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Honey of a business

By Christine Nikiel

Friday 4th July 2003

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It's a long way from detective work to being in charge of the country's best-known manufacturer of bee-products and health supplements but Comvita chairman Bill Bracks knows his honey bees.

The former Christchurch policeman worked on one of the country's most notorious murder case, the Juliet Hulme-Pauline Parker case, later made famous in the Peter Jackson film Heavenly Creatures.

Now he's leading Comvita's mission to create healthier returns as the Bay of Plenty-based company prepares to list on the new Alternative Exchange (AX) when it opens in August.

After winning Trade New Zealand's prestigious Consumer Products Exporter of the Year award, the company expects to further research links with Japan, where it recently opened its first offshore subsidiary, Comvita Japan.

The company, which manufactures health products made from bee byproducts as well as from selenium and colostrum, has grown from just two shareholders in 1998 to 130 shareholders.

Comvita was founded in 1974 by Claude Stratford, a Te Puke beekeeper who experimented with bee byproducts in his garage. Mr Stratford, now 92, started the business when he was 64 and still works with Comvita to supply some bee products. The company employs more than 90 people in New Zealand, Australia and Japan.

It produces a range of cough medicines and lozenges, vitamins and digestive tonics as well as honey, royal jelly, pollen and propolis, which is used as an antibiotic.

A confident Mr Bracks says with an average annual growth rate of 17.5% Comvita's expansion plans are "more than viable. Comvita has sufficient existing potential in its existing market to quadruple effortlessly."

Mr Bracks wants shareholder numbers up to 400 before 2006 and the $20 million annual turnover doubled.

But Comvita is picky about its choice of stakeholders.

"We're very selective because we believe in having a moral code and helping create a healthy society and environment are two of the major platforms."

Since entering the unlisted market in September shares have been trading at $1.15-1.20.

Comvita's biggest stakeholders are two of its biggest customers ­ a Korean distributor in Sydney and another based in Queensland.

Staying focused on a few markets, such as Comvita's top five ­ New Zealand, the UK, Australia, Hong Kong and Japan ­ means the company does not spread itself too thinly, Mr Bracks says. With sales of about $2 million last year, Australia is now Comvita's largest export market.

Exports accounted for about half Comvita's sales last year but chief executive Graeme Boyd says in reality 75% ends up offshore, the balance being exported by other enterprises or taken home by tourists.

Comvita's export market relies heavily on this country's clean green image, Mr Bracks says. "We're in the 'wellness' industry, and being made in New Zealand has huge value for us. Whether people believe the clean green image or not doesn't matter ­ we're seen as as clean and green and so we're a unique country."

That image protection was one reason Comvita protested against genetic modification.

Comvita supported extending the Labour government's proposals to extend the moratorium on releasing genetically modified organisms.

"Our marketing agents in Europe told us if there was the slightest whiff of GM around our products we'd be cut out of the market. It's that serious.

"Look at how bacteria is slowly becoming resistant to some antibiotics by adapting. Nobody believed that would happen when antibiotics were invented."

The country's bee-products industry is still battling to control the spread of the varroa mite, which attacks bees and discovered in New Zealand hives in 2000.

Comvita supports controlling the killer mite, Mr Bracks says, because it could so easily come back.

Product expansion is also on the cards and the $9000 prize from Trade New Zealand will go toward this.

The company wants to expand its product range to high-tech "functional foods" such as essential fatty acids ­ called something else of course to make them more accessible.

Comvita wants to be recognised as an international company, Mr Bracks says, and it has no intention of moving from its current headquarters in Paengaroa, near Te Puke.

"We made a decision a long time ago to stay here. And we're a significant agricultural company and it's better if clients see us in our natural environment rather than one of many in a city office."

Meanwhile, honey lovers can expect a bumper crop this year. A wet spring and summer is always followed by a large crop, Mr Bracks says, as plants and bees seem to compensate for low production.

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