Assignment four - A Strategic Brief on the Manuka Honey Industry PDF

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MARK101 Assignment 4

Date submitted: 27/05

300425071

A Strategic Brief on the Manuka Honey Industry By Megan Fermo (300425071) The purposes of this short strategic brief on the New Zealand Manuka honey include examining one of the primary consumer markets which the chosen company—Comvita— currently targets, as well as proposing a new market segment and developing a product recommendation. As with the previous analyses, ‘Manuka honey’ in this report is defined to be honey in the medicinal/health form (graded on the MGO or UMF scale), not the food group or beauty/skincare product. In analysing this report, a few trends mentioned in past analyses were considered: the influence and potential of the domestic and global Chinese Manuka honey consumption on local NZ companies and how the lack of economic stability on millennial consumers affects the Manuka honey industry. Comvita continues its trend of exceeding other competitors by exhibiting the strong market attributes observed on both the current and proposed target markets. Below include the main findings, summary, and recommendations made in this report:

Main Findings and Summary 

Comvita remains one of the strongest competitors in the existing target market (midlife Chinese consumers) and will be placed in an equally strong position should it choose to enter the proposed new target market (pet-owning millennials).



Consistent with previous macro- and micro-environment scans of the industry, the Chinese honey market (both global and domestic) remains a significant influence on the current Manuka Honey industry and the proposed product.

Product Recommendation 

This report suggests diversifying Comvita’s product line in order to break into the millennial pet-owning market, by developing ‘Comvita Pet Honey’.



Developing a product for domestic pets would allow Comvita not only to break into the millennial market but also to increase its presence in the international market, particularly in China, where offering quality pet products has emerged as a lucrative industry.

MARK101 Assignment 4

Date submitted: 27/05

300425071

Current Target Market New Zealand’s Manuka Honey industry has expanded significantly since the boom of the Chinese middle-class. As the overseas Chinese market continues to grow, Comvita has strengthened their sales by also targeting New Zealand-based, middle-aged Chinese consumers (40s to 60s) who tend to be health conscious, with children or young grandchildren to care for. The proven potential of this market has been due to cultural understandings of natural health[CITATION Mar18 \l 5129 ]. This is especially true of KiwiChinese consumers who live a westernised lifestyle but respect preventative medicine, like Acai berry and Manuka honey.

Mid-Life Chinese Consumers

Comvita’s focus towards this market is exemplified through various marketing campaigns like the company’s contribution to the Chinese consumer event ‘singles day’ which appeals to the market’s cultural ties, and Experience Comvita, offering mandarin speaking tours of the Comvita bee-keeping headquarters, appealing to the mid-lifer Chinese consumer who may not be fluent in English. This report identifies two target market attributes: brand familiarity and a prestige line. ‘Prestige line’ is defined as the way a company packages their Manuka honey. For example, strategically high prices and prestige or ‘black-label’ marketing. Middle-aged Chinese

MARK101 Assignment 4

Date submitted: 27/05

300425071

consumers have been found to be drawn to luxury goods and well-known branded products [ CITATION SN14 \l 5129 ] signifying social status—for example, Comvita’s ‘premiumgrade’ Manuka honey range [ CITATION Comnd \l 5129 ]. Its closest competitor, Manuka Health, is placed close to Comvita on the graph above due to its recent efforts to attract the Chinese market through acquiring Taiwanese TV star Alyssa Chia to sponsor their products to local Chinese consumers[ CITATION Man17 \l 5129 ]. While a company like 100% Pure New Zealand Honey also offers a costly Manuka honey prestige line, its global brand familiarity is not well-known among local and visiting Chinese consumers on the same level as Comvita, the highest recognised honey brand among visiting Chinese consumers in a recent University of Canterbury report[ CITATION Edw18 \l 5129 ]. With the overseas Chinese market only rising—counting for 17% of the $350+ million NZ Manuka honey industry [ CITATION Con18 \l 5129 ]– Comvita looks to retain a strong focus on the lucrative domestic Chinese market.

New Target Market Millennial consumers have not been the focus of Manuka honey companies (in this report, millennials are persons aged 21 to 35), and this is seen in Comvita and other companies’ focus on middle-aged consumers. As mentioned in previous analyses, millennial consumers find themselves with generally lower income than mid-lifers and would be less inclined to purchase prestige and high-priced Manuka honey product for themselves[ CITATION Cou181 \l 5129 ]. In addition to this, millennials are more conscious of whether honey is ‘ethical’ or not[ CITATION Thend1 \l 5129 ]. With millennials becoming the world’s largest consumer group, this report proposes a new target market allowing Comvita to reach this vital group: career-focused, pet-owning millennials residing in urban areas. Millennial pet-owners as a group spend around $67 billion annually on their pets and 67% of American millennials see their pets as their ‘family’[ CITATION Car18 \l 5129 ]; some millennials said they prioritise spending for their pets’ well-being over for their own. In targeting this market, Comvita has the potential to introduce a Manuka honey product “for pets” to urbanised and highly educated consumers willing to spend on quality products for their pets.

MARK101 Assignment 4

Date submitted: 27/05

300425071

This report found two proposed attributes for targeting this market: a social media presence and range of online delivery.

Pet-Owning Millennials

The busy life of a career-focused millennial means they do most of their shopping online, creating a need for online delivery and high-reach social media presence. As seen above, the pet-centred honey industry is a limited market with few competitors. Should Comvita enter this market, its worldwide online delivery and large social media presence (18.2k followers on Instagram) would place it above its closest proposed competitor, Aniwell, with only 986 followers [ CITATION Insnd1 \l 5129 ]. While Honeyvet, Apihealth, and Pet Magic are New Zealand-based and can provide online delivery, Aniwell is based overseas, relying on retailers like Animates to stock their products[ CITATION Anind \l 5129 ]. Campaigns on platforms like Instagram means Comvita can connect to this market with minimal spending. In terms of compatibility, this proposed market would not be a dramatic change for Comvita, whose existing markets already focuses on maintaining one’s health.

MARK101 Assignment 4

Date submitted: 27/05

300425071

Product Development “Comvita Pet Honey” The medicinal benefits of Manuka honey for human consumption have been highlighted in previous analyses; some of the benefits include assisting with wounds, throat pain, and general health. Recently, research and online testimonies to the effects of Manuka honey on domestic pets have found, in addition to human health, Manuka honey was proven to be as effective on pets when it came to wound-dressing, health maintenance, and preventing reliance on antibiotics [ CITATION Bla17 \l 5129 ]. With plenty of resources and trusted websites praising the medicinal qualities of Manuka honey for pets—particularly dogs—this report finds that Comvita is in a unique position of diversifying its product line with a new product: Manuka honey for pets, or ‘Comvita Pet Honey’—marketed to millennial petowners, in particular. Most of the pet-owning millennial market (ages 21 to 35) have been found to refer to their domestic pets as their “first-born child”, a reference to the current generations’ historically low birth-rates. Millennials are less likely to have children due to rising costs of raising children and economic struggles, and so choose to raise pets instead [ CITATION Hil19 \l 5129 ]. As the number of millennial pet-owners rises, this market’s desire for higher-quality pet products has risen as well. Millennials have been found to create “headaches” for existing pet companies supplying products like pet food and other necessities, by demanding better quality products than what the market has provided in the last few decades [ CITATION Stu19 \l 5129 ], comprising for the longest time of highly-processed, low-nutrient, and inorganic kibble or wet food. Today’s millennial pet-owners want to provide a healthy lifestyle for their pets. Premium Manuka honey for pets would especially appeal to affluent millennial consumers who want to give their pets organic treats with medical benefits, rather than overly processed treats. In 2018, 14% of millennial pet-owners in the US “bought a luxury item in the pet-care category”[ CITATION Hil19 \l 5129 ]. In the previous analysis, most of the four proposed major competitors (Honeyvet, Apihealth, Pet Magic, and Aniwell) use only low UMF grade Manuka honey in a mixed form, like animal creams and sprays, rather than Manuka honey in its pure organic form. For example,

MARK101 Assignment 4

Date submitted: 27/05

300425071

Apihealth’s $26 ‘Joint Support Manuka Honey for Dogs’ 250g contains only minimal Manuka honey and is not on the UMF grade standard[ CITATION Apind \l 5129 ]. Comvita’s prestige product line and high quality UMF-grade, compared to the few competitors, would allow the company to justify high prices on the proposed product. In terms of cost to the company, the proposed product could be developed with minimal costs as there would be little changes to the method of the company’s current beekeeping practices, in order to preserve the quality of its honey. Comvita can maintain its standard of beekeeping and pure honey form, and simply package the product differently in order to appeal to the petowning millennial market. Main costs would involve an integrated marketing communication campaign, overhauling the style of advertising to appeal specifically to the millennial petowning market. In addition to the millennial pet-owning market, there is also the bonus of being able to crossover to the coveted Chinese pet-owning market—China being the third largest pet-owning country besides the United States and Japan[ CITATION Mar181 \l 5129 ]. As mentioned above and in previous analyses, the Chinese market is continuously growing and is one of New Zealand’s largest exporter of Manuka honey. As the country’s middle class continues to boom, the international pet-owning market will be looking for high-quality medicinal and health products not only for themselves but also for their pets[ CITATION Chi18 \l 5129 ]. With proper prestige branding and an emphasis on the natural and organic quality of its honey, as well as easy accessibility to online delivery, this proposed product could have the potential for a large and significant reach in China, other Asian countries, and the United States. ‘Comvita Pet Honey’ would join a premium product group including ‘Pawsecco’ a nonalcoholic ‘wine’ for dogs [ CITATION Don18 \l 5129 ] and $400 designer pet clothes [ CITATION Hil19 \l 5129 ], except in this case Comvita will be differentiated by offering a product that is not only perceived to be premium with prestige branding, but also offers proven pet health benefits. For the loving millennial fur-parent, Comvita Pet Honey© offers the highest quality and 100% New Zealand Manuka honey in the market. Unlike other companies, Comvita understands pets deserve only the best and our products are passionately and locally crafted to ensure every pet gets the organic Manuka honey benefits they deserve.

MARK101 Assignment 4

Date submitted: 27/05

300425071

References Animates. (n.d.). Aniwell Active Manuka Honey Ointment 100g. Retrieved from Animates: https://www.animates.co.nz/aniwell-active-manuka-honey-ointment-100g.html Apihealth. (n.d.). JOINT SUPPORT MANUKA HONEY FOR DOGS 250G. Retrieved from Apihealth: https://www.apihealth.com/shop/manuka+honey+with+bee+venom+for+pets/Joint+Support+Honey+for+Pets++250g/x_sku/211-A.html Blackmores. (2017, September). How Manuka honey can help heal your pet. Retrieved from Blackmores: https://www.blackmores.com.au/pet-health/wound-care/how-manuka-honey-can-help-heal-your-pet China Pet Market. (2018, December 25). China Pet population and ownership 2019 update. Retrieved from China Pet Market: https://www.chinapetmarket.com/china-pet-population-and-ownership-2019/ Commons, E. P. (2018, June). CHINESE TOURISTS SHOPPING BEHAVIOUR. Retrieved from University of Canterbury: https://ir.canterbury.ac.nz/bitstream/handle/10092/15957/Commons%2C%20Edward_Master%27s%20Thesis.pdf? sequence=1&isAllowed=y Comvita. (n.d.). INTRODUCING A PREMIUM, NEW LOOK. Retrieved from Comvita: https://www.comvita.co.nz/ Country Report. (2018). Consumer Lifestyles in New Zealand . Retrieved from Euromonitor: http://www.portal.euromonitor.com.helicon.vuw.ac.nz/portal/Analysis/Tab Ferguson, D. (2018, October 27). Pawsecco, anyone? Millennials splurge on pampered pets. Retrieved from The Guardian. Hoffower, H. (2019, March 20). Raising kids is so expensive in America that millennials are prioritising their pets instead and dropping up to $400 on designer dog clothes. Retrieved from Business Insider: https://www.businessinsider.com.au/millennials-buy-high-end-dog-clothes-prioritize-pets-over-kids-2019-3? r=US&IR=T Instagram. (n.d.). Aniwell.it (Profile Page). Retrieved from Instagram: https://www.instagram.com/aniwell.it/ Lintz, C. (2018). How Millennials Spend on Their Pets. Retrieved from Pet Business: http://www.petbusiness.com/HowMillennials-Spend-on-Their-Pets/ Manuka Health New Zealand. (2017, Febuary). China-based TV star, Alyssa Chia partners with Manuka Health in natural health promotion. Retrieved from Manuka Health New Zealand: https://www.manukahealth.co.nz/ennz/news/china-based-tv-star-alyssa-chia-partners-with-manuka-health-in-natural-health-promotion/ Marketing to China. (2018). Honey Market in China: Great Opportunity. Retrieved from Marketing to China: https://www.marketingtochina.com/honey-market-shares-china/ Marketing to China. (2018, July 20). WHY PET BRANDS NEED TO PRIORITIZE THE CHINESE MARKET. Retrieved from Marketing to China: https://www.marketingtochina.com/pet-brands-need-prioritise-chinese-market/ S.N. (2014, April 30). China's addiction to luxury goods. Retrieved from The Economist: https://www.economist.com/theeconomist-explains/2014/04/29/chinas-addiction-to-luxury-goods Stuff. (2019, January 08). Millennials treating pets like they're children hurts pet-food firms. Retrieved from Stuff: https://www.stuff.co.nz/business/world/109781359/millennials-treating-pets-like-theyre-children-hurts-petfoodfirms The Vegan Society. (n.d.). The Honey Industry. Retrieved from The Vegan Society: https://www.vegansociety.com/govegan/honey-industry Williams, C. (2018, November). MANUKA HONEY - MARKET INSIGHT. Retrieved from My Farm: https://www.myfarm.co.nz/cms_files/investments/manuka-market%20insight%20final.pdf...