Focus on growth still the bottom line for Ecoya

20:53, Nov 29 2012
Trilogy founder Sarah Gibbs and Ecoya's new chief executive Stephen Sinclair. Trilogy is proving to be a leading light in the Ecoya group, making a $12.1 million profit in the six months to September, up from $10.4m a year prior.

Barefoot blonde millionaire Sarah Gibbs had kicked off her stilettos to pad across the Royal Port Nicholson Yacht Club deck for a photograph with the new CEO of Ecoya, the company that bought her and sister Catherine de Groot’s skincare brand Trilogy for $20 thmillion two years ago. 

She was anxious her feet were not shown in the newspaper, dashing back for her heels just in case they got in the frame.

 ‘‘I’ve been loving walking around the office barefoot lately, which I normally wouldn’t approve of, but the weather has just been soooo lovely,’’ the Karori resident confided.

 The sun may be shining on the part of the company Gibbs looks after but the Ecoya group as a whole has had a somewhat stormier time.

NZX-listed Ecoya group report dhed a loss of $797,000 after tax for the six months to September, fur dhther in the red than its $687,00 loss the same period a year earlier. 


Despite its seemingly sour result, Trilogy, which Gibbs still runs, has been improving strongly. 

The natural skincare based on certified organic rosehip oil extract has doubled production at an Auckland plant since being bought by Ecoya. 

The Trilogy division made a $12.1m profit in the six months to September, up from $10.4m a year prior. 

The Ecoya brand home fragrance and bodycare products, on the other hand, lost $1.98m following a $1.6m loss at the same time last year.

New chief executive Stephen Sinclair said: ‘‘We’re really investing in growing our top line, growing our sales and creating some capital value but we do acknowledge and realise that the market is looking for profits along the way so we would like to think next year we are delivering some, by the end of the next financial year.   

‘‘Then we can build on from there. But in the short term, from a dividend perspective in terms of returns? No. We are continuing to invest. I’m not sure our share dholders are with us to get dividends.’’ 

Its investors include institutional Pie Funds and Milford Asset Management, putting in $2m, and Trade Me founder Sam Morgan, who has a $1m stake. 

Craigs Investment Partners adviser Peter McIntyre said the   company  was in growth mode.

 ‘‘Their focus isn’t necessarily about profit at this stage, it’s about generating revenue growth. I think Trilogy is going to prove to be a really good acquisition.’’

Sinclair was recently promoted from chief operating officer, replacing Geoff Ross, who has taken the reins at boutique brewery Moa, but said the role was ‘‘not a whole lot different’’ to his previous position day to day.

Alongside Ross and Grant Baker, Sinclair was one of three owners who sold 42 Below to liquor multinational Bacardi for $138m in 2006. Previously an accountant, he was the numbers man at the vodka company and has been involved in Ecoya since day one when the trio first got on to 42 Below’s Australian manager’s brother ‘‘tinkering around’’ with scented candles .

The Ecoya group has an aggressive sales strategy for Trilogy, having it certified natural by Belgian-based non-profit independent body Natrue. That will give it a competitive advantage it would ‘‘shout about’’ as it will be the only Australasian brand with the label. It had to reformulate some products, even though it has always had a natural focus, to meet the strict standards. Sinclair said the certification investment was ‘‘significant’’ but hard to put a number on. 

This year its signature product, rosehip oil, was named the top natural oil product by Harpers’ Bazaar magazine. The whole Trilogy range will be repackaged to make it stand out further on the shelf and in some higher end retailers it will be selling from a concept counter manned by trained staff it calls Trilogists.

‘‘The refresh will help ping it off the shelf a bit more and stand out against our competitors. I think there is a little bit of sameness in the market and this will make quite a point of difference,’’ Sinclair said. ‘‘We’ve been talking to Kirks here in Wellington, Smith & Caughey’s in Auckland and working with Farmers not on a counter concept but more on amping up displaying the brands. In Australia we are in initial discussions with Myer about our own counter.’’

Australia is a big market for the group across both brands. Trilogy has been selling particularly well in pharmacy chain Priceline. At the Westfield shopping mall in Sydney’s Bondi the Ecoya brand has a standalone kiosk placed at the top of an escalator. ‘‘I met with Westfield in Sydney last week and they were keen to engage with us some more,’’ Sinclair said, adding there were ‘‘big’’ opportunities to extend sales channels across the ditch. 

The group’s focus was on Trilogy for the Asian market, where revenues were $1.06m in the September half year, flat on $1.05 a year earlier. ‘‘We need to sit back and understand where we can get our best wins and that’s through Trilogy predominantly in Asia but there are opportunities definitely for Ecoya selling in Taiwan, Singapore, Japan, Hong Kong...but we won’t forget about Ecoya.’’

Gibbs said it had no strategy for the United States or Europe at this stage although she was keen on Scandanavia.

Ecoya, which has its fragrances developed by an international perfumer, was playing with its product range and recently launched a line of ‘‘giftable’’ large candles in bright coloured boxes in time for Christmas. 

‘‘The business is fragrance driven, that is a strong part of what is important to us. We need to make sure we are continuing to change it, keeping it fresh and new, giving the consumer something different. French Pear and Vanilla Bean are popular and the new limited edition Mimosa and White Nectarine has sold out in Australia and New Zealand.’’ The candles are made at a factory it owns in Sydney. 

‘‘One of the big points of difference for Ecoya is that it is much more sophisticated than other brands in the market,’’ Gibbs said.

The group, which employs 80 split about equally between the two brands, had its eye on acquiring an Australasian rival within the next year and could do another capital raising to fund it. 

‘‘It possibly be an Australasian brand that sits in one or other of the categories with similar channels to market, not necessarily the same but similar back office functions.If [a competitor] has got the scale and can give us the benefits we’d look at it.’’

The share price has been volatile, moving from $1.00 a year ago to a high of $1.48 in June and now back down to 95c. However, because it was vulnerable to swinging largely when transactions were made because it was so tightly held. 

Gibbs and Sinclair both laughed when asked why the share price had been so volatile. ‘‘We don’t know. Can you help us with that?’’ Sinclair asked. ‘‘Have you got any idea why?’’ implored Gibbs. ‘‘Our strategy has always been to invest for growth and that’s what we’re doing so we’re not sure why.’

Contact Jazial Crossley
Wellington business reporter
Twitter: @msbananapeel

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