Your brand’s flying off foreign shelves? Start worrying…
Judy Naaké famously turned St Tropez into a household name in Britain. But expanding the self-tan brand to Europe nearly ruined her business…
Judy Naaké’s St Tropez business almost came unstuck and could have killed it when the fake tan brand she distributed in Europe started making its way back to the UK on the dreaded grey market.
A warning to all businesses trading wares overseas, Naaké tells the little known story of the company’s failed European expansion and how she saved her business before a successful private equity sale in 2006.
It’s a standing joke among colleagues. They call me ‘The Witch’ as I can always spot fakes or cheats. Years of flogging round the country selling beauty products have sharpened my instincts. They’ve served me well at home. But abroad, they probably saved my business from going bust.
The story behind St Tropez’s success in Britain is well known. I left school at 15 and had various jobs before I became UK sales agent for a number of beauty brands – including Decléor, Australian Bodycare and Darphin.
In 1995, I was offered the chance to distribute a new fake tan product from America called St Tropez. No one else wanted it and at first I wasn’t interested either as I already had fake tans in my range. But this one contained aloe vera, so I decided to take it on.
A decade later, the market for fake tans in the UK had exploded and St Tropez was the only player in town. We employed 140 people and the brand was used by celebrities such as Victoria Beckham and Elle Macpherson. In 2006, we sold the company for about £70m.
St Tropez, Europe and the dreaded grey market
But a little-told chapter in St Tropez’s history was our brief attempt at European expansion. We never really cracked it and I don’t think they’ve done so since.
Building a website for your business idea is easier than you might think. Our online tool ranks the top website builders that offer free trials.
Timing played a part. In Germany, we were too early. A sunbed was cheaper than a fake tan – there was no way we could bring it in for that price. And there was culture. In Italy, you couldn’t get a rep or agent to blitz the crucial lunchtime market because they’d all gone home for a nice long lunch with mama.
But our biggest battle was against the grey market. It started in France and Luxembourg. The distributors were desperate for St Tropez, and it seemed to take off instantly. The orders got bigger and bigger.
I know how hard it is to build niche products in a country. I’ve got the scars to prove it. If it happens slowly and methodically, it’s usually being done properly. Word of mouth spreads, giving you a solid base. But if your brand’s suddenly flying off the shelves, especially abroad, it’s usually a reason to worry.
With France and Luxembourg, I remember Norman (Oley), my partner at the time, proudly saying we’d made £80,000 on one order. Great – until the deal cost us half a million as bottles began entering the UK via the grey market, taking a large slice off our domestic sales.
“Exactly where are they selling it in France?” I asked my international sales manager.
“They say it’s going through catalogues published by the big car companies as perks for their staff.”
“Sounds funny to me,” I thought.
I’d worked in France and hadn’t heard anything like it. I also kept absolute control of every single St Tropez bottle sold in the UK. So if stock started appearing at places where I’d never done business, it had to be grey market.
Shutting down grey market sales
One morning, without telling my partner, my son or my PA, I got on a plane to Luxembourg with my retail salon sales manager. We went straight to the local Cash & Carry, introduced ourselves and asked to see our stock on the shelves.
“Not possible. We’ve completely sold out.”
“Fantastic,” I said. “Where’s it gone?”
They gave us the car catalogue story too, so clearly they were in cahoots with the French. Both were buying stock from us, releasing it on to the grey market and peddling the same line when pressed for details. We went home and immediately terminated our deals with both countries.
But they then started getting our products through America and bringing them into the UK. If one caused a customer complaint, I got it. If there was a bad batch, it was all down to me. Meanwhile all our UK accounts were upset because grey market prices were undercutting theirs.
It’s said that once a grey market starts, you’ve got no business within three years. I can see why. We managed to shut it down before we sold the business but it taught me a thing or two about the serious dangers of taking a brand overseas.
Besides, the UK beauty market is often regarded as the toughest market in the world to conquer. We did it with St Tropez, an American brand with a French name. And that’s an achievement in itself.
Extracted from ‘Going Global: 30 Years 30 Insights’ by Piper, the leading specialist investor in consumer brands. For more information or to order a copy, please go to piper.co.uk
About Judy Naaké
Judy Naaké’s career in the health and beauty industry began in 1982 when she became sales agent for French skincare brand Decléor. She later worked with Australian Bodycare and Darphin before she began distributing St Tropez to the UK in 1995. Since St Tropez’s sale to a private equity house in 2006, Naaké has invested in a number of ventures, including her son Lloyd’s Airbase make-up company, and regularly shares her business experiences on TV and on the speaking circuit.