Business is a rough-and-tumble game. Just ask Peter Nicholas. The chief executive of HiLife Health & Beauty is due to have an MRI scan after being repeatedly struck by a professional in a recent cage fight. He was filming a television ad for one of HiLife’s weight loss products, Rapid Loss, at the time.
The 45-year-old Nicholas, whose cosmetics wholesaler tops this year’s BRW Fast Starters list after nearly doubling turnover to $42.2 million in 2010-11 from a year earlier, explains that cage fighting – also called mixed martial arts, combining sports such as Thai boxing, wrestling and karate – is one of his hobbies.
But for the man who likes starring in his own commercials – he played a Russian gangster in one ad for his Nude by Nature make-up brand – the pastime also carries a strong business message.
Leaders need to show a willingness to take the hits, Nicholas says. “They must lead from the front. This took it to a different level, however. I had not fought in the ring for a while. I didn’t do too well with a shin on the side of my neck.”
Click here for the full BRW Fast Starters list
Click here for a comprehensive overview of the BRW Fast Starters in 2012
In the business of cosmetics – and apparel, into which the company is now moving – image is crucial. The fast-talking, cheerful Nicholas, who founded the business in 2008, is a pivotal part of the company’s image.
The Nude by Nature range makes up to 60 per cent of total turnover and although the typical customer is a 35- to 48-year-old woman, he uses the Mineral Cover foundation himself.
“You can’t tell. It’s almost invisible,” he says. “That’s been the eternal success of the product. It covers as well as liquid without the spillage and without all the neurosis that comes with liquid make-up. You can apply it easily with a brush.”
Nicholas’s motivation for getting into the cosmetics business was what he calls his “phobia with ageing”. He departs from talking business to paint a picture of a world in which better looking people have advantages over the plain. Human beings are attracted to good looking people, whether of the same or opposite gender, and this influences success in the workplace just as much as in the mating game, he says.
“Being a neo-Darwinist. I believe in sexual selection,” he says. “It works in the workplace – the longer you can look younger and hide defects [the better].”
If customers share his motivation, it is not for a lack of exposure to the product. HiLife spends one-quarter of its revenue – more than $10 million last year – on advertising, with a 60-40 split between TV and print.
The overwhelming proportion of TV advertising – 95 per cent – takes the form of direct response ads, preaching benefits of the products to a willing audience of morning and daytime shows.
Still, 80 per cent of sales are done through traditional retail outlets such as Priceline and David Jones, which Nicholas says may appear “counter-intuitive” in light of the heavy weighting on direct response ads. But, he says, this tells customers all they need to know about the product and reduces the costs associated with having trained people waiting for customers in stores.
For all its success in Australia, HiLife has not been able to crack overseas markets. Nicholas says there is a big demand in the United Kingdom for a natural Australian product such as his but after having looked at the market, he pulled back out of concerns about the company’s ability to consistently supply customers there.
This reflected concerns about the supply chain at home, where inventory mistakes early last year resulted in too much stock on hand.
“Forecasts are difficult at the best of times, with the best of people, Nicholas says. “You suddenly find yourself in a fantastic situation and people over-zealously order stock.
“The supply chain person has to be as good as the marketing manager. You have to get someone of world-class calibre.”
Things improved when HiLife hired a new chief operations officer in the form of former Kerry Packer confidant Michael Karagiannis. In June last year, boxing manager and promoter Karagiannis became HiLife’s second shareholder – Nicholas will not disclose their respective holdings – and since then things have been “tremendous”, he says.
“You’ve got to know when to cut and thrust. Now there’s better utilisation of personnel. That’s happening daily,” Nicholas says.
HiLife is now testing the UK again. It is also eyeing the lucrative United States market but will do so at its own pace and with its own funds, rejecting the cash injections Nicholas says the private equity industry is offering.
“We’re still resisting the cash,” he says. “We’re making too much money and too much profit to warrant it.”
Of Greek descent, Nicholas was born in Dusseldorf in 1967. His family moved to Australia three years later and settled in Sydney’s Marrickville. He went to Christian Brothers’ High School Lewisham and studied law and arts at Sydney University.
After “various” sales and marketing roles, in 1999 he started a business, later partnered by younger brother Alex, that created the Skin Doctors Cosmeceuticals – “bridges the gap between traditional cosmetics and cosmetic surgery” – and Naturopathica treatments. They sold to Sydney-based company PharmaCare four years ago.
For a businessman so grounded in the business of maintaining beauty and looks, image is key. A recent regulatory ruling tarnishes that image, however. HiLife’s website shows a big red retraction notice which starts: “An advertisement for ‘stem cell therapy’, which we published . . . should not have been published.”
The government’s Therapeutic Goods Administration ordered HiLife to display the notice for 90 days after publishing an ad it deemed misleading for a skin rejuvenation product that unlawfully made claims about therapeutic effects and failed to disclose that it contained no therapeutically active stem cells. The main ingredient, in fact, is derived from apples.
Nicholas puts the complaints, made anonymously to the TGA, down to “jealous” competitors. His colleague, direct marketing manager Murray Fleming, chips in.
“It was a simple error on our copywriter’s part that got picked up by a competitor,” he says.
Awkwardly, the copywriter seems to have made other errors, including offering a free sample of a product deemed to have therapeutic qualities, in clear breach of the Therapeutic Goods Advertising Code of 2007.
The company also draws flak on consumer websites from customers complaining about having their credit cards debited for free samples of HiLife product they had ordered.
Nicholas, who admits “things do fall through cracks”, says the number of complaints is “infinitesimally small”. But he also points the finger back at the consumers.
“Where people don’t adhere to the guidelines they get a bit narky,” he says. “The success of the company has been based on the fact that it’s a free trial. They don’t like having to pay for the product they’ve kept for longer than they should.”
Undaunted, Nicholas is moving into clothing. In January, HiLife started selling a range of seamless cotton push-up bras. Sales of Smart Bras through a TV advertising campaign are running at $2.5 million a month, Nicholas says. The range is only just being received by retailers, starting with the Priceline chain but Nicholas already has grand plans.
“I’d love nothing more than Dannii Minogue to take that to the UK,” he says.