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Comvita Takes Direct Model Strategy To Japan

Comvita Takes Intensive, Direct Model Strategy To Japan

Tauranga, July 15th, 2002 – Natural health company Comvita has established a subsidiary in Japan as it moves to reposition its business from being an exporter to an international marketing company.

Te Puke-based Comvita established its reputation through developing and marketing high quality bee-based products. The company is now broadening its product range while narrowing its marketing focus.

“Our strategic thrust is to shift from being an exporter to an international marketer – not across the whole globe, but in niche markets – and to get more involved in those markets,” says Comvita CEO Graeme Boyd.

“With this growth we have become less dependent on bee products, where there is growing pressure in obtaining sufficient supplies.”

Comvita has identified New Zealand, Australia, Japan and the UK as its key strategic markets. The launch of the Japan operation follows the company’s direct entry into the Australian market four years ago.

“We believe the marketing expertise we have in Comvita, coupled with synergies across global markets, will accelerate our growth beyond what a distributor can do,” Graeme Boyd says. “A distributor often has a diluted effort because we form a small part of their product range.

“We believe we’ve proven that in Australia. We’ve achieved growth there of about 100% a year for the past four years and it’s gone from scratch to being our biggest market.

“Although our fundamental strategic model is consistent, the company is managing each market differently. In markets like New Zealand and Australia there are simple distribution channels but in Japan there are 10 times as many distribution systems.”

In Japan, Comvita has opened a 100% owned subsidiary in Yokohama, employing key staff from a previous distributor.

The company has been supported by Industry New Zealand for the development of Japanese language electronic systems and has worked with Trade New Zealand to gain market knowledge of the Japanese sector.

Tauranga-based Trade New Zealand Account Manager Jodie Tipping says Comvita has worked hard to develop the Japanese market and says the recent launch of their Japanese office highlights the long term commitment they have given the market. A recent survey by Trade New Zealand shows Asia is the most important export market for New Zealand natural products, with Japan the single most important destination. Japan is the second largest natural health supplements market in the world, with a growth rate of 6 % each year.

Current sales in Japan are still a small part of Comvita’s overall export business, but Market Manager James Milne says there is high growth potential.

“The Japanese market is so big that once we get going this could be our biggest market. It could easily be worth $US10 million to Comvita. The propolis market in Japan alone is worth about $US100m.”

Japan is one of the world’s biggest consumer markets for propolis, which is a key product for Comvita.

“The population is aging and they are starting to pay a lot of attention to their health,” James Milne says. “Comvita propolis has a high potential for growth in the Japanese market. It contains high levels of active bioflavonoids with immune support and antioxidant properties that help the body’s fight against infection.”

The demand for Comvita manuka honey is also growing, as Japanese consumers learn more about manuka honey’s unique health-giving and antibacterial properties.

Graeme Boyd says Japan’s current economic difficulties may have created opportunities that might not have otherwise existed.

“Under this environment, Japan is more receptive to new ideas, so the opportunities are still there and it may even be easier at the moment.”

Establishing the Japanese operation has been intensive.

“Japan is one of the most complicated, culturally different, demanding markets in the world. However, it is amazing what we have learned and we believe that the Japanese market will provide an excellent payback for the company in the long term,” Mr Boyd says.


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