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Legacy brand builder McPherson’s gives us a glimpse of the way they get things done

mcpherson's, the venture magazineGetting an insider’s view into one of Australasia’s leading consumer products companies is a rare treat — especially when that company is the legendary McPherson’s. Since 1860, McPherson’s has offered quality essentials for daily living, and it’s a sure bet you know their contemporary brand names by heart: Dr. LeWinn’s, A’kin, Manicare, Lady Jayne, Swisspers, and Multix. Their products can be found in Australia, New Zealand, Asia, the UK, Germany, and the Middle East.

As the retail world shifts at a dizzying pace, McPherson’s is one of the most proactive companies in the sector, innovatively meeting global consumer demands for speed, choice, and quality. The firm not only leverages the power of the modern supply chain to lead today’s fiercely competitive omnichannel retail environment, but also drives a powerful, one-source category management program for their retailers.

“We sell across a number of channels, grocery, pharmacy, export, and so forth,” explained the company’s supply chain director, Mark Brady.  “As an example, we deliver out the door each and every day up to 5,000 cartons of mixed orders direct to store across every post code in Australia.” The same goes for New Zealand. In addition to a sourcing office in Hong Kong, the company has offices in Sydney, Melbourne, Auckland, and Singapore.

Company insiders refer to their strength in beauty products as their “big Popeye bicep in beauty.” Said Brady, “We are looking to further enhance our abilities and opportunities there while growing our focus on health and wellness. We have exciting core brands, strong agency partners, and new joint venture partners.

mcpherson's, the venture magazine“The advantages of the joint venture partnerships is that it allows MCP to accelerate fast from a standing start,” he explained. “The partner gets the power of the size and opportunity that is the MCP machine, both in logistics and customer relationships, while MCP gets access to differentiated brands and IP. Rather than looking only to expand brands we presently own, rather than beginning and effectively inventing a brand in a new category, we can use an existing brand. Typically, this allows us to jump straight into the channel and market as that joint venture, which is great.”

As a category leader in several brands in their channels, from beauty tools and accessories found on pharmacy shelves, to the green and recycled household goods under the Multix brand found on grocery shelves, MCP is a true pioneer. “We have had a number of innovations in recent times, with Manicare Sonic in the beauty channels, Multix greener, degradable, and compostable solutions in the grocery channels, and then more recently the launch of Dr LeWinn’s Collagen Surge — which by all accounts was the fastest and most successful launch in the pharmacy channel that we have seen.”

A mere handful of years ago, the company seemed to have fallen on hard times, carrying $100 million in debt. In just four years, McPherson’s reduced that load to less than $10 million. Today, the firm is well placed to finance the remaining debt, and is looking to the future, perhaps investing in new brands and business lines.

“We have some challenges focussed on the ability to supply the ever-growing demands of China,” Brady said. “We have an exceptional partner for our biggest China-facing brands (Dr. LeWinn’s), in the advanced skincare market. This growing domestic market and the overlaid China volatility brings obvious forecasting challenges to bear. We can have a 12,000 forecast for a given month and then get a purchase order for 90,000 within that month — with no warning. There is only so much safety stock you can hold, so for sure that brings challenges.

“In concert with our China partner on Dr. LeWinn’s, we are actually improving forecasting and product manufacturing lead times. McPherson’s purchased a percentage share in a Melbourne-based contract skincare manufacturer, Aware.

“Aware is one of the largest contract manufacturers in skincare in Australia, and as we now have a modest but not insignificant stake in that company, we have recently looked to further increase that share. This shores up supply and brings to bear some continuity of supply for that growing market and the growing but volatile demand from China.”

Great Partners Build Logistics Muscle

mcpherson's, the venture magazineThe firm recently partnered with Concept Logistics to open a Multix warehouse in Western Australia. “We have a 15-year relationship with Concept, so a very long-standing partnership. We did the numbers and there was a good strategic opportunity to open a warehouse for shipping the Multix brand straight into WA.” While the demand for Multix in the state represents only about 10 per cent of domestic demand, Brady noted that it was a great opportunity to “dip our toe in the water.”

“Concept has a national footprint, and one strategic and good advantage we have with this 3PL partnership is that they use our ERP system for controlling our stock, so we have full visibility of the stock and transactions as if it were in our own shed.

“There is a huge advantage in having a 3PL who uses your ERP system. It brings full and total transparency.” The ability to log in remotely to a shed as it were your own brings great power with the data, he said.

“In an era where first party data is so incredibly powerful, we have a first step in the path towards understanding and using our own data as we look along the path of AI and the power that might be brought in to assist us in end to end supply chain data processes. We do feel like we’re in the infancy of blockchain and data integration of the entire supply chain, but having that system in place at the 3PL brings great advantages as we move to better get a handle on this and the opportunities it can bring.”

Having a flexible logistics partner has been a boon for the legacy firm, which has a long history of change, continually adapting to market fluctuations and retail environments. Said Brady, “MCP has existed since 1860, and we have transformed from a hardware and tools shop back then to a health, wellness, and beauty company today. In the last five years alone, MCP has exited eight different brands and business arms while inbounding 18 different business and brands. We have the cornerstone of having our own shed here in Sydney, but having the added bonus of a 3PL partner brings the flexibility whereby we can expand or contract as needed with these ‘in and out’ brands.

“History tends to repeat itself, so we are prepared for the next five years of continued change. In the last 12 months alone, MCP has signed three joint venture partnerships with new brands in the beauty and wellness space, our first into that market, which is exciting.”

At this stage in the company’s renaissance, MCP is fast tracking to bigger things. “We continue to be on the journey for further success, and if I look at our share price today standing at $2.50, that’s a testament to that. Six months ago we were at $1.10. That’s a phenomenal story, and I am glad to be a part of it.

“I feel proud, as all the supply chain team should feel, that we in supply chain can add to that outcome and the growth strategies that we are pursuing. It’s a great place to work, and I’m glad to be here.”