HONEYLAND MANUKA HONEYFROM NEW ZEAL

HONEYLAND MANUKA HONEY
FROM NEW ZEALAND
AN INTERNATIONAL NEWVENTURE

NEW ZEALAND’S ECONOMIC ENVIRONMENT

New Zealand is a small island nation in the South Pacific south-east of Australia. Its landmass of 268 million square kilometers compares with the size of Oregon. With a slightly higher population than Oregon—just over four million (4.36 million in 2010)—New Zealand’s domestic market is small. GDP per capita is about US$30.045 per year (2010), slightly more than half of that of the United States, with an annual economic growth rate of 3 percent in 2010. Virtually free access of overseas competitors to New Zealand’s home market forces its numerous small and medium enterprises (SME1) to seek and develop international markets. Australia is its most important trading partner, accounting for 22 percent of New Zealand’s exports, followed by the United States (11.5 percent) and Japan (9.2 percent). New Zealand relies for its economic viability mainly on the success of its SMEs, since these constitute up to 90.7 percent of all firms and provide about 50 percent of New Zealanders with work and income (Ministry of Economic Development, 2004). A 2002 report initiated by the New Zealand Treasury identified the two major constraints for economic growth in New Zealand: the distant geographic location from international markets and the difficulty of raising sufficient capital.

THE MAKING OF HONEYLAND AND ITS PRODUCTS

Honeyland is an export business specializing in native New Zealand honeys. It was established in Palmerston North, a small town in the New Zealand Manawatu region in July 1986. The business started exporting right from its beginnings and has, in effect, never operated in
the domestic New Zealand market, focusing on one international market only. The company supplies exclusively to the lucrative Japanese market. The company is, even by New Zealand’s standards, very small. It is literally a one (wo)man enterprise. That does not limit the success, though. From modest beginnings the enterprise has grown into a reasonable business that turns over more than NZ$500,000 (about US$275,000) operating from a small office in the family home. New Zealand honey is positioned as a healthpromoting product, using New Zealand’s clean and green image. The company strategically targets qualityconscious customers, especially those who have been to New Zealand for a holiday and know its spectacular landscape. New Zealand has a reputation for its beautiful and rather unspoilt natural environment, including its exotic plants. The majority of New Zealand’s plants are indigenous, found growing naturally only in that part of the world. In particular, New Zealand has many flowering trees, such as the pohutukawa, kamahi, manuka, tawari, and rewarewa. Native bush and forest honey, which is produced in this environment, has a reputation for being healthy and beneficial to human well-being. The honey that bees collect from the flowers of the New
Zealand tea or manuka tree is said to have a great taste and very beneficial healing properties.

The owner of Honeyland, Sue, a trained school teacher, became aware of the good reputation and health benefits of New Zealand honey early on. In the 1970s, she raised a young family while keeping bees in a few beehives in the back of her garden around the family home. Sue has always kept a friendly open home and entertained the many international friends of her teenage
children and business partners of her husband. ‘‘When I look back, our home was always an open home, long before other people actually were in the international world.’’ Many of these visitors were Japanese because Palmerston North has strong links to Japan through its Japanese-based International Pacific College and Massey University. Many young Japanese students complete their high school and university education there. Attracted to the cultivated polite Japanese people, Sue chose her preferred market destination long before she started the company. Her interest in Japan and Japanese culture grew during visits when she accompanied her husband, a successful wool merchant, on his business trips. Soon Sue started looking for a business idea that would enable her to visit Japan on a regular basis without having to depend on her husband. The hobby of producing honey grew into a business idea.

EXPORT MARKET JAPAN

The contacts with Japanese friends exposed her to their culture, way of life, and work. While on her trips in Japan she gradually built up an extensive network of friends and business partners. ‘‘We had a real network of friends and acquaintances in Japan. I think that probably has been one of the great advantages, because some of them are students, some of them are old, they range from 15 years old to 90 years old. ‘‘They are all around Japan and they enjoy different sorts of lifestyles. So that is a wonderful way of getting a feel for what a country is like.’’

Additionally, Sue undertook further preparation before starting up the enterprise. She began to learn the Japanese language because she understood the importance of language skills
when doing business in Japan. It did not take long before she became convinced that New Zealand speciality honeys would be a suitable export product. Sue applied great care to understanding the specifics of the Japanese market. One major hurdle she had to overcome was gaining access to Japanese distributors and retail businesses. She said that in the 1980s this was not easy for a businesswoman. Speaking the language, and with some support from her friends, she eventually overcame this difficulty. Sue modifies and markets her products to the special Japanese requirements.

MARKETING STRATEGY

Honeyland’s market can be categorized into three different segments. One third of the business comes from sales through a supermarket chain that operates a ‘‘fixed price’’ strategy. Quality branded products are sold at a discount: ‘‘It is a discount type store. Unbelievable, their whole layout is similar to the one of the ‘‘two dollar’’ shop.2 Like 1 dollar, 2 dollar, 3 dollar shop! It is primarily liquor. . . . So they use good brands to bring people in and sell them cheaply.’’ Another
third of her business involves supplying a Japanese honey company with New Zealand comb honey. This company brands the product under its own name. The third and most important segment of Honeyland’s business derives from sales to a firm that is associated with Japan Travel Business (JTB). It targets the top range of the gift product industry with high returns selling gifts of various honeys in small gift packaging to returning travelers. Sue says: ‘‘The third part of my market is very much a niche market, a very top shelf specialty honey. . . . The niche market is
going through my representative in Japan.’’ Japanese tourists spend their short holidays in New Zealand’s surroundings. They experience the great outdoors enjoying the scenery doing bush walks and encountering many exotic plants among New Zealand’s wild flora. It is part of Japanese culture that travellers take home a small gift to friends and family. Others like to have a piece of New Zealand as a memory for themselves. Honeyland provides a solution for those tourists who do not want to worry about purchasing presents when holidaying. Honeyland products are available in Japanese airport stores for tourists to pick up upon arrival back in Japan. Packaged in small, beautifully labeled containers, the distinctive New Zealand honeys have become a much appreciated gift in Japan.

EXPORT BARRIERS

One of the biggest obstacles to Honeyland’s growth is sourcing and securing the supply of quality honey. Thus, the New Zealand supply determines the extent of the company’s
involvement in the international market and limits business expansion. Annual variations in quality and quantity are natural occurrences of the product. Sue solved the supply difficulties by developing and maintaining a very good relationship with her domestic supplier. Its loyal
commitment guarantees preferential supply even when overall stocks are low and it cannot deliver to other clients. Another problem is the management of organic export products. New Zealand has entered into an international treaty to protect plants and natural vegetation that
requires strict export controls. New Zealand’s Ministry of Agriculture and Fisheries (MAF) is the official body that looks after the treaty’s enforcement. Export operations are difficult because MAF requires strict compliance with its phyto-sanitary and bio-security regulations, including the
inspection of all exported organic products and detailed documentation. Careful planning and organization on the part of Honeyland is necessary to be able to meet the export deadlines. These problems have been solved through close attention to MAF regulations at the planning
and strategy stages. Thus, Honeyland now organizes international trade around these requirements and uses the MAF certificates for quality differentiation.

LOGISTICS

Access to reliable and cost-effective transportation is another issue with which Honeyland has to deal. New Zealand is far off the main shipping routes and transport costs are high compared to countries that are in the center of the world trade network. The large geographical distance between New Zealand and Japan is a big obstacle in itself. The normal shipping time to Japan is ten days on average. However, in reality it takes much longer for a shipment to arrive safely to the customer. Why is this? Honeyland usually ships out of Napier, a small rural town with international harbor facilities. Napier has turned out to be a convenient location since most of the honey is sourced and packaged regionally. The supplier loads the honey into sea containers onsite so transport costs and time inside New Zealand are minimized. However, using a small regional port also has disadvantages. Most of the d