With its mild winters and endless summer, Surfer’s Paradise is the archetypal Queensland tourist town. Here in Australia’s tropical northeast, January temperatures regularly top 30¬∞C and Trevor Beuth can’t keep his stock on the shelves.

Beuth’s company doesn’t make holiday staples like flip-flops, sunhats or beach umbrellas, however. Kelly & Windsor manufactures cozy bedding woven from alpaca fleece—and it’s the warmest quilts that sell out first.

The source of this unseasonal Gold Coast gold rush? Chinese tourists, who flock to the town for the 3km of white sands and leave its duty free shops laden with Australian-made wool products. That interest is mirrored online, where exports to Chinese businesses via global B2B website Alibaba.com have helped turn Beuth’s innovative company into a rare success story in Australian manufacturing.

Beuth started Kelly & Windsor on an industrial estate outside Melbourne in 2001 with the dream of making luxury bedding products, drawing on his experience as the Australian agent for a number of leading European fiber manufacturers.

While still experimenting with different materials, Beuth ran into an old friend who was consulting to the Australian alpaca industry. As he recounted the unique properties of the animal’s fleece—soft, warm, lightweight, absorbent, hypoallergenic—Beuth realized it was ideal for bedding.

Peruvian farmers have bred the alpaca for its wool for thousands of years, dubbing it “the fiber of the gods.” Australian farming only started in 1989, but today the country’s alpaca population of 150,000 is the largest outside of South America. Beuth began sourcing fleece to turn into quilts and pillows—and soon discovered why the wool was usually reserved for knitting sweaters and scarfs.

“Processing alpaca is quite a difficult process—it’s a very tricky fiber,” says Beuth. The softness and smoothness that make it so prized also make it impossible to consistently card and comb using traditional techniques. Separating the desirable inner fleece from the animal’s coarse outer guard hairs also proved a challenge.

“We were doing things with alpaca that nobody had ever done before. So there was no experience base, nobody to ring up and ask,” says Beuth. “It was really trial and error.” Perseverance paid off in the form of proprietary technologies that others are now trying to copy. “We’re now world leaders in alpaca bedding. Even the best of the best in Europe asking what we’re doing.”

EXPORT FOCUS

After two years hard labor, Kelly & Windsor began selling alpaca quilts through Australia’s leading department stores, following up with pillows and undersheets. Beuth supplemented the 100% wool products with lighter weight cotton blends, but knew from the outset it wasn’t only Australia’s warm climate that would limit sales.

“Making bedding in Australia and selling it in such a vast continent to such a small customer base is an absolute nightmare,” Beuth says. “Exports are very, very important to my business because the local economy at the very high end is a limited market.”

A chance conversation led Beuth to Alibaba.com. While most Australian businessmen see the wholesale trading platform, a subsidiary of Hangzhou, China-based e-commerce giant Alibaba Group, as a source of Chinese manufactured goods, Beuth spotted an opportunity to sell to the world.

“We’re a very small, ultra-niche business with limited resources. I’m running the whole thing pretty much on my own,” says Beuth, who now employs 10 staff but has at one time or another performed every task on the factory floor. “How does a company like us go global and market itself? Alibaba was an opportunity to do that at very low cost, so we decided to just put it out there and see what happened.”

The response was encouraging enough for Beuth to register as a Gold Supplier, paying a relatively small annual fee to access premium membership features and—most importantly—have his business verified by a third party.

“That gave me more credibility. They’re very thorough, they do investigate and check that you are who you say—not just a trader operating out of the back of a telephone box in Hong Kong,” says Beuth. “Since then the quality of the responses has improved considerably. I’ve had enquiries from America, Norway, South America and Korea, and even picked up Australian customers.”

CRACKING CHINA

It is in China where the brand has resonated most. Enquiries via Alibaba.com come in almost weekly—a satisfying return for such a small business. While not all of them turn into orders, Beuth has become adept at spotting those with potential and rarely writes off a sample order any more.

“You never know with enquiries from China. I dealt with one trial order for a couple of thousand dollars and thought that was that,” says Beuth. “Then the guy literally turned up at the factory and placed an order for around AU$30,000. Those things do happen and what’s my cost? Basically nothing.”

In the last five years B2B exports to Asia, via both Alibaba.com and traditional distributors, have helped Kelly & Windsor post year-on-year compound growth of around 35-40 percent. Success has allowed Beuth to turn his attention to the European market, recently exhibiting alongside the crème-de-la-crème of homewares manufacturers at the prestigious Maison et Objet fair in Paris.

He’s also discussing a potential expansion into B2C sales with his Chinese distributors—targeting the PRC’s growing middle class, which is embracing Australian-made goods through Tmall.com, an Alibaba Group online shopping website. “That’s a tremendous opportunity for us,” says Beuth, who can envisage high demand for new products such as an alpaca-bamboo blend quilt that already sells out in Hong Kong. “We just can’t make them fast enough.”

AUSTRALIAN MADE

Many contract manufacturers have offered to help Beuth solve that problem—and reduce costs—by shifting production to China. That’s a compromise on the brand’s core, Made-in-Australia values he’s unwilling to make.

“Price is not my driving issue. I want to remain Australian manufactured, using Australian fleece,” he says. Manufacturing in Melbourne also enables Beuth to stay nimble enough to win new business. “If I got an order from France today for 30 pieces that had to be airfreighted into Paris in a week—special sizes, French labeling—we could do it. People ask me what’s your minimum order for a special export size and I say ‘One.’ ”

Kelly & Windsor’s existing factory has enough upside capacity to allow the business to double or triple in size, Beuth says. The bigger barrier to increasing production is actually the supply of alpaca wool.

Australia’s headcount of 150,000 alpacas is less than 5 percent of the global population of 3 million. “That’s enough for me to be able to source raw material, but the production of Australian alpaca on a global scale—and certainly compared to wool—is tiny,” says Beuth, noting there are 250 million sheep in Australia and New Zealand alone. “Alpaca is a very rare, exotic fiber—much rarer than cashmere.”

Supplies are further limited because alpaca herds are often small—some with as few as 10 animals—and scattered across the continent. Beuth also has specific demands. “Alpaca comes in 22 colors and we only want the white. And we don’t want fine alpaca because it’s too soft and too expensive,” says Beuth. “So we only want certain colors, qualities and grades, and to try and collect that is very difficult.”

That difficulty is ironically one of Kelly & Windsor’s greatest strength. The industrial estates of Campbellfield that Kelly & Windsor calls home are also the manufacturing base of bedding behemoth Tontine, Australia’s leading pillow maker and owner of the brand name Doona—an Aussie synonym for quilt. “They could do my annual production in three days,” says Beuth. “But the quantity of alpaca available makes it such a niche business they’re just not interested.”

While other local manufacturers are engaged in a race to the bottom on pricing, squeezed by cheap imports at home and a strong Aussie dollar abroad, Beuth is able to charge AU$899 for his premium pure alpaca quilt on his website. Meanwhile on the Gold Coast, unscrupulous retailers fleece visiting tourists for twice that, even while claiming they’re 50 percent off. It seems they know a hot product when they see one.