Hi Mal and all, I would recommend you guys check out Comvita in...

Hi Mal and all,

I would recommend you guys check out Comvita in NZ for a potential analogue to TFC.

Comvita is the developer and marketer of high value manuka honey related products including medical grade wound care dressings.

Manuka honey has a unique antibacterial and antifungal compound that Comvita has developed into medical products and is successfully marketing at a global level. It also markets a range of health products as well.

Comvita started out at the product development and marketing end of the supply chain and sourced honey from apiarist's under contract. Manuka is a scrub species on rural land in NZ and, depending upon soft commodity prices the supply would be variable - e.g. Manuka would be cut or sprayed and hillsides turned into grazing land when meat/ wool prices rose.

Comvita also found that supply became expensive and scarce off the back of their marketing success. Buyers would come from offshore and buy raw manuka honey and ship it offshore for processing and marketing (e.g. China and the UK).

To combat these problems Comvita vertically integrated ... in their case moving down the supply chain to secure supply for their fast growing health and medical business.

They now grow their own strains of manuka and plant these out in commercial plantations and have their own apiarist division in-house which secures their supply of product - both from their own plantations and from third party (farmer and iwi) owned land.

I really like vertically integrated businesses as they control the entire supply chain and clip the ticket at each stage. This is why I like what TFC is doing, albeit going in the reverse direction to Comvita.

Anyway ... Comvita's share price has more than tripled in the past couple of years after they fought off a predatory and hostile takeover bid.

I think in the fullness of time, TFC will enjoy the same type of success ... however it will require patience for investors but ultimately the returns could be much more because, unlike Comvita where Manuka (or Tea Tree) is really abundant in NZ (and Australia) and there are multiple apiarists and marketers, TFC will have a dominance in the Sandalwood market.

Cheers
John