Bega’s taste for Capilano honey grows sweeter

Bega sweet on more Capilano shares


Agribusiness
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Bega Cheese lifts its stake in Capilano, and raises expectations of a looming bidding war

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Bega Cheese has increased its stake in the Capilano honey business to more than eight per cent after more share buying activity early this week.

Bega, which first started acquiring shares back in May, confirmed it has added a further 2.9pc stake in Australia’s biggest honey business on top of the 5.8pc it had accumulated by the start of September.

Some of the latest acquisition was bought from Amore Foods, a company associated with Bega’s Melbourne-based corporate advisor, David Williams.

Mr Williams is a principal of the Kidder Williams advisory firm which has had a strong strategic involvement with a range of agribusiness companies including, Select Harvests and salmon farmer, Tassal.  

Bega paid $21 a share for its recent purchases, although the market price lifted to a high of $21.19 early in the week –  firmly above the $20.06 proposed by the Roc Partners-Wattle Hill bidding syndicate which put a scheme of arrangement takeover offer on Capilano’s boardroom table last month.

More than `passive’ interest

While Bega has not flagged its longer term intentions, market observers expect it is quite likely to go head to head with the private equity syndicate to compete for shares, having already started paying a premium above the previous offer price.

Commentators noted it was unlikely Bega intended to be a passive shareholder.

However, the previous takeover arrangement and price remained in play because no formal alternative offer had emerged, yet.  

Meanwhile, the Australian Competition and Consumer Commission has begun investigating the honey industry’s import activities and potential sources of “fake” honey after German laboratory results found almost half the samples it tested from product sold in Australia were adulterated and unwittingly marketed as pure.

We want consumers to get what they're paying for - Rod Sims, Australian Competition and Consumer Commission

IGA branded Black and Gold private label honey, Aldi’s Bramwell's label brands and Capilano's Allowrie brand had samples which tested positive for added ingredients such as rice and corn syrup.

While none of the companies were apparently aware of any alleged adulteration, ACCC chairman, Sod Sims, said the competition watchdog was serious about any product marketing which could mislead consumers.

"We want consumers to get what they're paying for," he said.

“Whenever you've got allegations coming from such a credible source about such an important staple product, it becomes a very high priority for us."

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Capilano initially rejected the German Nuclear Magnetic Resonance test results, but has now offered to help fund an NMR testing facility in Australia to help "restore the confidence of consumers" in local honey.

It said it was immensely proud of the support it provided to the Australian honey industry and was troubled confidence in the sector was being eroded by inconsistent testing results.

Independent testing needed

Capilano managing director, Ben McKee, advised the federal Department of Agriculture Wednesday it wanted to join with other industry players, and "hopefully" the federal government, to establish an independent facility to test any honey sold in Australia.

The aim will be to ensure the database is appropriate for Australian honey and honeys from our region - Ben McKee, Capilano Honey

"Overseas facilities relied upon for recent media reports are failing to give a consistency of results needed to reassure the Australian public," Dr McKee said.

"The aim will be to ensure the database is appropriate for Australian honey and honeys from our region and the database contains transparency in the honey's authenticity and the expert assessment of determining adulteration."

Dr McKee said Brisbane-based Capilano's own C4 and C3 testing regime was "internationally recognised" but the company saw the benefit of a new regime to continue to restore the confidence of consumers and the local industry.

However, former ACCC chairman Allan Fels has urged testing and funding be completely independent of honey industry in order to be trusted by the public.

He noted people unconnected to the honey industry already knew it was a target for food fraud globally, and so regulators needed to question what honey importers had done to prevent tainted produce entering its supply chain.

Northern Victoria’s Beechworth Honey chief executive officer, Jodie Goldsworthy, welcomed Capilano’s support for NMR testing to identify adulterated honey, but also recommended a testing body be independent of the industry.

Ban high risk imports

She also urged a a temporary ban on imports from high risk countries.

“We now have proof of what we suspected for a very long time,” she said.

“Cheap, fake honey imports have contributed significantly to the 25 per cent decline in beekeeping and hive numbers that has occurred in the last decade.”

Consumers can buy 100pc Australian honey with confidence that it is the genuine article - Jodie Goldsworthy, Beechworth Honey

She said bees pollinated two-thirds of Australia’s food crops, so any further decline had dangerous implications for our food security.

“Until such time as a robust NMR testing regime can be put in place, we believe that the Government should place a temporary ban on imports from high risk countries,” she said.

“In the interim, consumers can buy 100pc Australian honey with confidence that it is the genuine article.

“Country of origin labels, mandatory on all honey, will help consumers feel confident of the origin – look for 100pc Australian.”

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The story Bega’s taste for Capilano honey grows sweeter first appeared on Farm Online.

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