State Of The Industry: Top Trends For 2010

December 29, 2009

Much of what we can expect to see in 2010 is a progression of what we saw in 2009. Here are the top 10 trends shaping the greenhouse floriculture industry.

1. Supply Chain Correction
The industry had been in a state of oversupply for a long time. The past two years, we’ve seen growers become more conservative with production. One reason for this shift is the advent of pay by scan or vendor managed inventory, where growers only get paid for plants rung through the cash register. The dumpster is no longer a paying customer. Another is fear to committing to too much inventory that’s not presold. Wholesale growers who successfully serve independent retailers are used to driving a lot of sales on speculation, but across the board, our industry is minimizing risk.

This was clearly evident this past poinsettia season. While growers overproduced in 2008 and threw a lot of plants away, in 2009, we heard many reports of being sold out and needing to buy in before December 10.

The supply correction has been painful because so many allied businesses serving growers were built on overproduction, an inflated model. Retail cutbacks also have hurt growers accustomed to growing a lot more. The industry is right sizing itself, which is painful in the short term but will be better long term.

2. Industry Consolidation
We continue to see industry consolidation at all levels and more growers leaving the industry. To some degree, the box stores are forcing this by dramatically reducing their grower vendor base. For those who are seeing gains in business, it is at the expense of other growers because the industry is flat as a whole. The most aggressive businesses are taking market share.

We also are seeing even more dramatic consolidation in companies serving growers. This was especially true on the flower breeding side the past two years, with Syngenta purchasing Goldsmith Seeds and the Yoder name and mum and aster lines. Benary bought Bodger’s seed lines, and a new company, Green Fuse, emerged to represent the vegetative lines. Ball Horticultural Co. also acquired Darwin Plants and Kieft Seeds and entered into an exclusive distribution relationship with Selecta.

3. Growers Working Together
The growers who have emerged as primary vendors for the box stores are now responsible for providing the complete assortment of products, which has required them to buy in. The big grower has now become the big customer for other growers. This has been a lifeline for growers who have lost retail accounts and for growers who would rather not be involved in marketing and merchandising. But there always is the fear that if the larger growers expand production, the contracted growers will be out.

We’re also seeing more growers and garden centers working together at the state or metro level. In Northwest Ohio, Maumee Valley Growers joined together to launch a successful promotion with The Toledo Blade newspaper last spring.

4. Focus On Edibles
Vegetable gardening was definitely a high point last spring and always resonates with challenging economic times. In addition to reducing grocery bills, consumers are interested in eating more healthfully. Herbs and vegetables are an ideal fit for growers pursuing sustainable and organic niches. Consumers seem to care more about organically grown food than flowers, although some certified growers are treating all their production this way. Plug Connection has expanded its grower network producing Organiks. Ball’s Burpee line also includes sustainable packaging options. Beyond vegetables and herbs, nursery growers are doing well with trees and shrubs bearing edible fruit, like blueberries.

5. Emerging Eco Markets
Green roofs and green walls are the rage in urban centers and have been an opportunity for growers who produce sedums. The challenge has been learning the logistics, because this segment of the industry is more like construction than landscaping. Companies are creating modular planted panels to install. Penn State has been researching which plants and methods work best. Beyond these installations, sustainability continues to be a focus for retailers and consumers. More growers are pursuing certifications that validate their sustainable practices. These include VeriFlora, MPS and USDA Certified Organic. Growers are making the investment because they see opportunities to set themselves apart from their competitors. Ball has created a sustainable supply chain that includes plug and liner growers. Walmart is working on creating a sustainability index for products similar to nutrition labeling in food.

6. Alternative Energy
With labor, energy and transportation being a grower’s top three costs, growers are looking at ways to reduce and control their heating costs and be immune to fluctuations in oil-based markets. USDA grants and incentives have made it economically feasible to convert boiler heating systems from natural gas to biomass and biofuels. Others are installing turbines to harness wind power to generate electricity. Viability LLC is a firm that specializes in helping growers secure these grants, which can be as large as $500,000.

7. Gardening Versus Decorating
The trend has been people getting away from the time and work involved with gardening and buying larger plants, patio planters and baskets for instant gratification. Proven Winners has done the best job capitalizing on this trend with its new 30-Second Planter, which is a fully planted paper pulp insert that can be dropped into patio planters. Proven Winners also is emphasizing outdoor living in all of its imagery and promotions.
With every trend there is a counter trend, such as people returning to traditional gardening, especially with vegetables and community gardens. The recession also brought a resurgence in do-it-yourself.

8. Water Issues
Although a good portion of the Southeast received a lot of rain last year, water issues are still big in California and Florida. And in many places throughout the country, all it takes is a few dry years to create a drought situation. In Southern California, growers who participate in the state’s Interim Agricultural Water Program have had to reduce their consumption by 30 percent. Citizens have been asked to conserve voluntarily. In addition to consumption, runoff filled with nitrates has been a big concern in Florida. Growers are learning how to use less fertilizer and reduce their water use

9. Internet Technology & Social Media
In addition to building comprehensive websites and generating e-newsletters, more growers and garden center retailers are getting involved with social media via Facebook and Twitter. The idea is to build that one-to-one customer relationship and communicate more often. It’s an attractive alternative or supplement to cost-intensive printed promotions and catalogs. Innovators in blooming potted plants are finding ways to make the consumer more engaged with the plant they purchased. Holtkamp Greenhouses rolled out a MyViolet.com program for African Violets this fall. Consumers can go to the website and enter a code unique to the plant and find extensive care and diagnostic information.

10. Collective Marketing
There is always a great deal of interest in collective marketing for the greater industry but there never has been a will to pay for it. The latest proposal is a grassroots initiative from our columnist Laurie Scullin and Frank Zaunscherb called Plant Life, focused on the benefits plants bring to our lives, contrasting life without plants with a much fuller life with plants. Industry members support the idea but have yet to back it with dollars.

One grassroots initiative that’s heading into its ninth year is America In Bloom (AIB), a revitalization program and contest that engages cities in plantings. More than 170 cities and 37 states have participated to date.

1. Tropical Plant Industry Exhibition (TPIE) – January 14-16, 2010 – Ft. Lauderdale, FL

http://www.fngla.org/tpie/general.asp

“TPIE is the trade event that offers everything foliage, floral and tropicals…all in one location, at one time, at one place. TPIE’s trade show is more than an exhibit area – it’s 200,000 sq. ft. of living and vibrant plants creating a virtual indoor garden of showstopper displays. With more than 500 exhibiting companies, TPIE offers wholesale buyers the widest array of resources for foliage and tropical plants in the country.

TPIE appeals to all types of commercial foliage, plant & cut flower buyers, including representatives from garden centers, supermarkets, chain retailers, wholesale and retail florists, interiorscape companies, rewholesalers, buying cooperatives, brokers, landscape companies, public gardens and more. The TPIE Short Course is a comprehensive educational conference offering nationally recognized speakers and relevant topics for garden center retailers and interiorscapers. General sessions have appeal for all TPIE attendees.”

2. Texas State Florists’ Association 97th Annual Convention & Trade Show – July 23-25, 2010 – San Marcos, TX

http://www.tsfa.org/default.aspx?p=ConventionFloristInformation

The annual TSFA convention offers two full days of education including design programs, hands-on workshops, business seminars, and a trade show floor will the best suppliers of plants, cut flowers, containers, and services.

3. TNLA Nursery Landscape Expo – August 19-22, 2010 – San Antonio, TX

http://www.nurserylandscapeexpo.org/

The TNLA Nursery/Landscape Expo is “the South Central United States’ largest gathering of Green Industry Professionals.  This is the premier show to attend to see what’s new, industry trends, new plant varieties, exclusive show discounts directly from exhibitors and many opportunities for valuable face-to-face interaction!”

4. Farwest Show – August 26-28, 2010 – Portland, Oregon

http://www.farwestshow.com/

The Farwest Show is three days of networking, learning, interaction and commerce for leaders in the green industry.  With more than 1,150 booth spaces, the annual Farwest Show is the self-proclaimed “top nursery and greenhouse show in the western United States”.

5. CalScape Expo – September 1-3, 2010 – San Diego, CA

http://www.piagrows.org/CalScape/seminar_info.htm

CalScape is hosted by the Plantscape Industry Alliance and is one of the leading interior plantscape conferences/trade shows.  The two day event is “where the interiorscape industry grows”.

Visit the provided links to find out more information about each event!

State Of The Industry: Survival Of The Fittest

December 28, 2009

Do you expect your greenhouse operation to survive 2010? Odds are your answer is yes, judging from the responses we got from growers who took our survey on the state of the industry in November.

In fact, the overwhelming majority of growers (92 percent) anticipate their operation being around in 2011. Eight percent of growers, however, aren’t sure they’ll be around in another 12 months, and more growers are getting vocal about their uncertainty or displeasure over the state of our industry – and the direction we’re headed.

“There is too much competition driving the price down,” says Alice Longfellow, owner of Longfellow’s Garden Center, a small grower-retailer in Missouri. “There is a small selling window and if weather delays that, everyone panics and cuts their prices. Box stores are not doing anyone any favors.”

Despite the price cutting Longfellow describes, the overwhelming majority of growers have not lowered their prices in 2010 to compete with the box stores. Only 3 percent of growers report lowering prices for 2010, and 74 percent report keeping their 2010 prices about the same as 2009 prices. The other 23 percent of growers say they’re raising their prices this year.

Erik Jacobsen, owner of Parkway Gardens, a small Canadian grower-retailer, is one grower who’s raised his prices for 2010. The way Jacobsen sees it, there are too many input costs in production to do anything but raise prices these days.

“We have to be one of the most inflationary industries in a deflationary economic environment,” he says. “All our input costs – labor, energy, containers, steel, plastic – are increasing dramatically, while consumers expect price stability or reductions during the recession. This has the effect of squeezing our margins even tighter. This is a dangerous time for our industry, especially for small and medium enterprises.”

Stress-Inducing Inputs

Pricing is just one concern growers have entering Spring 2010. Weather is always top of mind for growers – and that’s no different this year. So aside from the weather, we wanted to know which challenges are the biggest growers are facing. Twenty-two percent say competition, another 22 percent say labor costs and yet another 22 percent say energy costs.

Input costs are the biggest challenge besides weather for 18 percent of growers, and the input cost weighing most heavily on growers is energy. Nearly half of all growers listed energy as the input that places the biggest burden on their business. Increasing costs of pots and trays is also becoming an issue, as 11 percent of growers listed it as the most burdensome input. Pots and trays were followed by soil and amendments (9 percent), fertilizers (8 percent), chemicals (7 percent), labels and tags (3 percent) and water (2 percent).

Even with energy as the most burdensome input, the majority of growers say it’s the input on which they cut back most in 2009. Growers attribute an assortment of ideas for the cash savings, including extensive greenhouse winterization, the application of new heating methods and the installation of new, more efficient boilers.

Production & Sales

Around this time last year, we asked growers how they expected their 2009 sales to compare to their 2008 sales. Growers were optimistic then, with the majority (26 percent) expecting sales to increase less than 5 percent over 2008.

This year, we asked the same question – instead pitting 2010 sales expectations against 2009 sales – and growers are even more optimistic now than they were one year ago. The majority of growers (26 percent) now expect sales increases between 5 and 10 percent, and 66 percent of growers expect some kind of sales increase. Last year, only 56 percent expected their sales to increase.

“Everything is cyclical,” says Pat Berry, owner of Vickery Wholesale Greenhouse in Texas. “I believe business will turn around some in 2010 and more in 2011. There may be fewer players, which will make it easier on the survivors.”

Tying right in with increased 2010 sales expectations is increased 2010 production. Forty-five percent of growers say they plan to increase production this year, and more than half of those anticipate sales increases of at least 5 percent.

So expectations and production are up in 2010. How about crops growers are optimistic about? We asked growers which crop they’re most high on for 2010, and herbs and vegetables (28 percent) and ornamental bedding plants (23 percent) generated the most support.

We also asked which crops growers are most pessimistic about, and trees (21 percent), woody ornamentals (15 percent), fresh cut flowers (13 percent) and flowering potted plants (12 percent) are generating the most concerns. Few growers are pessimistic about herbs and veggies (2 percent) and plugs and propagation material (2 percent).

“Being involved with crops that produce food, I’ve been made aware of the use of greenhouses overseas for growing food,” says Michael Wellik, owner of The Strawberry Store. “I think the industry needs to redirect its efforts to switch away slowly from growing ornamentals to growing food. My newest philosophy is don’t grow it if you can’t eat it.”

A complete shift away from ornamentals is a bit extreme, but Wellik is right when he says food crops are an opportunity. Many growers benefited from the veggie boom last year, and many who benefited increased their vegetable production this year believing they’ll capitalize on the crop again.

The Reality Is …

Those are the positives about the state of all things commercial greenhouse floriculture. But the state of our industry today, according to growers and others, isn’t all that rosy. As Marc Clark, executive vice president of Rocket Farms put it: The big growers are getting bigger, the mid-sized growers are struggling and the small growers will survive – if they have a good niche.

Clark’s industry description is a good one, but others express bigger concerns about the state of the industry.

“[Our industry] is in poor shape,” says Kurt Messick, vice president of sales for the California broker, Messick Company. “This is led by the structural change to marketing plants to big box stores. There are so few, but with such buying power, growers have little or no control over their own businesses. So many of the small independent retailers have gone out of business that there is too much power in the hands of so few, and they are using this power to dictate prices.

“Many don’t honor commitments, and this leaves all the risk on the growers with no margin to compensate for this extreme risk. This is (and has been) a recipe for disaster.”

Ric Stevens of Nash Greenhouses in Michigan agrees consolidation has stepped up a notch recently, and it’s hurting those small and mid-sized operations.  “There has been a lot of consolidation in the last 12 months,” Stevens says. “I think you will see a lot more of the smaller greenhouses go by the wayside. You have to know the costs of everything you do.”

For our current customers, if you have not yet placed an order with us, please do so as soon as possible.  We are starting to sell out of some of the varieties. 

We welcome new customers to order with us as well!  To find out if you are eligible to buy wholesale from Vickery Wholesale Greenhouse, contact us today.  You can find our contact information on our website at http://www.vickerygreenhouse.com.   

Below is a great article written by the Society of American Florists about this study:

Gerber Daisy

With today’s high-tech and fast-paced lifestyle taking its daily toll on our lives, experts advise exercise and other personal lifestyle changes to relieve stress. According to behavioral research conducted at Rutgers, The State University of New Jersey, nature provides us with a simple way to improve emotional health – flowers. The presence of flowers triggers happy emotions, heightens feelings of life satisfaction and affects social behavior in a positive manner far beyond what is normally believed.

“What’s most exciting about this study is that it challenges established scientific beliefs about how people can manage their day-to-day moods in a healthy and natural way,” said Jeannette Haviland-Jones, Ph.D., Professor of Psychology at Rutgers and lead researcher on the study.

Kalanchoe

Research Findings 

A team of researchers explored the link between flowers and life satisfaction in a 10-month study of participants’ behavioral and emotional responses to receiving flowers. The results show that flowers are a natural and healthful moderator of moods.

• Flowers have an immediate impact on happiness. All study participants expressed “true” or “excited” smiles upon receiving flowers, demonstrating extraordinary delight and gratitude. This reaction was universal, occurring in all age groups.
• Flowers have a long-term positive effect on moods. Specifically, study participants reported feeling less depressed, anxious and agitated after receiving flowers, and demonstrated a higher sense of enjoyment and life satisfaction.
• Flowers make intimate connections. The presence of flowers led to increased contact with family and friends.

“Common sense tells us that flowers make us happy,” said Dr. Haviland-Jones. “Now, science shows that not only do flowers make us happier than we know, they have strong positive effects on our emotional well being.”

Sharing Space

The study also explored where in their homes people display flowers. The arrangements were placed in areas of the home that are open to visitors – such as foyers, living rooms and dining rooms – suggesting that flowers are a symbol for sharing.

Cyclamen

“Flowers bring about positive emotional feelings in those who enter a room,” said Dr. Haviland-Jones. “They make the space more welcoming and create a sharing atmosphere.”

For more information about the flowers that Vickery Greenhouse sells, click here.

Our existing customers can log in to our website here to get pricing and availability.  If you have not purchased from us before, contact us to find out if you qualify to buy as a wholesale customer.

1. Areca Palm
2. Rhapis Palm (also known as a Lady Palm)
3. Bamboo Palm
4. Rubber Plant
5. Dracaena Janet Craig
6. English Ivy
7. Pygmy Date Palm (Phoenix Roebellini)
8. Ficus Alii
9. Boston Fern
10. Peace Lily (Spathiphyllum)

Photos of each of these items can be found on our website – www.vickerygreenhouse.com.