According to The Investor’s Guide to the New Zealand Processed Food Industry 2017 — a report commissioned by the Ministry of Business, Innovation and Employment — exports of nutraceuticals and ‘other innovative products’ increased in value from US$342m to US$883m between 2006 and 2016.
Out of the US$883m total, US$342m came from Australia and the Pacific (representing a 10-year CAGR of 18%), East Asia accounted for US$329m (15%), North America US$92m (-5%), South East Asia US$51m (6%) and Europe US$57m (13%).
For infant formula, the export figure jumped from US$271m to US$684m over the past 10 years. The growth in both categories is doubly impressive when compared to far smaller rises in core grocery exports over the same period (US$301m to US$495m) and snacking goods (US$195m to US$290m).
“New Zealand is achieving strong long-term growth in infant formula, with further potential for growth and value increases,” states the report, which notes that China’s regularly changing rules are the key risk.
Meanwhile, nutraceuticals growth is being “driven by a wide range of enterprises and products…leveraging New Zealand’s geographic isolation and unique ecosystem / botanicals”.
The two sectors also occupy the top two spots in the value of exports per kg. Nutraceuticals and other innovative products command on average US$7.71 per kg, with infant formula commanding US$5.43. The overall food average is US$3.70.
It is hoped the report will help promote better national understanding of the processed food sectors, while also providing key information to potential investors.
“While the government collects large amounts of industry data, little of this has an investor- or industry-driven perspective,” it stated.
There has been considerable international investment in the New Zealand food sector over the past two years, including in the nutraceutical and supplement space.
Around US$1b in acquisitions have occurred since 2015, with private equity investors in particular looking for higher growth categories.
High-profile deals in the nutraceutical sector include the US$314m takeover of Vitaco by manufacturer Shanghai Pharma and private equity outfit Primavera.
Meanwhile, Pacific Equity Partners (PEP) acquired a 95% stake in honey and medical honey manufacturer Manuka Health, while Australian firm EBOS acquired natural health products company Red Seal for US$80m.
Private equity fund ORA New Zealand, controlled by China Diamond Holdings, took an 80% stake in supplement firm Better Health Co, which owns the GO Healthy brand, for an undisclosed sum.
The report adds that the overall processed food industry is not highly concentrated; the top 15 firms account for only 46% of industry employment, with high levels of NPD and innovation occurring in smaller companies.
It also states that non-traditional food sectors, such as nutraceuticals, have created 2,100 of the 3,400 new food industry jobs in recent years.