Fashion
Feb 19, 2024
by Karl Smith
Zero Sales, Zero Problems? What Renewcell’s Bankruptcy Says About the Future of Material Innovation
by Karl Smith
Feb 19, 2024

UPDATE – 2/25/2024: Less than a week since the publication of our original report, Swedish material innovator Renewcell has announced its decision to file for bankruptcy. Despite a sense of optimism conveyed to us about the company’s future, it seems that continued low sales – following on from November 2023’s month of zero sales – have clearly become critical, catastrophic even, for Renewcell.

Talks with primary shareholders, existing lenders, and possible sources of new investment – undertaken under the banner of a “strategic review” – have failed, leaving nowhere to go.

While this imminent financial meltdown was never communicated to FUTUREVVORLD during the course of our reporting, the crux of this article and comments made by Renewcell insiders remain, largely, as relevant as ever.

It is the same failures discussed in this article – of brands, of manufacturers, of the Fashion Industry at large, and indeed of Renewcell itself – which have reached a tipping point, leading this time to a declaration of bankruptcy announced today by Chairman of the Board of Directors, Michael Berg, who writes: “This is a sad day for the environment, our employees, our shareholders, and our other stakeholders, and it is a testament to the lack of leadership and necessary pace of change in the fashion industry.”

For a more thorough explanation of how (and why) we got here, read the full article below – originally published 2/19/2024.


In November 2023, Swedish textile-to-textile recycling outfit Renewcell made zero sales.

This isn’t because the necessary infrastructure isn’t in place – Renewcell has its own facility, more than capable of producing its CIRCULOSE pulp product at scale. It also isn’t because some act of fate, like the warehouse fire of March 2023, left the company without enough units to fulfil its commitments; in fact, Renewcell was forced to slow production as a cost-cutting measure.

Now, that’s two reasonable explanations put to bed – two excuses, discounted from the start. But, with those exclusions made, the question still remains – “Why zero sales?” – and others follow in its wake; questions like, “What does it mean for the company, or for the industry at large?”, “Does it actually matter?”, and, perhaps most interestingly, “Who or what is actually to blame?”.

And then, of course, there’s the extremely pressing question of how. How, exactly, did a once-feted material science pioneer like Renewcellpublicly listed for 76 SEK per share in November 2020 and rising to 300 SEK by January 2021, before tumbling to 9.47 SEK by November 2023 – not manage to shift a single unit of its game-changing flagship product?

To answer any of these, let’s first circle back: what is CIRCULOSE, and why is its success (or failure) important in terms of Fashion Industry progress?

A textile-to-textile recycling innovation, CIRCULOSE, according to Renewcell, “is a dissolving pulp [made] from 100% textile waste with high cellulose content, such as worn-out cotton jeans and cotton production scraps,” essentially facilitating the manufacture of viscose, lyocell, modal, acetate and other man-made cellulosic fibers. “These fibers,” the Swedish company explains, “are then spun into yarns, woven or knitted into fabrics and finally cut and sewn into new high-quality textile products.”

What makes this process – and its end result – so unique, however, isn’t what the product is made from, but rather what it isn’t. Nothing in a CIRCULOSE-based fiber or yarn is new; not only no new cotton, but crucially no new oils, petrochemicals, or even wood. It is, at its core, a circular product that removes virgin materials from the equation.

As for why that’s important, that’s also pretty much covered in the above, but, for the avoidance of doubt: a Fashion Industry phasing out virgin materials, especially those made from petro-plastics or requiring huge resource levels to create, is a massive and vital step.

So. Why isn’t anyone taking the leap?

“The process of going from testing new materials in the supply chain to incorporating those materials into a commercial collection takes a long time. Longer than originally anticipated. It’s a process,” explains Shannon Welch, Global Brand Director at Renewcell. Speaking exclusively to FUTUREVVORLD, Welch’s explanation at first seems to put the innovator in the firing line – but, as she continues, it quickly becomes clear that any sense of optimism or naivety in terms of Renewcell’s mission isn’t the root cause of the company’s uptake issue.

Reminding us that 585 tonnes of CIRCULOSE were sold and delivered in January – more than November’s zero, for sure, but still less than ideal – Welch is keen to emphasize the importance of the chain of production and sale in this equation: “Our direct customers are fiber producers. Some of our larger brand partners, like H&M and Inditex [the parent company of ZARA] do purchase viscose fibers made with CIRCULOSE® directly, but the vast majority of brands purchase finished fabrics or just order final garments. So, a brand’s purchase of fabric signals to the upstream supply chain that there is demand, but when there is a supply of our material out there, we need more demand/purchases to move our product along.

“All that’s to say, we have many developments with brands in the works that will be hitting the market this year. We are grateful for our brand partners. But we do need to see more interest from more brands and to move from capsule collections to main lines. While we are proud of the collections and products that have launched, we would be even happier if fibers made with CIRCULOSE® were incorporated into core products.”

It’s a pleasingly candid response – especially from a public company – to a question about something so volatile as sales; it’s also a response which doesn’t so much shift the blame as it does hint toward a wider problem with fashion brands and with the Fashion Industry as a whole. Namely that, while many of these companies want to be seen to change, few actually want to make that change in any tangible way. Especially ways that might affect their own bottom line.

“System incentives drive decision makers to optimize gross margins. If virgin materials are cheaper than recycled inputs, the industry will continue to opt for more damaging choices,” agrees Ken Pucker, Professor of Practice at the Fletcher School, Tufts University, highlighting the dichotomy of an industry which knows it can make sales off the back of “sustainability marketing,” but which isn’t willing to invest in anything like an actual sustainable model for fear of financial losses.

What’s interesting about this – because the notion that fashion-based businesses want to make money and not to spend it isn’t itself much of a surprise – is the way in which it feels like companies such as Renewcell have heard the claims that Fashion has been making about sustainability and, in reaction, opted to go ahead and call the entire industry’s bluff.

In that sense, could it be that what we’re seeing – where an outfit like Renewcell has the capability, the infrastructure, and indeed the product, but it appears as though the industry isn’t biting – is far more revealing of brands and manufacture than it is of innovators; far more telling about the disparity between Fashion’s words and promises versus its actions and intentions, than about the capabilities of circular producers like Renewcell.

Welch acknowledges this, but – so far as she’s concerned – it doesn’t represent a full picture of the situation: “That is an opinion we’ve been seeing and hearing,” she confirms, “But we have the support of many incredible brand partners like H&M, Inditex, PVH, and Ganni to name a few.”

Still, while Welch may be keen to highlight the role of Renewcell’s partners, the same doesn’t necessarily apply across the board. “The fashion industry is huge – there are so many brands – and we need more brands to step up now,” Welch says, “In a few years, it won’t be a choice to have more environmentally responsible materials – it will be a requirement, so better to get ahead of regulation then wait around for it.”

What’s interesting here is that, when Welch previously referenced brands themselves not being Renewcell’s primary customer base, this wasn’t a question of targeting – marketing CIRCULOSE to brands clearly is part of the company’s strategy. Renewcell, in Welch’s own words, wants more brands to “step up” and form direct partnerships.

That they seem reluctant, then, isn’t just something to brush off.

But why wouldn’t brands want to be involved with Renewcell? The company’s textile-to-textile recycling innovation has the potential to disrupt the fashion industry as we know it, and you’d think being the first such outfit of its kind would earn it some kudos.

“Being the first does present challenges, but we are also incredibly supported by the industry, the innovator community, and NGOs,” says Welch, “Creating change in an industry that has operated pretty much in the same way for a century, takes time.”

And, of course, herein lies the problem – the Fashion Industry has deeply ingrained ideas about itself; about how it should present, how it should behave, how it should be regulated and how, in order to best sell clothes, it should interact with consumers. All of these present challenges for Renewcell.

In terms of appearances, and in terms of dialogue with the consumer, there’s a reason that brands like GANNI have been keen to work with the Swedish operator, and why – at the recent Fall/Winter 2024 event – . Not because of some sense of shared Scandinavian pride, but because of shared core values; both GANNI and CPHFW sell themselves as progressive, Earth-minded entities as a USP and, to that end, collaborations with an innovator like Renewcell are easier to not only explain to consumers but also to sell them.

And when it comes to the huge corporations – H&M Group and Inditex – it’s hard not to be cynical and to point out the obvious benefits these companies, with less than stellar reputations when it comes to sustainability issues, might enjoy from positioning themselves as part of the solution rather than the problem.

Regarding other brands, though, the path is considerably less clear.

For one thing, textile-to-textile recycling, in general, doesn’t have the same kind of easily-marketable alchemy as, for example, turning ocean-bound plastic bottles into clothing. That’s an easy story to sell, because consumers already know and understand the problem of waste plastic in that form, and can picture floating islands of single-use bottles cluttering the planet’s clear blue waters and its most picturesque beaches.

There’s also the question of cultural cache: it’s not that Renewcell – its capabilities or its product – isn’t credible, but, to the eyes of the average consumer, it just isn’t visible. There is, perhaps, a reason that the relative upstart innovation outfit BIONIC was not only a partner in creating Patagonia’s “warmest ever jacket” last year around the same time Renewcell was unable to make a single sale, but also positioned as a key part of the jacket’s marketing strategy.

And, for want of a better word, that reason is “clout.”

Not only does BIONIC have the benefit of narrative – clearing up plastic waste in coastal Costa Rican communities, turning that plastic into materials for fashion – it also has the benefit of Pharrell Williams, not only as a partner, but as the company’s Creative Director.

Now, whether a material innovation outfit actually needs a Creative Director in the traditional sense is certainly up for debate. In the sense that it positions BIONIC as a brand in its own right, providing an anchor to the wider culture, however, the appointment is invaluable.

Putting this to Welch, she agrees in terms of its relevance and potency as a marketing strategy, but doesn’t see this as any kind of seachange for material innovation. “The notion that an ingredient brand is marketed to the end consumer isn’t new,” she says, “Look at Gore-Tex or Intel processors. They are incredibly successful material ingredient brands. That’s no different than marketing a more sustainable material to the end consumer. The brand-customer needs to buy into the sustainable properties and the messaging so that they can, in turn, market it to their customers.”

And so, once again, we’re left looking to the brands and, by extension, to the Fashion Industry at large, hoping it will see sense and make the necessary changes. Surely, when capital and cash flow are that industry’s governing principles, something so important ought not to be left in its hands? Especially not if progress needs to happen at pace?

“If the expectation is that textile-to-textile recycling exists, then all brands should adopt it immediately and in the next six months all clothing would be made from circular materials then that is an unrealistic expectation,” suggests Welch, discussing the management of expectations, “The fashion supply chain is long and complex. There is a real need for consumer education and that education should be coming from the innovators. We are the ones doing the work and know first-hand what the challenges are.”

That there ought to be some shared responsibility here – some synergy and symbiosis between brands and innovators, perhaps even finding a way to align progress with potential profits, rather than the constantly grappling for position – makes sense. That the Fashion Industry will simply accept that shared weigh, however, feels a little optimistic.

“Innovators are courageous and well intended,” says Pucker, “Their success hinges on resetting the rules and properly pricing damaging environmental impacts.” And the implication here is that, presuming this joint-venture is more than a little one sided, those not picking up their end must be incentivized in one way or another; positively or negatively. Either pressured to share the burden or, failing that, presented with one of their own.

“Policy makers must price in the costs of negative externalities of virgin fossil fuel based inputs,” Pucker agrees, “If done correctly, this will rebalance the incentives to properly consider planetary impacts.”

Renewcell was founded in 2012; Renewcell 1, our industrial-scale facility, opened in November 2022 so it has only been up and running for one year,” notes Welch, “We firmly believe that we (as a collective industry) are on the cusp of significant change, but it cannot happen overnight.

“Just think of all the improvements that have been made in the last 10 years since Rana Plaza. We are moving in the right direction. There are more than 35 new pieces of sustainability-linked legislation that are forecasted to go into effect around the world in the next two to four years. But we still need to pick up the pace.”

From this, it’s clear that Welch and Pucker are essentially on the same page – only Welch, and Renewcell, are less keen to shift the weight fully onto brands, knowing that positive outreach may lead to better results in terms of forging the kinds of partnerships necessary for Renewcell as a business to take positive steps for itself and for the planet.

Still, Renewcell’s apparent floundering in terms of sales is a pivotal point not just for the Swedish outfit but for material innovation as a whole. If a company with the full-scale production infrastructure, the supply chain in place, and stock of a fully-tested circular product can’t convince the Fashion Industry to buy in literally and figuratively, it’s hard to imagine who are what can.

“We need to see more uptake in our product and are working across the value chain to make CIRCULOSE® even more accessible,” says Welch, suggesting that Renewcell is also searching for an answer that same dilemma. “We now have 140+ mills that are a part of our CIRCULOSE® Supplier Network that are creating materials with our pulp for any brand seeking to adopt circular textiles.”

In terms of what’s next, Renewcell – as other innovators must – will continue to court brands to get their product into the hands of consumers. “Our message to brands is simple: CIRCULOSE® is available, the quality is proven, and our tech works,” says Welch.

Like her peers at other innovation outfits too, however, Welch – and Renewcell – know this needs to be a turning point if their efforts are going translate into Earth-friendlier accomplishments. They need not only to focus on getting brands on-side, but consumers too.

“To consumers, and I’m taking a page out of the Fashion Revolution playbook here,” Welch concludes, “ask brands #WhatsInMyClothes and demand they adopt circular materials, like ours.”

For now, that month of zero sales ought to act as a warning to everyone against complacency; to material innovators, to manufacturers, to customers