COSMOFACTORY

Deanna: [00:00:00] This episode is about bar soap manufacturing. It's about category insights and the beauty trends lifecycle. It's about globalization, exporting, and a market seeking strategy. It's also about off price retail and the treasure hunting consumer. With me now in the CosmoFactory Podcast booth at CosmoPack in Bologna, Italy is Ian Moore, general manager at the Soap Factory.
Ian, welcome to CosmoFactory.
Ian: Thank you, Deanna. It's a [00:01:00] pleasure to be here.
Deanna: Yeah, I'm so glad you're here with me and. I have to admit, the, the SOAP Factory is a delightfully self-explanatory name for a manufacturing company, but if you don't mind, please present the business to us. Where in the world is the SOAP factory?
If you can give us a sense of the scale and scope of production, maybe, uh, typical customer partner profile, those sorts of things.
Ian: Okay. We are based in Auckland, New Zealand. We're a pure contract manufacturer, which means we don't have our own brands, so we make whatever the customer needs. We'll make anything from 50 kilos up to whatever they'd like.
Our main customers, uh, currently 50% goes to the USA and to off price retail. The weakness of the New Zealand dollar helps that, and the rest of the business is split amongst FMCG tourism, boutique gifting and things like that. From a scale perspective, we probably process 700 tons of soap a year [00:02:00] into various markets.
We do try and be as efficient as possible, but a lot of our product is hand packed with a lot of labor and love, so we sometimes struggle to compete with the big guys. We're only a small team, 32 staff, but we do punch above our weight.
Deanna: Excellent. No, I like these details and I'm trying to visualize tons of soap, like how many containers is that like in a shipping container, something I can kind of imagine.
Ian: Yeah. You get, when we're importing the soap, you get 20 tons in a container. So what's that? 600? So you're talking 300 containers.
Deanna: That's fantastic.
Ian: A yeah. It comes all from all over the world and different parts. It, it, it sounds a lot, but when you're processing
Deanna: mm-hmm.
Ian: It goes through very quick, very.
Deanna: Yeah.
Yeah. And yours is only the second company based in New Zealand that I've gotten to interview here on CosmoFactory, episode 14, featured ingredient maker, [00:03:00] organic bioactive. So definitely worth a listen for anyone, uh, who hasn't heard that yet, but can you say more about the sort of customer partner that you work with in New Zealand?
I'm hoping, uh, you can help us see maybe a bit more of the country's, uh, B2B beauty market.
Ian: Okay. One of the strengths of the New Zealand is we have a lot of tourists. And they want to, to buy products that are made from local ingredients, whether it's goats milk, manuka honey, things like that. And there's a lot of New Zealand natural products that they will see when they're traveling around New Zealand.
And then they'll want to buy something like that to take, take away or take home. So we, we push that a lot with our customers and customers will come to us and say, can we have this special ingredient? We'll do whatever it takes to, to sell the product or help them sell their business or their brand. A lot of it is our customers wanting to take a, or sorry, get a, get a tourist or someone from overseas taking their product back home and then [00:04:00] continuing to buy it once they get back.
Deanna: Sure. No, that makes very good sense. And I, I'm curious to know then, are a lot of your New Zealand customer. Are they in sort of the personal care and beauty space, or is soap sort of a, a just a special category that's kind of any brand adds on? Is it maybe some fashion brands are selling soap? I, I, help me think about it more.
Ian: Yeah. So, so like I said at the start, there's FMCG is part, like, you go into a supermarket and buy an ordinary bar of soap to wash yourselves. Others goes into high-end gifting, so people will use a very face fragrance and so that someone will buy a gift for someone.
Deanna: Mm-hmm.
Ian: And then we do have, um, fragrance companies who want to have a soap made outta their fragrance.
Deanna: Sure.
Ian: We've got other brands that will want to bar soap just to compliment their liquid range.
Deanna: Okay.
Ian: So a lot of it is. Whatever, whatever the customer needs will do, what's required.
Deanna: Right, right. That's so, because bar soap is such a, it's such a niche. If, if you want it [00:05:00] in your product portfolio, you need to go to a soap manufacturer.
Ian: Correct. Correct. And, and it's, people say it's a, it's, it's, it's dying. But, you know, when you come to Europe, it's definitely not the, the biggest problem is when. Times get, um, tough, like they are now. People revert to the very, very cheap surfactant. You know, 80% water products, which are to the eye look cheaper, but in the end, they don't last as long and they're not as good.
But that's just part of marketing.
Deanna: Sure, sure. And you've already mentioned that the states is your biggest market. I, I wanna talk about this global customer a little bit more. How did you choose the US or other markets that you've gone into?
Ian: Um, the US was always a small part of our portfolio, but after COVID, um, our business in New Zealand died off and we were at that point selling a lot into back into China, funnily enough.
Deanna: Mm-hmm.
Ian: And then obviously that died and we [00:06:00] pushed our American customers and we got a lot of traction. And like I said at the start, the weakness of the New Zealand dollar helps us. Managed to get product on shelf in the us competing with the US local manufacturers.
Deanna: Yes. Yes. And I, I'd love to hear more about then how you're ensuring that you help brands deliver values for the customer.
I guess in the States in particular, what makes SOAP sell in the us?
Ian: Well, what, where we come in and we are again, a small, nimble manufacturer. We do. Products that the big guys in the US probably won't do.
Deanna: Mm-hmm.
Ian: So we've got customers, the likes of Burlington, cofactor Ross, TJ Maxx, who will come to us and say, yeah, we can buy all this stuff outta Europe.
We can buy all this stuff outta the us, but what we want is something a little bit different on shelf for their customers. Hey, hey, this is Manuka honey or goats milk soap all the way from New Zealand. But it's the same price as the local products.
Deanna: Mm-hmm. Mm-hmm.
Ian: Just gives those [00:07:00] companies. A little bit of variety on shelf.
Deanna: Mm-hmm. Okay. Thank you for that. And I, I want to go ahead and visualize the shelf here a little bit more if we can. You've mentioned the off price retail channel, some of the, the retailers, um, that you're working with, and there's a different sort of discovery. We talk a lot about brand, uh, discovery, beauty, product discovery in the industry, but there's a, there's a particular sort of discovery that takes place in these stores, I think for consumers.
It's maybe about finding hidden items, right? A part of that sort of search and reward type of shopping. Um, and I, I think it relies a bit from my understanding and, and retail isn't my specialty, but it, it relies a bit on what we think of as inventory variety, right? And off price retailer will stock seasonal items, some overstock items, but other products.
Um, and it sounds like this is where your company fits in, that have been produced just for that channel. Is that, is that what you're doing? And, and can you talk more about, more about the space?
Ian: Yeah. So what they. What they all call it, they call it a treasure hunt. Okay? So their [00:08:00] idea is you go into that store, you'll find it, but you'll only see one or two on shelf.
So you go, it's not something you can go back and get next week. You need to buy it there. And then, so what tends to happen is they're big stores or they've got, you know, TJ Max has got, what, 4,000 stores or something? So they'll only put two of your products on the shelf. So if someone sees it, they'll grab it.
And so what. The idea that we provide them is that there's a variety compared to what There's not. Like you go into one of those guys, they'll still sell the Dove soap and things like that, that people potentially recognize, but they'll see this little brand from New Zealand. They'll go, oh, that's a bit different.
It's the same price. I'll give it a go. Never seen it before. They may never see it again. 'cause we'll change the packaging for them, but we. All the off price stores in the US can't get enough reject products or markdown products from the big guys. There's not enough around, so [00:09:00] what they do is they get people to manufacture it for them as if they've had it.
You know, they'll put a price sticker on it that says, bought elsewhere for 9 99. You buy it here for 4 99. The reality is it's not sold anywhere else.
Deanna: Mm-hmm. Mm-hmm. That would be, it would be a suggested retail price if it were right on another shelf, but, but it's not.
Ian: No. And they all play that game.
Deanna: Yeah.
Yeah. So interesting and, and what you've described there in terms of sort of scarcity on the shelf certainly helps drive purchasing. I'm wondering if there are other secrets to reaching a consumer who maybe isn't guided by brand loyalty, but can I say brand indifference or is it, is it really this, this you called it.
Treasure hunting.
Ian: No treasure hunting. But what I suppose one of our niches is that what we will do is we will give them a, a bargain, I suppose they'll be, they'll get more soap for their dollar in a different packaging format, and that's where we come in with the New Zealand dollar being a bit weaker.
Deanna: Mm-hmm. [00:10:00] Can you, can you talk a little bit about. What's popular in soap? What is, what is the customer looking for on the shelf? Is it a certain sort of packaging that's compelling? Is it, you mentioned the size of the bar just now. What, what sort of details Yeah. Are helpful?
Ian: It's, it's, it's what they don't.
Get from somewhere else, like we mentioned Dove or this, yeah, a heap of different brands in the US which will all be very much the same, whereas most of ours is just calling out different ingredients. Manuka honey, goat milk, a bit of almond oil, Shea butter, things like that that are, and what we tend to do is we will find things that people haven't put together before.
And you chase the beauty industry. What's the hydrolic acids and koic acid, things like that. And you put it in the soap and they'll go, oh, I've seen that. In a cosmetic, I'll give it a go.
Deanna: Mm-hmm. And we had a conversation several weeks ago and, and what you've just said reminds me [00:11:00] of something, something that you shared with me then.
And I don't think you said it this way, um, but you basically told me that soap is rarely the category that leads a beauty trend. Um, so you mentioned like hyaluronic acid or these sorts of, um, really buzzworthy and compelling ingredients. Can you talk about any trends that are, that maybe you're watching or you know, what's going to be popular in soap in the future?
Yeah,
Ian: we definitely followers not leaders when it comes to that. And we, you follow the trends, you know, I think that what's the, the fragrance of the year this year is guava or something. So we know that in six months time, a customer will do it. Like now tallow is popular everywhere.
Deanna: Mm-hmm.
Ian: Mm-hmm. So people are coming to, can you put tallow on a soap?
We go, yep, we can do that. But we don't. What it does is that. The, the rest of the beauty industry or the cosmetics industry started, it grows and, and then they'll come to us and say, well, we would like that soap as well. So we definitely follow as not leaders when it comes to that.
Deanna: Yeah. It feels like a, a [00:12:00] comfortable pace of change, maybe a little less anxiety?
Ian: Well, we don't take the risk.
Deanna: Yes. Yes. You know, I have to admit, one of the things I love about my work in the cosmetics industry are the factory and facility visits. Endlessly enchanted by machinery processes, really seeing how things are made. It, it's super fun. Uh, particularly for me this year here at Cosmo Pack.
The CosmoFactory podcast booth is among the machinery exhibitors, so it's really wonderful for me to see this technology. But let's assume some of our listeners share my curiosity. Can you talk about some of the practical details about how SOAP is made? Um, I'm curious about, you know, formulations, um, I'm imagining you pour some of this soap into molds and some of it you're slicing up.
I asked about packaging earlier, but any, what would we see in your facility
Ian: because we are you starting off with a already ified soap noodle? Literally, um, some people describe it as like baking a cake. You just take all the ingredients, you blend it [00:13:00] together, and you put it through a machine and others will call it like a glorified Play-Doh factory.
So you're putting all these things in one end. And then you extrude it into whatever shape, color you like, and then you make a choice whether you sell it as a block or you then take that block and press it into a mold.
Deanna: Mm-hmm.
Ian: So yeah, if, if, if you basic, it's recipes like a cake, we, whatever we put in fragrance, everything goes in together.
It's then mixed. It goes in through a triple milling process, which makes you all the ingredients and the fragrances. Fully forced through the soap, we then put it into another process, which we can then create, create whatever shape size we want. But yeah, it looks, when you're extruding it out, it looks like a glorified Play-Doh factory.
Deanna: Uhhuh uhhuh. That's not so bad. Um, and I guess I'm curious too then, is most soap a rectangle? Like, is, is there sort of a standard format?
Ian: We what we say to our customers, [00:14:00] you are limited by your imagination. Whatever. And then obviously like anything, the more intricate it comes, the more labor you put in, the higher the cost
Deanna: and you have what we would think of as stock molds available.
Ian: Yeah. We've got, the business has been around. Uh, in its current form for 30 years. Yeah. But it's, the bones of it were like a hundred years O
Deanna: okay.
Ian: A hundred years ago. So we've got eight or 900 mold. You imagine a shape. We've got it.
Deanna: Fantastic. And speaking of manufacturing, I, I believe there's a sustainable manufacturing story here too, maybe especially in terms of water use or process waste.
Can you talk about these sorts of, of bar, so production?
Ian: Yeah. You'll see a lot of people who will be now in the sustainability or eco-friendly space. Saying how many plastic bottles they've saved or done. But if you think about it, soap has been around for a long time. It's, it doesn't. Basically it doesn't need to be protected.
It the only people put protection on it really. So you can put the, put a label on it and explain it. So [00:15:00] it is very sustainable. It, it doesn't have really have a used by date. The used by date's only for the packaging. You know, we've got bars of soap that were made 40, 50 years ago. You're sitting in our cabinets and they're still fine.
Mm-hmm. They're still fine. Doesn't degrade. Yeah. It's from a sustainability perspective, it's, it's amazing and it, and it's made by sustainable vegetable oil plantations. There's no, no water used, very little water used in the process. So, and there's no, no waste. Any soap that doesn't get used, we can put it into something else and so mm-hmm.
It's very, very, from a environment perspective, it's, it's great.
Deanna: Okay. So interesting to hear and. I'm imagining there are some questions I haven't asked you if. You know, you mentioned earlier maybe a fragrance brand comes and wants their scent in a soap, or you have a, a new partner in the gift channel or something like this.
What does your customer partner need to know that, that we [00:16:00] haven't talked about?
Ian: If a customer comes to us, one thing that we always say to them, we need them to understand what market they're selling into, what sort of retail price they're looking at, because we get, a lot of people come to us and they'll want to buy, start up a soap brand, but they've got no idea.
Deanna: Yeah, I mean, I did a quick Google. You can find soap upwards of a hundred dollars. Of course, you can find soap under $1 us. So I'm imagining there's a spectrum here in terms of margins and,
Ian: oh, huge. The, the biggest thing, the the biggest variability of your cost is the fragrance. You can, you can pay $50 a kilo for fragrance, where you can pay 5,000 bucks a kilo.
But the rest of it is, the rest of it is marketing spin.
Deanna: Mm-hmm.
Ian: And convincing people that they need to have this beautiful looking soap on their shelf.
Deanna: Yeah. Yeah. And, and you know, that's a project that I think so many brands are involved with. You know, having something, um, like you said on the shelf [00:17:00] as a retailer, but also, um, I'm imagining bar soap is something that's very visible when a an end consumer has it.
Uh, we talk a lot about, you know, packaging that's worth displaying and, you know, I imagine the soap has that sort of aesthetic appeal.
Ian: Yes. We've got, we've got some customers who we know that they. A lot of the packaging sometimes is worth more than the soap, and we've got people having these beautiful display boxes that we know full well.
It'll just be on the shelf, or they'll put a, a wrapped soap on the ba on the bathroom shelf so people see this beautiful wrapped soap, or even make soap that goes in people's drawers. Mm-hmm. You know, to make sure that their clothes smell nice.
Deanna: Fantastic. I, I feel like we've, we've covered so much about this product format and you know, it, it makes me think that even with the rise of solid and stick products in, in every beauty and personal care category today, bar soap really is in a class of its own. Ian, I, I think we could chat about soap for hours.
Maybe it's just me. Um, but let's [00:18:00] finish here. I, I thank you tremendously for sharing your time and your specialty with us. Thank you for being my guest and joining me today here in the CosmoFactory recording booth.
Ian: Thanks, Deanna. It's been a pleasure.