@madamswer I don't definitively know the answers to your questions but here are my thoughts.
JVs
I suspect that as Cain has already said they gain expertise through forming JVs. The WA JV is with an experienced honey producer and Capilano probably doesn't have many apiarists amongst its staff as it is is a packer and not a producer. However, Ben Mckee is a former beekeeper and so it is not as if the company is wading into a situation in which they have no expertise whatsoever.
As for the Medibee JV with Comvita I expect this is a similar story. Comvita has tens of thousands of hives in NZ and so has production experience. Perhaps more importantly, Comvita has already established a medical honey business so its customer base will probably prove to be invaluable to the success of the JV.
Valuation
I agree with your point regarding the difficulty of continuing to increase market share at the same rate over coming years. The same applies to price inflation - there is simply a limit to what consumers will pay.
Consequently, I have changed my sentiment to hold because I think it is unlikely that we will see the same profit growth that we have been used to in the next few years.
However, whilst market share gains might be harder to come by I don't think average selling prices have peaked for the following reasons:
1) Health food trends show no signs of abating and the growing number of people that buy into this seem to be fairly insensitive to price. For example, some people will pay $30 a jar for vitamin pills so I think $10 for a jar of honey is still relatively good value.
2) Capilano is aiming to increase its sales of premium priced Manuka honey. The Medibee JV is designed to do just this and should generate even higher prices because it is targeting medical uses.
3) Similarly I expect the Beeotic range will command a price premium to standard Australian honey (the bulk of Capilano's sales today). I suspect it will be sold primarily through the pharmacy channel which should yield better margins for Capilano than what the company earns from the major retailers. My understanding is that this product is made from a blend of commonplace Australian honeys unlike Manuka and therefore sales volumes are less restricted.
Capilano can also increase profits by continuing to in source honey production and thereby capture production as well as distribution/packaging margins.
Chinese exports are another potential growth avenue but although growing rapidly, these are still small relative to total sales. I can see this becoming a major growth driver over the long term.
It could be that strong industry wide production over the last couple of years will continue and lead to oversupply and price erosion hurting Capilano's sales and margins. Certainly, Capilano has been on a golden run for the last five years and it is possible that profits will mean revert in which case the share price is likely to fall in the short term.
As you can probably tell I do not have a clear view of what profits will do in the next 3 years.
However, I maintain that this is a well run durable business with good long-term growth opportunities.
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