Capilano’s Share Price Stable Despite Concerns of Fake Honey

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Capilano Honey Limited’s [ASX:CZZ] share price is the highest it has been in the past two years, despite facing accusations of selling fake honey.

Shares in the honey producer are sitting at $21.01 at time of writing, its highest price since August 2016.

Who is accusing Capilano of selling fake honey?

As reported by ABC, a leading international scientific lab that specialises in honey fraud detection has undertaken two types of tests on eight of Capilano’s Allowrie budget products. Including Nuclear Magnetic Resolution (NMR) testing and the Australian standard test, C4.

The German Quality Services International (QSI) lab found that six of the eight products registered as adulterated, meaning that it was not pure honey, when NMR screening was used.

In contrast, these eight products all passed when tested by QSI using the Australian standard test.

The president of the International Federation of Beekeepers’ Association, Phil McCabe, stated that consumers are being misled referring to the NMR test as ‘the most accurate available’, as reported by ABC.

In addition, QSI’s managing director Gudrun Beckh, who has been testing honey for nearly 30 years, backs the NMR test findings. Beckh told ABC that,

Fake honey always existed, but in the last years it’s a growing problem because of the people who adulterate using more and more sophisticated methods, so it’s more complicated to detect it’.

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What is Capilano saying in response?

When approached by ABC, Capilano has denied any allegations of selling fake honey, stating that it stands by its products being 100% pure.

Capilano stated that NMR testing was not the best way to determine adulteration, highlighting that it is not a part of the Australian or international testing regime.

The honey producer is claiming that NMR testing is unable to identify that blended honey from different regions is in fact pure. However, Beckh told ABC that the NMR test was able to pinpoint the country of origin and botanical origin of the honey.

What could the outcome be for Capilano?

It isn’t looking good for Capilano. To add on to the case against Capilano, ABC revealed that the Australian Bee Industry Council, which Capilano is a board representative in, recently lobbied the Department of Agriculture and Water Resources requesting it move from C4 testing to NMR. Stating that honey producers have found ways around the C4 sugar test.

While this is still all accusations right now, there’s little doubt that this episode is likely to tarnish Capilano’s reputation for the time being. The major concern here is that supermarkets will pull Capliano’s Allowrie brand from their shelves.

We will just have to wait and see how this one plays out.

Regards,
Ryan Clarkson-Ledward

For Money Morning

PS: You’ll find over 2,000 stocks listed on the ASX and on any given day a bunch will rise or fall. It’s near impossible to monitor these on your own. Our analyst Sam Volkering has picked out four Aussie stocks he believes could be top performers in 2018. Check out his free report ‘The Four Best ASX Stocks for 2018’.

About Ryan Clarkson-Ledward

Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

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