Australia’s Biggest Honey Company Making Changes

Alan Harman

Analysts say Australian’s big Capilano Honey Ltd. is vulnerable to a takeover by a major food company looking for a well-known brand.

The speculation follows a major shuffle of its Australian Stock Exchange-listed shares with Icon Brands selling its 20.7% stake and billionaire media mogul Kerry Stokes taking a 12.5% holding through his private companies, Wroxby and Australian Capital Equity (ACE).

Stokes is well-known in Australia for his ability to use creep provisions to wield influence over listed companies without paying shareholders a premium to gain control of the company.

The West Australian newspaper quotes unnamed sources close to Stokes saying he likes the honey sector and Capilano’s management team and positioning as a market leader.

“ACE likes that aspect of the agriculture space and believes quality producers such as Capilano will have opportunities to grow domestically and in Asia,” the source says.

Several months ago, Capilano – which holds about 50% of the domestic honey market – changed its policy, no longer requiring its 500 beekeeper suppliers to hold shares in the company.

Analysts are quoted as saying the increased liquidity from the policy change could see further movement on the share register and opens up the possibility of a takeover by a major food group.

Capilano has a market value of A$51 million (US$48.2 million) with its shares rising more than 140% in the last year to reach a record $A6.10 (US$5.76) each.

For the six months to last Dec. 31, Capilano reported a 27.8% jump in revenue to A$43.2 million (US$40.8 million) from $33.8 million, while net profit before tax rose189.2% to A$2.95 million (US$2.79 million) from A$1.02 million (US$963,700).

Capilano is one of the largest honey packers in the world with a capacity to process and pack more than 45,000 tonnes of honey a year.

Queensland-based Capilano started as small family business operated by beekeeper J.C. (Tim) Smith and his brother H.A. (Bert) Smith. They began packing and selling their Capilano brand of honey to grocery stores in Brisbane in 1953.

The business grew into a co-operative of Australian beekeepers and then to a publicly listed company that exports into more than 33 countries.

It listed on the small Bendigo Stock Exchange (BSX) to facilitate share trading, making the transition to a public listed company on the Australian Stock Exchange in 2012.

The name Capilano means “rushing water” in the language of the American Indian tribe, the Squamish, who occupied the Capilano district near Vancouver in Canada. It was there Tim Smith met his wife, Jill, while stationed in Canada as a Royal Australian Air Force flying instructor in World War II and proposed to her on the Capilano Bridge.

Capilano chief executive, Ben McKee, a former beekeeper who did PhD research on bees, tells reporters he has been repositioning the company from a “feed the masses” approach to a focus on driving premium brands.

Capilano last year took control of West Australian honey producer Wescobee and the company has told shareholders it wants to increase exports to China and is on the lookout for more merger and acquisition opportunities.

Meantime, the blog reports Capilano, is trying to disguise the fact it is selling cheap imported honey in the Coles supermarket chain by reviving its Allowrie brand.

The label doesn’t identify Capilano as the honey producer, and instead states that it is Honey Corp. of Australia Pty. Ltd. However the address for the company is the same as Capilano.

The blog speculates the Australian drought-induced honey shortage has forced Capilano to use imports to full-fill its supply contract with Coles.

“Some reports suggest that Capilano’s honey is being imported from China and Argentina,” the blog says. “Both countries have been associated with fake honey scandals in the past. So it is disappointing that Australian consumers are not being told where the honey is being imported from.”

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