Feel the buzz - modernising the business of bees
Beekeeping. Once predominantly a home craft and hobby, it has transformed into a multi-million-dollar industry in recent years as the world discovers an appetite for New Zealand honey, and the highly valued manuka variety in particular.
The industry has seen stellar growth over the last few years. Bee products currently bring in $300 million annually – a rapid rise from $98 million in 2010 – and the Government is targeting $1.2 billion in export earnings from the sector by 2028.
Because the bee industry has grown rapidly, technology has been playing catch-up. However, that’s all changing now with the emergence of a number of ‘bee-tech’ companies, all devising technologies and processes to shake things up, and be more productive and efficient. In short, they aim to revolutionise the industry on a global scale.
Backbone spoke to two companies in the bee-tech space, MyApiary and Revolutionary Beekeeping, to hear each of their stories about growth and to get an insight into the opportunities for one of New Zealand’s oldest agriculture activities.
Opportunity in the supply chain
You know when an industry is ripe for disruption when words such as “barbaric processes” get thrown around. But that is exactly the way Grant Engel from Revolutionary Beekeeping describes the method of harvesting honey when he entered the industry.
“You’d have frames of honeycomb taken from the hives, which were transported at times hundreds of kilometres to the nearest facility to be processed into honey. Not only was it time and capital inefficient, it was also highly risky because of the potential cross-contamination of equipment and resulting spread of diseases,” says Grant.
Coming from a dairy farming background, it quickly became apparent to Grant that the parallels and opportunities for change in the commercial beekeeping industry were obvious.
“If we could work out a way to harvest honey on site, we’d be cutting out an unnecessary step in the supply chain. You don’t see cows getting picked up and taken to a factory to be milked. The milking happens on the farm, and the raw product is then ready for final processing before going to market.”
Hands-on product development
In typical Kiwi fashion, Grant and Kim Engel set about coming up with a new harvesting product by carrying out prototyping in a shed on their Kerikeri farm. Over the course of a year, Grant worked on 12 units and oversaw CAD drawings and design changes. Eventually they had a new, much more efficient on-site harvesting system.
Furthermore, the uniqueness of their product meant the patent process was “relatively easy”. Having a patent also made the system more specific for the market and replicable on scale.
After launching the harvester, it quickly won a great accolade, the Fieldays Innovation Award in 2013.
“Winning the award gave us reassurance, as well as profile within the investor community, which was great because until that point we had been doing it on our own. Commercialising our product and taking it to the next level required a big financial commitment.”
But it wasn’t just capital they were after: they needed particular skillsets and people with similar values to take them to the next level. They eventually settled on the right combination of financial, legal and operations grunt to drive their business forwards.
Taking a pause for growth’s sake
The next step in the evolution of Revolutionary Beekeeping was key, says Kim.
“After winning Fieldays and selling a small number of units, we took a breather and created a business plan in liaison with New Zealand Trade and Enterprise. This was instrumental because although we had great interest in the product from Australia and the United States, we realised we needed to choose one market and do it well.
“The pause also allowed us to see how our invention could survive in the long run, and to look at the context: how it fits into the wider operation, not just product. A lot of people invent these things and just go out and sell them to raise capital, but it’s important to stop and take stock and realise the broader value of what you’ve created.”
They finally settled on a business model that saw Revolutionary Beekeeping license use of its product for a year. Furthermore, they created an end-to-end service for beekeepers that meant they not only had the means to harvest on site, but they would then collect and purchase raw honey from beekeepers: becoming a honey broker of sorts, delivering honey in bulk to wholesalers.
“If we could work out a way to harvest honey on site, we’d be cutting out an unnecessary step in the supply chain. You don’t see cows getting picked up and taken to a factory to be milked."
Since then, the business has grown to cover sites from the Far North to Bluff, with the number of sites using their harvesting system quadrupling in less than two years.
One of the directors, David Gibson, a former head of Deutsche Craigs investment bank in New Zealand, says there is immense potential within the business.
“While Revolutionary Beekeeping now services a huge number of sites, we can make the most difference with larger landowners. It will allow us to move the system away from being perceived as small beekeeper apparatus to adding value to much bigger operations. And we have two very large landowners already using the system,” says David.
“The eventual vision is for the system to become widely used in New Zealand honey industry. Our product provides a lightness in capital intensity, and is complemented by our collection service. There’s no reason why we can’t become one of the larger suppliers of honey in New Zealand and become integrated up the value chain.”
Taking the hassle out of being a beekeeper
Around the same time as Revolutionary Beekeeping’s business started to grow, in the Waikato MyApiary was also recognising the need for innovation within the industry.
Unlike Grant and Kim at Revolutionary Beekeeping, the two founders of MyApiary – Darren Bainbridge and Carl Vink – had no commercial experience with beekeeping. Although a hobbyist beekeeper, Darren’s background was in design development as an engineer, working largely in remote monitoring space- assessing measures such as cool store temperatures.
Business partner Carl Vink came from a marketing and strategy background, and was motivated by Darren’s insight into the sector and the need to modernise processes and streamline production in the beekeeping industry.
Carl explains: “As we spent time talking with industry, we observed many beekeepers writing notes on paper, storing job sheets in ring binders and planning work on whiteboards. In some cases, rather complex spreadsheets had been created to record and report on what they were producing and where it was coming from.”
“We thought that if we could streamline this process by providing an easy to use system that recorded data and helped plan work, we'd be able to make a real difference for beekeepers.
“Compliance and reporting are also critical issues facing the industry at the moment, and we wanted to make this process simple and straight forward for operators using our technology.”
Value of market testing
Starting out, it was all about introducing hardware monitoring technology Darren had devised from other sectors, to collect data that could help measure honey volumes, hive health and local environmental factors.
That soon morphed into something bigger as MyApiary had a similarly enlightening moment to Revolutionary Beekeeping when that company saw the broader value of their product – although Carl and Darren’s insights came through market testing rather than from third party consultants.
“A lot of people in the industry were saying that the hive monitoring data we could provide would be really interesting, but we just couldn’t get them over the line to join the research project and co-fund development. The feedback was they didn’t have the facility to manage and apply all the data and insights we’d be providing, at a time when high honey prices meant they were more focused on output than process,” says Carl.
With that in mind, at the start of 2016 MyApiary shifted its focus to creating an operations and performance management system drawing on cloud technology to automate processes.
They then took a big step forward last year when Waikato-based farm management business Gallagher provided seed investment, along with a number of other investors. Software development kicked off soon after with several co-development partners, and more recently, a number of commercial sales.
The next step for MyApiary is the Apiculture Conference in July this year, where the commercial version of the software will be officially launched.
"As we spent time talking with industry, we observed many beekeepers just writing notes on paper, storing job sheets in ring binders and planning work on white boards. In some cases, rather complex spreadsheets had been created.”
Future of beekeeping
Of the many similarities that exist between the two businesses, it is one common motivation which stands out – that of being to accelerate and future-proof the beekeeping industry in New Zealand.
In an industry which has already experienced the damage that bacteria and disease can bring, both businesses recognise a growing need to be increasingly vigilant and top of operations, as explained by Grant Engel.
“We need to be one step ahead to ensure that all players in the industry are aware of the risks involved. While the industry hadn’t changed a lot for well over 100 years, we are now seeing a shift in appreciation for how technology can help amongst new and younger people entering the industry.”