Accantia: Geoff Percy
Accantia chief Geoff Percy tells Growing Business the secrets of his management philosophy and how a self-proclaimed company man managed a successful buyout to create his own thriving business
Accantia chief Geoff Percy has some strong views on empowerment. “It’s a much over-used term,” he says. “The fact is that it’s easy to empower your staff to say no to you. The real challenge is to empower them to say yes.”
It’s a management philosophy that Percy has determinedly put into practice since Accantia was created through a management buyout in 2000. Having made the transition from senior manager within a global conglomerate to CEO of a focused and relatively small UK-based company, he has pushed growth and innovation to the top of the agenda. In just two years, the feminine hygiene and toiletries venture – best known for its Lil-lets and Simple brands – has launched more new products than in the previous seven under the ownership one-time conglomerate Smith and Nephew. This has required a huge amount of commitment on the part of the company’s product developers and marketers – a commitment that has been driven by Percy’s own newly unleashed entrepreneurial zeal.
And yet for around twenty years, Percy was himself very much a company man, having joined Smith and Nephew as a graduate trainee back in 1980. Aside from what he describes as a competitive sabbatical working for rival Neutrogena in the early nineteen nineties – he stuck with S&N, climbing the corporate ladder to become managing director of the consumer products division in 1998. However, following a strategic review in the following year, S&N decided to focus on its core business of making and supplying medical devices and the consumer side was put up for sale.
“I approached my line manager and made it clear there was a management interest in buying the consumer product business.” However, Smith and Nephew’s main objective was to get the best price for shareholders. Thus, Percy was charged with the task of presenting the company both to possible trade buyers and potential financial backers. “Under the terms of my contract, I wasn’t allowed to actively source backers for any buyout,” he says. “Whoever offered the largest amount of money would acquire the business.”
In the event, a fund operated ABN Amro Capital tabled the highest bid and a £170m management buyout went ahead. It was a complex deal that split the consumer products division into two, with Accantia taking Smith and Nephew’s Simple and Lil-let brands and Beiersdorf acquiring Elastoplast and buying back the rights to distribute its own Nivea product in the UK.
Despite the fact that Percy had no say in choosing Accantia’s financial backers, he declares himself totally satisfied with the outcome of the deal. “If we could have chosen our backers it would have been ABN,” he says, citing the fund’s “buy and build strategy. “They use an initial investment for growth. They show a healthy interest in the business while allowing us to get on with it.”
Hence the requirement for innovation and entrepreneurial flare. While Percy is quick to stress that Accantia achieved its independence from Smith and Nephew as a robust and profitable business, growth was not a given. With its Lil-lets range of tampons and related feminine hygiene products accounting for around a third of sales, the company was faced with a market in which demand was more or less static and where women tended to stick to a single brand – be it Lil-lets, Tampax (owned by Procter and Gamble) or a retailer own-label. “In this market we tend to get very excited by a single point move in market share,” says Percy.
On the marketing side, Accantia focuses on local sensibilities rather than one-size-fits all creative content that is (as Percy puts it) posted in “brown paper bag from Paris or Cincinnati”. A case in point is the company’s latest UK television campaign for Lil-lets – a humourous outing based on the style of very British children’s television shows of the nineteen seventies such as Magpie and How.
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In terms of launching new products, Accantia is more than prepared to go head to head with the giants. Indeed, the company claims to have come up with the first real breakthrough in the tampon market for more than 50 years. “When we were negotiating the management buyout, we committed ourselves to launching a self-lubricating tampon. We wanted to show that as a management buyout team, we were able not only to compete with but also to move ahead of our global competitors,” says Percy.
Accantia currently has a 26% share in the feminine hygiene market and Percy and his team hope that the Extra Comfort launch will help boost that figure to a target of 32% at the expense of current number one brand Tampax. However, innovation does not necessarily require a huge amount of R&D – Percy believes that new ways of marketing and packaging can also boost sales.” We have launched mixed packs (containing towels with different absorbencies for different times of the period). This is not rocket science but it wasn’t done before because the entrepreneurial spirit wasn’t there.”
Percy is proud of the speed at which new products have been launched to seize share in a changing health and beauty market and he argues that this is largely due to its independence from Smith and Nephew. “In 1999 we had a £10.7m turnover – that has now doubled to £22.6m,” he says, referring to the health and beauty market. “When you ask why, you come back to the question of freedom from corporate restraint and freedom of staff to get on with bringing products to market. The aim is grow Simple’s market share from eight per cent to ten per cent
While the company’s original business plan stressed a requirement for “reasonable” spending on R&D, Percy concedes this is an area where the sums allocated by Accantia can be easily outgunned by its deep-pocketed multinational rivals. In consequence, Accantia’s spending has to be focused to get the maximum bang for its bucks. “We have to work out early on which projects are going to work,” he says.
The company has also invested heavily in plant and machinery. Its Birmingham HQ and tampon factory is more than 100 years old, a well-known local landmark in the Allum Road area of Birmingham. At the moment it is being re-jigged both in terms of the building itself and the machinery inside to create a plant that is fit for production in the 21st century. Percy argues that the company’s willingness to invest has proved a morale booster for staff who were naturally uncertain about their prospects following the buyout. We have spent significant money over the last few years – we have spent six million on new kit for the factor. Management buy outs are often associated with stripping assets and cash – what we have been doing is investing,” he says.
Inevitably, though, there have been casualties. Team members who thrived under the Smith and Nephew umbrella were not necessarily cut out for life in a more entrepreneurial company where individuals are held accountable to a very high degree. There were also partings of the ways when the consumer business was finally split between Accantia and Beiersforf. “We had to try and select the best people for each company,” says Percy.
And Percy admits that his own mindset has changed since climbing out from beneath the S&N shadow – to put it simply, the formation of Accantia has given him an opportunity to lead from the front. “Now I can’t imagine not doing what I do, he says.
Accantia is well on its way to achieving its goals. Overall turnover rose to £94m in 2002 from £87.5m and Lil-lets and Simple are number two in their respective markets. But there have been hurdles. Plans to expand geographically have not progressed as fast as Percy would like, with recruitment of sales and marketing teams in regions such as Scandinavia a major stumbling block. “One of the challenges we face – one that we’re thinking about – is how we can acquire the management skills to take the brand to other markets. We need to find like minded people who can deliver to the standards that we have established in the UK,” he says
Nevertheless Percy is determined to press ahead with expansion plans – pointing out that the key syllable in Accantia is “can”.
Accantia at a Glance
Founded: 2000Employees: 500 Major Brands: Lil-lets, SimpleTurnover: £94m
Under the terms of my contract, I wasn’t allowed to actively source backers for any buyout. Whoever offered the largest amount of money would acquire the business