Waikato Business News September/October 2018

BAY NEWS
WAIKATO BUSINESS NEWS September/October 2018 47
Liquid gold looks
to regain lost lustre
Beekeepers anticipating a
better harvest. Photo/Supplied
Manuka Honey is positioned for recovery
despite recent climatic setbacks and
continuing concerns over copycat
competitors.
By RICHARD RENNIE volumes produced in 2017
dropped from 19,885t the year
before to 14,855t, with Manuka
Manuka honey was
being hailed as the
new hort gold only
a couple of years ago. Established
and newly minted beekeepers
were scrambling to
secure hives, equipment and
markets for the precious product,
which was achieving
prices as high as $80 a kg in its
purest form.
The 2017 Apiculture NZ
conference had the feel of a
Mystery Creek Fieldays, with
equipment retailers spruiking
trucks, handling equipment
and hive options, while more
than 1000 delegates queued for
what was once a low-key, small
venue event.
But a couple of tough
Springs hit the flowering rates
hard for the increasingly valuable
Manuka bush. Total honey
Scott Coulter
volumes hit particularly hard
in parts of Northland, Bay of
Plenty and East Coast, due to
a poor Spring limiting plants’
early flowering ability.
The fortunes of NZX-listed
honey giant Comvita are an
accurate barometer for the
weather’s impact upon the
sector in the past two years,
and the challenges that still
lie ahead for one of the country’s
most rapidly emerging
export sectors.
It has been a bumpy ride
for Paengaroa-based Comvita,
which was the darling of the
sharemarket two years ago,
reaching the dizzying heights
of $11.50 a share in September
2016.
But the record poor harvest
that had the company
only achieve 40 percent of its
expected North Island Manuka
volume resulted in Comvita’s
share price going into freefall
that Summer. The year-end
loss of $5.5 million pushed its
share price to an all-time low of
$5.20 by July last year.
Comvita’s share priced
recovered to $9 by early this
year, but was again knocked by
an announcement the harvest
was again poorer than initially
expected, and profits were
pushed back to $8.2 million,
only half what had been initially
expected.
But Comvita chief executive
Scott Coulter is upbeat
about the sector’s prospects,
and says he appreciates that
being the only publicly floated
company in the sector means
he’s in the spotlight more than
most.
“Historically we have not
had three bad seasons in a row
for Manuka, and early indications
are this Spring is looking
more typical, and we are due a
good one,” he said.
The company has been
working hard to buffer against
the surges in Manuka honey
supply that result from seasonal
variation, including buying up
$89 million of honey stock.
Work is also continuing
in trialling different Manuka
varieties that flower at different
times, particularly in the lower
North Island.
“That way if you do get a
bad weather event, you have
your risk spread and will not
lose out entirely if there are
later flowering varieties still to
come.”
However, having the good
stockpile of Manuka on hand
also means prices have not
spiked upwards as much as
might have been expected after
another tough season.
On the demand side,
Coulter said markets were still
strong, with good growth being
reported in the US, as well as
the company’s biggest market,
China.
US sales have grown to $26
million of the company’s $186
million turnover, while China
makes up $46 million. UK
sales have also recently surged,
with a reported 17 percent lift
over the past year to almost $9
million.
He attributes the success
in China to the hard grind of
forming a strong early relationship
with their local distributor,
who ultimately became Comvita’s
joint venture partner.
“You do have to invest the
time in these relationships and
keep up the contact regularly.”
A couple of recent attempts
by investors to buy Comvita
have not come to pass. But
Coulter said the due diligence
processes that had been conducted
had helped the company
define more closely where it
was heading.
“We could see we were
doing well in China and had
started to do well in the US,”
he said. “The only way you can
manage both opportunities is to
really focus resources to make
both work.”
The work on trials to build
the supply of Manuka plantation
has also gained greater
traction, and is giving the company
more confidence about its
Protecting Manuka honey purity.
Photo/Supplied
supply chain’s continuity.
Wendy Mossop of Mossop’s
Honey has mixed feelings
about prospects for the honey
sector over the coming months.
She, like everyone else, has had
her fingers crossed for a better
Spring-Summer harvest than
the previous two years.
However, she said that for
once the weather may be the
least of the sector’s problems.
“We are seeing quite a few
battles going on out in the
industry at present,” she said.
“We have the Australians
fighting for the right to use
the Manuka honey brand, and
that’s affecting values, and
there is the threat of China
coming into the market in coming
years with Manuka honey
from cuttings grown there.”
Meantime uncertainty continues
to exist around MPI’s
honey standards as officials
try to fine-tune the science that
is causing some headaches in
standards’ interpretations.
She said for smaller operators
who have been drawn into
the market by the prospects
of big returns from Manuka
honey, the past season has
proven devastating, and prospects
are not overly positive for
them.
“They are struggling to sell
their Manuka because everyone
[now] has plenty of honey
on hand, and prices are well
down on what they need them
to be. They will be struggling
to feed their hives going into a
new season, and it will be very
hard for them to see a profit
from this.”
There have been a number
of smaller operators selling out
their hives and in some cases
having to walk away from their
operations, she said.
“Some of the issues there
are to deal with, require more
than just a good Spring.”
Apiculture NZ chief executive
Karin Kos said attendance
at this year’s Apiculture
conference did not reflect any
loss of confidence in the sector,
despite a couple of tough years.
“We are of course hoping
for a good season this year
and the longer-term confidence
in the industry is still good,”
she said.
“We continue to see strong
market growth and having the
MPI standards has helped reassure
our markets.”