In the midst of an economic downturn, some may say that flowers are the last thing on most consumers’ minds. But as we welcome the first signs of spring in the UK, it brings with it major flower and pot plant purchasing events - Valentine’s Day and Mother’s Day.
These events pose two very different trading opportunities for the flower industry. Valentine’s Day is a strictly top of the range affair, with high-end red roses and niche-line flowers in demand and fetching high premiums, while its international reach adds pressure to the situation for suppliers and florists to source the right products. As it is only a UK concern, Mother’s Day is easier to gauge for the flower industry, with volume taking precedence over niche, high-end product and orders pretty much guaranteed.
Spread a little love
Although still a busy time of year, orders for Valentine’s Day last Saturday were down for most flower suppliers as a result of the credit crunch and a steady decline in demand over the years.
The fact that Valentine’s Day fell on a Saturday this year added to the downturn in demand, with many last-minute purchases from consumers and therefore both retailers and florists expected on Friday and Saturday morning.
Cardiff wholesale market trader PJS Flowers’ owner Peter Smith says that Valentine’s Day is always a non-starter when it falls on a Saturday. “We are about 22 per cent down on last year’s turnover,” he says. “But there has been a gradual decline in sales for Valentine’s Day and sales are always down when it is on a Saturday. It does not help that it clashed with the England and Wales rugby match. Everyone will have shut up shop by 3.30pm.
“The main problem is getting people to buy your stock, when everyone is afraid of buying extras in this climate. However, we were still busy on the actual day, because florists are not over-stocking, so if they were busy on the Thursday, they were here first thing on Saturday to top up. Everyone will still want flowers.”
Andrea Caldecourt, chief executive of the Flowers & Plants Association (F&PA), believes that there may be a shortage of flowers in florists on Valentine’s Day as a result of its timing and florists avoiding waste. “Many men will think they can rush to the florist just before kick-off,” she explains. “Men generally tend to buy at the last minute for most occasions and they may be disappointed; we know of a few florists who have introduced a cut-off date for Valentine’s orders, so customers will still be able to buy flowers, but the retailer does not guarantee any red roses.”
Valentine’s Day is still an important time for the flower trade, but Phil Dear, sales executive at UK importer and distributor of fresh-cut product Genesis Flowers, says that it is not the event on the floral calendar it used to be. “A lot of customers will not commit to orders,” he explains. “In the past, we could pretty much work out what we would need before Valentine’s Day so we could import the right stuff, but now only 50 per cent will let you know and there has been a marked decrease in early orders every year. But as we are importers, if you come to us on February 13, it is too late.
“We have shifted two to three times our normal volume this Valentine’s Day, which is less than you would expect for an event like this. It is a good week, but not a life-changing week. And sales the following week will be really poor as a result.”
Ring-a-roses
Dear believes that the ongoing decline in sales that his company has experienced is due to consumers moving away from the mostly disappointing and expensive experience of buying red roses out of season in the UK.
“Most consumers do not know what to buy and go for red roses, but do not understand that red roses in February cost more than when they are in season in Europe and, as a consequence, we never make a huge profit,” he says. “The perception of red roses at Valentine’s Day is that they are a rip-off, so this drives the price down. Chocolates are seen as a more worthwhile present, as roses are dead within two days because they do not last in our cold climate out of season.”
But red roses are still the mainstay on Valentine’s Day, with many growers engineering different coloured roses, such as the unusual blue-coloured rose, to jazz up the offer. “Long-stemmed, large-headed, deep red roses are the classic choice - something like Grand Prix or Passion,” says Caldecourt. “The pillar box red shades are not as popular these days as the darker, black-tinged ones.”
Both the wholesale and retail markets are now dominated by Fairtrade or Rainforest Alliance roses, and this has become the norm over the last couple of years.
“It is all about red roses,” confirms Dear. “Florists and retailers try to put them with pinks and foliage, but it is the red rose that sells the bouquet.
“The whole flower industry has taken on Fairtrade, Rainforest Alliance or Florverde [a South American accreditation with both fair standards for workers and environmental concerns]. I think it has become more of a marketing tool than a real interest in human ethics, but we try to promote it.”
Mum knows best
The flower industry’s feel for Mother’s Day this year is more optimistic. “Mother’s Day is a very different situation to Valentine’s Day,” explains Dear. “Valentine’s is all about getting red roses, but Mothering Sunday is more about the full selection and it is at a time of year when prices are better because there are more flowers available. It also helps that it is not an international event. Mothering Sunday is just another day in the Netherlands, so that makes it easier to get product in.
“In general, Mother’s Day is much better for the trade. The flowers are better quality and there are more varieties available, so we have a much better chance of pleasing our customers and the end consumer.”
Smith believes that this year will bring more trade for Mother’s Day than 2008. “The actual day falls later this year and prices will be down,” he says. “Last year, it clashed with Ladies’ Day in Russia and it was so near to Valentine’s Day that prices did not recover in time for Mother’s Day, bringing down demand.”
According to Smith, there has been a steady rise in demand for assorted flowers of all kinds, with just a couple of roses to go in each bunch for Valentine’s Day, while for Mothering Sunday, florists tend to want everything available in bulk. “Customers are going more for assortments, with sales for all kinds of flowers up across the board this Valentine’s Day trade,” he says. “It is the same for Mothering Sunday, just without the roses.
“However, the main factor this year is price. If the price is not right, we cannot shift it.”
A price to pay
Discovery Farms, which sends mainly spray carnations to suppliers, packers and wholesalers in the UK from two farms in Colombia and one area in Ecuador, agrees that price pressure is worse than ever this year. “We have probably had a drop of about 10 per cent in volume for Valentine’s Day orders and supplies for Mother’s Day will probably remain the same,” says Monica Florez, UK marketing manager at the company. “But where we see the difference is in the price. Volume is more or less the same, but clients are more conservative with money and have haggled more this year. People will argue about one or two cents on a stem, but at the end of the day it makes a difference.
“The situation we have on our farms with the dollar inflating hurts us more because of demand contraction. It has been the opposite situation for the last three years; when the dollar is low, demand is high, but we do not get the returns we deserve.”
Colombian flowers are generally more expensive on the UK market because of the logistics involved, but the country has built up a strong reputation for quality over the years. Discovery Farms sends mainly spray carnations to its UK customers, which make up 13 per cent of its overall exports. Around Valentine’s Day, the company receives high demand for burgundy and red carnations, whereas Mother’s Day brings the need for lighter, more pastel colours, as well as hot pink.
Just lately, Florez has noticed that there has been more of an uptake of chrysanthemums in the UK market. “The UK industry used to buy chrysanthemums from the Netherlands, but the state of the euro is now getting the better of demand and it is coming more and more to us,” she explains. “We now have a trade agreement with a chrysanthemum farm in Medellin, Colombia, where it is warmer than our other two farms in the Sabana de Bogotá.”
Florez believes that in these tough financial times, the flower industry still needs innovation to push it forward, but several plans have had to be put aside. “We introduced combo boxes last year, which offered a mixture of alstroemerias, roses, foliage and fillers, but we did not sell many,” she reveals. “People are afraid to go for anything different and want to be sure it will sell. We thought that our new idea called Perfection Carnations would be popular for Valentine’s Day, but it was not. We offered bunched large-head carnations with netting around them, but the feedback revealed that they were too expensive. The florist never knows if the consumer will go for an idea.
“But we will continue to try to deliver different options; at the moment, we are working on freeze-dried flowers that look the same as fresh but last in a bouquet indefinitely. And we are trialling production of edible flowers, which we are looking to make commercial by the end of the year.”
The F&PA has seen demand for new and more interesting offers. “We have noticed women are hoping for something more unusual, or their favourite flower,” says Caldecourt. “There is still a traditional core that wants a dozen red roses as the epitome of Valentine’s Day, but many women, while still wanting fresh flowers, would like their loved ones to break the rules a little.
“For givers wanting something more unusual, dramatic lilies or amaryllis are good choices. Tulips and fragrant hyacinths mark the season elegantly and most women love orchids. Whatever the choice, many women buy flowers regularly, so they know good quality and presentation.”
Change is in the air
This is not the time for new products or innovation in a market where suppliers and flower growers are being financially crippled by exchange rates and lack of demand.
Even the once buoyant Dutch flower market is feeling the pinch as demand dampens, and many feel that the flower industry in the UK and elsewhere is in for some changes. “It seems like the market is contracting,” says Dear. “It is going to experience change throughout the supply chain, from growers to suppliers, florists to retailers. It will not be the same industry in 12 months’ time.
“Because of the exchange rate, it seems the monopoly that the Netherlands has always had over the market will end, as suppliers are now looking to source from all over the world.”
This is good news for some, with Colombian and Ecuadorean roses making it onto the market in abundance, directly from source this year. Usually expensive compared to Dutch greenhouse roses, these South American flowers have been beating their Dutch equivalents to the post.
“Traditionally, the UK market does not buy roses directly from Colombia but through the Dutch auctions, where they are packed and given water tubes, and basically marketed well,” explains Florez. “Also, it is quicker to order last-minute purchases from the Netherlands, which has a steady supply, rather than us.
“The sad thing is that you see Colombian roses on the high street in London and it is obvious where they are from, but the florist assumes that they were grown in the Netherlands.”
It is obvious that the flower industry needs to educate its customers and consumers as to the benefits and the origin of the flowers they buy. However, the world’s preoccupation with roses on Valentine’s Day is still going strong, despite disappointing product shelf life and high off-season prices. As with fruit and vegetables, this is where seasonality is key and once the general public understands which flowers to buy and when, further value will be added to the purchase.
As a result, more companies are coming to the F&PA wanting help with promotion, marketing and consumer research. “Three existing PR clients have doubled their budget recently and we have taken on three new client campaigns,” explains Caldecourt. “In a difficult economic climate, you either curl up in a ball and hope for it to go away or you come out fighting. There is still a love and desire for flowers and plants in the UK, there are still people wanting to buy things and there are still occasions to celebrate, both big and small.
“Many of our member florists reported their best Christmas for several years, because they focused on quality, service and individuality, while keeping a tight control on stock and wastage. For those marketing to lower price points, the differentiator tends to be price, rather than design or choice. This is a tougher marketplace to operate in.”
BATTLING AGAINST PESSIMISM
FPJ caught up with Danielle Turner, managing director of Bunches Florapost Ltd, just before Valentine’s Day
Our order volumes for Valentine’s Day are very similar to last year, which is as expected as this year it falls on a Saturday, so you lose the orders from guys wanting to wow their ladies at work, in front of all their colleagues.
The big change for us this year is the flowers that customers are choosing in order to sweep their Valentines off their feet. Our red rose sales are 20 per cent down on last year, as guys decide to step away from the traditional and buy an alternative Valentine’s bouquet.
Valentine’s is always so last minute, with a quarter of total sales coming on February 13. It is the most difficult event to predict behaviour on and it is the occasion with the biggest risk, with commitments to roses being made months before the orders come in.
Sales of bunches are growing at a rapid rate of 27 per cent year on year, so for us I do not think the lack of growth on Valentine’s is indicative of how Mother’s Day or the rest of the year will go - it is just the Saturday effect. We are celebrating our 20th birthday this year and we are forecasting that 2009 will be our best yet.
We are constantly updating our range of bouquets to keep our offer fresh and engaging to customers. Mother’s Day will see the launch of a specific range just for mums and, as always, the theme is pink.
The biggest issue facing us at the moment is the weak sterling. Some 85 per cent of our flowers are bought in euros, so the poor exchange rate has seen our flower costs increase as much as 30 per cent, but this issue is very much beyond our control. We just have to make sure we run our business as efficiently as possible, but never compromise on our service and excellent quality.
The UK is full of pessimism at the moment, but it is not all bad news and I think strong businesses have a fantastic opportunity to grow and take market share. Tough economic climates squeeze out any complacency in your business and this has to be a good thing, encouraging innovation and positive change.
NO NEED FOR ROSE-TINTED GLASSES
Israeli producer Bickel Group saw an upturn in demand for its 11 edible flower lines from the UK foodservice industry in the run-up to Valentine’s Day.
The grower and exporter sold considerably more of its edible rose petal range this year and this has created further opportunities for the company.
“The uptake for Valentine’s Day was amazing, with demand slightly surpassing what we could offer,” explains the company’s chief executive, Danny Denan. “Suppliers are running away from the UK market at the moment, but we are having a lot of success.”
The Bickel Group grows a quarter of a hectare of edible flowers under plastic covers in Israel and finds that the weather is perfect for cultivation, although the flowers need protection from cooler temperatures at night.
The exporter also supplies decorative flowers to the UK and has noticed that florists and retailers have switched to less expensive products and require more foliage than before. “Valentine’s Day is still big business,” says Denan, “but orders have been lower in general compared to previous years. The flower trade is under pressure and it has become very quiet.
“It does not help that UK supermarkets sell African flowers very cheaply; the market is changing dramatically. But we are still seeing a need for innovation in the restaurant and hotel trade, as it needs interesting floral arrangements, as well as that something extra on the plate, which edible flowers can provide.”
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