Natures Organics' persistence beats resistance
Justin Dowel: Sales grew from $2 million to $100 million. Photo: Michael Clayton-Jones
Justin Dowel's father was initially reluctant to let him join the family business, Natures Organics, before he'd established himself in another career.
But when the natural beauty and cleaning products company was fleeced by an equity partner and fighting for survival, Terry Dowel relented and set his then 21-year-old son a challenge.
“Dad basically said to me 'we're getting the company out of receivership and we need to go from selling $200,000 a month to $300,000 to survive. Go and do it',” says Dowel.
Two decades on, Justin Dowel is the chief executive of the business and has expanded annual sales from $2 million in 1991 to $100 million.
Natures Organics, based in Ferntree Gully in Victoria, makes and sells Earth Choice cleaning products, shampoos and skin-care products, among others. It says all its products and packaging, which are made locally, are environmentally friendly.
The company was founded by Terry Dowel in the 1950s as Trydel Research and was originally a contract-filling company making bath cubes. When it moved into haircare products, Terry Dowel “saw a great opportunity in pioneering natural formulations as nobody was doing it at the time”, says Justin Dowel. It changed its name to Natures Organics in 1991.
Battling for shelf space
From the outset, the company had to battle to win shelf space for its environmental products because retailers “just didn't believe the issue ranked highly enough with consumers to warrant it”, says Dowel. “This is why it has taken us so long to get where we are today,” he says.
The company got a big break when its products were accepted for sale by the big supermarket chains in 1993 and 1994. The company lists all the ingredients and where they come from on the packaging and puts many of its products in clear packaging so consumers can see what they're buying. But the supermarkets told him consumers didn't care.
“I saw their buyers and basically kept knocking on the door time after time after time after time until they said yes,” he says. “Dad instilled in me that persistence beats resistance and we still have that mentality with everything we create. You've got to be patient because it's a very slow-moving industry.”
Eventually Coles and Woolworths agreed to a trial of a few of the products.
“We had a lot of hits and we didn't have a lot of failures, so when the retailers started seeing that our products sell, they started trusting more what we offered,” says Dowel, 41.
The company was expanding rapidly but that brought the problem of funding the growth. “We were doing double-digit growth, 20 per cent year on year for two decades, so we had to be mindful of not to grow to go broke, which happens to a lot of businesses,” he says. “It's easy to sell it but it's hard to produce it, because you've got to invest in capital equipment.”
Unwilling to take on a new partner after its previous experience and with the company's original bank reluctant to lend to it, Dowel spread the business's banking work around so it was not reliant on a single institution. He also raised money by factoring, which is when a business sells its accounts receivable to a third party to get immediate access to the cash.
Adding to the need for capital was the fact that Natures Organics makes all its packaging. It was moulding its bottles from recyclable PET while the rest of the industry was still using PVC. This meant savings and no transport costs – and hence no CO2 emissions.
“The thing that makes us a lot more successful than other businesses is that we don't just focus on what's in the product, we look at how the packaging's created and what it's created from. So we have a much more holistic viewpoint when it comes to the environment,” says Dowel. He says the company is the first in the world to make bottles from bioplastics, polymer derived from corn.
Mainstream acceptance sparks competition
Environmental products have grown from a niche retail sector to a mainstream one, which has helped with acceptance of Dowel's brand but also created more competition.
The market for environmentally friendly products is in two segments: the "hardcore greenie” which is a minority, and consumers who want to do the right thing as long as it doesn't cost extra or compromise a product's performance. This is the market Natures Organics aims for.
Dowel took over the business from his father in 2001 although his parents retain ownership.
The transition was made easier because his father, whom Dowel says is “a mad scientist”, stepped away from Natures Organics for a decade to work on a new business. The business has developed an organic liquid that can fill punctured tyres, doing away with the need for cars to carry a spare.
“Where a lot of fathers hang around and oversee everything and get involved in everything and it just gets really messy, Dad stepped back and said, 'I trust you and off you go',” Dowel says.
Like most manufacturers, Natures Organics is finding the climate tough with the high dollar and rising energy costs.
“We buy the most efficient state-of-the-art plant and equipment to make sure that we're filling faster than anyone else in the world. The only way you can compete with Asia is through technology and efficiencies,” says Dowel.
Justin Dowel's five tips for entrepreneurs
1. Never compromise your values or the ethos of the business and have something greater than the need just to make a profit.
2. Look after your staff and acknowledge their contribution.
3. No risk, no reward: while all risk has to be calculated, those who sit back and stop innovating end up deteriorating.
4. Have faith in yourself and your instinct.
5. Have a trusted group of good managers whom you know well and make sure they're aware of what you're trying to achieve together.