World Floriculture Map 2016, Rabobank:

'Equator countries gathering speed'

Rabobank’s 2016 World Floriculture Map, published in cooperation with Royal FloraHolland, highlights some key global trends in the very diverse floriculture sector. On the consumption side of the business, the rise of online floriculture sales is definitely one of these trends. Although the US floriculture market is showing signs of recovery, the total global floriculture market is still rather fickle. In Europe, the picture is very varied. The Russian market has been declining, resulting in decreasing and changing cut flower imports. The Netherlands is still a major junction in global cut flower trade, but the four cut flower exporters close to the equator—Colombia, Kenya, Ecuador and Ethiopia—are gathering speed. Colombia is also steaming ahead and has become a frontrunner in cut-flower sea freight. Looking at the future, predictability will become more difficult. Therefore, companies in the global floriculture market must be prepared for the unexpected.

Floriculture sector is extremely diverse
The ornamental plant sector is very diverse and includes the production of floral crops such as cut flowers and cut foliage, flower bulbs, potted flowering as well as foliage plants and bedding plants. Global floral production value is estimated at USD 55bn. Tree nursery—the production of trees, shrubs and other hardy plants—is worth another USD 35bn. But whereas cut flowers, cut foliage and flower bulbs are traded globally, mainly from south to north, more bulky live plants, such as potted plants and nursery products, are mainly traded regionally (see Figure 1).

Figure 1: Trade flows of flower bulbs, cut flowers, cut foliage and other living plants (excluding intra-EU)


Sources: UN-Comtrade, Royal FloraHolland, Rabobank, 2016.

Floriculture going online
Potted plants and nursery products are bought through a wider range of retail channels than cut flowers. However, there is one major trend impacting both categories: the rise of online sales (see Figure 2). The market share of online sales of cut flowers in total cut flower sales ranges from 4% in Russia to 10% in the UK. Online potted indoor plant sales already account for 7% in Germany, 8% in Russia, France and the Netherlands and 12% in online retail forerunner the UK. It seems that garden centres are challenged as they are the ones losing most market share in the UK, France, Germany and the Netherlands.

Figure 2: Retail shares of cut flower and indoor potted plant sales, 2015


Source: Source: UN-Comtrade, 2016, Royal FloraHolland, 2016


US floriculture sales are on the up, but global floriculture market recovery is frail
Total global floriculture sales, regardless of the channel of purchase, have become rather fickle in the last eight years, as indicated by global trade figures. Volatile exchange rates had a major impact on these figures too. It is uncertain if the uptick in cut flower trade, in both 2014 and 2015, will last. Some of the main floriculture markets are showing clear signs of recovery, others are flat or even in decline. The world’s largest import market for cut flowers is the US. In the US, floral sales have increased for four consecutive years (see Figure 3). Ecuador has profited most from the surge in the US’ cut flower imports. Mexico and Canada have also grown their share in the US market. Imports from Colombia, by far the largest supplier to the US, have not kept pace with total imports.

Figure 3: Total US floriculture and nursery consumer expenditure, 2005-2015


Source: U.S. Bureau of Economic Analysis, 2016

Removing trade flows into Russia
The European picture is more diverse when it comes to both market development and overall expenditure levels. One of the main changes seen is Russia’s decreasing appetite for (imported) flowers. Up to 2013, Russia’s share in global flower imports rose steeply, but since the economic and political turmoil in Russia, imports have been declining. Moreover, the origin of trade flows to Russia has clearly changed (see Figure 4). Ecuador, Kenya and Italy have grown their market share in Russia’s cut flower imports, mainly at the expense of the Netherlands. Russia has not banned flowers from the EU, but the decreasing value of the Russian rouble has made imported products more expensive, and on top of that, exporters have become more hesitant to do business in Russia. This has mainly hit Dutch floriculture exporters.

Figure 4: Cut flower imports by origin, 2005-2015


Source: UN-Comtrade, 2016

The rising four have surpassed the Netherlands
The Dutch share in global cut flower exports has continued to decline since we first published a World Flower Map in 2005. Currently, the Dutch share stands at 43% (see Figure 5). As the cut flower production area measures only 4380 ha (both covered and in the open field), the Netherlands is still a major junction in international floriculture trade. However, for the first time the four rising flower stars—Colombia, Kenya, Ecuador and Ethiopia—have passed the share of the Netherlands in 2015 and now account for 44% in global cut flower exports. Just two years ago, their share was 33% (in 2005 it was 25%). While roses are the main cut flower traded by these four countries, Colombia has a relatively diversified product range and is also the largest exporter of chrysanthemum and the second largest global exporter of carnations in the world. Despite low production costs, a favourable climate, large farm size, and increasing efficiency and quality, it remains challenging to grow cut flowers in these countries. There is (hardly) any domestic demand, producers have to deal with (a lack of) air freight capacity and high transportation costs, volatile exchange rates, and challenging political and social circumstances.

Figure 5: World's largest cut flower export countries, 2005 vs. 2015


Sources: UN-Comtrade, Royal FloraHolland, Rabobank, 2016

Colombia is the global leader in cut flower exports over sea
Where possible, exporting nations try to move away from expensive and relatively unsustainable air freight. Colombia is leading global sea freight in cut flowers (see Figure 6). Part of Colombia’s market share gain in the global chrysanthemum market is related to the use of container shipping. In East-Africa, the infrastructure is not yet developed well enough to boost these countries’ cut flower transportation over sea.

Figure 6: Cut flower trade by sea container (excuding cut foliage)



Source: Royal FloraHolland, 2016

Conclusions
The selected observations may mark the beginning of a new era in floriculture. A new era driven by major global events, such as the uncertainty caused by the current global geopolitical turmoil (more protectionism, difficult business environments), the fast-developing digital world and the rising importance of sustainability in floriculture. To be a leader rather than a laggard, floriculture suppliers should be prepared for the unexpected. This implies that floriculture businesses may need to become more flexible and robust at the same time, in order to cope with various future scenarios. Furthermore, companies may need to explore opportunities to spread into other markets and/or sourcing countries/regions, enter digital marketing channels and adopt more sustainable supply chains.


Source: Rabobank

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