The concentration in supply and demand has exerted its own particular pressures on the two leading Dutch flower auctions. Last week, they announced their intention to merge and adapt to the new direction and intensely competitive nature of the dynamic worldwide flowers and plants sector.
The management of both co-operatives signed a declaration of intent on October 26, and Timo Huges, of Aalsmeer, who will become managing director of the merged venture, FloraHolland, tells FPJ the new flower power will offer benefits all round. “The main aims of the merger are to strengthen the market position for both suppliers and clients and make cost savings throughout the chain by increasing efficiency. For this, a further increase in scale is essential. It will provide an even better platform for growers and suppliers to get the right product to the right people in the UK market, at the right price,” he says.
“The UK is the second biggest direct export market from the auctions and it continues to grow. We all know that retail is extremely important and that a significant amount of supplies are direct from source. The question is of course can you go through the auctions and receive added value? We can offer the whole range of services that UK buyers want and the merger will enable us to create considerable cost savings, which will give us an important advantage in the UK.”
On a global front, management chairman Oosterom of Aalsmeer adds: “We are convinced that we are stronger together. We will be able to serve the production and trade better than each of the auction organisations on its own. The demand towards standardised and integrated services is constantly increasing. The market specifically demands standardisation and unity from the auction organisations in the area of product sourcing, marketing services, logistics and infrastructural facilities.”
The management of both organisations say the merger comes out of a position of some strength. The two companies have a combined 4,600 employees, servicing 12,300 suppliers (some shared) - 6,000 of which are members of Aalsmeer - and more than 3,000 buyers.
The new organisation will exist of three export auctions (Aalsmeer, Naaldwijk and Rijnsburg), three regional auctions, a mediation office, which deals with programmed and fixed price orders, and an import sourcing department. Recent developments at both companies, designed to improve productivity and service levels, will be continued.
General director Jacques Teelen, of FloraHolland, says a strong network of physical market sites will now become stronger. “This network must expand its position as a whole to remain strong within the competitive international floricultural market.
“The Dutch floricultural position is influenced by world-wide production, trade, logistics and ICT developments. There has been an accelerated move towards large-scale activities worldwide. Growers and trading companies both locally and abroad, trade to an increasing extent directly and world-wide retail development also continues at great speed. This all effects the strength of the Dutch auction system.”
Concentrating on the strengths that already exist will be a key driver, says Huges. “We are a big organisation, but we should try to become one of the world’s leaders be doing what we are really good at,” Huges says. “Rather than diversifying, we should focus on our strengths. I truly believe that because we are so close to our growers, we are in a good position to develop new concepts together for the retailers. As long as everything is done in a transparent and fresh way, we can tap into an industry that is in the process of refocusing.
“We are not just auctions, we are a link right through the chain from the consumer to the grower,” he adds. “We have a wealth of information about what the grower can and is producing and while we do not want to sit on someone else’s chair, we are willing to share that information
“The main office will be in Aalsmeer, we will retain the red tulip logo and the company will be called FloraHolland. But in principle, not that much will change. Aalsmeer and the is a world-recognised name and the red tulip is also known throughout the industry.”
The auctions do not expect significant personnel issues, as the development will create new opportunities for staff. Since the announcement, on October 26, Huges has already hosted several meetings with various sections of the auction user base and says the merger has been well accepted. “It is not our intention to split our existing commercial ties. “The reaction to the announcement has been overwhelmingly positive, across the range of growers, members and suppliers,” he says. “I always work on the 80:20 principle and there is bound to be a proportion of people that have negative thoughts about a change. This is an emotional business and that is something we are aware we have to manage sensitively and carefully. There are a lot of long-term relationships involved and we will take the time to tell people our plans and make them aware how they will benefit.”
The merger proposal will be streamlined in the coming months, with the aim of implementing a new company on January 1, 2008, following the required decision making procedures in both cooperatives. Dutch competition authorities will play an important part in the process.
Until the merger is a done deal, both companies will continue with business as usual.
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