“At the moment, 50 ha is large enough if you want to do business with retail, but soon you’ll need to have a nursery of at least 75 or 100 ha”, said Billy Coulson of Nini Flowers to me via Zoom. Seeing that their company Nini Flowers in the Kenyan town of Naivasha is exactly 50 ha large, I asked Billy about the implications for him and his wife Fiona. “Merger or takeover”, he replied.
Before the ink of the Floribusiness article about Nini Flowers was dry, it was announced that the nursery has been taken over by another grower. Production companies are expanding, and trading companies are keeping busy too. Trading companies that have their own production are favoured by the supermarkets, according to Billy.
Billy’s statement is confirmed in the new edition of Floribusiness by Bas Rensen, director of Flamingo Flowers. This company won the big Tesco UK tender last year. Flamingo has a large production site in Africa. Vertical integration they call this, or perhaps we should call it backward integration.
Increase their global market share
Royal FloraHolland (RFH) is also joining the consolidation game. The auction might be reducing its real estate portfolio in Aalsmeer and Naaldwijk, but they’re keen to further increase the turnover realised by growers via the auction. They’re also hoping to increase their global market share, which had been declining over the past few years.
The only thing that’s certain is that there always will be changes
Chief Commercial Officer Ruud Knorr tells us more about the auction’s international ambitions in this edition. His forecast is that RFH will add €200 million to the growers’ turnover by 2021. The CCO thinks that growers in Kenya and Ethiopia, as well as growers in some European countries, are going to make use of the new financial and logistical services offered by the auction.
There are more changes ahead for the auction. By the end of this year, all auction transactions will take place digitally via Floriday. And in two years’ time, products will be sold via the cloud at the national auction instead of physically at one of their locations. They’re also going to separate transactions and logistics.
And as Royal FloraHolland wants to get more growers in the Netherlands and abroad to commit to the auction, they’re also looking into changing their membership model. Finally, there’s the issue of mandatory certification for auction suppliers.
Not fast enough
Some growers and buyers feel that the changes at RFH are going too fast, and they wonder if they still want to stay on. Others, however, feel that the developments aren’t going fast enough. Several tulip forcing companies have told RFH they want to cancel their membership, which could mean a €100-million turnover value loss for the auction.
RFH is currently in discussion with these growers, hoping to keep them on board. Without them and without the ‘more conservative buyers and growers, it’s going to be difficult to achieve €200 million growth in 2021.
Whether Royal FloraHolland is going to fulfil its ambitions, remains to be seen. And that’s also true for the developments regarding vertical integration and the consolidation of production companies. The only thing that’s certain is that there will always be changes. It’s the outcomes of those changes that are mostly unknown.
In any case, Floribusiness will continue to keep a close eye on the developments in the international floricultural industry. Enjoy reading the new edition of Foribusiness magazine!
Managing editor Floribusiness
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