How Thankyou Group cracked the hand wash market with the most expensive product in the supermarket

Caitlin Fitzsimmons Online editor

How Thankyou Group cracked the hand wash market with the most expensive product in the supermarket

Published 13 March 2014 10:33, Updated 13 March 2014 12:32

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Thankyou Group co-founder Daniel Flynn shows off the social enterprise’s product range. Photo: Luis Enrique Ascui

When Thankyou Group co-founder Daniel Flynn told Coles and Woolworths he wanted to expand beyond food and water into bodycare products, he was received with some scepticism.

After all, the first product was a natural hand wash that would be the most expensive hand soap in the supermarkets by a fair margin. The recommended retail price for the Thankyou hand wash was $7.50 – $1.51 more than the next priciest product in the store.

“To be honest, both [Coles and Woolworths] weren’t as excited as we were because it’s a tough category to crack and the particular product we put on the table is like nothing in the supermarkets right now,” Flynn says. “In the cereal or muesli bar space, it was easy to see where we fit, but to come in with the most expensive hand wash in the supermarket was a big ask.”

But they agreed to do it and the product launched in mid-October. Like any new product, the supermarkets set a hurdle, specifying the minimum sales needed within six months for the product to keep its shelf space. Flynn says the product has achieved just under triple the target.

The secret is twofold. Firstly, consumers are responding to the fact that Thankyou Group is a social enterprise and that profits from products sold go to fund water and health projects in the developing world. The company has put an enormous amount of effort into Track My Impact technology, with a unique code on each item so consumers can see exactly where the money goes. The second reason is the quality of the product.

As Flynn puts it – and this reporter agrees – the Thankyou hand wash is more similar to products sold in pharmacies at double, triple or even quadruple the price. It has a premium look and feel and Flynn says it’s made entirely of natural ingredients such as bergamot and vanilla bean, without the “nasties” of cheaper products such as parabens and sodium lauryl sulfate. Thankyou uses palm oil with a sustainability certification.

Yet Flynn says Thankyou Group is still able to make a profit at that price and the money is used to fund health and hygiene training projects around the world. He says the raw ingredients are not that expensive – and the volume associated with being in the supermarket helps keep the cost of materials down. He says upmarket competitors that sell similar products for $30 in the pharmacies are probably making “huge margins”, though he notes that it is a different business. Pharmacy products usually have higher costs because of distributors, and in some cases would have to pay for retail space as well as elaborate marketing, Flynn adds.

The success of the Thankyou hand wash has prompted Woolworths to take Thankyou’s hand lotion in recent weeks, while body wash and soap bars are coming mid-year. Coles stocks the hand wash, but is still reviewing whether to take the hand lotion, body wash and soap.

Overall, since getting the first Thankyou products into Coles and Woolworths, Flynn says supermarket sales have grown 200 per cent across water, food (cereals and muesli bars) and body care.

At the end of the 2013 financial year, the company had given away $587,000. As of today it’s raised over $1.1 million for its philanthropic purpose.

Back in July last year, Thankyou Group had helped 56,000 people get access to clean water. March figures are not out yet, but as of December the company had helped 67,896 people get access to safe water, and 60,000 people get access to health and hygiene training. It had also funded just under 63,000 weeks worth of food aid.

Flynn says the feedback from the supermarkets has been positive with the caveat that it’s “still very early days”. Thankyou Group is far from being a big player in the supermarket world.

Coles and Woolworths did not respond to BRW’s invitation to comment.

 

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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