Honey Markets Further Explored
Last month we detailed the manuka-focused sections of an enlightening conversation between three honey marketers from the Apiculture New Zealand National Conference in June. Here, that recap continues, with this month’s attention going to New Zealand’s wide range of honey varieties and some challenges faced by honey producers and marketers. From supply-demand disparity, to moving New Zealand’s honey backlog and the high cost of securing new markets, we recap what 100% Pure New Zealand Honey general manager Sean Goodwin, Manuka Health chief commercial officer Harry Woods and Egmont Honey founder and chief executive officer James Annabell had to say – along with some input from the audience.
Two years prior to the honey marketing trio’s discussion in Rotorua, Goodwin had stood on the same stage at the national conference and detailed the honey industry’s “self-inflicted wounds” (that address was detailed in August 2019 Apiarist’s Advocate). While this year he declared, “much has changed”, a disparity between supply and demand for New Zealand honey is continuing to depress prices.
The 100% Pure NZ Honey GM estimated annual sales, of domestic and export markets combined, to be about 15,000 or 16,000 tonnes of honey in the past year, following a Covid-induced spike in demand. National production has ranged from 19,000 to 27,000 tonnes a season for the past three years.
“We are not sustainable. We are not even selling the honey we produce in a poor year, let alone what we produce in a bumper year like we had 18 months ago,” Goodwin told the audience.
“It is important to realise our issue is not production … but it has got to be related to opening up markets. The only way we are going to have a durable, long-term industry where everyone can make a decent income is by selling, at the very least, the 20,000 tonnes we produce on average.”
While some market’s high standards around residues, diastase, C4 and American foulbrood levels in honey is hampering access, the cost of gaining market penetration is also huge. Both Annabell and Woods detailed examples of the massive marketing spend required to first gain shelf space, then move product to the consumer.
“To crack into a new market comes with big advertising spend through external PR companies in a range of countries,” Annabell explained.
“To get into [leading UK health and wellbeing store] Holland and Barrett we might spend £150,000 internally a year, then you have external PR, external digital on top of that. That is an established market and for a new market, it is basically a carbon copy, but with a bit more on digital marketing.”
Woods detailed one retail partner through which Manuka Health did not make any money for the first two years as they spent to build their position and get the right consumers through the door.
“To start that partnership we had to put money into brand building. We had to buy retail space, pay for the mailers and the digital campaigns. The easy part was turning up with a beautiful jar of honey and a great marketing site value, because retailers are really interested and it is a great product. The hard part is moving that jar off the shelf. That is where the investment comes. That is where a really clear marketing strategy is critical. It gets expensive,” Woods said.
That sort of example was reinforced by veteran bulk honey exporter John Hartnell during the question and answer part of the session, with Hartnell telling the crowd that beekeepers will sometimes have to take a short-term price reduction for their honey in order to keep markets open longer term.
“When you commit to a market, you have got to stay there. It is a big road to come back otherwise. If it is a retail product you are going back to buying shelf space, buying digital marketing, it is never ending. It costs two years’ worth of profitability, possibly more today if it is a lower priced item, to get that product back on the shelf,” Hartnell said.
Increasing levels of non-manuka honey are being sold, with Hartnell telling the conference delegates that he had exported more than 30 shipping containers of honey dew in the last year.
“It’s on a knife edge,” Goodwin warned though.
“Any fluctuation in price at this early stage, before you have really cemented that consumer demand, has you up on the block with someone willing to come and take that space.”
Beekeepers should be working with packers and exporters to ensure they are producing the right honeys for the marketplace too.
“Suppliers really need to be partnering with trusted partners who are going to be there for the long term. If you are setting up business on the hope that someone will come around the corner and knock on your door, that is probably a flawed strategy. You need to build a business that is connected to a business that will partner with you for the long term and has an end-to-end view right to the consumer,” Woods said.
For Annabell, reducing impediments to market access, like troublesome C4 or diastase readings in honey, was another way beekeepers could make their honey more appealing to buyers.
The goal for our honey industry should be to get to a point where Kiwi producers can sell their honey crop “without lurching through these peaks and troughs, having to sell honey cheaply and not making any money,” Goodwin said.
The way to even that out is to increase demand though, and that may not come cheaply to the packer, exporter or the beekeeper.
“We will continue to create demand over time,” Woods said with optimism.
“All industries have fluxes of supply and demand that do not always move in conjunction with one another. That is natural in any agricultural business. We are in a state at the moment where supply outweighs demand. We do need to continue to invest in consumer understanding. I think that is absolutely critical.”
ApiNZ has video of national conference discussions, including the market panel detailed above, available here.