Mānuka honey exporter Comvita pushes further into Asia with Singapore deal

Mānuka honey maker Comvita has expanded into Singapore. Photo / NZME

Comvita chief executive David Banfield says the company’s $10.36 million foray into Singapore will boost its earnings.

Shares in the mānuka honey exporter rallied after the NZX-listed company announced that it had acquired specialist honey retailer HoneyWorld Singapore and its consumer brands.

Comvita said the debt-funded acquisition would improve its earnings per share by 22 per cent in the full year 2024 and would drive a 24 per cent increase in its return on capital.

“It represents a highly strategic acquisition for us in a market that connects the world with Asia and Asia with the world,” he told the Herald.

HoneyWorld, founded in 1997, operates 18 outlets in the Singapore market, with forecast revenue in 2024 of more than S$13m ($15.85m).

Combined with its existing business in this market, Comvita’s market share in the mānuka honey category in Singapore will be around 50 per cent, the company said.

Together, Comvita and HoneyWorld have identified incremental opportunities to further grow household penetration and share of the category in this important market over time.

HoneyWorld is the largest mānuka honey retailer in Singapore.

Comvita will supply the HoneyWorld brands in-store, as well as grow the Comvita mānuka brand and range.

Comvita already has a “store footprint” in Hong Kong and South Korea.

On Monday, Comvita said it had signed a long-term partnership with Ole supermarkets in China.

Comvita chief executive David Banfield.

Comvita had honey inventory worth $145m at the half year to December 31 and plans to reduce that to $85m by 2025.

The company’s guidance for the year to June 30, just finished, is for earnings before interest tax, depreciation, and amortisation (ebitda) of $30m.

Banfield said the Singapore acquisition would accelerate the company’s target of reaching ebitda of $50m by 2025.

“These are all significant long-term opportunities and for us, and it is timely that we do this now as we prepare for full year 2024 and beyond.”

Honey products are sought after in Asia.

“People in Asia have used honey as a medicine for thousands of years, so there is a market that is pre-disposed towards it.”

As it stands, the household penetration of mānuka honey in China and Singapore is less than 1 per cent, compared with 3.5 per cent in some of Comvita’s other markets.

“If we achieve what we have been able to achieve in some markets in China and Singapore - then there is significant room for growth. We just have to deliver it.”

The New Zealand mānuka honey sector has long argued that only mānuka honey made in New Zealand should be labelled “mānuka”.

However Australian honey interests opposed the move and this was recently upheld by the Intellectual Property Office (IPONZ).

Separately, Banfield said Comvita would continue to fight to have “mānuka” honey recognised as a New Zealand-only product.

“We are undeterred. We have to get protection for ‘mānuka’ species from Aotearoa.

“Our commitment remains undiminished and we will continue to make sure that we do everything possible to get the right protection for ‘mānuka’.

“And underneath that, making sure that consumers get the quality of product that they deserve.”

By late afternoon, the company’s shares were up 16c or 5.26 per cent at $3.20.

Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.