Peru's rich biodiversity lends itself to supporting difficult-to-duplicate economic models, as is proving to be the case with the country's burgeoning alpaca industry.

Cashmere has historically been considered the most luxurious textile in the world. Today, the Asian fiber has a new rival that is attracting the international community of buyers: alpaca. The Andean fiber has a cultural and ethnical significance in Peru. As the finest and warmest wool in the world, alpaca was described as “fiber of the gods" by the Incas. Fernando Pastor, Manager of Kuna, explained to TBY the characteristics of this special fiber “One of the features that characterizes alpaca is that it has many natural colors, and we have more than 24 natural colors in gradients ranging from light beige to dark brown, as well as from a light gray to black. We can ensure our clients and buyers that alpaca is a 100% natural product." Roberto Fioretto, from Incatops, added “Alpaca is one of the finest fibers in the world, and it adapts to the human body, especially royal alpaca or baby alpaca, which are very soft. The hair does not have scales like wool; its shape is cylindrical. This is a fiber that does not get too warm or too cold; it adjusts the wearers' body temperature according to the weather conditions."

Alpacas are one variety of the South American camelid, of which there are four altogether—vicunas, guanacos, and llamas make up the quartet. Alpacas do not destroy the plants that grow in the Andean mountains upon which they feed, as they eat only the top portion of the plants while leaving the roots to grow back the next year. By contrast, cashmere goats eat the entire plant, destroying even the root. Cashmere goats are a contributor to the massive desertification process that is affecting several regions in Mongolia and China.
Peru has around 3.5 million alpacas—80% of the world's total—representing a source of income for 120,000 families in the region. Arequipa, Puno, and Cusco lead the way in the production of alpaca fiber, followed by Huancavelica, Ayacucho, and Apurímac. Arequipa, Peru's second-largest city, hosts several factories that process both alpaca and the more expensive vicuna wool. As a result, “La Ciudad Blanca" has imposed itself has a textile hub within the country. According to official statistics from the Ministry of Foreign Trade and Tourism, alpaca fiber exports reached USD150 million in 2015. Of total alpaca exports, USD98 million correspond to shipments of textiles (fiber, yarn, and fabric), while USD7 million were accounted for by exports of home textiles. Apparel exports totaled USD44 million in 2015, up 3% from 2014. Within the category, 2015 woven apparel exports totaled USD12 million, a massive 40% increase from 2015.

The Peruvian government elected alpaca as one of its best ambassadors to promote the “Made in Peru" branding efforts. As such, the Peruvian fiber is gaining the attention of the medium and high-level segment of international buyers. Key markets that are currently driving the export of alpaca are Germany, South Korea, Japan, Italy, France, the UK, and Hong Kong. To further support both the production and the export of alpaca throughout the world, the Ministry of Agriculture and Irrigation has established new organizations such as the Consorcio Alpaquero Perú Export, SPAR, and FRALPACA, which have been carrying out significant transactions with the local and international textile industry.

Private enterprise plays a major role in the alpaca industry, as Michell and Grupo Inca have for decades controlled the majority of the market. These companies continue to trade with Andean peasants raising alpacas according to the Peruvian tradition, managing, supporting, and owning ranches and cooperatives in the Andean region. These giants of the Peruvian alpaca industry contribute over USD50 million to the country's economy every year, and they represent an ideal case study of how Peruvian agriculture can employ vertically integrated business models capable of directly managing operations all the way from the Andean fields to global distribution chains.