Comvita Internationalisation Report

Executive Summary

Comvita products are currently available outside of New Zealand in the UK, Australia, Germany, Hong Kong, Japan, Taiwan and online anywhere across the world. The objective of this report was to investigate expansion possibilities for our products into new overseas markets.

We began the international research process with the entire world in mind, which through primary screening led us to ten, and through further assessment, down to four. We analysed these four countries upon their competitive environments and government restrictions, which then allowed us to choose the country that would best suit our current situation.

After analyzing the international market, we recommended China for the next stage in Comvita's international expansion plan. China has a large population base that if accessed by Comvita could produce some very lucrative sales figures. The natural health food market size in China is extremely large with growth rates estimated between 10 and 30 percent for the next few years. We segmented the Chinese market and analyzed how we might go about targeting the favourable market segments. The segments that we will look at targeting are the rapidly ageing population, the white-collar middle class, the upper class, and those who have a preference for health food products. These segments will be targeted in all of the main urban settlements across China once initial market penetration has occurred. After research we recommend distribution through China Food Services Corporation as they have local knowledge and contacts across the country.

The China health food market has the potential to be a large cash cow for Comvita. With such a large population base and an ever increasing demand for more westernized products Comvita is a brand which is ideally suited to take advantage of this situation. With such global emphasis on health food products and natural well being Comvita's expansion into China could lead to the company becoming a world renowned health food brand.

Table of Contents

Executive Summary 1

International Market Selection 4

1. Primary Screening 4

2. Initial Entry Assessment 4

Final Four Countries 7

3. Competitive Situation Analysis 8

Austria 8

Switzerland 9

China 10

Canada 10

Final Market Recommendation: 11

China 11

Market Segmentation and Analysis 11

Geographical 11

Income 12

Age 12

Psychographic 13

Market entry mode 13

Marketing Mix Strategy Analysis 16

Marketing Mix 17

Product 17

Price 18

Place 19

Promotion 19

Conclusion 20

Introduction

We are a New Zealand based company that is committed to providing its customers with high quality natural health foods and health products. Our range includes health foods such as Manuka Honey, and a health products range comprised of various extracts for individual health benefits, a range of beauty products, and the Medihoney range for skincare and first aid.

Comvita products are currently available outside of New Zealand in the UK, Australia, Germany, Hong Kong, Japan, Taiwan and online anywhere else. The products are available mainly at health stores, emphasizing the health benefits the products can offer to the consumer. We are looking to build on New Zealand's reputation as a relatively unspoiled natural environment by growing its presence in other overseas markets. We are planning on entering another country in order to expand our horizons and reduce the risk of becoming stagnant in our current state. Last year Comvita turned over a net profit after tax of NZ$5 Million and has experienced a year-on-year increase of 19 percent (Comvita Annual Report, 2010) even throughout the global recession. So while other companies are struggling with keeping afloat, we are hoping to pounce on another international market. This report is aimed at identifying the international market with the most potential for our product range.

For this market analysis we will only be looking to expand our natural health food selection, which includes our range of Manuka Honey. This is an industry with strong growth and demand overseas that we do not want to miss out on. By focusing solely on our Manuka Honey range, we will not be spreading ourselves thin with our limited resources, as we are only a small company compared to most of our competitors in this international market. If our initial venture is successful, then we will have the knowledge and contacts available to expand and include our diverse range of products in the chosen country.

International Market Selection

1. Primary Screening

We are already operating in the UK, Australia, Germany, Hong Kong, Japan and Taiwan, so these countries can be dismissed automatically. We have decided not to include the USA in our assessment of potential countries regardless of its potential, because of difficulties involved in dealing with the FDA (Food and Drug Administration, 2011) which does not recognize Honey as an active ingredient for health benefits, so making claims that Manuka Honey is active is in violation of the FDA labeling regulations (www.benefitofmanukahoney.com, 2010). This would limit our options for differentiation and in such a mature and competitive market this would make success very difficult. We have dismissed the Middle East due to its current political volatility, and its history of political instability. Greece and Ireland have been ruled out due to economic instability since the global recession, as have countries in South America such as Argentina and Brazil who, along with Greece and Ireland, have received bailouts from the IMF (International Monetary Fund) in the last 10 years (WordPress, 2010). India was considered initially, but despite its huge size,