Why cult sneaker brand Allbirds is making shoes from eucalyptus trees

Allbirds, the Silicon Valley startup behind a wildly popular wool sneaker, is pivoting from sheep to trees.

The venture-capital darling is unveiling two new models Thursday made with the fibres of eucalyptus trees, effectively doubling its product line. One of its new kicks will be a flora version of its seminal, minimalist running shoe.

"We've been the leaders, you could argue, in creating a new class of footwear," said co-founder Tim Brown of the company's novel use of wool. "And at first glance, shoes made out of trees don't make a lot of sense, either."

Branching out

Allbirds said eucalyptus will require only 5 per cent of the resources that go into a traditional shoe made of leather, plastic, rubber or some combination thereof. And while there's a lot to like about wool shoes, from a warm, fuzzy fit to anti-microbial properties, they still don't pair overly well with summer or rain. Allbirds is hoping its eucalyptus line, which wicks away sweat, will strip some of the seasonality out of its business and expand sales in America's southern climes, as well as in markets such as Australia.

Co-founder Joey Zwillinger, a biotech engineer, said the company has been developing the new material since its launch two years ago. In the interim, the company's woolly business has grown at a pace that surprised even its co-founders.

From the start, the Allbirds strategy was to hit the wide gap between dress shoes and motley, technical sneakers designed for specific sports. Sartorially, an Allbirds running shoe, or "Lounger," fits somewhere between a Chelsea boot and a pair of checkered Vans. The timing was propitious, as casual athletic wear increasingly replaces more formal workwear and consumers embrace new e-commerce companies for their sartorial choices. "We've been blown away by the success that we've had," co-founder Tim Brown said. "We vastly underestimated the power of the idea of comfort."

A shoe for the digital age

Bayard Winthrop, chief executive officer and founder of apparel brand American Giant, said the cultural shift was catalyzed, in part, by technology. "The narrative has been that millennials don't like to work, but in reality, young people are working all the time now," Winthrop said. "So they have a different view of what workwear looks like." He added: "Honestly, the customers are way ahead of brands on this stuff."

Big Sneaker, of course, is hustling to catch up. Any good idea in footwear is quickly imitated, as evidenced by the mounting pile of trademark lawsuits between sneaker brands. The Allbirds all-sheep strategy was no exception.

Recently, Nike wove wool into both its Air Max line and its Air Jordans. A little further up market, Ermenegildo Zegna sells a pair of merino wool sneakers for approx. $685. Meanwhile, Giesswein, an Austrian company specialising in slippers and clogs, dropped a merino running shoe in November. "What is clear is that wool is having a moment," Brown said. "If we've been part of the leadership of that, we'd be humbled and flattered."


Laying the roots for the future

There's some evidence the fledgling Allbirds empire may have helped fluff up the price of raw wool, though its agreements with New Zealand ranchers have insulated it from any price surge. Eucalyptus, it turns out, wasn't a hedge against higher wool costs. Instead, it appears to be a small patch of white space in the sneaker game, one that will likely be filled in with rivals. Beyond that, the future of plant-based shoes may soon include bamboo or similar flora currently woven into shirts and sheets.

Allbirds, which declined to discuss its financials, has even landed on the radar of NPD analyst Matt Powell, who is notorious for skewering sneakerheads and casting a gimlet eye on the financial impact of heavily hyped, limited edition shoes such as the Adidas line produced in collaboration with Kanye West. In this case, he acknowledged the rapid of ascent of Allbirds.

"[It's] gaining steam and has a cult-like following," he said.