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Hit the ground running in 2019...

Spellbinding... informative... well-presented. These are the words used to describe the latest business trends in international floral production that were highlighted at WF&FSA’s 2018 Floral Distribution Conference.

wffsa1Tulip production in Holland.Oasis Floral Products/Floralife sponsored an edifying 90-minute discovery session on the current state of international flower production, outlined by renowned international floral experts from the United States, South America, Europe, Africa and Asia:

Jim Daly; Floralife

Joaquin de la Torre; Ball Seed Latin America

Heidi Wernett; China Horticultural Business Services

Steven van Schilfgaarde; Flower Auction of Holland

Neil Hellings; Oserian Development Company

Jim Daly illustrated current production, consumption and transportation figures relative to North America

Production of United States’ flower consumption — import and domestically-grown

Eighty-percent of flowers consumed in the United States are imported from:

Colombia 65 percent, of the imported volume

Ecuador 20 percent

EU 6 percent

Canada 4 percent

Mexico 2 percent

In stem count, wholesalers receive 35 percent of the above imports and 65 percent are received by non-wholesale importers. Ninety of all domestic flowers come in through Miami.

Domestically, flower production has been greatly reduced since the 1980s due to import volumes. Additionally, the mix of domestically-grown flowers has changed to those varieties not imported in high volumes such as lilies, delphinium, gerberas, iris, tulips and peonies.   The number of domestic producers has decreased from 900 growers in 1992 to 420 domestic growers today. Production of all domestic flowers sold in the United States is summed up in the following order:

California 78 percent

Washington 6 percent

Hawaii 4 percent

Florida 3 percent

Oregon 3 percent

New Jersey 3 percent

Michigan 2 percent

Mexico and Canada produce similar flower quantities as the United States, but the crops are not as specialized. About 60 percent of the stems sold in Canada are domestically-grown in the United States.

Mass markets

Out of all outlets that sell flowers, 48 percent are Supermarkets

The industry sales increase will be around 2 percent, whereas Supermarkets will be around 5 percent.

Retail growth patterns

Amazon touts 100 million prime members; retailers are getting bigger.

Retail florist doors were down 1.7 percent in 2016, but sales were up by 2-3 percent.

     Wholesalers & event planner are getting bigger.

   Global groups are getting bigger — a new phenomenon.

Environmental changes

Warmer growing climates are occurring in the upper and lower hemispheres

Water is less controlled-either too much …or too little

Weather extremes bring floral disease and shortages

Transportation

Traffic congestion increased by 7 percent year-over-year in 2013, alone.

Sea freight out of Colombia:

2015: 761

2016: 843

2017: 1071 (U.S. ~150)

Time is not a problem —East Coast in 3-5 days.

Postharvest issues are as good or better than air in the United States.

Partnership with Miami or combined channels may be the answer.

What to watch

Store-to-home delivery

U.K. starting on a large scale

Amazon (farm-to-home)

U.K./U.S. store pick-up

Farm to consumer

Storage Omni-channel technologies

 

Joaquin de la Torre represented cut flower statistics prepared by Carolina Pantoja and Jonathan Arevalo from the Economic Department of Asocolflores

Percent of export

Netherlands   49.3 percent

Colombia   15.7 percent

Ecuador 9.9 percent

Kenya 7.6 percent

Ethiopia 2.2 percent

Other Countries 15.4 percent

Largest Colombian presence in:

USA

Canada

UK

Japan

Korea

Colombian floral export value in 2017: $1.4 billion dollars

Colombian Crops Exported by Value in 2017

Roses 22.1 percent

Carnations 16.1 percent

Chrysanthemum 10.9 percent

Alstroemeria 5.6 percent

Hydrangea 5.3 percent

Lilies 0.6 percent

All Other 39.3 percent

Colombian Crops Planted by Hectares in 2018:

Roses 34.6 percent

Hydrangea 19.6 percent

Chrysanthemum 11.8 percent

Carnations 11.7 percent

Alstroemeria 5.2 percent

Other 17.1 percent

Largest Ecuadorian presence in:

Russia

Germany

China

Spain

Production insights

There seems to be a common opinion that the market is growing at 5 percent

Most large companies seem to be growing at rates higher to 5 percent

Prices are stable to lower

Cost are growing at rates higher than 5 percent including labor and transportation

Long-term trends to watch

Production

More consolidation at the farm level; exports from South America to North America will be concentrated in no more than five to seven companies.

Diversification of the portfolio of flowers will continue; the market is looking for new and different products. “Perfect flowers” are no longer trendy.

Large Colombian-based companies will enter new production areas in Mexico, Africa and Asia.

Local and seasonal production in North America will complement the imports; their value a and distinctness will be very important in the mix.

Distribution

Wholesalers will continue to consolidate

Large Colombian-based companies will dominate the supply to supermarkets, but as production consolidates, they will go back to servicing wholesale and small retailers

Small distributors will not disappear completely. As in the case of production, there will be niche competitive areas for them. In Joaquin’s opinion, small distributors will account for 20-25 percent of all flowers sold.

Large Colombian-base companies will enter the distribution of locally grown products.

Large distribution/production companies will concentrate in North American markets.

Small producers will concentrate in new/small/niche markets. This will change with time.

If the market is growing at 5 percent and large companies are growing plus-5 percent, then if there is not a new market that can absorbed the extra production — prices will come down

China seems to be the only market capable of absorbing the extra production.

Sea freight will become much more important as potentially the only way to have some equilibrium in air cargo between supply and demand.

Heidi Wernett from China Horticultural Business Services delved into the trends in Asian flower production and consumerism

Population factors

United States: 325 million

Asia : 3.5-4 billion and > 50 percent of the world population

China 1.4 billion

India 1.3 billion

Southeast Asia 700 million-plus

Japan 127 million

Total world population: 7.8 billion

Asian Cut Flower Production: 40 billion Stems; 230,000 acres

China 125,000 acres (+4-percent/year)

Yunnan Province > 50 percent of Chinas production at 12 billion stems.

Japan 60,000 acres (-2 percent/year)

3,500 new varieties; > 1,000 breeders

Taiwan/Thailand 20,000 acres

Vietnam 15,000 acres

Korea 6,000 acres

Malaysia 1,500 acres

(India, Pakistan, Bangladesh not included)

Asian cut flower market: 6 billion USD

Asia’s anticipated flower consumption will increase by 200 percent by 2028

Trends in the Asian market

Tinted colors are HOT!

Blue flowers are HOT!

Orchids leading the way in Taiwan, Thailand, Malaysia, Vietnam

Future outlook

Consumption per person — 200 percent increase

Need 30 Billion more stems!

Surge in mass market sales to middle class in 2nd and 3rd tier cities

Cash ‘n carry bouquets on the increase

Exports to the United States

More new varieties imported from Japan

More orchid imports —Taiwan & Vietnam

Financial

Increasing China demand may lead to price competition for global flower supply

More Bitcoin payments with trading partners in Asia

3-4 billion customers

10 times the size of the U.S. market

Consumer appetite for floral products is enormous!

Steven van Schilfgaarde from the Flower Auction of Holland explained the latest trends in the European flower market

The strength of the marketplace for over 100 Years

The marketplace

> 4,000 members offering the widest assortment

> 2,500 customers

> Customers operating on five locations

> 145,000 daily transactions

Range of services

Clock/auction services

Floriday — new international trading lanes

Small-scale logistics and logistic services

Property

Invoicing and payment security

Advice for our growers, customers and other users of the marketplace

Additional services

Optimal price-setting with lowest transaction cost

Advantages of scale

Efficient process

Standardization

Multiple options (clock, clock presale, direct flows)

Four Important European Trends

Digitalization

Increase of scale within the sector

Globalization

Sustainability

Neil Hellings from the Oserian Development Company discussed the challenges facing Kenyan flower growers

Key challenges facing Kenyan flower growers

Perceptions

Traditions

Market concentration / Lack of diversity

EU / Brexit

Airfreight

Ever more demanding consumers

Climate change

Customer/Consumer-driven changes

Before:

Fairtrade — equitable treatment of labor

Now:

Pesticide usage

Carbon footprint

Water usage

Weather Challenges

Last year, Kenya experienced severe drought. This year, the country has record levels of rainfall

And record low levels of sunlight

Actions to reduce carbon footprint

Electrification of vehicle fleets

Use of better volumetric boxes – Cargolite

Better volumetric packing - no-cut solutions

Want to learn more about the current trends in floriculture? Mark your calendar for WF&FSA 2019, scheduled from Nov. 5-7, 2019 at the Miami Airport Convention Center.

See you there!