Comvita JV a healthy sign
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.