"After the Gold Rush – the current situation in the New Zealand honey industry", November 2024, 92 pages. Coriolis (New Zealand) Ltd.
Reviewed by: Bruce Roscoe
Honey was one of New Zealand's "major success stories" and "can be again", Tim Morris of boutique market research firm Coriolis writes in introduction to the tome "After the Gold Rush – the current situation in the New Zealand honey industry". The question becomes, is the prospect of resurrection supported more by evidence or faith?
After the Gold Rush follows up the Coriolis 2012 report, "Investment Opportunities in the New Zealand Honey Industry". At a time when local and offshore investors alike are seeking to view their engagement through a rearview mirror, the report is nothing if not courageous. It is also free. Though more a primer intended to advertise research capability than a finished item, the report is nonetheless a valuable reference. Industry participants will want to read the last section －"Where to from here?”－ first.
Unfortunately, only three of the 92 pages look to the future. The outlook is dark. "Things are going to get worse before they get better due to excess inventory", the report concludes from interviews with three honey packers and an auditor. Hive numbers are earlier guessed to bottom at "something like 350,000". The final page recounts "a number of mistakes" the "stakeholders in the New Zealand honey industry" made in their "management of mānuka". In counting as "mistakes" the lack of a "single industry body" and "refusal" to implement a levy, Coriolis has cast its lot with the current duopoly of Apiculture New Zealand and the UMF Honey Association.
A Rich Vein of Data
Between the covers of After the Gold Rush is a rich vein of data. Any research into the honey industry is handicapped by a paucity of primary data. Coriolis has amassed global and New Zealand data that is germane to honey trades in general and mānuka trades in particular. Although the base data are secondary, Coriolis has added value through modelling and field interviews with beekeepers and packers. Two of several beekeepers' soul-cut comments: "It is cheaper to walk away". "Value is not going back to the beekeeper. It's lucky our son has left. We can't support him..."
Preliminary estimates are produced where available data are "patchy". If readers "have better data, call us with it," Coriolis invites in a reflection of an industry that does not care to count. In sum the report contains 73 data figures. (It would be helpful if they were numbered and indexed.) Eight show global and the remainder New Zealand data, both macro and micro. It is worth viewing all data figures. Pause at each one, breathe in the numbers, and imagine or think. Questions leap out from the pages. The report's authors are happy to receive questions. They invite you to contact them "directly to discuss or debate anything" about the research (their names and email addresses are supplied).
On viewing the figure showing the 20-year trend in the average export price for New Zealand honey (all types) against the about 60-80% lower prices for a selection of other honey exporting countries, the question that lodged in the mind of this reviewer is, is honey the actual subject of this report? How could so much mānuka honey have been sold in such a short time at such a high price? What underpinned the confidence that so much more should be produced? What has happened to deflate this trade and the hopes that it held and now nurses?
Mānuka May Be Turning into a Honey Product
Mānuka in five of the top 10 export markets (China, Hong Kong, Korea, Japan, Singapore) is viewed as an alternative medicine and resides in the world of Chinese traditional herbal medicines. Efficacy may not have been proven clinically by the standards of Western medicine, but in these countries the two categories of medicines coexist. (Japanese hospitals of size have departments of "Eastern medicine"). It seems likely that a large volume of mānuka in other countries is consumed by residents of Chinese or other Asian heritage.
Coriolis states that mānuka is "medically proven" in five categories. Where, then, are the mānuka medicines? Mānuka-impregnated wound dressings are approved in some countries in the medical device category, but mānuka-based medicines for internal use are not found. Laboratory experiments that prove efficacy against medical conditions sill cannot be repeated in in-body experiments. Wound dressings have not lived up to their promise, as Comvita Ltd's accounts since the June 2020 year show.
As an alternative medicine, too, it is possible that mānuka is failing to live up to the promises many consumers expected it would keep. It has been sold as a food but marketed as a medicine in language ("wellness" and other words of that ilk) that flirts with regulatory boundaries. Being delicious does not help. Medicines are not expected to be delicious. Current market malaise could be explained by the beginning of a long retreat to the status of a honey product.
With the exception of Finasucre, a Belgian sugar processor, and Swiss giant Nestlé, which is looking to exit, Coriolis shows the major direct investors in the New Zealand sector to be Chinese or of Chinese connection. This reviewer can find no example of investment made by an offshore honey company. A useful focus for future research, therefore, may be the changing position of mānuka in the market for traditional herbal medicines. Put another way, some research appears to look at a cat and ask why the dog is underperforming.
Cowboys Off (and On) the Range
Coriolis is perhaps too quick to castigate mānuka "cowboys". Some observers may see big cowboys accuse small cowboys of being cowboys. Imposition of the mānuka scientific definitions by the Ministry for Primary Industries in 2018 sent small cowboys off the range. In hindsight, it has become clear that those exiles were an important source of demand. Their practices are now adopted by larger versions of themselves who, in Japan at least, routinely sell multifloral mānuka under a monofloral mānuka banner. (It is an easy fudge to pull off when writing product descriptions and price cards in Japanese, the more so when the point size of lettering used to print "multifloral" in English on the product label is one-half or even one-third the size of the lettering used for "mānuka".)
Eyebrows and Champagne
Inroads made by Australian "manuka" honey in offshore markets and the dangers posed by conflicting New Zealand regulations for chemical residue in honey are gaps in the report. Eyebrows will be raised －shaved off, maybe－with the Coriolis view that, "Effectively manuka honey has more in common with a premium wine...than everyday honey. A lot more could be done with this in mānuka honey marketing (e.g. vintage years, beekeepers reserve, older years at higher prices, etc)".
Coriolis posits that "any honey claiming to be 'active' is likely a fraud' － that will be news in Japan where Australia's Capilano "active manuka honey" is said to have become the largest selling mānuka brand － and uses "UMF" as a generic term whereas it is the trademarked brand of an industry body. None in this reviewer's circle would agree that "the people running this industry are still mostly beekeepers..."
An interval of 12 years between identifying "investment opportunities" and explaining, to quote Coriolis, "the evolving big picture crisis..." is too long. Excusing the lapses of a free primer, much expertise and insight ground the Coriolis research. More frequent, commercially produced and sold shorter reports, say at two-year intervals, that balance reaction with prescription would benefit the industry more than current extravagant spending on public relations-type "messaging".
A Crisis Conceived at Home
Comvita Ltd also recently has described the industry as in a state of "crisis", as has this reviewer. Our use of this word appears too liberal. Not everything has turned to hell in a handbasket in export markets. Monofloral mānuka volumes and values, for example, in the year ended June 2024 were pretty good. Volume of 5,704 tonnes and FOB value of NZD317.7m represented year-on-year increases of 13.2% and 23.2%. The per kilogram value of NZD55.70 was up 8.8% over the year-before value. True, FOB data represent only the transfer of products between countries at a declared value. Some packers may have merely shifted inventory from New Zealand to their overseas self-owned units or affiliates (the so-called "channel-stuffing" to which Coriolis refers).
Some crises are caused by others, some we make ourselves. Whatever crises beset the industry appear deeply rooted in New Zealand. At least some portion of the scores of millions of dollars surrendered through bulk exports at throwaway prices must be reclaimed. And in an economy said to be a real estate market with bits and pieces tacked on, beekeepers must be left with more than some of the bits and pieces. Avenues to broader, more tangible equity participation must be found.
Bruce Roscoe is a Japan-based New Zealander providing honey importation and distribution consultancy. He is a former director of research for Deutsche Bank Securities Japan, with extensive experience as an equity research analyst and as correspondent for both leading New Zealand and global media publications.
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