China Is Coping with Pollution by Buying Fancy Honey

China Is Coping With Pollution by Buying Fancy Honey

Bruce Einhorn

http://www.bloomberg.com/news/articles/2016-09-08/china-is-coping-with-pollution-by-buyin*

SUMMARY

Comvita, the biggest honey brand in New Zealand, is looking to take advantage of its homeland’s reputation as an environmentally friendly country. With worsening pollution and several product-safety scares, consumers in mainland China are demanding foreign brands that promise something many local products can’t: peace of mind. This has led to increased sales for imports that are considered safer – from baby formula and facial creams to fresh fruit and live seafood. The fear of pollution is changing China’s consumer spending. For many years, people in China have eaten honey believing that it helps with digestion and with the immune system. Comvita is a beneficiary of this all-natural foods demand. Currently, 60 percent of the company’s sales comes from selling manuka honey to Chinese consumers. Two 250-gram jars of Comvita’s manuka honey sells for 849 yuan ($127) on Tmall, an online marketplace owned by Chinese e-commerce company Alibaba. Although the brand is already popular in many cities such as Beijing and Shanghai, there is still a lot of room for growth as it hasn’t yet caught on in less affluent cities. Walker Zhong, CEO of Oceania Natural, says that the demand for manuka honey has created an opening for counterfeiters. There is a lot of fake manuka honey being sold because of the original’s high price. In spite of the ongoing competition, the company plans to double annual revenue by diversifying into oils, berry products, and olive-leaf extracts. Last September, Comvita bought a 13 percent stake in SeaDragon, a New Zealand producer of fish oils. Comvita’s strategy is “about connecting our customers to the source of their food.”

OPINION

This article is a perfect example of how sometimes a company’s main consumers aren’t always from within the borders of the company’s country. It shows that globalizing one’s business proves to be very beneficial, especially when your business is at an advantage. Comvita has used its country’s reputation in the smartest way possible. This is evidence that globalization can help a company gain a differentiation and human capital just because of where it's from. The fact that in China, their manuka honey sales for more than nine times its domestic price, is astonishing. Not only is the company benefiting itself, it is also providing its consumers with what they really want which is “peace of mind”, like it mentioned in the article. What better way to make its consumers happy than for Comvita to let them know that what they are eating is not hurting or worsening their county’s environment. In my opinion, Comvita is extremely lucky to be in a good market and in a growing country at the right time. It seems that management is also doing a great job by trying to diversify into oils, berry products, and olive-leaf extracts. In the article, it mentions that they have added these products because they help maintain healthy eyesight and cholesterol levels. This shows how Comvita is being innovative while still taking in consideration its consumer’s health. That is an intelligent move on the company’s behalf, especially when there is a large amount of counterfeiters trying to sale fake honey. If it wasn’t for globalization, companies like Comvita would not be able to reach the right type of audience. I consider Comvita to have a healthy business model and marketing strategy.