Investor Newsletter – December 2019

December 2019
THE BUZZ
Issue #1 - December 2019

A WORD FROM BRETT

(Executive Director)

Upon the confirmation of the appointment of our
new CEO, David Banfield, we draw to a close the
period of strategic review undertaken by the
Comvita Board which commenced in June 2019.

Our trading environment continues to evolve
rapidly, both on the demand and supply side. New
norms have been established and we need to
continuously adjust and respond.

Comvita’s ability to adapt had not kept pace with
the rate of change. Our processes had become
complex and our vertically integrated organisation
model made us rigid. At times we were distracted
by conflicting objectives between supply
operations and demand parts of the business. The
strategic review identified that we had to refocus to
drive value within the business and at the same
time maintain sales growth momentum by being
more connected with our global consumers.

Accordingly, we have worked to create operational
separation between supply and demand (Brand),
each with a clear proposition for the creation of
commercial value:

 Mandate for Supply is: “low cost producer of
high-quality ingredients”
 Mandate for Brand is: “sustained profitable
growth”

The above model will be enabled through a
redesigned leadership structure and a streamlined
way of working. The aim is to simplify where there
was complexity, reduce costs, increase
productivity, and drive both top and bottom-line
growth.

This is just the beginning of a long-term
transformation programme for the full realisation
of Comvita’s potential.

We have laid the groundwork and taken the first
step to prepare a stable foundation for our new
CEO to build upon. We have an agreed agenda for
growth of the business and the direction is clear.
Board and Management are looking forward to
working with David on the next phase of growth for
Comvita in the New Year.

- Brett Hewlett


INTRODUCING DAVID
BANFIELD

(CEO – starting 20 January 2020)

We were delighted to announce the appointment
of our new CEO, David Banfield, on the 12
th

December following an extensive search and
recruitment process.

David is an internationally proven Managing
Director/ CEO with significant experience leading
both private and public sector companies with
revenues of up to NZ$600 million. He has first-
hand experience in acquisition and integration,
eCommerce, direct to consumer business models,
global retail across four Continents, and on the
ground experience in over 60 countries around the
world.

David has an excellent track record of delivering
strong results utilising his deep cultural
understanding and through the motivation and
development of diverse multi-cultural teams.

David has been married to his wife, Joy for 28 years
and is the proud father of triplet boys Louis, Charlie
and Harry. David and Joy will move to the Bay of
Plenty prior to joining us on 20 January. On the
personal side, he is passionate about rugby (ex-
player, Coach and avid supporter) water skiing,
golf and football.





David brings a wealth of leadership
experience from many countries around the
world in premium categories. This along with
his long-term experience in China and the US
will be hugely valuable in these crucial
markets for Comvita. More details of his
experience are outlined in the recent NZX
announcement sent out earlier in December.


“I cannot wait to get started on the
journey to lead the turnaround of
results at Comvita with the team.

We recognise that the business has
underperformed in recent times and
it’s our role to bring performance and
returns back to the levels our Team
and Shareholders rightfully expect.

I would like to wish all Shareholders a
Happy Christmas and a healthy and
successful 2020 and look forward to
meeting many of you in person in due
course.”

- David Banfield

THE BUZZ

Issue #1 - December 2019

CHINA: MANUKA HONEY NATURAL
WORLD
In September, Comvita launched its transformed UMF™ Manuka honey
range to consumers in China at the opening of Comvita Manuka Honey
Natural World at L+ Mall, Lujiazui Centre in Shanghai. The immersive
Manuka Honey Natural World experience covered 200m
2
of premium
retail space and detailing the source-to-shelf journey of Comvita
Manuka honey from rural New Zealand to retail shelves in China’s
largest city. Chinese celebrities and key opinion leaders, including
菜花
美少女
Monica and Yufie
时髦日志
(pictured below), walked through
the interactive New Zealand landscape display, which included large-
scale scented Manuka flowers and ferns, buzzing honeybees, beehives
and a virtual reality experience. In addition to those in attendance, a live
broadcast of the opening ceremony was viewed by millions of people.

China is our largest sales market, so revealing our new prestige
packaging across the entire Comvita UMF™ Manuka honey range via this
large-scale in-market activation demonstrates Comvita is entering a
new brand era. We unveiled our new packs to New Zealand consumers
earlier in the year.
While all jars still feature the iconic Comvita™ red brand colour which
Chinese consumers actively seek out on-shelf, Comvita’s new UMF™
Manuka honey packaging has an embellished honeycomb finish with a
contemporary bee and Manuka flower pattern motif. Lids are embossed
with the Comvita™ logo, and inside the product’s premium box, a brand
booklet talks to the traceability of the rare honey from its remote New
Zealand source throughout the supply chain.


At the Comvita Manuka Honey Natural World opening ceremony,
Comvita Co-founder Alan Bougen was joined by New Zealand Trade and
Enterprise Regional Director for Greater China, Fiona Acheson, Chinese
supermarket chain Ole’ Senior Procurement Manager Zhang Haibin and
Comvita China General Manager Wang Xiao (pictured above).

USA: COMVITA MANUKA HONEY
VERIFIED AS NON-GMO

Comvita has achieved the official Non-GMO Project seal of approval for
its UMF™ Manuka honey range sold in the USA and Canada.

The company’s UMF™ 5+, 10+, 15+ and 20+ Manuka honey, which is
available across North America via large, well-known retailers such as
Costco and Vitamin Shoppe as well as online, now features the impartial
third-party’s seal of approval front-of-pack.

With increased awareness about GMOs across North America, and
more in-market shoppers paying attention to labels, displaying the
Non-GMO verification on-pack provides American shoppers another
reason to choose Comvita. In addition, Comvita is the only Manuka
honey sold in North America which is Certified Gluten-Free by the
Gluten-Free Certification Organization.

These certifications offer an additional level of assurance of the quality
and purity of Comvita Manuka honey, and that our products are true-
to-label.

In April, Comvita launched its new USA-specific packaging to North
American and Canadian consumers. The newly designed jars have been
warmly received by consumers in-market, and clearly differentiate
Comvita from other brands in the competitive Manuka set.

As the global leader, Comvita has enjoyed Manuka honey's emergence
from niche to mainstream in the Northern Hemisphere, especially as
more Americans have discovered its value.



HONG KONG: UPDATE

Most people are aware of ongoing political unrest in Hong Kong in
2019. For the country, there have been commercial ramifications
for businesses including store closures, disrupted transport,
reduced spending and a significant online delivery impact.

GDP for the third quarter of 2019 has contracted by 2.9% year-on-
year with retail sales volume tumbling 26.2% year-on-year in
October.

The impact on Comvita sales has been circa -13% year-to-date
compared to last year. We have seen a restoration of normal
trading activity from Hong Kong locals during November and
December although it may take longer for the tourism retail trade in
Hong Kong to return to its previous strength.

ARE YOUR DETAILS UP TO DATE?
You can change your address and/or update your holding
details online by visiting the Link Investor Centre:
www.linkmarketservices.co.nz. You will require your Common
Shareholder Number (CSN) number and FASTER Identification Number
(FIN) to register these changes and/or access your holding.
You can also register for a free online display of your holdings with
Link, using your email address and password.

COMVITA KIDS LAUNCH IN USA
Comvita has launched in-market the USA only line of
UMF™ certified Manuka Honey-based products for kids. Comvita Kids is
a line of Soothing Syrups and Pops that combine Certified UMF™
10+ Manuka Honey with other well-researched, safe, natural and
premium ingredients. Products are available throughout North
America in Whole Foods Markets and CVS Pharmacies, as well as online
via ComvitaKids.com and Amazon.com.

Three products make up the Comvita Kids line (pictured above):

Manuka Honey
Soothing Pops

 150% daily value
of Vitamin C for
immune support
 Naturally relieves
sore throats
 Three flavours
per package
including grape,
orange and
lemon
Manuka Honey
Night-Time
Soothing Syrup
 Made with
Chamomile to
promote restful
sleep
 Vitamin C, D and
Zinc for immune
support
 Soothes sore,
irritated throats
and coughs
 Tasty grape
flavour
Manuka Honey
Day-Time Soothing
Syrup
 Made with Ivy
Leaf Extract to
help clear mucus
 Vitamin C, D and
Zinc for immune
support
 Soothes sore,
irritated throats
and cough
 Tasty orange
flavour
PROPOLIS PFL60 CAPSULE LAUNCH

This year Comvita launched its premium PFL60 Propolis capsules with a
fresh look and feel, promoting the health benefits of this high-quality
product. It has been selling strongly in Hong Kong, New Zealand and via
cross-border eCommerce in the lead up to Christmas with sales continuing
to maintain momentum.
This premium proposition adds depth to an already strong product
category.


2.3 MILLION MANUKA SEEDLINGS
PLANTED
During Bee Aware Month in September, Comvita celebrated adding 2.3
million trees to the New Zealand Government’s national tree count in 12
months. Comvita currently occupies second place (to a major forestry
company) on the official Trees that Count Leaderboard having planted 6.4
million Manuka seedlings in regional parts of New Zealand since 2016.


Comvita’s Colin Baskin, Heather Johnston and Joshua Easton.

As well as helping to ensure the longevity of the apiculture industry, the
Comvita Manuka Plantation Programme contributes to the biodiversity of the
natural environment given Manuka is a nursery plant, and is essential to the
wellbeing of bee colonies. Jobs are also created in rural areas where Manuka
planting takes place. Over the past year, Comvita planted more than 2,000
hectares of farmland in Manuka across six regions. Once the plantations are
established, Comvita will place its hives on the properties to collect a honey
crop. Comvita’s accompanying Manuka Breeding Programme has been
successful in producing high-quality UMF™ Manuka cultivars to suit differing
environments. These superior seedlings are used when developing
plantations.

Comvita Plantations Manager, Joshua Easton, says, “It’s not just about
Manuka though. We’re now undertaking companion planting, growing a
range of other native plant species alongside Manuka to further assist with
beehive health and biodiversity.”

Comvita’s oldest plantation site, Lake Tutira (Hawkes Bay), at eight years old
has had another successful year in honey production. This demonstrates the
benefits of planting Manuka on marginal farmland creating economic return
for both beekeeper and landowner, whilst also improving the environmental
impact on the land in both erosion control and effluent runoff.

The honey yield and quality data collected to date from the Tutira plantation
trial area is encouraging and consistent with our assumptions included in our
Manuka plantation investment modelling scenarios.