBI's Trend Special on

Alternative distribution channels.

Tips:

The best opportunities in the European market are mostly found in the middle-high and high-end segments.

Therefore, you should pay special attention to design and high quality.

The influence of large chain store retailers in the home textiles value chain has increased significantly in the

European market at the expense of the position held by of wholesalers and importers. If you are able to supply

consistently large quantities at relatively low prices, large retail chains may be partners of some interest.

CBI | Market Intelligence Product Factsheet Woven and Knotted Woollen Carpets in Europe | 11

What are the end market prices for woven and knotted woollen carpets?

There is a very wide price range within the European market for woollen carpets. Prices vary depending on the product’s raw material quality, manufacturing technique, size and (fineness of the) design. Your products will be sold to European consumers for a price that is many times higher than your selling price. The consumer price is approximately 4-6.5 times the FOB price (Table 3). The margins are divided among the different players in the trade channel. In the event that retailers trade directly with exporters, the entire margin (including the wholesaler’s margin) goes to them. Besides energy, labour and transport costs, FOB prices depend heavily on the availability and price of wool. In 2011, the average price for wool saw a sharp increase, after which it steadily decreased until the end of 2014. Since then prices have been increasing again, largely due to the renewed demand from China. Incidental price increases are not usually passed on to consumers but, instead, are deducted from exporters’, importers’ and retailers’ margins. Table 2: Wool prices since 1999 on the Eastern Market Indicator (ABC News: Stephen Letts)

Table 3: Indicative retail prices per segment (per m2)

Table 4: Indicative price breakdown per segment (FOB price =100)

*VAT percentages in Europe range from 18% in Malta to

27% in Sweden. On average most of these percentages

are around 20%. In this table 20% has been used for

the calculation.

Low end Middle High end

Woven

woollen

carpets

€ 12 - € 24 € 29 - € 43 € 49 or more

Knotted

woollen

carpets

€ 14 - € 27 € 30 - € 45 € 52 or more

Low

margin

Middle

margin

High

margin

FOB price 100 100 100

Transport, handling

charges, transport

insurance, banking

services

(20/15/15%)

+20

120

+15

115

+15

115

Wholesalers'

margins

(50/75/90%)

+60

180

+86

201

+104

219

Retailers' margins

(90/110/150%)

+162

342

+222

423

+327

546

Selling price, VAT

(18 - 27%)*

+68

410

+85

508

+109

655

CBI | Market Intelligence Product Factsheet Woven and Knotted Woollen Carpets in Europe | 12

Useful sources

These trade associations and fairs are useful sources for finding trading partners in Europe. ECRA, European Carpet and Rug Association

EFTA, European Fair Trade Association

EURATEX, European Apparel and Textile Confederation

WFTO, World Fair Trade Organisation

ICC, Chamber of Commerce for international trade and business

Trade fairs

Visiting, and especially participating in, trade fairs is highly recommended as one of the most efficient methods for testing market receptivity, obtaining market information and finding prospective business partners. Trade fairs are still the most important way to meet new clients within the home textile sector. The most relevant trade fairs in Europe for exporters of carpets are: Domotex, Hannover, January

Heimtextil, Frankfurt, January

HOMI, Milan, January and September

IMM, Cologne, January

INNATEX, Hofheim, January and August

Maison et Objet, Paris, January (esp.) and September

Ambiente, Frankfurt, February

Salone del Mobile, Milan, April (designer)

Tips:

You can focus on the middle-high segment if you can offer added value in the kind of materials you use and/or

any special type of craftsmanship.

If your production is mechanised it is possible to focus on the middle-low end.

You can focus on all market segments when marketing your woollen carpets in Europe. However, be aware that

generally European consumers in the more mature markets (Northern and Western European regions) are aware

of the latest trends and incorporate them into their interiors whether these be trendy, contemporary or classical.

Emerging markets are mostly driven by disposable income, which is usually still too low for the majority of

consumers to afford premium home textile products. This means that the high-end segment for carpets is

currently still out of reach for most Eastern European consumers. Therefore, if you are targeting Eastern

European buyers it is recommended to focus either on the emerging middle-high market, if you can offer some

hand-made value, or on the low-end market, if you offer mechanised production. Functionality and fashion are

important benefits when targeting the middle-high market, which currently offers most opportunities.

Compared to the mature markets in the Northern and Western European regions, the position of wholesalers and

importers is still much stronger in the emerging Eastern European markets for home textiles. In the short term,

the importer/ wholesaler will remain your best choice. However, over the long term, large retailers will be moving

increasingly towards the Eastern European markets and will become a market entry point to Eastern European

markets of interest to Developing Country exporters.

CBI Market Intelligence

P.O. Box 93144

2509 AC The Hague

The Netherlands

www.cbi.eu/market-information

marketintel@cbi.eu

This survey was compiled for CBI by Globally Cool :: creative solutions for sustainable business

in collaboration with CBI sector expert Remco Kemper

Disclaimer CBI market information tools: http://www.cbi.eu/disclaimer

December 2015

CBI | Market Intelligence Product Factsheet Woven and Knotted Woollen Carpets in Europe | 14

Annex I: Classification of woven and knotted woollen carpets

Harmonised System (HS)

Within the EU/EFTA, the following HS codes are used for trade in woven and knotted woollen carpets: 570110 - Carpets of wool or fine animal hair, knotted

570231 - Carpets of wool/fine animal hair, of woven pile construction, not made up nes

570241 - Carpets of wool/fine animal hair, of woven pile construction, made up, nes

570291 - Carpets of wool or fine animal hair, woven, made up, nes

570310 - Carpets of wool or fine animal hair, tufted

Prodcom

The following Prodcom codes are used to indicate European production of woven and knotted woollen carpets: 13931100 - Knotted carpets and other knotted textile floor coverings

13931200 - Woven carpets and other woven textile coverings (excluding tufted or flocked)

13931300 - Tufted carpets and other tufted textile floor coverings