Two cattle farmers from WA turned their failing property into a multi-million dollar essence supplier to the world cosmetics industry.
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Entrepreneur: Stephen Birkbeck
Company: Mt Romance Australia
Business type: Australian native plant oil extraction, manufacturing, wholesale, retail
Founded: 1990
Employees: 53
Turnover: (2004 - 2005) $11M +
Head office: Albany, WA
Contact details: +61 8 9841 7788
The Mt Romance Story
Turning a failing West Australian cattle station into a global perfume essence supplier with an $11-million turnover has been quite a diversification for Steve and Karen Birkbeck. In 1989, they were first-time cattle farmers - and finding it hard to make ends meet. Steve says: “We had our grocery cheques bounce twice over a couple of weeks, we had young children, I had to find a way to raise money.”
In 1990, the Birkbecks stopped grazing cattle and started an emu oil essence business - Mt Romance, the name inspired by their scenic farm near Denmark, WA. Now, Mt Romance supplies Australian sandalwood oil to the luxury perfume markets of Europe, the Americas, the Middle East and Asia.
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Key learning points:
- Lateral thinking - If a failing WA cattle farm can become part of the global perfume business, what could you be doing with your assets or skills?
- New markets - Start by looking for the hidden niche in a big market rather than trying to figure out how to get a small share of the whole market.
- Marketing - Sponsorship allows you to link your brand’s name and attributes to something or someone who is well known. And with a bit of luck, they might even win.
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The Birkbecks began by hiring a formulations chemist and produced their first range of skincare products and cosmetics, which were sold through local markets. In 1993, Mt Romance began manufacturing a range of sunscreens.
The Challenge
To penetrate the luxury perfume sector and sell Australian sandalwood oil as a perfume essence.
The Solution
By 1993, Steve wanted to break into international beauty markets. France seemed an obvious place to start, but an extensive SWOT analysis of the French consumer market showed that it would be difficult. “It told us that it would be very hard for a small Australian regional business with a turnover of a couple of hundred thousand dollars to penetrate the fashion/beauty industry in France.”
The SWOT analysis did identify one entry point for Mt Romance - sunscreens in the French Alps. Birkbeck says: “Sunscreens married in with the image of Australia and we have good sun-cancer technology.” The marketing campaign included sponsoring the winner in a famous Spain-France yacht race. When Mamukala was first across the line the brand received continental-wide press. By 1996, Mt Romance’s Mamukala sunscreen was the second-biggest selling brand in the French Alps.
By 1997, the Birkbecks were ready to expand and purchased an essential oil factory in Albany. Venture capital investors, managed by Foundation Capital Ltd, bought a 23% share of the company in 1999 and Birkbeck got serious about research into extracting oil from Australian sandalwood. He says: “The greatest challenge is convincing other people to buy into your vision. You have to present a vision, see potential and then make sure people don’t think you’re mad.”
Indian sandalwood has been a key agent in perfumes for 150 years. But because of price and supply uncertainty, there has been a trend to synthetic ingredients for the past thirty years. Birkbeck’s challenge was to have a new natural ingredient listed. He says: “A classic perfume like Chanel No. 5 hasn’t changed its base formula in decades. Some fashion houses took five years of regular visitation to make a change.”
Birkbeck worked hard at understanding his customers and researching the supply chain. He says that persistence and building trust and loyalty were key in breaking into the market. “I got on the plane and knocked on doors. We had five years investing money, time and energy with no guarantee of return. It wasn’t until 2003 that we felt we’d made it.”
The Result
Sandalwood oil from Mt Romance is now a key ingredient in many new and some long established iconic frangraces. In the 2004-05 financial year, Mt Romance increased net profits by 74% over the previous year, making an EBITDA profit of $1.9 million. In the past four years, sandalwood oil has increased in price from $300 to $725 a kilo. Birkbeck says: “We have improved the product technically. We now utilise every part of the tree: oils, resins, hydrocarbons.”
In 2005, Mt Romance became the first inductee into Western Australia’s Export Awards Hall of Fame, having won the WA Regional Exporter of the year in 2002, 2003 and 2004. In July 2005, the Birkbecks sold Mt Romance for approximately $20 million to a Melbourne-based company, Purity Australia.