“The 100,000 Hive Project” is what they are calling it. It’s ambitious, a little bit tongue-in-cheek, but a sign of Egmont Honey’s desire to work with beekeepers to grow their supply base and market share. The New Plymouth-based business are calling on beekeepers who wish to partner with them and contract their hives’ future honey crops to the Egmont label. We explore the reasoning behind the move and what’s in it for beekeepers.
“You have to think big, don’t you?” says Egmont Honey’s chief executive James Annabell, when asked about the scope of their push to secure honey supply.
The company’s founder admits the “100,000 Hive” title – which would represent almost an eighth of all registered hives in New Zealand – has been landed on as more of a marketing gimmick and to pique interest, than a target.
Annabell, speaking from the UK amid a sales mission to solidify and extend the Egmont Honey reach, says the goal is to work more closely, and with a larger group of beekeepers, to develop “sustainable” relationships.
While the finer details of exactly how the contracts will work will not be finalised until Egmont Honey has held discussions directly with potential suppliers, the basis of the relationship would be that the New Plymouth-based packer would buy all honey contracted to them, giving beekeepers certainty their honey will be bought, while providing Egmont Honey guaranteed supply.
“We have been throwing this idea around for a while because, while we have our database of suppliers and we go to them and then some others come to us, this will put a bit more structure around supply and supply relationships so that everyone has a bit more certainty really. An effort to professionalise the industry a bit,” Annabell says.
The guaranteed supply would help Egmont Honey not only solidify and expand their current global markets, but also potentially grow into new markets. Currently they export to “more than 20 countries” and are looking to grow the chief executive says.
“As a company we shift well over 1000 tonnes of honey a year and I wouldn’t be in the game if I didn’t feel we had plenty of growth potential as a company. With the 100,000 Hive Project we are looking after current demand, while also looking to the future.”
Egmont Honey’s demand is for “bush” or “pasture” honey Annabell says, as well as multifloral manuka. He encourages beekeepers to reach out to them and discuss their likely production, both in terms of variety and quantity, plus pricing and the finer details of the contract arrangements.
“We will talk to everyone individually to understand what their supply capability is, what sort of honey they produce. Then we will set some pricing around that based on the market price, but probably with the option to tap-out should the price go beyond what the retail market can accept.”
Following the introduction of Ministry for Primary Industries’ (MPI) manuka honey export standard in 2018, non-manuka honey prices fell from regularly above $10/kg to the beekeeper to around $3. However, in the past year that price is said to be in the $5 to $6 range with MPI reporting a 20% increase in the export price in their recent Situation and Outlook report (detailed in Export Honey Volumes Declining).
Setting a “sustainable” price is about getting the balance right between maximising returns for stakeholders in the supply chain and ensuring history does not repeat and markets are lost, Annabell explains.
“There’s demand for the honey we are trying to contract, but there is also a tipping point. Back in the days prior to MPI’s manuka honey definition, when clover was blended into manuka, then prices went up and our space on the shelf disappeared quite quickly. So, this initiative is about sustainable supply, at the right price, to ensure we maintain shelf space.”
Current pricing is “putting pressure” on those markets again, he says, while acknowledging that beekeepers are facing fast rising costs to doing business.
A five-year contract term has been floated, “to prove we are not just going out to fill a one-off contract or spike in demand”, Annabelle says.
“We are not reliant on any one market. We are broad in our distribution, so, if one market falls over, we are still pretty well buffered by others. It is no secret, Egmont Honey has grown quickly and that is off the back of a young, motivated and aggressive sales team.”
Over the coming months they will hold discussions with beekeepers on a one-to-one basis.
“I think there will be a huge amount of interest, but then it comes down to whether people are willing to come along on the ride and trust us. Some people might say ‘we will just let the market decide and go where we will with our honey’. That is obviously fine, but it comes with its own risks. We are not long off thousands of tonnes of honey being moved at $3.50.”
Egmont Honey are unlikely to be the only major honey buyer offering forward contracts this coming season, with Midlands Apiaries general manager Douglas McIntyre signalling they will likely repeat something similar to the clover honey contracts offered to beekeepers in season 2021-22. Those deals were more suited to the clover honey producers of the South Island, giving beekeepers a sliding price scale for their honey based off colour grades, with the lighter the honey the higher value. July sees McIntyre travelling to their Asian markets to shore up arrangements, after which time they will be able to set the details of their new season contracts.
Comvita, who targets manuka honey, will continue to work with their “supply partner group” whose honey is exclusively contracted to their label. While they are always happy to discuss potential partnerships with new suppliers, the current supply partner group – along with Comvita’s own hives – generally fills around 90 percent of their honey requirement, chief executive officer David Banfield says.
Airborne Honey sales and marketing manager John Smart says, although they will not be putting out supply contracts to beekeepers, they continue to be willing buyers and he can’t see that changing through the coming season.
“We have our regular honey suppliers who Airborne has built up relationships with over the years, some for decades. On top of that, we are always willing to discuss new supply relationships with beekeepers and expect the prices we offer to be every bit as competitive as the other big buyers in the domestic market.”
Whatever the details of supply arrangements, the surety of a buyer is likely to appeal to many beekeepers and contracts get taken up. Whether that will total 100,000 hives might be another story, but Egmont Honey are thinking big.
SIDEBAR:
Egmont Honey Sold!
In just seven years Egmont Honey has gone from Taranaki father-and-son duo Toby and James Annabells’ one-hive beekeeping business to soon be the property of the World’s largest food company.
Last week Swiss multinational food and drink conglomerate Nestlé announced it is buying The Better Health Company, which took control of Egmont Honey in 2020. The sale will require approval from the Overseas Investment Office, a process which is likely to take several months.
Terms of the deal, including price, have not been disclosed.
