Avado Organics
Avado Organics designs, manufactures and sells Australian Certified Organic low-allergy personal care, baby and new mother products, using 100% natural ingredients.
StartupSmart spoke to company spokesperson Gregory Ferrett.
This is a family business – it’s been doing business since 2005. Tammy Fender, the founder of our business, had a child who was born with severe eczema.
She looked at products from all over Australia, all over the world – even products that were recommended by her doctor – and none of the products would work. She was not alone in this.
What we discovered in our research was that 57% of people have sensitive skin. This is not just adults but this is children and babies.
People are looking to go to specialist outlets to buy products there, and one of the things we discovered is that people will pay up to $38 for a 250ml shower gel or $42 for a 100ml cleanser, just to get a product that will work on the skin; a 100% natural product.
Competitors realised what was going on and then started trying to get the product prices lower.
They tried to create what we call “nature equivalents”, which are chemically-manufactured products that don’t meet the requirements of people with sensitive skin.
So we’ve developed a product range with two unique capabilities, or two unique positions.
Firstly, one of our products contains the only naturally occurring chemical that will reverse the effects of ageing on the skin.
The second unique position is our price point. Our objective is to create 100% natural products with certified organic ingredients at a supermarket price.
Tammy fender’s mother, Susan Harvey, has provided almost all the capital to date. She put a significant amount of money into the business to get it to where it is today.
We have certification with Australia Certified Organic. That allows us to go into the Chinese, Japanese and many other markets without additional certification.
We formally trade in three countries, we have 750 retailers, but we also trade informally in 16 different countries. These are countries where we are approached by retailers to stock our products without having a formal distributor.
Our products are proudly Australian-made but we hold stock in Melbourne and in our warehouse in Los Angeles, and we have a well established Hong Kong distributor.
We have taken a contract with Priceline to stock a new product. We expect that over the next 12 months, we will sell something between 80 and 100,000 units of this particular product.
We’re having strong interest from the Asian markets and from the US markets as well.
Our revenue will come from three key markets – our home base in Australia, the US and in Asia.
In the US, our focus in the market there is going to be on the natural market. There is one company in the US which is specialising in premium-priced foods and personal care.
However, they do generate revenue twice the size of Coles here in Australia and they have 900 stores.
In the US, we are already in most of the major online retailers, including Amazon.com, and we have our first traditional retailer – a small, 60-strong pharmacy chain in the Midwest.
We know that our products are well accepted in Asia. In Asia, people are looking for that label that says “Not made in China”.
In Australia, we plan to extend our product range into Woolworths and to add to our current range in Coles and Priceline.
We will expand our profile in Australia with the medical fraternity, who recommend our products.
Right now, we need funds to produce products for the next period. For November to December, we expect strong revenue through Priceline and through Coles for our products.
We plan to launch in South Korea in 2012 in January, and in Australia we want to expand our marketing programs.
We’re looking for investors who want to either just be a shareholder or may even want to become part of the business.
Nothing stops somebody else from taking our product and looking at the list of ingredients and producing them. In the US, probably our strongest competitor will be California Baby.
The way we put together our products, and the way we manufacture them and the experience we have in organics in particular, gives us an ability to produce products 5-15% below [the cost of] California Baby or our other key competitors.
It’s the way we produce the products that gives us a strong competitive advantage.
We’re building the business for a trade sale in approximately 2015-16.
History has shown that in this particular marketplace, investors will pay a premium for a company with strong revenue growth and a unique product that larger players can’t produce.
To support our strategy of a trade sale, we are planning to reinvest most of our profits from 2012-13 back into the business.
