Comvita JV a healthy sign

Exporter - - EDITOR’S LETTER - Glenn H. Baker ed­i­tor@ex­porter­magazine.co.nz

The re­cent sign­ing of a Heads of Agree­ment be­tween Comvita and its dis­tri­bu­tion part­ner in China, Shen­zhen Comvita Nat­u­ral Food Co, to form a joint ven­ture (JV), is an­other gi­ant step in the ex­port jour­ney of the Bay of Plenty-based global nat­u­ral health prod­ucts com­pany.

SCNF has an ex­ten­sive sales and dis­tri­bu­tion net­work in China in­clud­ing more than 400 Comvita branded depart­ment store kiosks, 35 branded Comvita stores in tier one cities, and around one-third of SCNF sales are through e-com­merce plat­forms such as Tmall and JD.com.

Comvita CEO Scott Coul­ter says the re­la­tion­ship with SCNF goes back more than 12 years and now in­volves more than 200 staff.

The SCNF-Comvita busi­ness has also ex­pe­ri­enced a com­pound an­nual growth rate of 30 per­cent since 2004.

He says the JV will al­low Comvita to cap­ture an in­creased mar­gin on sales into China and build a pipe­line for new Comvita-branded prod­ucts go­ing for­ward.

“Be­ing on the ground in­side China is a key build­ing block to our fu­ture growth strat­egy,” he says.

Comvita sup­plies all of the ma­jor e-com­merce plat­forms in China. Sales have grown 33 per­cent over­all across the en­tire Chi­nese e-com­merce mar­ket to the end of June 2016, which is a re­mark­able re­sult to say the least.

Coul­ter points out that the Chi­nese mar­ket is mov­ing in­creas­ingly into a di­rect trade model and he ex­pects the ‘grey chan­nels’ used by a num­ber of im­port­ing com­pa­nies will be­come harder to nav­i­gate for many prod­uct lines over time as China de­mands com­pli­ance with its ‘Blue Hat’ Health Food leg­is­la­tion.

He be­lieves this JV will pro­vide Comvita with much more flex­i­bil­ity to op­ti­mise sales and chan­nel prof­itabil­ity through di­rect im­por­ta­tion into China.

China is the world’s largest honey pro­ducer and con­sumer so this is an ex­cel­lent po­si­tion for the Comvita brand to grow from. I’ve long ad­mired the brand as a stand­out ex­am­ple of how to get it right in the China mar­ket – a case of ‘slow and steady wins the race’.

And one gets the feel­ing that the race is about to speed up con­sid­er­ably.

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