New Zealand vodka kings hope their recipe for success will work in China as they venture into its home fragrance market.
42 Below founders Geoff Ross, Grant Baker and Stephen Sinclair have opened a flagship store for Ecoya scented candles and body products in Shanghai.
Since the trio sold the
vodka company in 2006 to Bacardi for $138 million, their investment vehicle The Business Bakery has invested in a number of companies including an 83 per cent stake in the Australian-based fragrance firm.
Ross said the Ecoya business had parallels with 42 Below in that it was high margin, showed global growth potential and options to exit the business.
The store, in the wealthy Gubei district, is part of a joint venture with a Chinese company which will see further stores opened in the market.
"We're bringing the design, marketing and in-store merchandising skills to the equation, and of course the product, and they're bringing local retailing skills like lease agreements, fitouts, staff," said Ross.
He said the products - priced from $25 to $75 - were pitched at the luxury end of the market with a retail strategy modelled on firms like Gucci.
"A Gucci may have a flagship store on Sloane St but then right round the corner, in Harvey Nichols and Harrods, they'll have Gucci stocked. We like that model," said Ross.
The million-dollar expansion of Ecoya into other markets - California is next in line - will see boutique stores established in "influential" cities to showcase the full range of products with around 80 per cent of sales coming through other retailers.
The tough retail environment had not dampened demand for home fragrance products, with monthly sales up eightfold since The Business Bakery bought a stake in 2008.
Ross puts this down to people spending on small slices of luxury - like a $100 scented candle - rather than a big ticket item.
