The man who made New Zealand vodka hip sniffs a fresh chance of success with his latest NZX listing.
Geoff Ross had his work cut out for him when he decided to launch a vodka label from his garage and market it into the US.
But he succeeded in creating a worldwide brand that now has a strong position in markets where people can't pronounce the exotic flavours of
feijoa and manuka honey.
Now Ross - who is actually 42 years old - together with former 42 Below executives Grant Baker and Stephen Sinclair, and The Business Bakery directors, has turned to sweet pea and jasmine scented soy candles and vanilla bean hand lotion. His mission, with a company called Ecoya, is to grab a position in a high-end market where people are prepared to pay up to $70 for a candle.
Ross has great ambitions for Ecoya which this week issued a prospectus for a stock exchange listing.
If successful it will be the first NZX listing since Kathmandu nearly six months ago.
Ross says he plans to follow a similar strategy to that of his vodka company.
Through independent director and US-based friend Richard Frank he plans to market the brand to Hollywood stars and studios.
Frank is a former president of Disney Studios and Paramount TV Group and has strong contacts in film and TV where Ross hopes Ecoya's products will have an opportunity to feature.
The products, which include a range of lotions, soy and palm wax candles, soaps and body washes, will mainly be promoted through publicity and public relation drives into magazines.
Ross told the Business Herald yesterday that Ecoya was looking to collaborate with fashion designers through fashion weeks and feature at interior design shows.
The company already has a strong footing in the fashion world through the board appointment of Collette Dinnigan, one of Australia's most successful female designers. Air New Zealand's chief executive Rob Fyfe is also an independent director. Craig Schweighoffer, who worked with Ross on 42 Below, is Ecoya's chief executive and is based in Australia. Until recently Ecoya's products have only been available in New Zealand, through Ballantynes, and in Australia, through David Jones but Ross plans to expand the products in the US, UK and China.
The capital raised through the public listing of Ecoya will fund the expansion of the company into international markets.
On Thursday the company got the green light to list on the NZX after its prospectus was registered at the Companies Office.
Ecoya's major challenge will be enticing consumers to buy the products instead of other globally recognised brands such as The Body Shop, Lush and Jo Malone.
Despite the obvious competition, Ross claims the home fragrance and luxury skin care market is less aggressive than the liquor market and a product that is much easier to export.
"It is a busy category but so was Vodka. In the US, almost every week a new Vodka label is launched. Vodka is a very aggressive market. There are global players in Ecoya's space but it's not as cluttered. It's not as cut throat as liquor and the competition for [a high end product] has not been that strong.
"These products like Vodka don't have [a short] expiry date. It's not like we're sending tomatoes to LA," he said.
Ross said Ecoya would remain a New Zealand company with its products made and distributed from Botany Bay, Australia. Although it was not a goal, he notes that the company could potentially later be bought out by a competitor as was the case with Bacardi's purchase of 42 Below.
Ross says part of the product's appeal is its clean, green and environmentally friendly image. The brand will heavily rely on this environmental accolade when it enters the US and UK markets.
When Ross was asked a few years ago why people should drink 42 Below he said, "Mankind hasn't been living in New Zealand for long enough to mess up the environment, so our air and water down there is the purest in the world. If you drink 42 Below all night, you won't get a hangover."
The candles are made from soy wax and palm wax instead of paraffin, which is still the predominant wax used in the candle industry.
Ross said the emissions released when a paraffin candle is burned are"like starting your car in your living room".
The soy wax also burns at a lower temperature to paraffin candles, making it safer to have around children. The lotions do not contain sulphate.
Frank said "everyone in the US wants to visit New Zealand because it's green and eco friendly. People here have a great sense of humour. We need to further push this green image when marketing Ecoya overseas."
This was part of the marketing strategy of 42 Below when it claimed its Vodka was made from the purest water in the world.
Frank said the US tax on alcohol and regulations made entering a liquor brand into the US challenging. "Despite market conditions this category has not been hit like others. The wine market [in the US] has been flat. And every hip hop, rap artist wants their own Vodka brand," Frank said.
Ross said compared with major multi-nationals such as Johnson & Johnson, Ecoya would be a "blip on their screens"and targeting a different audience.
"We're not going to be pressing their shelf space. These companies are hopeless at launching new brands or pushing popular culture within specific consumer behaviour. We're operating in the high end luxury market."
Ecoya's bath and body range includes soaps, hand lotions, shower gels, body butters and the home fragrance range includes diffusers, soy and palm wax candles. Fragrances include scents such as wild frangipani, French pear, lemongrass and ginger and lotus flower.
The products will range from $34.95 to $69.95.
The Numbers
Ecoya's net revenue for the financial year ended March 2009 was $2.2 million. It is expected to be around $3.9 million for the financial year ending March 31, 2010 and is forecast to reach $8 million for 2011. In the company's prospectus it states the company does not expect to make a profit for three years.
Brokers and fund managers spoken to by the Business Herald said they had not looked at the stock because of the size of the IPO.
THE OFFER:
* 42 Below founder Geoff Ross is publicly listing Ecoya.
* The company is seeking funds to expand into US, Britain and China.
* Offering 10 million shares at $1 each.
* Option to accept oversubscription of up to 3 million shares.
* A pool of 1.5 million shares for public investors.
* A pool of 6 million shares for NZX firms and selected institutional investors.
* A pool of 2.5 million shares for independent directors and private investors.
* Offer opens on Monday.
* Global body and bath market worth about $31.5 billion a year.
* US home fragrance market valued at about US$7.2 billion in 2007.
GEOFF ROSS:
* Former chief executive and founder of 42 Below.
* 42 Below was listed for three years before it was sold to Bacardi in 2006.
* A former managing partner and board member of DDB Advertising.
* A former client service director and management team member for Saatchi & Saatchi.
* Board member of the Melanoma Foundation.
* Adviser on the Air New Zealand "Grab a Seat" initiative.
* A director and shareholder of The Business Bakery that has shares in Dorchester Pacific, Ecoya and The Hyperfactory.
* He is executive chairman of Ecoya.
