Proof is in the science for successful honey firm

It took Chris McElroy four visits and some creative persuasion before British supermarket giant Waitrose agreed to stock his New Zealand Honey Company products.

Trying to win supermarket shelf space in the world's most contested food market was no easy task, but McElroy, the chief executive of specialty honey producer the New Zealand Honey Company, finally won them over by providing a point of difference and building on the New Zealand brand.

And that is their strategy - having a product scientifically proven to contain antioxidants or antibacterial properties, leverage from NZ's premium reputation as a food producing nation, and targeting the world's affluent and health-conscious consumers.

"What we have done is validated what people have known for some time with substantial science," he said.

Along the way, they hope to improve the economic viability and long-term sustainability of the southern New Zealand honey industry through producers owning more of the value chain and no longer being held captive to commodity-price cycles.

The New Zealand Honey Company, which was last year named New Zealand's fastest growing company, was formed in 2006 by Hawea beekeeper Peter Ward and three private shareholders. Since then, in Britain and Hong Kong, they have tested consumer demand and reaction to the validated health properties of nine specialty honey products made from South Island kamahi, rata, white clover and manuka pollen.

Mr McElroy said they needed to first prove consumers were prepared to pay a premium for its honey.

"The retail price is twice as high as normal honey. We've tried to get into the nutriceutical area and what we have to do is convince consumers they should pay more for these honeys."

It has proved successful, with annual sales growing from $300,000 in the year from August 2006 to $5 million this year with volumes of honey expected to reach 500 tonnes.

They plan to grow that to 2000 tonnes a year as they roll out the business model in the next two years throughout Europe, Asia, the Pacific and the west coast of the United States.

It was growth that required new capital, and Mr McElroy said this year the company would look for private investors and honey suppliers to buy shares to provide cash.

"What we see is having a strong supply-chain married to a strong marketing company as the future for the southern honey industry."

The company sold its products in 1300 outlets, including the 55-store British health food retailer Holland Barrett, supermarkets Asda, Morrisons and Waitrose, 110 supermarkets in Hong Kong and 40 retailers in China. UK sales of specialty honey were up by 8 per cent to 10 per cent a year.

The honey was validated and shipped in bulk from New Zealand to Belgium, where it was packed in jars bought from Portugal and distributed to Europe. Mr McElroy said shipping costs and public concern about carbon footprints meant it did not make sense to ship the jars to New Zealand, pack the honey and then send the product back to Europe.

Product for Asia and the Pacific was packed in Dunedin.

However, the industry faced challenges. In the past few years, between 30,000 and 50,000 South Island hives a year have been sold to North Island beekeepers for manuka honey production, as beekeepers retire or hives are sought to replace those decimated by the varroa mite.

The country's annual honey production has stalled at about 12,000 tonnes, of which half came from the South Island. Of that 12,000 tonnes, about 7000 tonnes was exported with 60 per cent of that sold as a commodity, usually to international honey traders.

Mr McElroy said it was this commodity trade that he hoped to target, to add value, and allow the industry to grow and attract young people.

Mr McElroy has a vision of a southern honey industry which, in five years' time, owned a substantial global health food business built around the health qualities of honey.

- OTAGO DAILY TIMES