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Alpaca Fiber Coooperative History
The Alpaca Fiber Cooperative of North America is an agricultural cooperative incorporated under the laws of the State of Colorado. Wholly owned by its Members, who are producers of alpaca fiber and who have purchased one share of common voting stock, members annually invest at least 50% of their annual fiber production in the cooperative in exchange for a share of the profits of the cooperative in proportion to the quantity and quality of fiber they invest. AFCNA uses the members' fiber as an asset to generate cash for the manufacture of finished products designed by AFCNA.
Our History
This section includes a brief timeline of key events within the Coop since its founding in 1998.
1998
The Alpaca Fiber Cooperative of North America, Inc. was formally established in February 1998, an elected Board was installed and the cooperative officially opened for business by beginning to collect fiber on July 1. The first collection of huacaya and suri fiber from members totaled approximately 27,000 pounds. A relationship was established with the Sonora Wool and Mohair Company to provide grading, record keeping, baling and storage. Due to low world alpaca prices and the relatively small commercial quantity of fiber, the BOD elected to hold over the 1998 clip to be combined with the 1999 clip before processing into yarn and finished products.
1999
The 1998 and 1999 clips (total of approximately 52,000 lbs) were containerized in late November/December 1999 and shipped to Arequipa, Peru for processing into yarn by Michell & CIA Company before being processed into finished products by other manufacturers in Peru. There was a great deal of interest in receiving alpaca products prior to receipt of the finished goods being manufactured from North American fiber. The End Products Committee, led by Julie Safley, developed a line of men's and women's sweaters and accessories as well as blankets, sofa throws and small area carpets which were offered through a black and white line drawing catalog mailed to members for purchase on a wholesale basis. These products were made entirely from Peruvian yarns purchased from Michell & CIA Company. This generated $200,000 in revenue; however the program ended at slightly better than break even after covering overhead. The quality of the products was satisfactory but delays by suppliers and partial shipments caused considerable unhappiness among members. Distribution, a major challenge, was handled entirely by volunteers.
2000
In December 2000, one year after the 98 and 99 fiber was shipped, finished products were finally received back in the US and distributed to members who had placed advance orders. 50% deposits provided by the members funded the manufacturing. Products delivered in year 2000 were made entirely of North American grown alpaca fiber. This process turned out to be incredibly cumbersome and difficult to handle for both the Peruvian companies involved and the AFCNA. It was fraught with losses and complications that the parties involved in the process did not wish to repeat. Fiber investment by members limited the designs we could produce on the basis of available grades and limited color choices due to dye lot minimums. In addition, members waited nearly a year for delivery of their products.
2001
The AFCNA had reached a major turning point. Three things had become obvious: 1) An organization the size of AFCNA could not be run totally by volunteers. 2) The world market price of alpaca fiber, in the foreseeable future, would not provide a satisfactory return to the members. 3) Manufacturing products from the actual North American fiber collected was not feasible. There were three major changes: 1) The first paid employee, Karen Dewhirst, was hired as general manager. 2) The feasibility of selling from available inventory was tested. 3) AFCNA contracted with Fulfillment Direct, in Florida to handle orders and shipping. A limited selection of hand-knitting yarns, suri and huacaya woven scarves and suri stoles, and a basic dress sock knit in the United States were available for purchase and immediate delivery. Members, and retail customers who located the website, could purchase from the website or call a Fulfillment Direct. The strategy of selling from inventory was very successful in spite of limited selection and difficulties with Fulfillment Direct. It was determined that this could be a very effective growth strategy if sufficient capital could be generated to purchase and maintain inventory levels to meet growing demand.
2002
Due to the success of 2001 marketing program. The BOD decided to continue and expand in this direction. A four-page black and white photographic catalog was mailed to members and AOBA members in October 2001, to sell accessories, sweaters and blankets for the holiday season. Inventory was moved to Decatur, TN after concluding the relationship with Fulfillment Direct. A full time customer service representative was hired. This provided AFCNA with direct control of customer service, distribution and inventory. The holiday season was very successful with all product purchased being sold, generating $150,000 during October through December. This was over 3 time the sales of FY 2002.
In January 2002, we contracted with David Stensland to provide Product Development services for the AFCNA. David is responsible for all design and manufacturing of America's Alpaca products. The design strategy is to provide alpaca apparel and accessories that reflect the lifestyles enjoyed by alpaca breeders. Clothing is characterized by high quality and classic styling that is casual and appropriate for the market demographics. This is significantly different from other alpaca garments being imported by competitors. An 8-page color catalog was mailed to members in May 2002 to test the ability to market alpaca clothing to be worn in the warm seasons. This again was very successful with 90% of the spring/summer apparel sold by the beginning of the fall season. Additional emphasis was given to the Yarn Division. AFCNA attended The National Needlework Association (TNNA) tradeshows to cultivate wholesale yarn customers selling from boutique yarn shops. This strategy has been successful, though on a smaller scale than the apparel program, due to the smaller size of the market and competition from established yarn companies. Though the growth has been gradual, the purchasing season for the yarn business compliments the apparel business and provides a steady cash flow for the company. There is a natural synergy between the yarn and apparel businesses. As we develop new and innovative yarns for the apparel business, the ability to meet large yarn spinning minimums has been possible by packaging the excess yarn from the apparel program to sell to yarn shops. This strategy expands the acceptance and availability of America's Alpaca yarns and allows us to keep apparel program over-production losses to a minimum.
Another important development, in 2002, was the successful introduction of the store-in-the-box, the Alpaca Product Station (APS). One hundred APS were sold in 2002, primarily to members. These fully stocked and self-contained stores serve as marketing tools for alpaca producers. The products help an alpaca producer tell the alpaca story by illustrating the difference between huacaya and suri and the handle of various grades of fiber. Sale of alpaca products from the farm generates cash flow for the farm and the products serve as excellent marketing tools in the hands of satisfied customers. These mini-franchises generated 34% of the holiday orders from AFCNA members. There is a very high satisfaction rate with APS purchasers.
2003
The strategy for FY-2003 has been to build on the success of 2001 and 2002. The APS Program was continued with 50 additional units sold. The marketing program focused on increasing retail sales through web sales and a direct marketing campaign. Items sold at retail prices significantly increase the profit margins, enabling the Coop to return better profits to its members. A direct mail campaign during the fall/winter 2002 season tested our ability to market our apparel and accessories to consumers, outside the alpaca community. Leased mailing lists were obtained from catalog companies selling to our target market; Sundance, Orvis Women's, Jennifer Tyler Cashmere and Smith & Hawken. In addition, we mailed to AOBA members, AFCNA members, Alpaca Magazine subscribers, AOBA inquirers and our existing wholesale and retail customers. The mailing consisted of three high quality color catalogs. Through this campaign, the retail sales increased from 2% of our business the prior year to 8% and doubled the number of customers purchasing at retail price. Almost 1% of those receiving the catalogs placed an order. According to industry experts, this response is excellent for a new company. The increased retail sales due to this direct marketing campaign was quite significant. Further testing of this 'direct to consumer' marketing strategy will continue.
In 2003, AFCNA made it first capital equipment investment purchasing a state of the art sock machine. The popular, heavy terry socks are being made in Canada from the members' fiber. Although the 100% made in North America was a good selling point, the manufacturing costs are high, setting the retail price above competitors, and with a very low profit margin for the Coop. Socks are one of the best selling items. With a machine available to produce the terry socks, we can significantly reduce the cost, lower the price and increase the profit on each pair. This machine is also capable of producing custom designed socks. We have a solid working relationship with a company in Tennessee that currently manufactures the America's Alpaca dress socks. The Coop will contract with this company to house and operate the sock machine.
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Last Updated ( Friday, 07 April 2006 )
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