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Rural Industries Research & Development Corporation |
Thirty Australian Champions
Shaping the future for rural Australia
edited by Keith Hyde
RIRDC's major publication documenting the experience of thirty outstanding Australians who, through their business enterprise, vision and perseverance, are making a significant contribution to the welfare and economic growth of rural and regional Australia. Each chapter is presentedf as a separate html file which you can view, download and print.
The Australian Essential Oil Company
The Australian Essential Oil Company grows, distils, markets and exports 100 per cent pure essential oils to buyers in Australia, and around the world, from a base on their small farm at Coraki on the North Coast of New South Wales. The oils are extracted from a variety of native plants, but foremost among these is the native tea tree, Melaleuca alternifolia . The company ’s essential oils are used in a wide range of cosmetic, toiletry, and aromatherapy products. The oils also have a variety of agribusiness and industrial applications.
Principals of the Australian
Essential Oil Company, R to L, Judith and Bill McGilvray and Brett Anderson.
The company ’s founder and Managing Director, with over 20 years experience in essential oils,is William (Bill)McGilvray.The Australian Essential Oil Company is very much a family business, with wife Judith and son-in-law,Brett Anderson, also having key roles.However,it has been Bill ’s knowledge,skill and attention to detail that has guided the company to become a significant force in the international market for essential oils.In a relatively short time,they have grown to the point where the Australian Essential Oil Company exports about a quarter of all the essential oils produced in Australia each year.
Bill first became interested in essential oils in 1986.His background until then was in industrial chemistry,although he had been interested in herbs and natural health since he was a child.However, in 1986,Bill was asked for advice on the production and distillation of tea tree oil.In preparing his report, Bill was shocked to see just how ad hoc the industry really was at that time.They were using rusty stills,making do with whatever plants they could gather from the bush,and there was very little consistency in their methods.“I realised then that tea tree oil was a pretty resilient product,” he recalls. “They were starting with tea tree cut by hand from the wild, plus all the dead frogs and lizards, insects and goodness only knows what else, and still coming up with a presentable product after distillation.
Since then, Bill has been hooked on tea tree, but his business success has not come easy. It has taken plenty of hard work, and there have been many difficulties. One of these was the fact that although he was an analytical chemist, he had not worked extensively with organic substances such as tea tree oil. Bill believes he has had a natural aptitude for his materials, although he is quick to admit just how hit-and-miss much of his early work was.
“That was the state of the tea tree industry only 15 or so years ago in the eighties, and even into the early nineties. No one really had a firm handle on growing tea tree under plantation conditions, or on quality control.
Bill ’s background in chemistry has been invaluable, particularly for providing contacts with more suitable qualifications than his own. With a plenty of advice and assistance, Bill has helped change the way tea tree oil is produced in Australia.
Since his start in tea tree oil, Bill ’s interests have expanded to include other Australian essential oils, and from production into marketing the oil around the world. He is also the Managing Director of Australessence Pty Ltd, a company which is trading in, and supporting the growth of, research into essential Australian oils. He also convened Australian Melaleuca Oil Marketing, a production and marketing group with some 85 growers as members.
Champion Qualities
- New business built on skills base
- Identified opportunity in new industry
- Focus on quality
- Market chain development
- Collaborative marketing Industry leadership role.
The First Plantation
After his interest in tea tree was sparked, Bill bought his first property with his brother-in-law. Unfortunately, the North Coast region was hit with some of the most devastating flooding on record.
“We owned around 524 acres of land, and for the first three years we could do little but swim on it. We could do almost nothing until 1990, when we first started planting. Until then, what little tea tree we could get from that land was bush harvested. ”Tea tree had been bush harvested since the 1920s. Bill recalls that in the industry ’s infancy, plantations were not common. “ There was virtually no plantation material available, even for examination. It was quite obviously the way to go. You could drive past it and see nice, neat, orderly rows you could run machines down, instead of a mob of crazy guys running round in the bush, bogging tractors and smashing machinery."
Bill McGilvray (below) inspects a young stand of plantation tea tree.
Bill grew open-rooted seedlings at first, which was a tedious method, but he considered himself well prepared. He had methodically selected his seed from trees with known performance and yield, and had 12 acres of land ready for planting. No sooner had they begun, however, it started raining again.
Bill remembers the scene vividly, “We persevered, until the planter became irretrievably bogged in the mud. We then forged on in gumboots, until the ground turned to slush. We managed to get the 12 acres planted, but the land only re-flooded. I remember very clearly swimming out to see how those plants were going, ” he laughs, “which was about a 300 metre swim, I suppose — duck diving in, and it was very muddy. ”By this stage, the plants were up to 60 centimetres long each, and had continued to grow underwater. In fact, when the waters finally subsided, there was a surprising number of the original plants left in the ground.
Bill replanted in 1993. “The hardest job was removing the trees from that first planting. We couldn ’t kill them. The land had been laser-levelled, and they were still popping up out of the ground.
Throughout his many years working with tea tree, Bill has been continually impressed with the hardiness of the plant. Not only can it survive flooding, but it also recovers very quickly from fire.
Tea tree is a paperbark tree, and in a bushfire the flames just travel up the trunk, without inflicting any lasting damage. The leaves are full of oil, and explode. The heat, however, is enough to set the seed of the tree, the capsules popping open and spreading enough seeds to ensure survival of the species. In its initial stages, it is also a very quick-growing plant, slowing down as it becomes more established.
This hardiness would prove beneficial, as Bill ’s tussle with the natural elements continued. 1993 was the beginning of five years of drought. He developed an irrigation system, but the aluminium pipes would heat up in the sun until they were too hot to touch, and any water passing through them would burn the plants.
It is not surprising that Bill and his brother-in-law decided they ’d had enough at one point, and went their separate ways. Bill moved on to marketing tea tree oil for other plantations. His brother- in-law retained the farm and still operates the same plantation, quite successfully. “He has about 100 hectares planted, and thriving. We eventually discovered the correct techniques, particularly how to manage the soil. Soil management caused many headaches, but once mastered, the tea tree can grow very, very well, ”Bill says. “Tea trees have grown here since time immemorial — they tend to be self-- sustaining to a certain extent. We can make the most out of tea tree ’s propensity to stay alive no matter what the circumstances.
Getting Established in Marketing
In the early years, while his land was unusable, Bill started trading in tea tree oils, initially just to stay afloat. He acquired tea tree oil wherever he could, just to create some cash flow. The problems of quality control were constant, however, and there were often times when he doubted he would have a sufficient quantity of specified oil to fill orders. It was a piecemeal way of doing business, but Bill was learning quickly.
Frustrated with the ever-present quality problems, he assembled a small group of growers who were prepared to adopt a uniform method of distillation. He continued his research and established quite advanced facilities for the state of the industry at that time, capable of identifying distillation. problems with particular farmers. He can identify trends in the oils coming in, and give the appropriate advice where necessary. He remains highly selective in his choice of growers, visiting them as often as he can, so that he knows their arrangements first-hand, and to keep things as amicable as possible.
Tea tree planting by
hand in the early days of the plantation industry.
The group of companies now processes and markets oil from as far north as Dimbulah in North Queensland, and as far south as Port Macquarie in northern New South Wales. They blend the different oils to achieve the consistent specifications required by their customers. Bill believes that the market success of the Australian Essential Oil Company is based on this reliability and meeting customers requirements. “I think it caused some deep thinking in some other marketers ’ arrangements, ” Bill says of his efforts to standardise his oils. “Many of them were tied to one plantation, or some of them were still tied to bush oil. We were taking from the lot, and presenting tea tree oil in a manner I believe minimised its differences. ” In particular, this has helped secure the European market, where buyers are extremely concerned with quality control.
“My aim from the outset was to form long-term relationships with people in the market, to distinguish what we ’re doing in the marketplace from others, ” Bill says. “I also aimed to establish a fair price and to provide excellent and very prompt service. Given Australia ’s isolation, that ’s sometimes difficult and quite costly for us, but it is absolutely essential to work in with people, particularly when they ’re buying large quantities.
We also have to make the financial terms as equitable as they possibly can be, since we have an obligation to get our growers ’ money back as quickly as possible. But at the same time, if someone ’s buying large quantities it ’s a tad unreasonable to expect them to bear all the financial burden. ” Bill believes that personal service, fairness and respect have been key success factors for the Australian Essential Oil Company. He believes that other marketers, who trade through distributors, do not have quite the same network of growers and markets as he does.
Although the initial quantities of oil traded were quite modest, the amounts have grown quickly.
In their second year of operation, 50 tonnes were shipped out of the farm base factory, followed by 80 tonnes in the third year, and closer to a hundred in the next. “It ’s slowing down a bit now, ”notes Bill. “That ’s not unexpected, but hopefully we ’ve consolidated our markets reasonably well. I spend a lot of time with the people who buy our oil, trying to see where they ’re going, what product lines they ’re looking at. At the same time, I am introducing them to other essential oils they can use in conjunction with tea tree.
One of the Company ’s first customers, Australian Tea Tree Industry Association member Bob Barnes, is still one of their best clients. For decades, Bob has produced a variety of therapeutic products, and a range of veterinary products under the label Vetex, including antiseptic creams, shampoos, conditioners and soothing lotions. Bill notes that Vetex products are used on Kerry Packer ’s polo ponies.
The Australian Essential Oil Company is primarily a marketing company, with its own quality assurance, research and development support structure. Bill calls it a modest set-up, but it includes a small plantation, blending and testing facilities, a well-equipped laboratory, and their main offices. All the company ’s oils come through this base, and Bill remains very particular about what goes in, and what gets sent out. They primarily manage oil from other growers, and have developed precise accounting systems to keep track of their growers ’oil and returns. Long ago, the decision was made to trade only in bulk oil. This cut out the consumer-based end of their market, since manufacturing products of their own would put them in direct competition with many of the businesses they sought to supply.
One of the new, mobile
tea tree oil stills shared by growers.
Until recently, Bill still did much of the hands-on work himself. Now, the business is managed with the help of his wife, Judith, and their son-in-law, Brett Anderson, who is also their General Manager.
They employ a full-time chemist, and a handful of support people. It is a small team, and everyone works long hours. But their diligence has paid off.
Bill now spends a good deal of his time overseas, looking to expand and maintain their markets.
He is confident that while he is away, things are being looked after properly, and that their oil will continue to be of a standard not only acceptable to the needs of the marketplace, but good enough to live up to their company motto, “Of the Earth, From the Earth, For the Earth.
Bill spends much of his time overseas with his current customers as well as looking for new markets. In America, he works with groups selling consumer-based products that use tea tree oil as their main ingredient. This is currently the most important market for tea tree oil but Bill ’s interest for the future is elsewhere.
As his research and the distillation processes have been refined, Bill has focused on the pharmaceutical properties of tea tree oil, and a high grade of oil he now refers to as ‘premium ’. He categorises a second grade as ‘standard ’, another as ‘technical ’, and still another as ‘industrial ’. This move has resulted in some debate within the industry, as most producers have been content to adhere to the Australian standard of quality, but Bill believes there is still room for improvement. “It wasn ’t just graded in terms of chemical constituent ratios, ”Bill says of his newer oils. “If it was a really nicely produced oil, produced by people who knew what they were doing, and had that lovely spicy aroma to it, then I ’d class that as ultra-premium. If it was badly burnt, and a bit of a mess all-in-all, then that got relegated to the bottom category, which was industrial.
Bill says that he has learnt a good deal over his years in the industry, and while the many delays were frustrating, they have allowed him to monitor the developing plantation industry. In particular, he acknowledges a debt to Brian Small. “ A mine of information for people, ”he says. “His trials demonstrated, in due course, that you could plant tea tree as densely as you like. He got up to 30, 000 plants to the hectare, I think, and could still see no regression in the individual plants. ”This thinking has seen many successful plantation operations using high-density planting. “A tremendous amount of good work was done by the industry ’s old brigade, ”Bill acknowledges. “I was eager to glean as much information as I could. I was sort of building up a support network. People I could talk to and hopefully learn something from, and make an entirely new set of mistakes instead of making the same ones over again.
Bill McGilvray notes
that product development is an ongoing task.
The Australian Tea Tree Industry Association (ATTIA)
One of the first people to give Bill any worthwhile advice in the tea tree industry was Geoff Davis, who Bill considers to be something of a legend in the industry. Geoff had many years experience producing and marketing essential oils, and it was his influence that aroused Bill ’s interest in the industry. It was also through Geoff that Bill came to be involved with ATTIA. “I initially became involved in ATTIA just to learn as much as I could, ”recalls Bill, “but after a while I thought that maybe I should think about putting a little bit back. ”He gradually took a more active role in the Association, and in 1991 became its Chairman for four years. “That was as much as I could handle, and I did what I could. I was very keen to hand it over to someone else. Being Chairman of a new industry association is very demanding."
Bill ’s time as Chairman saw a great deal of growth in the tea tree industry. Bill fondly remembers the Association meetings as a “seething mass of differing opinions, ”but in the early to mid-1990s there was a tremendous amount of activity in the industry. Growers began planting as quickly as they could, and there were new farmers coming in regularly. In particular, the deregulation of the tobacco industry meant that farmers in North Queensland had to look for different crops, and Bill has nothing but praise for the high grade of oil derived from plants grown in that area.
Bill believes it to be unfortunate that ATTIA has never been well supported across the industry. Part of the problem has been logistics, with so many growers being so widely spread out. In part, this fragmentation is also typical of any industry still in its infancy. But through all of the infighting Bill stuck by his adopted slogan, “United we bargain, divided we beg."
With the benefit of hindsight, he thinks it might have been a little too early for the industry to find its feet. He notes that the Australian macadamia industry went through many of the same dramas before emerging as a powerful organisation. With time, experience and maturity, he believes the tea tree industry ’s best days are ahead.
Bill ’s own influence cannot be ignored, however
His top-level role in ATTIA gave him an obvious profile, and he has become a quite well-known figure in the industry. His views on quality, production, marketing and research are equally as well known. It gave him the influence he needed to run a company that could be based on mutual respect and trust in its relationships with customers and growers. “The only way to lead is to get in, and at least attempt to do things that I expected of other people. ” His influence also gave him the ability to push for continued research into essential oils, despite constant opposition. Many institutions, such as the Department of Agriculture, the CSIRO, and the Therapeutic Goods Administration, once ignored essential oils. Bill has helped change their attitudes by proving the worth of the tea tree industry. The opportunities for business and development have been there all along. It has been up to the people involved to get that momentum going. He believes there is now a huge number of quality people prepared to conduct more research into essential oils.
In 1994, Bill played a key role in gaining Austrade assistance to set up a marketing arm of ATTIA, Austteam Ltd, with the idea of generically marketing Australian Tea Tree Oil at the international level. Originally, Austteam was financed by the growers themselves, who were set up as shareholders in a public company. They helped to fund a number of overseas visits to markets in Europe and America. The intention was for the market information to be available to all industry participants, but Bill ’s expectations were not met. Many of the growers he was cooperating with began to see Austteam as a threat to their own marketing. “For quite some time it looked like we might succeed in the way I had hoped, ”he says, “but I didn ’t take proper account of competing corporate interests, who, in my view, had a very short-sighted way of looking at the long-term growth of the industry. They could have easily ridden along and been the major beneficiaries. Bill hopes that ATTIA will continue to support research from which all industry members will benefit.
Bill McGilvray inspects
his small-scale distillation units used for accurate assessment of essential
oil yields.
Research and the Future
For Bill, the future is wide open. The Australian Essential Oil Company continues to thrive, and there is plenty of room for growth and expansion. “Like any good prospector, I ’m always looking around the corner to see what other essential oils are there. ” He has identified opportunities in a variety of crops. He considers that Australia has more variety and opportunities in essential oils than any other country. Although the trade has been around for over 500 years, Bill believes there are many oils yet to be developed. There are many as yet untapped markets, and people who are looking for new ways to use tea tree oil. Bill hopes the leisure industry will open up for him, although that seems a long way off. Overseas, the North American market has only. just started to evolve and now continues to grow. Canada and South America also represent untapped markets where work is just beginning.
Recently, Bill has helped to produce an entirely new essential oil, blue cypress. Its development from scratch has demanded considerable time and effort, but that investment has already paid off. In what constitutes a major coup, blue cypress was selected as the official oil of the Sydney 2000 Olympics. Bill has become the Chairman of Australian Cypress Oil Pty Ltd, keeping his activities in blue cypress entirely separate from his interests in other oils. Blue cypress has been something of a labour of love for the last few years, however, and it provided an opportunity to work with the indigenous peoples of Bathurst and Melville Islands, who helped set up their plantations in the Northern Territory. “Great people, ”Bill smiles, “with a great entrepreneurial spirit. Very supportive of what we ’re trying to do." The end result has been a range of consumer products, such as scented candles and rubbing oil, bearing the Olympic logo.
Judith and Bill McGilvray discuss Australian tea tree oil with Peter Meschede of the German trading company, Eramex Gmbh, at the “In Cosmetics ”trade show in London.
The biggest challenge for the Australian essential oils industry, according to Bill, now lies in improving the regulatory requirements for the quality of oils. Because this is still such a new area, some of the controls that exist for other therapeutic products do not yet exist for essential oils. Bill considers that some producers have made extraordinary claims to customers — claims that could not be backed up by any regulatory body. “What I ’d like to see, ”Bill says, “is the people who are selling cosmetic products not make claims. The tea tree industry ’s not well enough positioned to allow claims to be made, and that ’s the biggest area this industry has to confront. ”The choice is for essential oils to be regulated properly, or for them to remain as a kind of ‘folk medicine ’, or curiosity. Currently, there are still many legislative ‘grey areas ’ in the industry, but once people realise that any kind of legal guidelines are not limitations, but opportunities for advancement, then the industry will move ahead.
