Few things are as instantly mood-boosting as arranging a colourful and fragrant bouquet of flowers in a vase and watching it transform a room. But buying flowers is seen as a bit decadent in the current economic climate, despite the fact that it is a relatively cheap pick-me-up.
Sales of cut flowers and ornamental plants are steadily down since the start of the recession, with sales volumes for Mother’s Day down 1,000 tonnes from last year, according to Kantar Worldpanel, and the average spend on Valentine’s Day bouquets declining from £17 in 2009 to £15 in 2010.
“We estimate that there has been a slow erosion of sales since its peak at almost £2.2 billion in 2007, and the market is now worth about £1.75bn,” says Flowers & Plants Association spokesperson Caroline Marshall-Foster. “Overall, the cut-flower market appears to be declining and the houseplant market is static at best,” she adds.
One contributing factor, according to the organisation, is that supermarkets systematically undervalue the category. The multiples have helped open up the market but the commoditisation of plants has also created problems. “By continually offering the products at falsely low prices, not only are margins being squeezed but the perceived value of cut flowers and plants has gone down in the eyes of consumers. As a result, supermarkets have put a ceiling on the price possibilities,” she explains. “This in turn impacts on the rest of the chain, who simply don’t have anything else to take out of the equation. We are now seeing many growers struggle badly or go out of business.”
The price ceiling is the reason the UK growing sector has not been able to compete with overseas producers who, with lower labour and land prices, could offer significantly more competitive prices - even taking into account transport costs. Increasingly, however, overseas growers are also struggling to meet supermarket price points and as a result quality could suffer, warns Marshall-Foster.
In terms of supply, there are generally plenty of flowers available but, given that there is nothing left to strip out of the cost base, more and more growers are going out of business. The risk is that, long-term, demand will outstrip supply and prices will be forced up. Adding to the problem, countries that do not have the dominance of supermarkets are prepared to pay more, meaning supply is and will continue to be channelled to more lucrative markets.
In terms of logistics, transport costs are rising far higher than core product cost, according to the F&PA, and that in turn affects both cost and availability. While this impacts more on the traditional sector than the multiples, the industry is unanimous in identifying a problem. Adding the rising fuel costs to the decline in consumer spend, the flower and plants industry is being squeezed at both ends.
At independent florist level, where shoppers are still making gift buys, i.e. Valentine’s Day, Mother’s Day and birthday bouquets, it is mainly self-purchases that are deemed an unnecessary luxury, it seems. People are even skimping on wedding flowers and funeral arrangements - traditionally important sources of revenue for florists. “Weddings are being hit particularly badly as brides try to cut costs, while funeral flowers are either reduced in value with smaller or shared tributes, or replaced by donations to charity,” says Marshall-Foster.
Luckily, a glimmer of hope can be found in the fact that the recession has generated an “affordable treat” culture. Sainsbury’s has seen a positive increase in sales of its higher-value flowers, such as the Dozen Colombian Roses and their premium lilies, which thanks to a boom in sales over the last 12 months, has led to the launch of a new premium range called Floral Collection - the floral category equivalent to Taste the Difference. “People need something special but affordable to cheer them up and, with the right promotion, this is a key opportunity for flowers,” Marshall-Foster explains.
Helen Evans, director of business development and support at New Covent Garden Flower Market, agrees. “Over the last decade we have seen the number of flower wholesalers reduce at the market but in the last year, while we saw a slight downturn in fruit and vegetable sales, we have seen a reversal of the downward trend in terms of flowers,” she says.
One of the areas where there has been particular growth is in contract and event floristry, two sectors that are expected to see an uplift this year too due to the Olympics. The focus on Britain could not have come at a better time, thinks Evans, and adds that the demand for home-grown produce has never been greater. “In the same way that consumers are very aware of the benefits of buying British fruit and veg, they are increasingly asking for British flowers and foliage too.”
Now it is up to the independent sector to increase its market share of roughly a third by setting itself apart from the multiples, says Evans. “Independent florists need to offer something different. The two things you would never get from the back of a Dutch van are UK-grown flowers and foliage, so champion that.” -
