Can manuka honey boost your bank balance?

 

It’s almost a magical product, with multiple health-giving properties, but can manuka honey also boost your bank balance? Amy Hamilton Chadwick finds out how to get money out of honey.

If you can get your yields of honey and the UMF quality factor at good levels, the returns can be well in excess of traditional sheep-farming returns.
— Andrew Watters, MyFarm

Is there any other investment like it? It’s a sustainable, ethical, pharmaceutical, environmentally positive, vegetarian, gluten-free, dairy-free food – with the potential to provide outstanding returns.

Mānuka honey is a product that commands a premium price and is in demand around the world. Produced exclusively in New Zealand, mānuka honey is a future economic powerhouse of a product for our country.

Active ingredients are powerful

What makes mānuka honey so special? It has a unique nutritional profile that includes impressive antibacterial factors, making it useful medically as a wound dressing. Local honey manufacturers now grade the efficacy of different honey using the Unique Mānuka Factor (UMF) rating system, from UMF 5+ to UMF 25+.

There’s no hard evidence that it works as an antibacterial when it’s eaten, but people like the fact that it’s resistant to superbugs, makes a delicious sugar replacement, and is generally free from side-effects (unless you have an allergy).

Now it’s made its way into skincare as well, where there’s been a recent surge in mānuka honey being used as an ingredient in premium products.

It even has the celebrity seal of approval from chef Jamie Oliver, socialite Kim Kardashian, and actor Scarlett Johansson.

It’s an export winner

The value of mānuka honey to our economy is already sizeable, but those in the industry say it has the potential to be even bigger.

The current export value of mānuka honey is around $190 million annually, and exporters have a goal of reaching $1.2 billion by 2028. For that to happen, though, there needs to be more consistent supply – which is where investors come in.

Up until now, nearly all our mānuka honey has been produced from wild mānuka trees. But with strong demand and a need for consistency, New Zealand’s industry leaders are working out how to farm this liquid gold.

“It’s a novel concept to ‘farm’ bees as the primary land use,” says Andrew Watters, chief executive of MyFarm, which offers agri-sector investments across a range of industries.

“For most of us, honey production has been an add-on for orchards and so forth – clover honey or pollination services. So, to turn around and revert to farming mānuka honey is quite a modern thing.”

It’s an exciting emerging opportunity, says Stephen Lee, general manager of Mānuka Farming NZ. This company is the commercial arm of the Mānuka Research Partnership, which includes industry heavyweights such as Comvita and Tweeddale’s.

Borrowing from the wine industry

Lee believes there’s an opportunity for mānuka honey to copy the wine industry, offering honey with its own local stories, benefits and flavours.

There’s also the chance to develop speciality pharmaceutical-grade mānuka farms. While plans are still in the early stages, Lee thinks that within five years we’ll see fantastic results coming through.

It’s possible this will show farmers that mānuka can be more profitable than sheep farming. Certainly, mānuka honey sells for higher margins than any of our other agricultural exports.

“If you can get your yields of honey and you can get the UMF quality factor at good levels, the returns can be well in excess of traditional sheep-farming returns,” says Watters.

“But you’ve got to have the right location – a situation where the neighbours can’t put hives right on the boundary. There’s the potential to make a pretty interesting investment.”

Interesting, yes. Reliable? Perhaps less so.

Overcoming challenges

As a relatively young industry, the mānuka honey trade has hit a few snags over recent years. For starters, tests haven’t always showed consistent health benefits – and no test seems to be able to pinpoint levels of unique active ingredients.

Production has been poor for the past two years, which hasn’t been helped by organised crime groups stealing bees and honey.

There are threats from overseas too. Despite the UK Trade Mark Registry registering mānuka honey as a trademark of the New Zealand product, Australians are still angling to use the name ‘mānuka’ for that country’s arguably identical tea-tree honey. In fact, up to two-thirds of mānuka honey sold globally is counterfeit.

So, there are plenty of challenges ahead for producers and suppliers. But if those challenges can be met, mānuka honey will have a great future.

Local groups are working hard to trademark and protect the mānuka honey brand, and prevent the export of mānuka saplings. They’re spending money on science that will support the health benefits.

How to invest

Keen to invest in mānuka honey? There are several ways to do it, and you’ll need to keep your eyes open for opportunities.

· You could start simply by buying shares in Comvita, which is listed on the New Zealand Stock Exchange.

· You can sign up to MyFarm to look out for syndicated opportunities.

· You can contact Mānuka Farming NZ and talk to the group about buying or investing in land for cultivation.

Whatever you choose, remember that mānuka honey is not necessarily going to be a steady performer; expect some volatility.

Lee says investors in new plantations will wait four or five years to see an income, and at least one out of every five years will be a bad year, production-wise.

On the upside, though, it’s an ideal hedge against traditional agri-sector investments such as dairy, sheep, and beef.

“It’s ethical, responsible, and sustainable. It’s great for the environment and for erosion control. It’s cruelty-free. It’s a plant-based food. It’s medicinal,” says Lee.

“Mānuka honey really ticks a lot of boxes.”

By Hamilton Chadwick

First published 19 February 2019

The editorial below reflects the views of the editorial contributor only and content may be out of date. This article is sourced from a previous JUNO issue. JUNO’s content comes from sources that it considers accurate, but we do not guarantee that the content is accurate. Charts are visually indicative only. JUNO does not contain financial advice as defined by the Financial Advisers Act 2008. Consult a suitably qualified financial adviser before making investment decisions.