How Abel goes global from the Aro Valley

Born out of a frustration at not being able to find a natural perfume, Frances Shoemack founded Abel alongside her husband David over a decade ago in Amsterdam. For six years it was a Dutch company run by expat Kiwis, but it now operates from Wellington’s Aro Valley and last year raised $2.2 million in investment, led by VC firm Maker Capital.

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Why did you move back to New Zealand to run a company that was well established in Europe?

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It really was about family and wanting to come home after 10 years in Amsterdam. Otherwise, you wouldn’t really move a business like this to New Zealand. In Amsterdam, we were so close to many of our key markets and suppliers. It was nothing for us to pop across to New York for business. 

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We love being home, but time zones are no joke. I spend three nights a week on calls and three early mornings starting from 6 or 7am.

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How do you get your fragrances into the hands of customers?

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Our sales split is 30 percent ecommerce, 70 percent retail. We’d like to get that to 50/50 in the coming years. 

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Initially we built the business quite lean and signed up with distributors in most of our markets. They either approached us or we met them at trade fairs. But now we want to go deeper in some of our key markets and to do that we need to pull away from the distribution model and actually own those channels ourselves.

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What’s the key market you are focusing on?

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The US is our biggest focus since we did the capital raise. Going direct involves a lot of hard work.

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We’re not trying to compete with Gucci or Prada. You can already grow very big in the niche perfume category. Byredo sold for 1 billion euros; Aēsop was another high-profile acquisition. But if you drew a Venn diagram, niche perfume and clean beauty is our sweet spot. There are just a handful of brands playing in both fields and both categories are  currently seeing huge growth.

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A direct operation in the US involved setting up a corporation/tax entity, warehousing, employing people on the ground. Everywhere you turn there’s another thing to do. Longterm, it’s the right thing for the brand to own that whole customer journey.  

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I think you kind of have to show you can crack the US, especially as New York and California are leading in terms of the clean beauty movement. The US is already our biggest market – has been for a few years now – but really cracking it is not going to happen overnight. It takes a lot of time and legwork.

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What’s the retail environment like in the US?

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In 2020 it was heartbreaking [with] the number of retailers that closed up and there’s a new spate of it at the moment as well. 

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A lot of mom-and-pop type stores weathered Covid but the current climate is just too challenging. Retailers are asking for longer payment terms. We’ve never done consignment [where a retailer will sell items and pay a portion of the proceeds to the supplier], but that’s prevalent at the moment. Not a lot of stores are willing or able to pay for stock up front. 

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But there’s always demand for good products, it's just finding the right channels.

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How do you price your products when consumer demand is weak but supply-chain costs are increasing?

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Because we only use natural ingredients, we don’t have a lot of flexibility. Whenever I see a lower price point for a perfume saying it’s made of natural ingredients, I’m dubious straight away. It’s like making juice out of real oranges rather than flavouring. You just can’t do it for the same price.

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There’s very little transparency in the perfume industry. From day one, we shared our full ingredients list. No one else does that and there’s no regulation around the terms brands use. Our margins have gotten tighter, the cost of ingredients is skyrocketing, but we are holding true on our pricing. 

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How do you create raving fans for your perfumes?

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Finding genuine, influential fans is really key. Maybe there’s a yoga teacher with a high profile who has a loyal and trusting network. 

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To grow ecommerce, you need to have a really strong database and recurring customers. Having great products is obviously crucial. We have a ‘one in, one out’ policy – when we launch a new perfume, we take one out of the collection. 

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That’s to keep an eye on excellence and sustainability. It’s when you take a product away that you find out how many loyal fans you have. We get emails every day asking for more of our discontinued fragrances. We will find a way to get those fans some more of that perfume.

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What key breakthroughs have given you confidence that Abel can be a best-selling global brand?

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It’s landing a really good account, getting into a really awesome store. If you can get to those buying teams who see 100 products a week but only take on three a quarter, you start to make progress. We’ve been able to do that. 

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We’ve also had some great press in the likes of Financial Times and Vogue, which is definitely a form of validation.

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I was also so proud when we closed our capital raise last year because in the due diligence process you really have to put everything out there. You’re worried they’ll discover something you didn’t know you’d missed and tell you the business is shit! That didn’t happen, instead it gave us confidence in what we are doing. We’d always been light on governance, just hustling our way through. So setting up a board and decent governance has been great for the business.

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What are the priorities for the next 12 months?

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The US is the big focus. I’ve been up there five times in the last year or so. It’s where we are investing most of our time, energy and resources. Other than that, it’s new product development. As bigger players get involved and follow the trend, we need to make sure we stay ahead of them and keep pushing the boundaries.

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As told to Peter Griffin

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