For most of its 30-year history, Wicklow-based Fragrances of Ireland sold mainly in Ireland to tourists. But recession has turned this on its head. Now the company exports 70 per cent of its output, primarily to the US, where its strategy of eschewing big retailers in favour of smaller outlets is beginning to pay off.
"The recession bit fairly quickly and turnover fell from around €3 million to about €2.2 million," says managing director David Cox, whose father Brian co-founded the company with his brother-in-law (Donald Pratt of Avoca) in 1983.
“We had to cut costs in line with falling sales but we managed to keep all the staff who wanted to stay and people really pulled together to get us through,” Cox adds.
“It was certainly a wake-up call and maybe we needed a big change after 30 years. Since taking the decision to push hard into the US in 2011, it has been all go. From almost a standing start we have trebled our sales there, have taken on two new staff (we now employ 20) and our turnover is recovering well.”
US expansion
Fragrances of Ireland is still family-owned and the family had to fund the US expansion as the company's bank of 25 years would not.
“We needed to make the investment upfront and, while we have never gone a penny over our limit, or ever bounced a cheque, and had a mortgage-free premises as security, we were refused [by the bank],” Cox says. “I was very taken aback as it seems decisions are being made by remote bean counters and that relationship banking no longer exists.”
Fragrances of Ireland’s first product was a perfume called Innisfree. Cox says that while the scent itself was important, his father and uncle also took extreme care with the branding. “They wanted to communicate the idea of it being an original product from Ireland that had a story. They approached the family of WB Yeats for permission to use lines from his famous poem of the same name on the packaging. That was pretty cutting edge marketing at the time.”
A second line, Naturally Irish, was launched in 1990, and a number of other products have followed, including Connemara, Patrick and Sonas. However, its most significant creation to date and the product leading its charge in the US is a fragrance called Inis.
'Energy of the sea'
"Inis was a major shift as it moved the focus away from tourism and established us as a fragrance house in our own right," Cox says. "Inis is Irish but it's not ethnic and, because of its tag line 'the energy of the sea', the range has gone down very well in coastal areas in the US."
Fragrances of Ireland exports to other countries, including Germany and Japan, but Cox says the US held the biggest market potential. Its strategy there has been to supply small retailers which typically don’t sell any other perfume.
“In the big stores you are one among hundreds competing against international brands with $100 million to spend promoting a single perfume. You never get the chance to tell your story,” Cox says.
The company’s products are now in around 600 small outlets in the US and growing. It is usually the shop owner who chooses to stock the range and they make loyal customers.
“We’ve probably spent around €250,000 developing the US market in the last two years. However, we’re now getting repeat business and those who took small quantities on trial are coming back with much bigger orders.”
After much soul-searching, the company turned down the offer of a listing by one of the major drugstore chains in the US. Doing so meant waving goodbye to an order of over $200,000.
“We want to retain control over our product and our pricing. If you commit and they start squeezing you on price or upping the competition, you could be in real trouble.”
The company’s one exception to avoiding the mass market is its long-standing relationship with shopping channel QVC. It has been selling through QVC on a regular basis for a number of years. Cox says that while the organisation is very exacting to work with, it is also very fair and pays its bills on the nail.
Exclusive QVC fragrance
"QVC is our one really big customer and we've been dealing with them since the late 1990s. They get you airtime in around 120 million homes in the States. At their request we developed an exclusive QVC fragrance called Caru and this has worked out very well."
Cox says the company now has its own full-time business development manager in the US and is broadening its customer base through listings with agencies that focus on specific geographical areas.
“We’re not out of the woods yet and money is still tight, but we are pleased by our progress. It is encouraging to know that you can build a brand new market if you really make the effort.”
