Unfortunately, it's holding up better source of wool (7)
I believe the answer is:
alpacas
'unfortunately it's holding up better source of wool' is the definition.
I can't judge whether this defines the answer.
'unfortunately it's holding up better' is the wordplay.
'unfortunately' becomes 'alas' ('alas' is used to express regret).
'it's holding' means one lot of letters goes inside another.
'up' says the letters should be written in reverse (in down clue: letters go upwards).
'better' becomes 'cap' (both can mean to beat somebody else's attempt).
'cap' back-to-front is 'pac'.
'alas' going around 'pac' is 'ALPACAS'.
Can you help me to learn more?
(Other definitions for alpacas that I've seen before include "Llamas with long silky fleece" , "Sources of wool" .)