Australians are increasingly willing to pay for premium brands such as Gucci and Kiwi businesses should pounce on the opportunity. (Photo: Getty)
Australians are increasingly willing to pay for premium brands such as Gucci and Kiwi businesses should pounce on the opportunity. (Photo: Getty)

BusinessJune 23, 2019

Australians have deep pockets for luxury and that’s good for New Zealand

Australians are increasingly willing to pay for premium brands such as Gucci and Kiwi businesses should pounce on the opportunity. (Photo: Getty)
Australians are increasingly willing to pay for premium brands such as Gucci and Kiwi businesses should pounce on the opportunity. (Photo: Getty)

While bargain hunters get excited that cut-price retailer Costco is on the way, across the Tasman opportunity lurks for New Zealand firms targeting the other end of the shopping spectrum, writes Bella Katz.

Luxury. It’s a New Zealand brand’s friend in Australia. If New Zealand companies don’t position their consumer products at the high end of the market they’re losing a unique opportunity to build brands with longevity that command a premium.

The Australian luxury retail sector is on an upward trajectory, fuelled both by local buyers and tourists from countries with an appetite for the luxe. Ibisworld says the premium category is set to grow at between 6 to 8% a year, compared with broader Australian retail where growth is only around 3%.

Take the Gucci store in Melbourne’s Chadstone Shopping Centre which could be mistaken for a super-hot nightclub. Everyday people line up outside behind a rope, and the bouncer-slash-security guard has a policy. It’s one in, one out.

For a brand with a $155 pair of socks as the cheapest item, Gucci is oblivious to any signs of retail woe. Seemingly, no election nerves or fears of economic downturn can touch Gucci or any other super luxury equivalents.

Meanwhile, over the other side of town, Baker Bleu rewards a long daily queue of customers with delicious and high-priced sourdough bread from a tiny store window. Every day it sells out hours ahead of closing time, and yet the bakery continues to limit production and turn people away. Far from discouraging tomorrow’s customers, the fear of scarcity makes them line up earlier to get that baguette.

That’s not to say times aren’t tough for the everyday Australian retailer. The market is polarised, and complicating matters further, we may be value seekers in some product categories and premium pundits in another. So a retailer’s own brand might be the label of choice for cereal but nothing short of the most expensive shampoo will do.

It’s a complex time in retail with a multitude of brands in every single category. Category buyers may see ten completely new brands of skincare pitched to them every single week, and some of the most obscure labels can have a bigger digital voice on social media than more established ones. How else to explain the Kylie Jenner phenomenon and her billion-dollar beauty empire, which is based on nothing but fame?

Australians show premium propensity towards the same categories as buyers from all over the world, with personal electronics, clothing and shoes, cosmetics, jewellery, and dairy products topping of the list. In the grocery category, Australians are willing to pay a higher price for premium meat and seafood, coffee and tea, alcohol and spirits, and dairy and haircare.

When it’s a product that’s organic, all-natural or environmentally sustainable, Australians are also prepared to pay a higher price for it, according to Nielsen’s Changing Consumer Prosperity Report.

Doesn’t that look like a good news story for New Zealand? Those categories are replete with Kiwi offerings. The challenge is differentiating themselves in this market as genuinely premium, and that means making every contact point worth the customer’s money.

New Zealand consumer brands, like Australian ones, are still relatively young – we’re yet to have the long history of European houses with celebrated founders. But what we do have is the formula for how those established brands were built and their reputations maintained to always command top dollar.

There’s a commitment to premium positioning that’s for the long run and a brand that’s built meticulously. It says no to discount, high volume channels which means reconsidering selling through notorious discounters like Chemist Warehouse. Take a lead from brand builders such as Aesop skincare, whose products you’d never see on Chemist Warehouse shelves.

While Chinese tourists in Australia make up 30% of the luxury market, the remaining 70% are locals. Australians have serious appetite and deep pockets for a quality item with a good story behind it.

Again, this is magic for New Zealand exporters to Australia, because the reputation New Zealand companies have is as skilled brand creators with an irreverent sense of humour.

We just have to make sure those classic luxury values are there: scarcity, high-quality ingredients, specialised manufacturing techniques and, in some categories, efficacy. And they should be balanced with unique and customised experiences in-store and online, as well as rewards for loyalty, and a sense that the customer’s business is genuinely appreciated.

Bella Katz is a commercial business advisor with New Zealand Trade & Enterprise in Australia, and a frequent writer and speaker on the topic of brands.

Keep going!
Honeywrap
Honeywrap

BusinessJune 22, 2019

The beeswax wrap providing an alternative to single-use plastic

Honeywrap
Honeywrap

In our Q&A series, The Lightbulb, we ask innovators and entrepreneurs to tell us about how they turned their ideas into reality. This week we talk to Honeywrap co-founder Tara McQuinn, makers of organic fabric beeswax wraps.

First of all, give us your elevator pitch for Honeywrap.

Honeywrap is a beeswax wrap made with organic cotton. They’re reusable and an alternative to plastic food wrap like Gladwrap or cling film.

What were you doing prior to Honeywrap?

I was working as an occupational therapist. We (co-founders Jo Falloon and Amy DeMuth) were all occupational therapists. The three of us were all friends and mums.

So what was it that sparked the idea for Honeywrap? What was your lightbulb moment?

I got the idea when my son brought home this beeswax wrapping he’d made for a school project. I thought it was great; it was reusable and it was a good alternative to clingfilm. At the time, no one was making beeswax wrap [commercially in New Zealand], so Jo, Amy and I started researching ingredients to make our own. I was kind of over my job so we were looking at different business ideas we could do together over a glass of wine. 

At the time, Jo was on a Plunket committee and they were about to do a market a month later. That kind of gave us a deadline because we thought ‘right, let’s make some to take to the market and sell’. We made them and they ended up selling really well. That was when we realised this really had potential as a business.

We also saw the potential for it to make a difference [to the environment]. It wasn’t just about making another product: we really thought it was something that could help reduce plastic in lunchboxes and just plastic in general as well.

Co-founders Jo Falloon (left), Tara McQuinn (right) and Amy DeMuth started Honeywrap in 2013 (Photo: Supplied)

Did you know anything about beeswax wraps before?

Not at all! We’d never seen it. We were kind of just blown away that all the ingredients were natural and how effective it was compared to Gladwrap or cling film.  The natural ingredients give the cloth a ‘tackiness’ which allows it to be moulded around your food or dishes, meaning the food gets kept fresher for longer.

What do you use to make Honeywrap?

We use organic cotton, beeswax, tree resin and jojoba oil. We only use organic cotton because we wanted to make sure they weren’t doing harm [to the environment] by using normal cotton which was full of pesticides. The other ingredients are natural preservatives so the wrap becomes more pliable but also more tolerant of the fridge or freezer.

All our beeswax comes from New Zealand Beeswax down in Geraldine. We used to just get it from friends who had beehives and we’d sieve all the wax out ourselves. But the quality of beeswax was so variable between beehives [that it was difficult] to get the product to have the same end finish. So now we get all our beeswax from a single supplier.

We also used to make all our wraps in the garden shed at the back of our house. But about a month ago, we finally moved into our new premises [in Avondale]. It’s got an office area and a production area so we’ve got more room for production.

Honeywraps can be used for up to a year (Photo: honeywrap.co.nz)

What’s been your biggest challenge so far?

Probably the need for really good production. We don’t just have a product we can market and sell, so we’ve really got to manage the production side of the business. And because all the ingredients are natural, they can be quite variable too. They respond to heat differently, they respond to waxes differently. Figuring out questions like how to cut the fabric to maximise the number of pieces that we get have been challenging too.

Because we’ve been based from home, it’s always been about having enough people to scale. But I think we’re finally at the point now where we’ve made enough product… to actually keep up with demand.

Now the challenge is making sure we stand out from the rest since there’s way more competition out there now.

What about in terms of trying to get the formula just right? That must’ve also been quite challenging at the start.

When we were first trying to make the mix, it was like being back at school again doing science experiments. My whole kitchen was just covered with different swatches of different mixes. We were trying to make them on the stove, testing and retesting them.

It ended up taking about six months for us to try and come up with the best ratio that actually worked.

“We were in the kitchen experimenting with formulas for months” (Photo: Supplied)

What stage of business is Honeywrap currently at? Is the business profitable?

We’re just about profitable, but I’d say we’re still at a growth stage. We definitely wouldn’t still be doing this if we weren’t making a profit!

Finally, what can we expect for the rest of 2019?

For Plastic Free July, we’re collaborating with Project Jonah so that all the profits we make from the new Moana print (by Wellington artist Cat McKay) will go to support their work in protecting our marine life.

We’ve also got some other new prints coming out including another new design from Evie Kemp. And then we’ve got a couple of other products we’re making as well to help people reduce plastic in the kitchen.