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Being a small, sparsely populated island nudged up against the edge of the Arctic Circle hasn't stopped Iceland from nurturing a rich and varied design industry.

While Viking runes, vintage Northern architecture and eons-old natural elements inspire much of the country's design and craft work, "the field is young, and we've taken steps to develop the industry as a whole," says Sari Peltonen, spokeswoman for the Icelandic Design Center. The first national design policy was published this spring, and the Iceland Academy of the Arts gave its first master's degrees in design.

Peltonen says much of modern Icelandic design speaks to the island's rugged geography, history and folklore (full of epic sagas and tales of magical wee folk).

The country's signature sheep's-wool sweater is known as lopapeysa; the wool has two layers, making it light, airy and water-resistant. You can find not only the sweater but its Nordic yoke pattern on porcelain mugs, candles, even paper napkins. 

Gerdur Gudmundsdottir uses the sheeps' skins to make sheared stools and shaggy benches; Sigurdur Mar Helgason's cozy Fuzzy Stool also utilizes the sheep's lank white or black hair. (www.epal.is; www.kraum.is)

Ragnheidur Osp Sigurdadottir, who works under the name Umemi, has had a hit with her NotKnot, a soft sculpture made of stuffed knitted tubes. At once a piece of art and a squooshy pillow, the NotKnot comes in a variety of colors and configurations. (www.umemi.com )

"The inspiration originally came from scout knotting," she says. "I've been fascinated by knots, the process of knotting and their purpose for some time now."

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