african honey bee micro franchise incubator nov 2012
TRANSCRIPT
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AFRICAN HONEY BEEMicro-Franchise Incubator
BUSINESS PLANNovember 2012
By Guy Stubbs
105 Robyn StreetCenturion, 0157, South Africa
Telephone: +27 82 454 1028
E-Mail: guy@africanhoney bee.co.za
Website: www.africanhoney bee.co.za
“And whatever you do, in word or deed, do everything in the name
of the Lord Jesus, giving thanks to God the Father through him.”
(Colossians 3:17 ESV)
mailto:[email protected]://www.africanhoneybee.co.za/http://www.africanhoneybee.co.za/mailto:[email protected]
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The Agriculture Research Council’s Bee-keeping for Poverty Relief Programme states:
‘Bee-keeping is probably the only form of agriculture with an overwhelmingly positive
impact on the natural environment … allowing people to derive economic benefit from
… floral resources in a non-destructive way, ensuring local
participation in conservation efforts.’
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PROLOGUE
Khensani Sondlani – bee-keeper, Bushbuckridge
When Khensani Sondlani joined the African Honey Bee - Bushbuckridge Incubation HUB1, she hoped that
this would finally allow her migrant-worker husband the opportunity to come home and be permanently
reunited with his family.
A resident of the poverty-afflicted Bushbuckridge community near the Kruger National Park, South Africa,
Khensani’s husband works hundreds of kilometers away in the economic heartland of Johannesburg. He is
able to visit his wife and seven children for only four weeks every year. Khensani has learned how to save
and carefully manage the R800 that her husband sends home each month, but bee-keeping is providing
her the opportunity to move from survival mode to sustaining a successful small business. Should the
business continue to prosper Khensani’s husband will be able to come home, in turn allowing their
children to grow up in a stable, dual-parent family.
Khensani has now almost completed her National Qualification Framework Level 1 Learnership in Bee-
keeping. She owns ten hives and a stand. She often works with Elinah, her neighboring bee-keeper,
because she knows that if the African Honey Bee bee-keepers work together, everyone benefits. Over and
above the income from honey sales, the bee-keepers share a percentage of the revenue.
For Khensani, the next step is to become an African Honey Bee franchisee. Her passion for bee-keeping
has never been in doubt, but now she is confident that she has the expertise to start a commercial-scale
bee-keeping business of 100 hives. And that confidence is strengthened because she knows that her
mentors - African Honey Bee - will support her every step of the way.
For the past 14 months Tshepo, her Incubation HUB Manager, has been teaching her an effective,
revolutionary method of bee-keeping, as well as training and mentoring her. Khensani has been employedby the Incubation HUB and will graduate to fully-fledged franchisee at the end of her 18 month incubation
period. With the resources of African Honey Bee and its financial partners, Khensani knows she has a good
chance of borrowing enough funds to purchase 100 hives and her own ten stands, a battery-operated
bicycle to service her business and a smartphone tablet to track and communicate her progress.
1 A cluster of bee-keepers living in close proximity to each other.
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1.
Table of Contents
1. Table of Contents ......................................................................................... 4 2. Appendices .................................................................................................. 4 3. Executive Summary ..................................................................................... 5 4. African Honey Bee ....................................................................................... 6
5. Bee-keeping in Africa ................................................................................... 9 6. AHB products and services ........................................................................ 12 7. Marketing ................................................................................................... 16 8. Innovation and Technology ........................................................................ 33 9. Operational Plan ........................................................................................ 35 10. Management and Organization .................................................................. 40 11. Investment case ......................................................................................... 44 12. Financial Plan ............................................................................................ 49 13. Summary.................................................................................................... 58
2. Appendices
Appendix A why a Christian Social Enterprise
Appendix B off-take agreements
Appendix C the AHB Manual
Appendix D AHB technology and innovation
Appendix E bee-plant production and carrying capacity
Appendix F production plan
Appendix G material requirement plan
Appendix H organisational chart
Appendix I ratio analysis
Appendix J non-quantitative project risks Appendix K references
Appendix L presentation
Appendix M website
Note: If you are online while reading this business plan and click on any of the
Appendices, you will be directed to that particular appendix’s URL. Documents will be
downloaded to your computer. Some web browsers might require that you click on your
right mouse button and select the option “Open Weblink as New Document.”
http://www.africanhoneybee.co.za/_literature_112744/Appendix_Ahttp://www.africanhoneybee.co.za/_literature_112744/Appendix_Ahttp://www.africanhoneybee.co.za/_literature_112745/Appendix_Bhttp://www.africanhoneybee.co.za/_literature_112745/Appendix_Bhttp://www.africanhoneybee.co.za/_literature_112746/Appendix_Chttp://www.africanhoneybee.co.za/_literature_112746/Appendix_Chttp://www.africanhoneybee.co.za/_literature_112747/Appendix_Dhttp://www.africanhoneybee.co.za/_literature_112747/Appendix_Dhttp://www.africanhoneybee.co.za/_literature_112748/Appendix_Ehttp://www.africanhoneybee.co.za/_literature_112748/Appendix_Ehttp://www.africanhoneybee.co.za/_literature_112749/Appendix_Fhttp://www.africanhoneybee.co.za/_literature_112750/Appendix_Ghttp://www.africanhoneybee.co.za/_literature_112750/Appendix_Ghttp://www.africanhoneybee.co.za/_literature_112751/Appendix_Hhttp://www.africanhoneybee.co.za/_literature_112751/Appendix_Hhttp://www.africanhoneybee.co.za/_literature_112752/Appendix_Ihttp://www.africanhoneybee.co.za/_literature_112752/Appendix_Ihttp://www.africanhoneybee.co.za/_literature_112753/Appendix_Jhttp://www.africanhoneybee.co.za/_literature_112753/Appendix_Jhttp://www.africanhoneybee.co.za/_literature_112754/Appendix_Khttp://www.africanhoneybee.co.za/_literature_112754/Appendix_Khttp://youtu.be/IRKt-ZXI6Xshttp://youtu.be/IRKt-ZXI6Xshttp://www.africanhoneybee.co.za/http://www.africanhoneybee.co.za/http://www.africanhoneybee.co.za/http://youtu.be/IRKt-ZXI6Xshttp://www.africanhoneybee.co.za/_literature_112754/Appendix_Khttp://www.africanhoneybee.co.za/_literature_112753/Appendix_Jhttp://www.africanhoneybee.co.za/_literature_112752/Appendix_Ihttp://www.africanhoneybee.co.za/_literature_112751/Appendix_Hhttp://www.africanhoneybee.co.za/_literature_112750/Appendix_Ghttp://www.africanhoneybee.co.za/_literature_112749/Appendix_Fhttp://www.africanhoneybee.co.za/_literature_112748/Appendix_Ehttp://www.africanhoneybee.co.za/_literature_112747/Appendix_Dhttp://www.africanhoneybee.co.za/_literature_112746/Appendix_Chttp://www.africanhoneybee.co.za/_literature_112745/Appendix_Bhttp://www.africanhoneybee.co.za/_literature_112744/Appendix_A
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3.
Executive Summary
There is a critical need for skills, employment opportunities and small enterprisedevelopment in the poorest rural areas of southern Africa. Coincidentally, these
same poor communities have access to prime bee-keeping natural resources that
they are not currently utilizing. There is also a global shortage of honey bee products
that comply with organic and fair-trade standards. The business concept of AfricanHoney Bee (AHB) taps into this valuable opportunity.
AHB is a Christian Bee-keeping Social Micro-Franchise Enterprise which hasdeveloped a sustainable, commercially-viable business model that enables owner-
operated micro bee-keeping businesses (BKBs) to participate in the mainstream
global organic and fair-trade honey markets.
Break-even is achieved in year two by the establishment of Incubation HUBscomprising 2000 hives per HUB, each HUB employing and incubating ten bee-
keepers over an 18-month period. When each of the ten bee-keepers has been
established as a franchisee, a further ten are recruited and incubated. When critical
mass has been reached in an area, incubators can be relocated to other ruralpoverty nodes.
After break-even has been achieved, the business continues to grow exponentiallywith every new hive that is added. Strong cash flows at both the levels of AHB (the
franchisor) and the BKBs (the franchisees) make the AHB franchise model eminently
suited to rapid expansion. Replication of the model to other regions in South Africa,
and potentially to other African honey-producing areas, is unlimited.
Two types of investment opportunity exist per Incubation HUB:o 1 x R 5 M (US$ 625 K) Quazi-equity2/grant/loan is required for establishing a self-
sustaining Incubation HUB that incubates a minimum of 40 BKBs.
o 40 x R 140 K (US$ 17.5 K) soft loans3
are required to establish at least 40 BKBs. The investment opportunity offered by AHB is unusually attractive in that it is a
commercially viable project that also enables blended-value impact investors4 to
contribute actively to promoting a more sustainable economy, preserving
biodiversity and uplifting society in a way that glorifies God. In particular this project
is a unique opportunity for public or private investors with a sustainable poverty
alleviation objective.
AHB is looking for partners that can provide funding (possibly in combination withother support such as logistics, business mentorship, access to market and
marketing knowhow).
This project scores very highly in terms of: sustainable micro-enterprisedevelopment; capacity-building; poverty relief; promotion of organic agriculture;
development of new accreditation standards; conservation of the natural
environment; enhancement of agriculture through pollination; creation of new niche
export markets; and marketing to the triple-bottom-line consumer market.
2 A category of debt taken on by a company that has some traits of equity, such as having flexible repayment options or being unsecured.
3 18 month holiday, repayment in 3 years at 6% interest. 4 Investments made with the intention to generate measurable social, and environmental impact alongside a financial return.
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4.
African Honey Bee
Enterprise description
AHB is a Christian Bee-keeping Social Micro-Franchise Enterprise.
Foundation
AHB is a Christian-based enterprise that follows the Biblical admonition: ‘If a brother or
sister is poorly clothed and lacking in daily food, and one of you says to them, “Go in
peace, be warmed and filled,” without giving them the things needed for the body, what
good is that? So also faith by itself, if it does not have works, is dead5.’
More detail can be found in Appendix A.
Mission Statement
To alleviate both spiritual and physical poverty through bee-keeping, by enabling poor
rural families to profitably benefit from the natural resources available on their
doorsteps in a way that witnesses God’s glory.
Vision
As a witness to God’s glory, AHB has a vision of catalysing a network of thousands of
viable community-based, self-sustaining micro bee-keeping businesses spread across
southern Africa.
Goals and Objectives
To help train and equip Incubation HUBs of no less than 40 owner-operated bee-keeping
businesses per geographic locality, each HUB is:
To produce and sell 72 tons per annum of accredited organic, fair-trade table honey,72 tons of organic, fair-trade industrial honey and 7.2 tons of organic, fair-trade
beeswax.
To establish these HUBs through first establishing commercially viable Incubators.
To incubate ten new bee-keepers per Incubation HUB every 18 months.
To build up a minimum of 40 BKBs per HUB, each to a level where they are farmingwith 100 hives.
To create a minimum of 5 jobs6 per BKB i.e. 200 jobs per HUB.
To empower each HUB to lifting 2000 rural poor people7 above the poverty line withapproximately R 5 M injected into the local rural economy per HUB annually.
To continually develop and refine a field- and market-proven, scalable businessmodel as well as the project modus-operandi for commercial roll-out acrosssouthern Africa.
To apply Gospel-based principles to the entire enterprise and thereby witness God’sglory to those that are seeking.
5 (James 2:15-17 ESV) 6 Each BKB could employ 4 f amily members and provide work for 1 ancillary business/service provider. 7 Income earners support on average 10 people in South Africa’s r ural poverty nodes (StatsSA 2007)
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Market
AHB has 2 markets:
The Franchisee – AHB “sells” a complete “business in a box” franchise to thefranchisees, enabling them to become fully established BKBs.
The honey bee product buyer – this market can be broadly divided into
o Retailers ando Raw Materials Supply Chain Partners
AHB’s capacity to deliver
AHB has been building a team of financial, technical, legal and marketing experts with a
passion for social development matched by decades of proven real-world expertise.
Guy Stubbs – AHB’s founder is a Christian Social Entrepreneur who has been involved in
social development for more than 25 years and has developed specialist expertise in
developmental bee-keeping. Guy started bee-keeping in 1981. He is also an
internationally award-winning photographer with a long track record in social
development, agricultural and environmental issues. He is currently finishing the Regent
Christian Social Entrepreneurial MBA programme (USA).
Martin Johannsmeier – AHB’s senior bee-keeping advisor is a renowned bee-keeping
and bee-plant expert who has published many articles, and edited, authored and
contributed to many globally recognized bee-keeping publications. In addition to
advising AHB, he has edited the AHB manual and provided research on the bee-plants in
Bushbuckridge.
Sidwell Banne – AHB’s development bee-keeping advisor is the owner of the well-
known Honeybadger shop and training centre. Sidwell is a distinguished bee-keepingdevelopment specialist who contributed 30 years to development bee-keeping at the
Agricultural Research Council. In 2005, Sidwell was one of only 4 bee-keepers awarded
the prestigious IH Wiese Bee Researcher of the Year trophy by the South African Bee
Industry Organization, in recognition of his outstanding achievements and commitment
to bee-keeping development in South Africa.
Kobus Visser – AHB’s operations and training manager holds a B.Sc. in Construction
Management. Kobus has an impressive history of project management, financial
management, ‘Not for Profit Organization’ management and entrepreneurship. He has a
particular skill for finding creative, practical solutions in challenging situations.
Andrew Weeks – AHB’s legal and knowledge transfer expert is a Cape Town-based
commercial lawyer with experience in business development, consumer law, plain
language contracts and intellectual property as well as social, environmental and
agricultural issues.
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The five driving forces that work to support the AHB model
1. The social dynamism: Rural people subjected to poverty and (to earn an income), alife of migrant labour
8, will now be able to live and work at home, and so the family
structure is re-established.
2. The technical dynamism: The Afri-hiveTM and NektarTM technologies enable ruralAfrican farmers to improve and share their knowledge. By combining the best of
African and Western forms of apiculture and cutting out expensive infrastructure,
resources, systems and technology, bee-keepers are once again able to run
commercially viable businesses. Cell phones have also revolutionised rural life. Roy
Brander refers to the cell phone as a “poor man’s computer.”9 Louis Liebenberg
developed a technology called CyberTracker to enable illiterate bushmen to
transfer ecological data gathered from animal tracks (that only they were able to
read) to researcher’s computers via hand-held devices. This data is translated into
information and intelligence to manage wildlife preservations10
. James Canton
confirms AHB’s strategy that “convergence of leading-edge technology will be the
single most powerful driver of change for the next 100 years.”11
The most excitingaspect of the cultural fusion taking place through technology is not so much the
consumer’s access to precise information about what he/she is eating, but the
consumer’s reconnection with the producer via social media. The concept of the
village market is back on a global scale and the personal relationship between the
consumer and the farmer is being restored. This time, however, it is via cyber
space.
3. The economic dynamism: As discussed later, poverty in rural South Africa isextreme. According to Silimela Development Services families earn less than R 456
per month12
. The AHB model enables these same families to earn R 6000 per
month13
; a substantial 1500% increase. Because these families spend 90% of their
income locally,14
the model has a knock-on positive effect of benefitting and
stimulating the local economy.
4. The environmental dynamism: Rural African communities benefit because throughthe AHB model and access to the natural resources on their doorstep, they develop
a respect for the environment. Bee-keeping is the only form of agriculture without
a negative effect on the natural environment.15
Landowners benefit because the
communities who use the land for bee-keeping develop a respect for it and
become its guardians.
8 Someone who migrates within a country, possibly their own, to pursue work. (Deshingkar and Grimm 2005) 9 (Brander 2008) 10 (CyberTracker 1998) 11 (Canton 1999) 12 (Silimela Development Services 2009) 13 Each BKB has 100 hives x US$108 earned annually
14 (Hanlon 2010) 15 Quoted by the South African Agricultural Research Council (ARC 2001)
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5. The political dynamism: By involving producers and consumers in the GlobalVillage Market through innovative communication, technology, business systems
and trade, political barriers are broken down and a global sense of Ubuntu16
is
established. Julius Nyerere, the first president of Tanzania, developed the concept
of Ujamaa – “a person becomes a person through the people or community.”17
Marvin Cetron & Owen Davies refer to this global trading relationship as a
“benevolent cycle.”18
5.
Bee-keeping in Africa
The African honey bee
The African honey bee ( Apis mellifera scutellata) is a subspecies of the Western honey
bee. It is native to central and southern Africa, though at the southern extreme it is
replaced by the Cape honey bee, Apis mellifera capensis. This subspecies has been
determined to constitute one part of the ancestry of the Africanized bees (also known as
"killer bees") spreading through America. The African bee is being threatened by the
introduction of the Cape honey bee into northern South Africa. If a female worker from
a Cape honey bee colony enters an African bee nest, she is not attacked, partly due to
her pheromone resemblance to the African bee queen. Now independent from her own
colony, she may begin laying eggs, and since A.m. capensis workers are capable of
parthenogenetic reproduction19
, they will hatch as "clones" of herself, which will also lay
eggs. As a result the parasitic A. m. capensis workers increase in number within a host
colony. This leads to the death of the host colony on which they depend. An important
factor in the death of a colony seems to be the dwindling numbers of A. m. scutellata
workers that perform foraging duties ( A. m. capensis workers are greatly under-
represented in the foraging force of an infected colony). When the colony dies, the
capensis females will seek out a new host colony20.
Honey production in Africa
Tropical honey production differs from temperate honey production in several aspects.
The type of honey bee is different from the type used in Europe, Asia, and the Americas.
Also, the flowers and plants on which the honey bee feeds may be different. Moreover,
the climate, geography and management practices of honey production may be
different and all have an influence on the quality and quantity of honey produced.
Owing to the lack of a clear winter season in tropical climates, the period in which the
beehives are in production is often longer than in temperate climates. The honey bees
do not have to produce honey for a winter season in which food is not available insufficient amounts. But in areas with a long dry season, the production of honey may be
lowered by the limited availability of food for the honey bees. In tropical apiculture,
there are many types of beehives. In Tanzania and Zambia, the most common hives are
16 Ubuntu, is an ethic or humanist philosophy focusing on people's allegiances and relations with each other (Gade 2011) 17 (Nyerere 1967) 18 (Cetron and Davies 2010)
19 A form of asexual reproduction in which growth and development of embryos occur without fertilization.
20 (Martin, Beekman, et al. 2002)
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made from split logs, which are placed in trees to attract the bees. These log hives may
be left unattended for most of the year. This form of bee-keeping is often called semi-
controlled bee-keeping21
.
Most African honeys are polyfloral, because most African countries have a large variety
of plants. The plants the honey bees feed on strongly influence quality aspects such as
color and taste. This is especially the case for forest honeys, which often have a strongtaste and a dark color. These honeys may also contain a larger amount of pollen, which
has an additional effect on taste. In East Africa, it is a common practice to use smoke to
chase the honey bees from their hives before harvesting the honey. The result is a
honey with a smoky flavor, which honey processors and consumers often do not
appreciate22
. These smoky honeys are generally not suitable for table honey, but they
can be used in the industry after being mixed with odourless honey. However, one
importer, Tropical Forest Products from the United Kingdom, markets these smoke-
flavored honeys as a specialty.
The different climate and management practices in tropical regions pose several
problems for the production of quality honey. Bees can regulate the moisture content of
their honey, but in humid climates they may not be able to reach sufficiently low values
for the honey to be used as either table honey23
or industrial honey24
. With simple
management practices like the placement of hives in ventilated places, significant
improvements may be obtained.
High temperature may also affect the quality of honey. The HMF
(hydroxymethylfurfural) content, which is an important quality parameter, is directly
related to the temperature during production, storage, and transport. The HMF content
rises with the temperature. Results from Chile, Guatemala, and Zambia show that, using
proper practices of temperature control, the HMF content can be controlled25. Thestandards for the European Union regarding maximum HMF contents are in Council
Directive 2001/110/EC. In general, HMF content may not be more than 40 mg/kg,
except for industrial honey (limit not specified). An exception in the maximum content
of HMF is made for honeys from regions with tropical climates. For tropical honeys, the
maximum content is 80 mg/kg. However, honey traders use stricter rules than the
legislation requires. They usually do not base the permissible HMF content on the origin
of the honey, but on the intended use of the honey. Honey traders often apply a norm
of a maximum 10 mg/kg for table honey. The maximum HMF content for industrial
honey may be as high as 40 mg/kg.
21 (Sommeijer, et al. 1997)
22 (Koekoek, F; van Loon, M; 2006)
23 Honey intended for consumers, to be eaten dir ectly or as a natural sweetener for drinks or in cooking
24 Honey that is used as an ingredient and does not meet fully all the criteria for table honey and is therefore regarded, according to the EU criteria, to be of lower quality t han table honey. It still
however qualifies for use in t he food industry, for the manufacture of bakery goods, confectionery, breakfast cereals, sauces, tobacco, and products such as honey-roasted nuts as well as
pharmaceutical and cosmetic products. 25 (Koekoek 2007)
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The bee-keeping industry in South Africa
The South African Bee-keeping industry is relatively small both in global terms and in
terms of the overall South African agricultural sector. South Africa was the 64th largest
honey producer in 2006, producing a mere 0.11 percent of world production (1500
tons). The direct value of honey bees in South Africa (only considering honey bee
products) is estimated to be in the region of R 100 M with total direct employment in
the region of approximately 3000. There are only 20 or so professional bee-keepers and
150 commercial bee-keepers in South Africa26
.
Honey bees are, however, critically important for agriculture and conservation. This
importance far exceeds the value currently derived from honey bees by bee-keepers. It
has been estimated that managed honey bee pollination adds a value in the region of
R 189 M - R 828 M per annum to the South African deciduous fruit industry alone. This is
16 - 69 times the amount (R 12 M) that bee-keepers presently receive for this service.
The sub-tropical oilseed, vegetable seed, berry and cut flower industries (as well as
certain other fruits and vegetables such as squash and melons) are also to a very large
extent dependent on pollination services provided by the bee-keeping industry. Theestimated value added by honey bees would further increase if the pollination by honey
bees of garden plants, exotic plants and indigenous plants is considered. It is estimated
that honey bees are pollinators for approximately 60% of flowering plants in South
Africa. Honey bees and the wild honey bee population are therefore also vitally
important in the conservation of floral reserves and in terms of biodiversity. It has been
said that bee-keeping is possibly the only form of agriculture with an overwhelmingly
positive impact on the natural environment27
. Commercial bee-keepers on their own are
not capable of providing all the necessary funding and infrastructure to support and
sustain the honey bee population in South Africa, considering its relative importance to
other industries and to the country as a whole (in terms of conservation and
biodiversity). Support would also be required from all those that derive value from
honey bees, including the government35
.
This is especially relevant when one considers the overwhelming challenges facing the
South African bee-keeping industry. A review of the South African bee-keeping industry
at the end of the twentieth century by Schehle (1996) summarized in Johannsmeier
(2001), found that these challenges included:
shortage of honey, leading to supplementation by imports
high unemployment, increasing theft of hives to 20% of the total number
still no solution to the Cape bee problem
increasing bee losses due to pesticides on crop plants cost and inefficiency of traditional night work with bees
rocketing fuel prices
lack of knowledge about bee disease identification and control
mutual mistrust among bee-keepers
26 (NAMC Report 2009) 27 (ARC 2001)
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Two positive aspects were highlighted:
With available natural resources, the industry could expand to twice or three timesits present size.
Honey produced in South Africa was of high quality and could easily compete againstother honeys on the world market.
Honey processing
The processing of honey comprises the separation of honey from the comb, cleaning,
mixing, and packing of the honey. The processing of the honey is best done at room
temperature, since this preserves the natural characteristics of the honey. The
processing of honey has a substantial influence on the quality of the final product.
Good, hygienic standards have to be applied throughout processing, packaging, and
storage to prevent contamination of the honey. The moment of harvesting is critical to
the quality of the honey. The honey is ready for harvesting when it has had sufficient
time to ripen. During ripening, the chemical composition of the honey changes and the
moisture content decreases. When the honey is ripe, the cells are sealed off. Unripe
honey has a high moisture content, which makes it vulnerable to fermentation. Oldhoney has been in the honeycomb too long and may have deteriorated. Exposure of the
honey to high temperatures should be avoided, since it increases HMF content. As
explained earlier HMF forms naturally in honey over time by the breakdown of fructose,
a process that accelerates as the temperature increases. HMF, however, is not harmful
to human health.
Honey contains natural preservatives added by bees. When honey is properly stored in
airtight containers, it enjoys an almost indefinite shelf life. But when honey is exposed
to heat and moisture, its quality can deteriorate quickly. The shelf life of table honey can
be lengthened through heat treatment (pasteurization). This treatment should be
performed with caution, since the heat also results in deterioration of the quality (HMF
content).
6. AHB products and services
AHB has two types of product
The Franchise – AHB “sells” a complete “business in a box” franchise to franchisees,enabling them to become fully established BKBs. This product includes: incubation
(training & mentorship); access to innovative technology and knowhow; logistical
support; and most importantly, access to premium markets.
The honey bee products – these products are the produce of the enterprise andinclude honey, beeswax, pollen, propolis and royal jelly.
This chapter focuses on honey bee products. The franchise is discussed in the sections
on production (section 9) and human resources (section 10).
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Honey
Bees produce honey from the nectar of blossoms or secretions of plants. The bees
collect the nectar and secretions, which are transformed and combined with other
substances and stored in honeycombs to mature. Honey has a complex composition.
The main ingredients are fructose, glucose, and water. It may also contain other sugars
such as sucrose, maltose, and melitose (and other oligosaccharides). In addition it
contains enzymes, minerals, vitamins, and amino acids. Honey may also containimpurities such as traces of fungi, algae, yeasts, and solid particles that have come loose
during processing28
.
There are many types of honey. Honey may be categorized by the origin of the nectar or
the method of processing and presentation. The categories below are taken from
Council Directive 2001/11/EC29
relating to honey, which describes the conditions under
which honey may be placed in the EU market as follows:
By origin
Blossom honey - obtained predominantly from the nectars of flowers Monofloral - single botanical source
Polyfloral - Several botanical sources
Honeydew honey - obtained from the secretions of plants
By type of processing
Comb honey - honey is still contained in the combs and is presented and sold assuch. The comb and the honey are edible.
Chunk honey - containing one or more pieces of comb honey
Drained honey - obtained by draining decapped, broodless combs
Extracted honey - obtained by centrifuging decapped, broodless combs
Pressed honey - obtained by pressing broodless combs with or withoutapplication of moderate heat
Examples of monofloral honeys are clover, acacia, and sunflower honey. Blossom and
fruit-blossom honey are examples of polyfloral honeys. Forest honey consists of
“honeydew,” the term for all non-nectar secretions of trees and plants collected by
bees.
Honey may be liquid, solid, or creamed. The flavor, aroma, and color of honey depend
on the nectar source visited by the bees. The color may vary between nearly colorless to
dark brown. Most honeys offered in retail are blended, but in the specialty retail stores,there is a wide variety of single-origin honeys.
Both the food industry and individual consumers are major end-users. Honey intended
for direct consumption is called table honey. Honey used for further industrial
28 (CBI 1999) 29 (European Union 2005a)
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processing is called industrial honey or baker’s honey. The criteria for table honey are
stricter than for industrial honey. Therefore, honey that does not meet the criteria for
table honey may still be used as industrial honey30
.
Honey has some applications in medicine. It has an antibacterial property which has not
been fully examined yet. The antibacterial activity of honey is primarily related to
hydrogen peroxide generated by the action of an enzyme added to the nectar by bees.The hydrogen peroxide cleans and dehydrates the wound and thereby promotes
healing31
. For that reason, honey is incorporated into bandages for treating wounds
resulting from burns.
Beeswax
Beeswax is a natural animal wax produced by various species of honey bees. The wax is
secreted by four pairs of glands on the worker bees. Bees use the wax to construct cells
and cappings in the comb in which the honey is stored. Beeswax is extracted from old or
damaged combs and is therefore a by-product of honey production.
Beeswax has several chemical properties that are unique and highly appreciated by
certain industries. Beeswax is a very stable substance that resists oxidation; it is soluble
in water and is barely affected by acid. The composition of beeswax is very complex; the
industry has not been able to produce a substitute with equal properties. Although
many synthetic waxes are available today, beeswax remains irreplaceable in many
industrial applications.
Beeswax is used not only by the bee-keeping industry, for the production of
honeycombs, but also by the pharmaceutical and cosmetics industry, in candle-making
and for the production of polishes and varnishes32
. Compared to the market for honey,
however, beeswax is a minor market.
Propolis
Propolis is a substance collected by bees from the buds and leaves of plants. This
substance, which resembles resin, is used to fortify and seal the beehive to protect it
against external influences such as infections. Several health claims have been made
about propolis. Like honey, it contains a natural antibiotic which is used in treating
wounds. It allegedly increases resistance to disease and promotes general well-being.
Propolis is sold in capsules, tablets, granules, tinctures, and ointments.
Royal jelly
Royal jelly is a white secretion from certain glands of nurse bees. It is the food of the
queen bee. Royal jelly is reputed to have powerful beneficial effects. It is thought to
30 (CBI 2005b) 31 (Waikato Honey Research Unit Honey 2005) 32 (FAO 1996)
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Consumers - developing versus developed countries
The gap between consumer trends in developing and developed countries continues to
widen. According to Pick n Pay, South African honey’s main retail competitor is Golden
Syrup, even though two thirds of the honey consumed is imported, ‘dumped’37
Chinese
honey, (not accepted for import by the EU because of its dangerous residues38
).
Consumers in South Africa are generally not interested in the origins of their sweetener,
only the price. By contrast, consumers in Europe, Japan and North America are no
longer hoping for safe food, they see it as a prerequisite39
. Discerning, conscious
consumers want to be able to “trace the taste” of their food40
. They need to know not
only that their food is safe, but also that it is a) benefitting (or at least not being
detrimental to) the natural environment, b) benefitting the producers in a social
uplifting way and c) creating economic development.
By 2012, it has become unviable to produce honey in South Africa for the local market.
Meanwhile, because of CCD (Colony Collapse Disorder41
), North America has lost nearly
30% of their bees, in parts of China farmers are having to hand-pollinate fruit trees
(because the honey bees have been wiped out42
) and Europe, Japan and the US arevirtually no longer able to produce their own organic honey
43. There is a general global
shortage of honey.
7.
Marketing
Product Goals & Strategic Objectives
AHB has a goal to produce super-healthy, premium grade, organic, fair-trade, BRC44
(British Retail Consortium) accredited, fully traceable honey bee products at competitive
market prices (i.e. without the surcharges usually charged for traditional “fair-trade”
products). Most importantly, products of this nature will result in client loyalty because
customers will experience a tangible relationship with the producers: they will be able
to see exactly what they are eating, trace where it comes from and who made it, and
establish what the health benefits are.
Marketing Objectives
As explained earlier, although AHB recognizes that one of it’s products is the franchise,
it doesn’t market it’s franchises as yet. This chapter therefore focuses on the marketing
of honey bee products.
37 No longer accepted into the EU, honey is dumped in Africa where governments are l ess quality stringent (Shneider 2011). 38 In February 2002, the world honey market was strongly affected by an EU ban on Chinese honey, following the identification of antibiotics in samples of Chinese honey. (FAO 1996) 39 (GlobalGap 2010) 40 (Harrewyn 2011) 41 A phenomenon in which worker bees from a beehive or European honey bee colony abruptly disappear. (USDA 2012) 42 Maoxian County of Sichuan, China … lost it pollinators through the indiscriminate use of pesticides and the over -harvesting of its honey. The result is that hand pollination of pear and apple
trees has become a common practice. (Buzzle 2010) 43 The production of organic honey in [Japan, USA and] Europe is limited. The main reasons are the presence of; and treatment of; the varroa mite, the lack of unpolluted areas, and cold winters.
(Koekoek, F; van Loon, M; 2006) 44 The BRC Global Standards are industry-leading Technical Standards that specify requirements to be met by an organisation to enable the production, packaging, storage and distribution of
safe food products (BRC 2012).
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Partnering with key retailers – table honey
Rather than selling product directly to market, AHB prefers to establish and nurture
relationships with key retailers on a partnership basis. AHB will focus on partnering with
South African and European retailers that place emphasis on a more discerning, ethical
consumer. A partnership directly with a retailer could eliminate unnecessary waste
caused by distribution middlemen, enabling the retailer to price organic, fair-trade
honey competitively.
AHB is looking for retailers that share:
the same values,
an appreciation of the need for sound economic business practices which includetaking the social, ethical and environmental bottom-line into account,
similar principles on three pillars:
o sustainable products & services,o resource efficiency & climate protection, ando producers, employees & society.
Partnering with raw materials supply chain partners
Honey bee products are used as ingredients in food, cosmetics and pharmaceutical
products. Of the 10 K tons of honey consumed by Switzerland each year, 9 K tons of the
honey is used as ingredients45
. Large supply chain raw material agents like Varistor ag46
,
develop relationships with producers to supply their clients honey bee products. It is
AHB’s objective to partner with such agencies.
Selling product
Initially product will be limited to organic, fair-trade table and industrial honey and
organic, fair-trade beeswax. Over time the product range will increase to includepropolis, pollen and royal jelly. Because AHB will be selling through supermarket
retailers and raw materials supply chain partners, its product-selling marketing strategy
will be one of support to the merchants rather than one of direct sales. This section
primarily focuses on this approach.
Market research
Lifestyles of upper middle income groups are similar in South Africa to those of
professionals in other developed countries, i.e. working couples with two or three
children, with nutritious eating habits and a demand for nutritional variety. Durban,
Johannesburg and Cape Town have substantial Muslim and Jewish populations and thusrequire halal
47 and kosher
48 products. During 2010, kosher honey was Pick n Pay’s
49
best-seller50
– a good example of how important it is to understand psychographics.
45 (Heller 2011) 4646 (Varistor 2012) 47 Halal is a term designating food which is permissible to use according t o Islamic law (Kalamullah 2012). 48 Kosher foods are those that conform to the regulations of the Jewish Halakhic law framework, kosher meaning fit or allowed to be eaten (Jewish Encyclopaedia 2012). 49 The Pick n Pay Gr oup is one of Africa's l argest and most consistently successful retailers of food, general merchandise and clothing. (Pick n Pay 2010) 50 (Swanevelder 2010)
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Consumers chose kosher over conventional honey, assuming that because it had been
blessed by a Rabbi51
it was healthier, safer or cleaner.52
The Zion Christian Church (ZCC)
church, (over 20 M members also with strict dietary laws) are a good example of a
massive untapped potential market for unadulterated honey53
.
The EU accounts for approximately 20-25% of the world’s honey consumption. In 2007,
consumption amounted to 310 thousand tons. Consumption figures for the period2003-2007 show strong fluctuations in terms of value. The fluctuations were caused by
large price variations. However, figures on volumes and industry sources indicate that
real consumption was stable. Due to the maturity of the market, consumption of
conventional honey (i.e. not value added such as organic, fair-trade accredited) is not
expected to show enormous growth in the coming years. Increased interest in a healthy
lifestyle maintains consumer interest in conventional honey, but does not lead to a
significant growth in conventional honey sales. In contrast and as discussed later,
organic, fair-trade honey consumption levels are rapidly increasing. Interestingly the
economic crisis has had little effect on honey sales. Consumers in the EU continue to
purchase honey, as they regard honey as a basic food product54
. In general, the honey
market is a very stable market. Nevertheless, the market is still evolving. Market shares
of monofloral and single-origin honeys are increasing and increased concerns about the
effects of intensive farming on the countryside, as well as on the environment in
general, have also intensified interest in organic honey. European bee-keeping is
severely threatened by varroasis and the Colony Collapse Disorder. Both ‘diseases’ lead
to decreases in the number of bee colonies and reduced honey production. They also
affect the profitability of bee-keeping55
. Furthermore in 2011 the EU placed a ban on all
GM-contaminated honey56
.
Industry Trends
As a consequence of growing concerns about food safety, upper middle income
consumers and other stakeholders are demanding a quality guarantee. Food quality
requires transparency throughout the supply chain. Traceability records all stages of the
supply chain and therefore adds value to the quality and safety.
Consumers are becoming more interested in healthful and “natural” food. Honey is a
natural sweetener that contains health-promoting ingredients such as vitamins,
minerals and amino acids and is therefore considered better than refined beet or cane
sugar. Although honey has many flavors, mono-floral types are becoming more popular
and consumption growth is expected to increase dramatically57
.
51 In Judaism, a Rabbi i s a teacher of Torah (Jewish Encyclopaedia 2012). 52 (Harrewyn 2011) 53 (ZCC 2010) 5454 (SA Food & Drink Report 2010) 55 In contrast, South African bees are more robust and not effected by either disease (Martin and Medina 2004).
56 (Phillips 2011) 57 (CBI 1999)
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While some consumers are becoming more concerned about the safety of food, in
South Africa there is a trend for consumers to turn away from expensive products such
as honey. Here Golden Syrup is honey’s greatest competitor58
.
EU imports of honey amounted to € 375 M in 2007. Imports fluctuated significantly
between 2003 and 2007. In terms of volume, imports actually increased by an average
of 1.7% annually to 215 thousand tons. Global prices of honey fluctuated as a result ofimport bans on honey from several countries, such as China and Brazil, and weather
conditions. The bans have been lifted again. However, bad weather conditions keep
honey quantities available for import to the EU small. Nevertheless, EU importers
continue to buy honey, though at higher prices.
The largest EU markets for imports of honey from developing countries are Germany,
the UK, Spain, Italy, Belgium and France. Developing countries together supply 41% of
total EU honey imports. Argentina is the leading supplier to the EU. However, the value
of supplies from Argentina decreased significantly in the period 2003-2007 and, in 2008
and early 2009, supply volumes decreased sharply. Consequently, other developing
countries have profited from the developments in Argentinean honey supplies59
.
Exports of honey to the EU are restricted to countries which are on the so-called ‘third
country list’. The list states the extra-EU countries which are allowed to export honey to
the EU (2001/158/EC). Countries not on the list are not allowed to supply honey to the
EU. To be on the list, a country should have a Residue Monitoring plan for the analysis of
residues of antibiotics, sulphonamides, pesticides and heavy metals.60
Germany is by far the leading EU market for honey, with consumption amounting to 96
thousand tons in 2007 (30% share in the EU). The other major consumers of honey in
the EU are the United Kingdom, France and Spain. Per capita consumption differsgreatly between EU countries. In 2007, per capita consumption in Greece was 1.6 kg,
while in Italy it was only 0.3 kg61
.
As discussed, the honey market is principally segmented into honey for household
consumption and honey for industrial use. Table honey is used mainly as a spread on
bread, and some is used as a natural sweetener for drinks such as tea or milk. It can also
be used in food preparations such as salads, vegetable and meat glazes and casserole
dishes. The other major market segment for honey is the food industry. This industrial
honey is mainly used in the bakery, confectionery and cereal industries. It is particularly
useful in baked goods. The moisture-absorbing quality of honey helps breads, cakes,cookies and candies stay fresh longer. Finally, honey also has a use in honey wine and
several after-dinner liqueurs. Honey was traditionally used in food preparations, but is
58 (Swanevelder 2010) 59 (Koekoek, F; van Loon, M; 2006) 60 South Africa is currently not on this list because export activity became extremely low in recent years. Action is being taken by AHB and the South African Department of Agriculture to rectify
this. The process is not so m uch a question of whether permission will be granted but what the costs of testing will be t o meet the required expectations. AHB is however confident that due to the
global deficit in honey, honey of the quality to be produced by the venture will be welcomed into Europe with little hindrance (Allsopp 2012). 61 (CBI 1999)
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now often replaced by sugar and sugar syrups. The honey which is used by the food
industry is often of a lower quality than the honey used by households.
Consumer preferences for honey show many similarities between countries. In general,
EU consumers have a preference for light-colored, clear, liquid honey with a mild taste.
Honey packers in the EU blend honey from mixed sources to create honeys with such
properties and an acceptable price. The honey used in the blends is polyfloral honey.The market for monofloral honeys is small (estimated at less than 10%). The ratio
between liquid honey and creamed honey differs strongly between countries. Most
Belgians and Finnish consumers prefer creamed honey, while most consumers in The
Netherlands prefer liquid honey. Consumption of darker and stronger honeys is often
related to the domestic production of forest honey. Where forest honey is a traditional
product enjoying wide acceptance, consumption of darker and stronger honeys is more
common. In the more developed markets, offering wide assortments, darker and
stronger honeys are also more common62
.
OrganicAn estimate of the total market for organic honey in Europe in 2007 was around 6.5thousand tons per year (i.e. 2% of the total honey market at the time). Germany
accounted for 2.5 thousand tons of the EU consumption of organic honey. Organic
honey is mainly used as table honey. Consumers of organic and health foods mainly use
honey as a natural, nutritious alternative to sugar and for flavouring in cooking. It is also
used by many consumers as a natural medicine. Although scientific research has not
been able to confirm many of the claims on the medicinal properties of honey, there are
many people who believe in it. Consumers are willing to pay a higher price for a product
such as honey, when it is organic63
.
Fair-tradeThe fair-trade segment consists of consumers who are socially conscious and are willing
to pay a higher price for products that are fair-trade accredited. The fair-trade global
honey market reached 1.7 thousand tons in 2007 and is growing steadily, the leading
consumers being Germany, Switzerland and the UK. The EU market for fair-trade honey
amounted to 1.1 thousand tons in 2006. The largest market is Germany, with sales
amounting to 438 tons in 2006. The UK is the second largest EU consumer and shows a
large growth, as sales increased from 101 tons in 2003 to 322 tons in 2006. Other
emerging fair-trade honey markets are France and Denmark64.
Natural health foodEU consumers are increasingly interested in a healthy lifestyle and, consequently, in the
consumption of health food. Health food refers to food products which are low in fat or
even have calorie-burning properties and which have limited sugar and salt content.
This includes functional foods, which have specific health-promoting properties (e.g.
62 (CBI 2005b) 63 (Koekoek, F; van Loon, M; 2006) 64 (Seufert 2010)
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antioxidants) and food products with added vitamins and minerals, or bacteria
supporting the intestinal function. The increasing awareness of the importance of diet
and nutrition, particularly among Western European consumers, has been accompanied
by increasing concerns about the safety of food. Recent food scandals and critical food
research have led to a negative image of synthetically manufactured food ingredients.
Together with a higher appreciation of products from nature and a growing
environmental consciousness, this has made natural products more popular.
Honey fits in well with the natural health trend. It is a completely natural product which
has several health-promoting properties. Nevertheless, honey consumption does not
expand under influence of the health trend. Honey has always been appreciated for its
natural origin and its therapeutic as well as medicinal properties. The health trend re-
emphasizes the value of honey and strengthens sales to existing consumers, but does
not cause significant increases in total sales. It mainly helps to prevent substitution of
honey by other bread spreads and sweeteners, such as jams, which are continuously
improved and for which the assortment continues to expand65
.
Monofloral honeyMonofloral honeys, such as acacia, are becoming more popular in the EU. Especially in
the leading EU markets, demand for these monofloral honeys is increasing at the
expense of blended honeys. The largest growth in consumption is expected for these
types of honey. However, there are significant differences in consumer habits and
preferences in the various EU countries66
.
Adding valueBecause African honey producers have developed a bad reputation (due to deficiencies
in quality and supply), a strong quality focus is important to overcome the hesitation of
importers. Successful exports will require presenting a strong value proposition tocustomers, based on aspects such as taste and appearance, botanical origin, production
method (organic/fair-trade) and service delivery. Honey with a “good story,” such as
fair-trade, will sell well in countries such as Germany, Switzerland and the United
Kingdom. Marshall points out that South Africa has the potential to become an
important exporter to the European Union67
. Currently, South Africa exports no honey
at all.
In South Africa, the value-added food market is benefitting from the booming middle-
class and will continue to reap benefits in the future as well. The middle-class cultural
values “determine how consumers look at benefits of products and individual needs,wants and desires”
68. Ethical honey offers many benefits. It is safe, clean and
unadulterated; it is beneficial to human health and the environment; its production is
traceable and it helps to alleviates poverty.
65 (CBI 1999) 66 (Koekoek, F; van Loon, M; 2006) 67 (Marshall 2010) 68 (Association for Consumer Research 2012)
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Industry analysis
Demographics of target market segmentSouth Africa has one of the most skewed income distribution patterns in the world, with
the top 10% of the population accounting for 47% of consumption or income. A market
segmentation tool in South Africa is the Living Standards Measure (LSM). This tool
divides the population into ten LSM groups were 10 is the highest and 1 is the lowest. It
cuts across race and other techniques of categorizing people, and instead groups people
according to their living standards using criteria such as degree of urbanization and
ownership of cars and major appliances. The LSM uses 29 criteria such as hot running
water, electric stove, satellite TV, PC in the home and number of cell phones per
household.
Ranking of SegmentsThe LSMs 7, 8, 9 and 10 are attractive potential markets because of their high
expenditure. With the right kinds of values offered (e.g. unadulterated honey
sanctioned by religious groups such as the ZCC), the lower LSMs (4, 5 and 6) are also
become potentially attractive markets because of their numbers. In South Africa theimportance of Gauteng (with an average income per capita 93% higher than the national
average), Western Cape and KwaZulu-Natal cannot be underestimated in determining
strategies for sales of high value products in South Africa. The black middle class grew by
30% during 2006, adding a further 421,000 black people to the middle income layer of
the population known as "Black Diamonds." These figures point to a rapid growth in
consumer lifestyles among the black population, in turn having an impact on sales of
consumer goods. The Black Diamonds moved an extra R 60 billion (US$ 7 billion) into the
economy during 2006, despite four interest rate increases. Black Diamonds are
estimated to have an annual spending power of R 180 billion (US$ 25 billion). According
to the UCT Unilever Institute study, Black Diamonds account for 12% of blackconsumers, but have 54% of black buying power. Black Diamonds now make up 2.6 M of
the total 23 M adult African population. For a company marketing consumer goods in
South Africa this is important as it points to a growing and more quality- and status-
conscious consumer market.
Target customers and stages of adoptionAdoption and diffusion of innovation is a mass communication theory used by many, if
not all, marketers. A classic example is the Manuka honey story. Ten years ago New
Zealand bee-keepers dumped their Manuka honey or fed it to their cattle. Because of
clever marketing tactics that highlighted Manuka honey’s medicinal values, producers
now achieve prices 10 times higher than conventional honey. The instant consumeradoption and very fast market penetration can probably be attributed to satisfying
consumer culture (i.e. traceable, healthy, mono-flora, organic honey with medicinal
properties). Major South African retailers are focusing on the "Black Diamond" market.
This implies high value product that satisfies the aspirational needs of this target
market. Companies are increasingly also targeting low-income consumers often referred
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to as the BOP69
. Strengthening health consciousness will provide opportunities across all
segments of the industry.
How to target customersOrganic and fair-trade niches are the most attractive segments for African honeys. This
is where an effective traceability system that enables the consumer to choose what
food they purchase will be the maker or breaker of a product. With the right marketingcampaign, virtually all the market segments can be targeted. Marketing appropriate
values to market segments is more important than targeting one segment.
Current competitive situationIn South Africa competition is all about price. There is very little consumer awareness
about the value of honey, so the biggest competition is sugar syrup. Two thirds of honey
consumed in South Africa is imported. For AHB the major competition for producers are
honey packers that import cheap honey. However there is currently no competition on
the value added honey playing field largely because all imported honey must be
radiated and thereby eliminating organic certification. The honey packers import verylow quality honey from countries like China and Argentina and blend it with local honey.
As a result they are able to sell it at prices slightly higher than sugar syrups. It is a market
that will be very difficult to infiltrate because of the high cost of producing value-added
honey. Similarly, in Europe there is major competition for blended honeys. The largest
importers and packers of honey are found in Europe and especially Germany. There is,
however, very little competition for niche value-added honeys.
Major competitors in South AfricaFleurs Honey - Pretoria
Highveld Honey Farms - Goldcrest Honey - Johannesburg
Highveld Honey Farms - Littlebee Honey - JohannesburgNektar Honey – Johannesburg
Major competitors in EuropeRowse Honey – United Kingdom
Walter Lang - Germany
Tuchel Fair-trade - Germany
Gepa Fair-trade - Germany
Alfred L. Wolff - Honey & Bee Product - Germany
Naturenvie Sa - France
Alto Eco France – France
AHB’s competitive advantage
AHB can provide value-added honey at competitive prices.
69 The largest, but poorest socio-economic group. (BRINK 2010)
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AHB’s competitive disadvantage
Because AHB is a start-up company it has not yet been able to demonstrate reliability,
quality and stability.
AHB’s competitive edge
Niche
AHB will be providing 100% traceable (by the customer) organic, fair-trade,
unadulterated honey from unindustrialized, unpolluted parts of Africa. Only one other
producer (from Mexico) offers the same value adds but at exorbitant prices.
Marketing Strategies
Key strategies
Direct off-take agreements with retailer/merchant: supply product direct todistribution networks. Three off-take ‘letters of interest’ are attached as Appendix B.
Through traceability, enable the customer to become their own organic, fair-tradeaccreditation moderator.
Use technology to establish relationships between producers and customers.
The technology will also provide complete transparency and therefore developcustomer integrity and loyalty.
Achieve low cost exposure by running extensive public relations campaigns. Themedia are always interested in running articles on the venture as it is a unique, new,
“feel-good” story; moreover, it has the marketing advantage of benefitting the
customer, the producer, the retailer/merchant, the natural environment and society
generally.
Provide the market with an interactive, well-run website that can be accessed fromstore, cell phone or computer.
Positioning
AHB positions itself as premium quality, 100% traceable, organic, fair-trade African
honey that is sold at conventional honey prices. Emphasis will be made on the shared
values of the honey.
http://www.africanhoneybee.co.za/_literature_112745/Appendix_Bhttp://www.africanhoneybee.co.za/_literature_112745/Appendix_Bhttp://www.africanhoneybee.co.za/_literature_112745/Appendix_Bhttp://www.africanhoneybee.co.za/_literature_112745/Appendix_B
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The global village market concept – a self-tracing transparency
Imagine you are in Zürich, visiting your favorite Coop store at Bahnhofbrücke 1. Firstly,
you have chosen Coop because they guarantee safe (BRC-graded) triple-bottom-line
food. You want to buy some honey. At the honey shelf, you select a jar labeled “organic,
fair-trade.” The origin is marked as “Kruger National Park, South Africa, Batch
AHB150267, July 2015.” You notice that this jar is no more expensive than other
conventional honeys. Above the shelf you notice a computer screen and a barcode
reader with a sign that says “scan here for info on your jar of honey.” You decide to
rather use your cell phone QR barcode scanner. You scan the jar and immediately a
web-page opens with photographs, YouTube video links, articles and a Facebook page
enabling you to see, read about, watch and communicate with the actual rural African
bee-keeper that produced your jar of honey. There is information about the climatic
conditions and the wild unpolluted flora that made your batch of honey unique. You can
meet the bee-keeper’s family and see how by buying his/her honey, you have helped lift
people out of rural poverty. You can read about the nutritional and medicinal values of
your particular batch, followed by blogs suggesting recipes, uses and doses. You can
trace your jar of honey right down to the exact hive it came from. You can even view theposition of the hive on Google Earth. Best of all is the relationship you develop with the
honey bee farmer. You and your family love the unique, creamy African flavors of the
honey produced by Emily Khoza and you continue to buy AHB honey. Later you and your
family visit Emily at her home on your way to the Kruger Park….
Product
Below are the characteristics and attributes of the honey produced by this venture:
Unadulterated – pure, virgin honey that doesn’t contain any additives such as sugarsyrup.
Unblended – similar to wine where no two batches are the same, each with its ownunique characteristics. Each jar of honey can be traced to a specific batch
characterized by season, climate and specific plants that flowered during that
season.
Raw - honey as it exists in the beehive or as obtained by extraction, settling orstraining, without adding heat.
Traceable - product loyalty is nurtured by enabling customers to do their owntraceability i.e. the ability to trace the product back to the producer, see the exact
location of the hive that produced the batch in the jar as well as the plants that
contributed to the batch, and even communicate with the producer.
Organic accredited – supporting a production system that sustains the health ofsoils, ecosystems and people. It relies on ecological processes, biodiversity and
cycles adapted to local conditions, rather than the use of inputs with adverse effects.
Organic agriculture combines tradition, innovation and science to benefit the shared
environment and promote fair relationships and a good quality of life for all
involved.
Fair-trade accredited – AHB sees institutionalized “fair-trade" as a subsidy ormarketing ploy that impedes growth. It has therefore developed a model that helps
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producers in African poverty nodes to directly access global markets, achieve
competitive prices, trade under better conditions and realize sustainability.
Poverty alleviation – each HUB of 40 BKBs will create 200 new sustainable jobs andlift over 2000 people out of poverty
70.
Mostly indigenous flora – the Lowveld is home to over 100 indigenous bee plants.This makes the honey special because no two batches are ever the same. Different
plants flower at different times according to the seasons and climate. Because ofthe variety of plants that the bees forage on, the medicinal properties of the honey
are usually much higher than other honeys.
Greater Kruger National Park – bordering the production area to the East is theworld-famous Kruger National Park. Hives positioned along its boundary will
therefore produce a very unique honey: there are not many honeys produced in
famous national parks.
Environmentally friendly - bee-keeping has an overwhelmingly positive impact onthe natural environment
71. Communities that benefit economically from their
natural environment develop respect for it and a sense of conservation. AHB is also
assisting the Sabi Sand Game reserve (part of the greater Kruger National Park) toprotect Rhinos from poachers and trees from elephants.
No CO2 emissions – the bee-keeping production methodology developed by AHBfunctions on a zero fossil fuel, zero grid electricity system where solar-charged
electric bikes are used for transport.
Medicinal attributes – the honey produced from Africa’s indigenous bush has beentested and found to be even healthier than New Zealand’s Manuka honey, which
retails at US$120 per kg.72
Bushveld honeys were tested against Manuka honey to
compare their antibacterial action and in most cases the African honeys
demonstrated a higher antibacterial factor and tasted much better.
Market price – by partnering with AHB, retailers are able to deliver superior valuesand benefits to their customers at market prices by creatively restructuring the value
chain.
Pricing
Current indicative consumer prices for conventional table honey:
Woolworths (South Africa) – R110 (US$ 13.75) per kg73
Coop (Switzerland) – R120 (US$ 15) per kg74
Markets
The European marketThe European market has an appetite for organic and fair-trade products and thereforeAHB’s honey will be well received if its organic, fair-trade attributes are promoted.
70 Each BKB creates 5 permanent jobs (as discussed earlier). Each income earner in Bushbuckridge supports 10 people on average (StatsSA 2007).
71 (ARC 2001) 72 (Amazon 2012) 73 (Woolworths 2012) 74 (Coop 2012)
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Three major European supermarket groups have already provided AHB with off-takeletters of interest, requiring that the product be packaged and labeled in South
Africa.
They like the proposed brand name “African Honey Bee” and would like AHB topromote inf ormation about the project’s traceability, poverty alleviation,
community development and environmental impact.
This information will also be very useful for their Corporate Social Investment (CSI)public image.
They are very excited about AHB’s website proposal to link producers to consumersusing internet social networking. They will consider placing computer screens and
QR barcode scanners with product on shelf so that consumers can immediately view
(on the website) the bee-keeper who produced the batch of honey, information on
how the bee-keeper’s family have been lifted out of poverty, the plants that
contributed to that specific batch and even the bee-keeper’s social media address.
Furthermore they are very excited to hear that AHB had partnered with the SabiSand Game reserve and Kruger National Park and plan to run a media campaign to
promote this and the CSI aspects of the business.
The South African marketConsumer awareness about the positive attributes of organic, fair-trade honey in South
Africa is limited.
Most consumers consider honey a sweetener, not much better than Golden Syrup.
As a result, the best-selling honey in South Africa is cheap imported (dumped)honey.
AHB have, however, received an off-take agreement from an organic fooddistributor that supplies health products to about 350 stores in southern Africa.
These stores include upmarket delis, tourism boutique stores, a whole range ofpharmacies (e.g. The Dischem Group) and health stores.
After investigating how New Zealand successfully markets its Manuka honey75, AHBdecided to explore marketing its honey in South Africa as a medicinal or health food
product (packaged in a brown medicinal-looking jar). Initial market indicators are
good. South African consumers are prepared to pay higher prices for “medicinal
honey.” As discussed earlier, certain market sectors, e.g. the ZCC church, may use
only natural76
products as food/drink for religious reasons. Currently they consume
non-organic (imported, dumped) honey unknowingly. The ZCC church has
approximately 20 M members and their Easter gathering in Moria attracts 15 M
pilgrims. AHB sees this as potentially a very lucrative market.
75Ten years ago, New Zealand bee-keepers dumped their manuka honey or feed it to their cattle. Their bee-keeping association came up with a clever marketing tactic where they started selli ng
their honey as a medicine. They packaged the honey in a brown jar and developed a “Unique Manuka Factor” to measure the honey’s antibacterial activity. Their government assisted in a
worldwide marketing campaign and now they achieve prices 8 times higher than conventional honey. (MGO 2010) 76 A product in its natural form that has not been processed.
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Supply & demand
The U.K. consumed: 27,000 tons of honey in 2003 and 28,000 tons of honey in 2006,725 tons of organic honey in 2003 and 1200 tons of organic honey in 2006, 100 tons
of fair-trade honey in 2003 and 250 tons of fair-trade honey in 200677
.
Switzerland consumed: 10,000 tons of honey in 201078.
South Africa consumed: 1,500 tons of honey in 2003 and 3,000 tons of honey in2006
79
Sustainability requirement
AHB needs to make a minimum of R47 per kg (wholesale price) to reach equilibrium80
.
As illustrated in the figure below, AHB can achieve a wholesale price of R47 if product is
sold in South Africa81
to Woolworths.
To capture market, AHB will provide the consumer with a high value product at
conventional product prices82
.
Communication Strategies
Advertising
There are so many public relations opportunities for this venture that it would be a
waste to spend marketing budget on expensive advertising.
77 (Seiler 2011) 78 (Seufert 2010) 79 (Shneider 2011) 80 (Silimela Development Services 2009) 81 (Swanevelder 2010) 82 (StatsSA 2007)
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Social Media
Much like www.beanthere.co.za, aggregate all communication across the socialmedia and other online platforms to drive traffic back to the website. This will assist
in keeping the content current and relevant, two of the cornerstones of social media.
By having the producers and the consumers interacting with each other throughthese media, the product will have an extra layer of communication and a feeling of
inclusion by all parties concerned.
“Save the Honey Bee” Campaign
Colony Collapse Disorder (CCD) amongst other honey bee epidemics has created ahuge awareness about the plight of the honey bee. This global campaign can be used
to AHB’s advantage.
With a project and a product of this nature, opportunities abound – something that is
often quite lacking when doing media, stakeholder and influencer relations. With the
AHB project, there is not only scope to educate the public about the health benefits of
honey, but also help to empower communities to help themselves, while at the sametime profiling the will and determination of ordinary South Africans to be the best they
can be, with a world-class product, farmed locally for a global and domestic market 84
.
Distribution
Distribution will be achieved by supplying directly to retailer/merchant distribution
hubs. Where possible, product will be packaged and labeled in Mpumalanga, South
Africa. Crated product will be packed in containers for export and local distribution.
Bulk importers
Bulk imports of honey reach consumers through importers, packers, wholesalers andretailers. Importers usually combine the functions of importing honey into the EU with
processing, blending and packing the honey. Packers blend most of the polyfloral honey
to make acceptable table honeys. Most of the low-priced honeys end up as private label
products on supermarket shelves. The higher-quality monofloral and single-origin
honeys are sold as packer’s brands in both supermarkets and specialty shops.
Retailers
An estimated 85% of honey in the EU is sold directly to consumers85
, and retailers play
an important role in the distribution of honey to consumers, super- and hypermarkets
constitute the most important outlets for honey. They belong to big retail groups in the
EU like Metro (Germany - http://www.metro.de), REWE (Germany -
http://www.rewe.de), Carrefour (France - http://www.carrefour.com), Auchan (France -
http://www.auchan.com), Groupe Casino (France -http://www.groupe-casino.com),
Ahold (The Netherlands -http://www.ahold.com), Delhaize Group (Belgium -http://www.delhaizegroup.com), Coop (Switzerland - www.coop.ch), Tesco (UK -
84 (Verrijdt 2011)
85 (Koekoek, F; van Loon, M; 2006)
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along the value chain. When this information is added to actual sales information,
effective sales reviews can be made.
SWOT Analysis
STRENGTHS
Commercially viable Incubation HUB ensuresreaching break-even fast.
Simple Phased Approach based on principles ofsustainability…taking infrastructure to the
source…
Well researched concept, field tested throughpilot projects and R&D.
Based on critical mass of high quality honey. First professional bee-keeping course for
development bee-keeping.
Consistent with rural cluster developmentprojects.
WEAKNESSES
BKB loan risk and equipment abuse. BKB attrition. Theft and vandalism. Widespread project area and related logistics. Uncertainty regarding guaranteed market off-
take.
Reliance on domestic market. South Africa not listed as an EU honey provider.
OPPORTUNITIES
Access to abundant unpolluted natural resources. Global shortage of honey. Africa being the least polluted continent means
that we have the potential to become the highest
potential organic, fair-trade producer.
Value chain consolidation through the socialfranchise model.
Branding opportunities (fair-trade, organic, KrugerNational Park).
Availability of funding for poverty alleviationprojects.
Honey suppliers, including those in developing
countries, are offered good opportunities throughadapting to the natural and health trends. Many
food manufacturers are currently engaged in
replacing the synthetic and less healthy
ingredients in their food formulations by natural
and healthier substitutes. Honey is potentially one
such substitute.
THREATS
Political interference in project rollout. Bee disease, swarm absconding and Cape bee
problem.
Market disruptions from larg- scale producers. EU banning imports. A threat to the reputation of honey as a natural
health product, and subsequently to the
consumption of honey, is the imports of honey
contaminated by chloramphenicol and other
prohibited substances. Chloramphenicol is an
antibiotic which is used to cure sick bees, but
which can also cause a fatal blood condition in
susceptible individuals, called aplastic anaemia. In2002, Chinese honey was banned from the EU as it
was often contaminated with chloramphenicol.
The negative media attention seriously harmed
the reputation of honey as a natural health
product.
Climatic conditions could affect honey productionin a negative way.
8.
Innovation and Technology
Extensive research of failed rural development programmes in South Africa shows thatinsufficient training, lack of on-going support and inappropriate technology are three of
the biggest obstacles to sustainable success. AHB has addressed these issues by
developing an innovative micro-franchise model (discussed in this document), Afro-
Western bee-keeping technology, data and traceability software and an effective
method of training. Further information can be found in Appendix D and Appendix C
respectively.
http://www.africanhoneybee.co.za/_literature_112747/Appendix_Dhttp://www.africanhoneybee.co.za/_literature_112747/Appendix_Dhttp://www.africanhoneybee.co.za/_literature_112747/Appendix_Dhttp://www.africanhoneybee.co.za/_literature_112746/Appendix_Chttp://www.africanhoneybee.co.za/_literature_112746/Appendix_Chttp://www.africanhoneybee.co.za/_literature_112746/Appendix_Chttp://www.africanhoneybee.co.za/_literature_112746/Appendix_Chttp://www.africanhoneybee.co.za/_literature_112747/Appendix_D
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Providing support on a partnership basis – micro-franchising
The AHB micro-franchise model is not only a revolutionary new model for the South
African bee-keeping industry, but a proven and stress-tested approach to sustainable
small business growth across the globe.
Micro-franchising is able to effectively address the issues of critical mass, appropriate
structures, training, logistical support and access to market in a way that increases
development bee-keeper retention in the industry.
Mi