Exploring the Alternative – building sustainable market opportunities
With honey stacking up inside beekeepers’ sheds all around New Zealand, experienced honey exporter JOHN HARTNELL offers a potential solution…
Much has been said about the manuka honey industry. It has been a wonderful success story and for the first 20 years under supply and over demand saw prices climb on an annual basis. It was a win-win situation for both the beekeeper and the export packer, and this success was held up as a key primary sector product. Many can remember the government targeting product sales of $1billon per annum as part of their primary sector growth package.
However, this success and some over exuberant media profiling raised beekeeping as the next go to industry, and yes, they certainly came. The industry recorded a massive growth in beekeepers and hive numbers. Many were passionate hobbyists, but a growing number hit the ground running as commercial beekeepers. As a result, production of manuka honey began to climb and gradually it surpassed market demand.
Today, we have close to 9000 beekeepers and 900,000 beehives in New Zealand. Production of honey has risen from 6,000 metric tonne annually in the early 1990s to record levels today of between 20,000 and 25,000MT. This is an estimate only as 7,500 hobby beekeepers who consume, barter or trade their product makes it extremely difficult to quantify their output.
But here is the crunch…we record annual honey sales, both domestic and export, at no more than 16,000 per annum. You may well ask; do we have a problem? and the simple answer is, yes.
Annual production far exceeds current sales, and we face the reality that stocks held in beekeeper’s sheds could equate to two or more years annual production and are growing, unless we hit a poor season and a crop failure. Could this happen? Yes, but the geographic spread of hives across the country makes this a lessor risk than it was in the early years when targeting manuka honey was very regionally focused.
What can we do?
The export packer prefers all manuka to be packaged in New Zealand. This is a sound strategy…for them, and it does provide strong quality assurance for the “NZ Manuka Honey” brand. The problem is, the current market, both domestically and internationally, does not consume/purchase the annual manuka crop.
Over production means there are winners and losers. Those beekeepers with strong ties to the export packer network will sell a portion of their production and maintain a cash flow for their business, however there are many new entrants who do not have these historical associations and have no opportunity to place their product.
Their strategy, and understandably so, is to look to international markets for their production in bulk form. For many packers “bulk” is a dirty word, but as a beekeeper without an alternative it can be a business lifeline and accordingly this trade is growing. The question is, how we protect the integrity of the NZ Manuka Honey brand when we pass the packing and marketing responsibility to a packer and marketer in another country.
Understanding these dynamics, what should the industry strategy be and how might we go about it while always keeping in mind the key understanding that the integrity of the NZ Manuka Honey brand and strong quality guidelines must be delivered consistently on behalf of the industry throughout the world?
One option that requires serious consideration is an alliance between the NZ manuka honey industry, and a reputable international packer in each primary world market. Take Europe as an example.
The European market is huge, it has a massive population base, sophisticated distribution networks and a consumer base which eats honey…probably a good start. The duty on NZ honey into Europe is 17.3%. It is far cheaper from a product perspective to pay this duty on a drum than in an added value consumer pack. Add to that freight efficiency, particularly when international markets prefer glass than PET plastic, and the numbers start to stack up. Nett product delivery per container in bulk is far more cost effective.
What should we do?
I believe it is time for the industry to consider forming strategic joint venture relationships with one or more of the reputable European honey packers.
Why? They are very experienced in their target markets. They have established relationships and brand exposure to the European retail sector. They know honey and the importance of brand protection and quality. They operate at a scale which makes our current surplus production pale in comparison and … it makes bloody good sense.
What would this mean?
Firstly, the industry would need to clearly understand that when you enter such a relationship you are making a long-term commitment. That means as an industry we would need to commit, for example, 5000 MT per annum to this joint venture year on year, understanding that prices and demand may fluctuate.
We would take the good with the bad. We would need to commit money to marketing, shelf space purchase, and be patient. Good things take time.
There would be a silver lining though, and that comes in the form of sales, cash flow and the knowledge that a percentage of the manuka honey crop, part of the current surplus annually, would be sold.
Establishing a clear set of rules for a joint venture operation would be paramount. These would cover product handling, processing, brand management, quality assurance and marketing approach. Surely an entrepreneurial country with a strong primary sector base like New Zealand can get this right?
What would it look like?
Perhaps it could take the form of a co-operative structure, will it only cover manuka, or will it include other quality NZ mono-floral honey varieties? This will need further thought. Are you prepared to support such a strategy and would this be beneficial to your business? Do we have other options on the table that are worthy of consideration? As now is the time.
Anyhow, that’s enough for now and something to mull over as we head into our next production season and yet another manuka honey crop.
While I’m at it with the questions… have you sold your stock? If no, something must change.
John Hartnell has over 40 years’ experience exporting honey internationally, is the managing director of honey export company Hartnell & Associates Ltd and was a founding board member of Apiculture New Zealand.
What are your thoughts on this issue? Let us know, email email@example.com