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Rural Industries Research & Development Corporation |
Thirty Australian Champions
Shaping
the future for rural Australia
edited by Keith Hyde
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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.
Australian Mint Oils
The story of Australian Mint Oils Pty Ltd is an interesting study in the transition from agriculture as the backbone of the Australian way of life to an increasingly commercial operation, which rides the highs and the lows of globalisation like any other industry.
On-farm
distillation of peppermint oil
This move has been overseen, and in many ways pioneered, by Dr Leo and Helen Cahill, two remarkable entrepreneurs. The unique, and indeed diverse, skills which they bring to their company, have marked out an unusual pairing within their operation. During their time as peppermint oil producers, they have seen the industry change from a group of farmers producing and selling peppermint oil to an industrial operation making a name in a large international market. Key to their journey into the wider world of peppermint oil has been the role of Australian investors in providing the needed venture capital.
The goal of Australian Mint Oils Pty Ltd (AMO) is to develop the business to include an Australian- based flavour house with a reputation for being experts in peppermint flavours and expanding internationally.
Dr Leo and Helen Cahill
Background
The Cahills began their involvement with AMO in the late 1980s. Leo, initially a research scientist with the Department of Agriculture, was then Project Manager for the peppermint project commenced by Daratech (the commercial arm of the Victorian Department of Agriculture). With the election of the Kennett Government in the early 1990s, Daratech decided to sell off this project. Leo and Helen had always wanted to operate and own a business of their own, and thus began to consider themselves as potential bidders. “It took us some time to get up the courage to make the leap from secure, salaried jobs to a new business like this, but once we made our decision there was no going back, ”says Leo.
Dr Leo and Helen Cahill. 34 |Thirty Australian Champions During this period, Helen was employed as the Victorian Centre/Distribution Manager at Nutri- Metics International, a direct-selling, multinational cosmetics company. It was during her time at Nutri-Metics that Helen developed a love of business and marketing. Her creative talents were well used in the company ’s interdepartmental management as well as their promotional activities.
Helen ’s job had become increasingly administrative due to structural changes within the company, so she was also looking for a new challenge.
Champion Qualities
- Established markets for product
- Strong vision for the future
- Focus on quality
- Market chain development
- Strong investor support
- Based on sound regional research
In 1994 Leo resigned
from his position within Daratech and waited six months to find out if
their bid for control of AMO had been successful.
Leo then set up AMO headquarters at the family home while Helen continued working for Nutri- Metics until April 1998, when she joined Leo in the peppermint business.
In March 1999, AMO headquarters was combined with a new Distribution Centre and relocated to its present site at Tullamarine in Melbourne.
“The downside to new industries is very unpalatable. If you look at the downside then you (might)find yourself failing — if you look into that hole you might fall in.
The Peppermint Industry
Peppermint oil is used worldwide in confectionery, cosmetics, and oral-hygiene products (such as chewing gum, toothpaste and mouthwash), chocolates and sweets. It is generally sold to the manufacturer through flavour houses who deal in all kinds of essential oils.
Australian Mint Oils
now has 1, 000 acres of peppermint under cultivation in north-eastern Victoria
AMO is a unique company in Australia as it takes its product from the farm to the manufacturer ’s factory. The crop itself is grown in north-eastern Victoria, where the Cahills have 1, 000 acres of peppermint under cultivation. Initially peppermint was produced on a number of smaller, less efficient farms, but over time AMO found this structure to be inappropriate for their long-term goals and have developed their current, large plantation.
AMO ’s crops are located in the valleys of north-eastern Victoria, which are known for their rich soil, cool summer nights and high rainfall. Climatically they are perfect for growing peppermint.
Peppermint is a perennial crop planted in autumn in Victoria. The annual production cycle begins with irrigating from mid-November through to harvest in February. The peppermint plant goes through its major growth phase during spring.
“We have to control for weed growth,” Leo says.
“Peppermint does not like competition. Then we fertilise and irrigate. The major disease to worry about is rust, but we now have rust control programs. Then, at harvest time, you end up with a thick bio-mass of peppermint plant about 30 to 60 centimetres high across the paddock.”
When the peppermint is ready for harvest in these valleys, in early to mid-February, it is mown, raked and left to dry for 12 to 24 hours, before being picked up using a forage harvester. “At the plantation site we have a large distillation plant, ” Leo says, “built using American technology and Australian ingenuity. ” Once distilled, the oil is decanted into 44-gallon drums and freighted down to AMO ’s Distribution Centre in Tullamarine where it is prepared for export (to the United States of America, Japan, United Kingdom)or warehoused, ready to supply the Australian confectionery, oral hygiene and cosmetic manufacturers.
Harvesting peppermint
on-farm in north-eastern Victoria
AMO is the largest peppermint oil producer in Australia. However, the world market for peppermint oil is approximately 5, 000 tonnes and Australian production accounts for only a small proportion of this total.
Central to AMO ’s marketing strategy has been a focus upon personalised service and product flexibility. In the last six months, AMO has become the chief supplier for many of the major confectionery companies in Australia as well as making significant exports to the USA and UK.
Leo and Helen believe that there is a growing gap in the international market which AMO can fill, particularly with the weakening of the Australian dollar.
Investors
Getting AMO off the ground was never going to be easy given that, as an industry, peppermint requires large capital outlays and investment in properties which may take long periods of time to yield results. The Cahills thus decided to bring in investors. Over the past few years, they have worked closely with a group of Melbourne people who have invested several million dollars in AMO. “We work closely with our investors. They have ridden the waves with us and they ’re committed to making this company work, which is crucial because there are all kinds of hiccups in agriculture, ”says Leo.
The role of the investors is an evolutionary process, according to the Cahills, and has been a key component of their ten-year business plan. “We started with a ten-year plan. The first five years were spent on refining our production techniques. Now, over the next five years, we want to spend our energy on the processing and marketing side. of the business, ”says Helen. Such a move involves enormous growth and development as AMO moves from a crop/agriculture-based operation to a product/agriculture-based company.
In-house analysis of
peppermint oil for quality control
The Cahills have honed their various skills in order to reach the specific goals they have set. “Sometimes you change the route or the vehicle you use to get there, ”says Leo. “We started Australian Mint Oils with a small band of growers who were under contract to produce oil for the company. This structure soon proved inappropriate for what we wanted to achieve with the business. We couldn ’t maintain the supply or quality, ”he says, “so we had to become growers ourselves, although we didn ’t originally want to go down that route at all. In the future we will work with other growers, but next time they will be much bigger growers, who won ’t be looking after three to four acres of land for additional income. We will have growers with a hundred acres of peppermint, who are very serious about it, and will put the necessary money into it and want a lot of money in return."
The Future
AMO is still in its infancy as a business, according to the Cahills, both in terms of the industry itself and the company. AMO itself was only established in 1989. “We ’re still in infancy stage. In 20 years, when there ’s a mint industry up and running, then I ’ll be able to say that we ’ve been a success, ” says Leo. Central to AMO ’s future is the long- term goal of becoming a specialist, peppermint flavour house. This would allow the Cahills to establish in-house blending facilities, a research and development sector, as well as a laboratory. All of which is currently contracted out to service supply companies.
A 200 litre drum of
export peppermint oil is sufficient flavouring for over 100 tonnes of toothpaste
Central to this move into a product-based operation has been the introduction of Helen into the firm. Utilising her administration, marketing and creative skills, Helen has been able to capitalise on Leo ’s sound scientific and agricultural skills. “Leo knows the oil, so when we get into meetings he can answer all of the technically related questions,” says Helen, “but it ’s my role to get his foot in that door. I have to convince Australian manufacturers that we have something to offer them." The next phase of development will see Leo and Helen further developing their international contacts within the industry and also, at home, to highlight AMO products to buyers everywhere.
Australian peppermint
oil packs for specialty product manufacturers.
Conclusion
AMO is a story of ‘work in progress ’. It is a company on the cusp of global market expansion. However, even at this early stage it offers us a valuable model of a new-age Australian business and, in particular, of a modern Australian agricultural business. It is a company which has moved on from its commodity base into the future growth and value-adding areas such as marketing and product development. It has specifically targeted international companies, offering a unique and personalised service to its clientele. Based on what we already know about AMO, its future is no doubt likely to reflect the creative and unique ways in which it has established itself as Australia ’s leading peppermint oil producer.
