A clear head for business, and history

You wouldn’t know it but the chest-clearing eucalyptus oil in your local chemist is a $30 million business. It’s an age-old family remedy for success.

If you happened to be driving down Clarinda Road, South Oakleigh, one of Melbourne’s dreary, sprawling, southeastern suburbs, perhaps to play golf at Kingston Heath, or – rather less likely – to visit my old school on the other side of Centre Road, you would pass a nondescript building with the words “FGB Natural Products” above the door.

Even if you did glance at it, you would only register the fact that it’s the home of Bosisto’s Eucalyptus Oil, which you’ve almost certainly bought at some time, and perhaps put a few drops of it on a teaspoon of sugar to clear your chest, as my mother used to do.

But you wouldn’t know that this business was a living echo of some of the greatest and most notorious names in the history of Australian business.

These days FGB is entirely owned by Peter Abbott, 82, and run as a family business with his wife Alison, daughter Tegan and son-in-law Henry Minson, but the 'F' in the name stands for Felton, the 'G' for Grimwade and the 'B' for Bickford.

What’s more, Peter Abbott bought the business in 1974 out of the collapsed Slater Walker Group, the first corporate raider and the one on which all the others were modeled – Bond, Skase, and Holmes a Court, as well as the modern private equity raiders like KKR. Slater Walker was the original “Barbarian at the Gate”.

Felton Grimwade & Co and AM Bickford and Sons were two of the seven wholesale pharmacy distributors that merged in 1930 to form Drug Houses of Australia.

Alfred Felton and Frederick Grimwade had set up their wholesale drug business in 1867, about 15 years after Joseph Bosisto started distilling eucalyptus oil in Melbourne, with the help of his friend Baron Ferdinand von Mueller, the government botanist who founded the Botanic Gardens.

Five years later Felton and Grimwade started making their own glass bottles because they were having trouble getting strong enough ones to hold their tonics and medicines, and so began the glass business that became Australian Consolidated Industries and made the two men their fortunes.

Alfred Felton, a confirmed bachelor, died in 1904 with no dependants and left his fortune to charity as well as the National Gallery of Victoria. That money became the Felton Bequest, a corpus that has underpinned Victoria’s art buying for more than a century.

Fred Grimwade died six years later with a large family and three sons who carried on the family name and business – Norton, Harold and Russell – and the Grimwades became one of the great Australian business and philanthropic families.

Joe Bosisto, meanwhile, died in 1898, having had a remarkable career producing eucalyptus oil, which he took to exhibitions all over the world and won a succession of awards, as well as Hypol cod liver oil and Kruse’s Fluid Magnesia.

J Bosisto & Co had been converted to a company and it lived on after Joe’s death. The company was eventually bought by DHA, which went on to become one of Australia’s most successful companies – that is, until Slater Walker Australia swooped in and took it over in 1968.

Slater Walker promptly sold all the properties and leased them back, as it always did, except that the profit in those days didn’t cover the rent. It then tried to get the profit up by forcing the chemists to pick up their supplies rather than get them delivered, and built 65 cash-and-carry warehouses around Australia called Buywise.

The whole thing failed and brought down DHA, which in turn helped bring down Slater Walker. In 1974, DHA was broken up and the bits were sold.

Young Peter Abbott had been heading up a division called DHA Rural, which sold veterinary supplies and agricultural chemicals in the bush, and he was given the job of selling the wholesale pharmaceutical businesses in each state. He sold them all and then resigned, becoming a consultant to Graham Mapp, who was running Slater Walker Australia at the time.

The only businesses Peter Abbott wasn’t able to sell was a ragtag collection of old-fashioned pharmacy lines – Bosisto’s, Hypol, Clements Tonic, Kruse’s Magnesium, Fisher’s Phosphorescence and Bickford’s cordials – so one day he said to Graham Mapp: “Why don’t you sell them to me?”

He got them for next to nothing and also bought the original shelf company called FGB & Co Ltd. And so began another Australian family business built on the names of some of the nation’s great 19th century family businesses – Felton, Grimwade, Bickford and Bosisto.

The Abbott family’s blue mallee gum trees are still grown and the oil distilled at Joe Bosisto’s original farm at Inglewood, near Bendigo, and the oil is then brought to Clarinda Road for bottling. It’s a beautiful thing, this eucalyptus oil, because you can clean with it as well as breathe it to clear the airways, and FGB now produces a huge range of inhalants, oils, cough drops and natural cleaning products.

The business has been growing at about 10 per cent a year and turns over more than $30 million. When I visited them this week, I met a distributor from Saudi Arabia who is now helping the company export to the Middle East.

After watching the debacle of Slater Walker, Peter has always run the business conservatively – never taking on debt and avoiding takeovers.

The business is governed by a board that includes Peter, Alison, Tegan and Henry, as well as the (non-family) managing director, David Leong, plus Peter Watson, another son-in-law who represents Peter’s four children from his previous marriage.

Where to from here? Well, Tegan and Henry are the only second generation Abbotts in the business and will take it forward, although the precise ownership succession is still being determined.

They recently built a huge new warehouse on the land next door and are just about to start building new offices.

And I walked away from my tour of the pace with as clear a head and chest as I’ve had in weeks.

For more family business commentary click here.

Alan Kohler will be hosting two Ashes lunches with Gideon Haigh and Stephen Fay (former editor of Wisden and author of books about The Bank of England and the collapse of Barings) on June 25 in Sydney and June 26 in Melbourne. To book a table click here.