Honey deal not so sweet


Sometimes it takes somebody else to bring to light the reason you’re uncomfortable with something.

In this case, Wellington’s Vantage Consulting Group director David Miller has unearthed the nub of the challenge underneath the proposed buy-out of manuka honey (and other products) producer Comvita by overseas-owned Cerebos, in turned 83% owned by Japanese liquor company Suntory.

“Do we really want to expose one of our most promising high added value primary industry based sectors to the whims of offshore managers,” Miller asks?

“The thought of flogging offshore the value chains associated with icons such as Mt Cook, the Waitomo Caves, the kiwi or the All Blacks would be beyond the imagination of most New Zealanders. Why on earth would we do it for manuka honey derived health products, which are based on another national icon?”

Miller (whose press release can be found here) makes the point that, like Fonterra and its brands and Zespri, the country would rightly question whether someone making a bid for those entities would be considered to be acting in the best interests of New Zealand. Yet, neither dairy cows nor kiwifruit are native to New Zealand – but manuka is.

Like Chalkie in yesterday’s Dominion Post, Miller says that shareholders and directors may simply be looking for the best deal, now, that they can out of potential buyers. Chalkie (see the article here) is also asking whether there mightn’t be a white knight NZ buyer who would help operate the business, and by default, the wider manuka products industry, in the best interests of the country.

sticK’s in agreement with them both. The recently launched Manuka Research Partnership (a 50:50 deal under the Primary Growth Partnership fund) is looking at how to produce 16 times the current production of manuka honey and crack $1 billion in sales over the next few years. Much of its focus is on improving the yield from swathes of high country that increasingly may only be suitable for what was once considered a weed.

Comvita’s a cornerstone component of the MRP, but quite how a change of ownership would affect the research programme is problematic.

Miller’s right.

This is ‘our’ product, and though it is over to Comvita shareholders to decide whether they are prepared to be patient and execute a long-term strategy, there’s a great potential for yet another New Zealand industry to merely end up being pawns in somebody else’s game.

If NZ Inc, in this case strongly led by Comvita, doesn’t control its manuka value chain, efforts such as MRP risk being still-borne before they’ve really even started.

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About sticknz

sticK is by Peter Kerr, a writer for hire. I have a broad science and technology background and interest, with an original degree in agricultural science. My writing speciality is making the complex understandable. I am available for outside consultancy work, and for general discussions of converting a good idea into something positive
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7 Responses to Honey deal not so sweet

  1. kemo sabe says:

    “This is our product”…
    No it isn’t, actually.
    No amount of hand-wringing will alter the fact that the shareholders will sell if the price is high enough. The priice will doubtless reflect the exciting potential of the business. That’s how the market works.
    The only measure the government could take in future (without infringing on the property rights of others) would be to claw back any assistance it has provided to the company in terms of R&D grants, etc. Even that policy would be fraught with difficulty.

    • sticknz says:

      Totally agree, as have most of the other commentators about infringing on property rights. It is more that NZ Inc will lose opportunities. Admittedly, Comvita have been hugely instrumental in developing the market, and it is there prerogative to sell. Wearing a ‘for the good of NZ’ and the ongoing possibilities, it may be a shame. Then again, perhaps the new owners would help develop the market and potential. My crystal ball’s pretty murky!

    • Richard S says:

      With a name like yours, one suspects you work for Cerebos. Take your offer & stick it up your ass. Go ride on someone elses back.

      • sticknz says:

        Second guessing kemo sabe, I think they were making the point that we’re talking about a ‘property’ (with a value) that is owned by Comvita. They have the right to sell it; though there’s a lament come sadness that NZ Inc is losing an opportunity. However, kemo sabe may like to reply

  2. kemo sabe says:

    I too am saddened by seeing good NZ businesses get lost into overseas ownership. It usually occurs when the business has started to make an impact in global markets.
    The question is, what can be done about it? David Miller does not help us answer this question.
    A year or two ago it was suggested that a fund be set up in NZ to buy into companies like Comvita when they became takeover targets. Nothing came of it.
    The trouble is that this kind of response flies in the face of economics. If a firm has greater value in foreign ownership than in NZ ownership, (for example because it can access wider markets), then the end result seems rather inevitable: it will become foreign-owned sooner or later.
    Shareholders are driven to maximise the value of their investments, not by some notional patriotic duty.

  3. kemo sabe says:

    Sorry, I missed what I think is your other point.
    Does Comvita have assets which it could argued should be owned by others? An example might be intellectual property which was created via a government grant, or perhaps by a university, and vested in Comvita. Governments have tended to take a rather passive approach to this issue, probably rightly.

  4. Pingback: Time to read fine print of manuka research project specs | sticK – science, technology, innovation & commercialisation KNOWLEDGE

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