Distilled from gum leaves, it was Australia's first indigenous export. No sooner had the First Fleet landed in 1788 than this fragrant cure-all was dispatched to England for testing.

In the 1850s botanist Ferdinand von Mueller had grand visions for its commercial potential and by the turn of the century the oil was being exported around the globe for use as a disinfectant, antiseptic and much else besides.

Before long Australia's eucalyptus oil industry was in full swing, employing post-goldrush miners hungry for work. But after World War II– with labour costs rising and exporters turning to wheat – the eucalyptus oil market increasingly moved off-shore.

Australia was soon a net importer of the oil derived from its best-known native tree. Other countries, including Spain, Portugal and later China, snared the market.

But now distillers are trying to wrestle back the industry. The owners of the Bosisto's brand, established by pharmacist Joseph Bosisto with von Mueller's encouragement in 1852, are ramping up production in the Gold Rush town of Inglewood.

Over the past five years Peter Abbott, chairman of Felton Grimwade & Bosisto's, and his daughter Tegan, the company's executive director, have helped oversee the planting of three million "super-strain"Eucalyptus polybractea, bred with the help of the University of Melbourne.

They now want to plant another six million of this deep-rooted, multi-trunked blue mallee that can be repeatedly harvested – by being cut to the ground every second year – for possibly centuries. Although all eucalypts contain oil in their leaves, E. polybractea has been found to be particularly high in cineole, the oil's key medicinal component.

While Felton Grimwade & Bosisto's still blends its local oil with that imported from China (where oil is distilled from the Tasmanian Blue Gum or E. globulus)  Ms Abbott, seen below in one of the plantations, says the aim is to increase production to the point that they can do without overseas oil and "bring the industry back to where it started".

Distilling the oil in Victoria taps into our growing appetite for buying local, sustainable products with a traceable providence. It also fits with our taste for using "natural" pharmaceuticals and cleaning agents, with eucalyptus oil now in everything from muscular rubs and cold remedies to laundry liquids and insect repellents.

Moreover, the distilling process is romantically old-school. The Abbott's 130-year-old boiler is in a forest rather than a factory and is fired up using leaf waste from previous distillations.

Once the steam has been pumped through a vat packed with eucalyptus leaves and the oil distilled, the leaves can be used for mulch. The Royal Botanic Gardens Cranbourne is one of the biggest users of this oil by-product.

The public can get a sense of the process (and pick up free mulch) at the Eucy Distillery Museum in Inglewood. There are also regular distilling demonstrations by one-time "eucy cutter" Geoffrey Robbin Collins at a tourist reserve in nearby Wedderburn. It takes three days for Robbie, below, to cut the foliage, fill and seal the vat, fire up the boiler and distil the oil.

But Australia's eucalyptus oil industry has had a lot longer journey than that.

Go to inglewood.vic.au/eucy-museum/ for information about the Eucy Distillery Museum and wedderburn.vic.au/hard-hill- tourist-reserve for information about the distilling demonstrations.