2019 is coming to an end, so it's time to look back. How was the year? What were the challenges and what are the opportunities for 2020? We spoke with two export associations in the main flower producing countries in South America; Alejandro Martinez, president of Expoflores in Ecuador and Augusto Solano, president of Asocolflores in Colombia.
All things considered, for both countries, it has been a challenging year; for Colombia particularly the beginning of the year due to the weather, and for Ecuador it was a though year in terms of adjusting to the oversupply in flowers and the strikes that were hard for most of the farms. However, they look forward to 2020. The United States is for both of them by far the most important country with plenty of potential to increase sales. "Consumers do not look where the flower comes from, so in order to succeed we all need to supply a high quality product", says Solano. Also in other countries, they are seeing opportunities to increase market share. In the future, they both expect productivity to grow rather than acreage, thanks to efficiency improvements.
Augusto Solano of Asocolflores and Alejandro Martinez of Expoflores.
When comparing 2019 to 2018, flower exports grew for Ecuador and remained more or less the same for Colombia. "Monetarily speaking, flower exports grew 1.9% in comparison to last year (i.e. YTD), but that was mainly due to a general increase (4.2%) in prices, rather than to an increase in the volume of exports, which actually decreased by 2.3%", says Martinez. In Colombia, weather issues resulted in more or less similar export numbers compared with 2018. "It was in a certain way a difficult year at the beginning with the weather, we did not have great weather and it affected the production. Therefore, our export levels stayed more or less at the same level in 2019 as in 2018", says Solano.
What went well?
Martinez: "As Expoflores, we have been working closely with authorities on regulating farms with none or low regulations in terms of Intellectual property, workers regulations and others. This has meant a reduction (low for the moment) in terms of supply, but the real effect will be seen in 2020. Farms have executed their commercial programs with professionalism and as a result you can see farms are doing better overall work in terms of supplying the market."
Solano: "One of the things that has Asocolflores felt that has been improved is logistics. In previous years, we have had some problems in transportation. This year, it went very well. And one of the things that is continuing to increase is sea freight. I think it is not going to replace the air freight, but they're going to complement each other - an important thing we noticed this year."
Challenge: Oversupply of flowers
Martinez mentions the global oversupply of flowers to be a challenge to the flower industry. "In general in Ecuador, exports have fallen in terms of volume, and although prices have risen compared to last year, the increasing level of supply exceeds the existing demand, and thus prices will have to go down. This poses a serious challenge to the flower industry."
Challenge: Creating consumer awareness
Another challenge Martinez and Solano are both addressing is increasing the consumer awareness of flowers and in turn the consumption. "I think it is a challenge that the industry has had for many years", says Solano. "As someone once said, what we need is more people buying more flowers more frequently. It is something where the industry has a big job to do yet. And to be successful I really think that we need to work together, because it has been said many times that our main competition is not one country against the other, the main competition is other products like chocolate, perfume, wine, and other things. And as always, weather is something that may be a challenge, as well as quality. We have to improve quality - not only Colombia, but all countries. The best promotion we can have is a quality flower, no matter where it comes from; because a bad flower is going hurt the image of the flowers, and the consumer who gets one bad flower will stop buying them. It is not that he won't buy flowers from one country or another. It is the product itself in general”.
Asocolflores organized several activities to promote their brand 'Flowers of Colombia', like tribute tours in New York, Tokyo, and London. Also, they just participated in a large art fair in Miami (FL), USA, namely Art Basel, where their flowers were on display at the VIP lounge. [ALA7]
In order to better supply the customers, Expoflores has been working on getting more insights in their customers' demands. "A challenge relates to expanding our market share, especially if we consider that, at a global level, demand is growing. In order to tackle these and other challenges, we have already started an aggressive long-term program to gather and use data and technology to get valuable insights that eventually will enable us to identify opportunities to overcome those hurdles, for instance by getting a deeper understanding of customers' needs, identifying new shopping patterns, finding gaps between demand and supply of specific varieties in different markets, among other key issues".
Local production is hot - affecting imports?
Globally, local production is hot, also in the US, Ecuador's and Colombia's main export market. Are the imports therefore decreasing? "There are a lot of limitations to produce local products like the time of the year you can produce them, which is mainly summer", says Solano. "Also the diversity of varieties and the price of the flowers are not the same. They are going to compete, but I think there is room for everyone, and the per capita consumption is still low in many countries, particularly the US. It is said that about 30 or 35 percent of the households in the US buy flowers, so there's still lot of room to grow there."
Martinez does not see the demand for cut flowers decreasing. "It keeps on growing at a slower rate. When looking deep into each market, there are certain markets decreasing and others increasing. I believe the key point is that not only the growers, but wholesalers and markets react to what the consumer wants and values in a flower. We cannot push prices down, we all have to focus on what the consumer wants and values in flowers and aim our joint strategy towards that demand."
Both see many opportunities to grow in the US. "Penetration is low, so there is a lot to gain", Solano says. And for Ecuador, the US has been the only market where market share has increased (2 percent compared to 2018), compared to the other two main players, the EU and Russia.
But they see more opportunities to grow in other countries. For Colombia, China is an opportunity as well as a challenge, as transportation is really difficult. Also Spain and Poland seem to become more important countries, and they are eager to grow further in Japan, which is already a special market for them. "We want to offer them a wide variety of high quality flowers for all the years to come."
Based on Expoflores' data, the following countries are becoming interesting markets for the Ecuadorian flower industry: Armenia (roses), Australia (alstroemeria), Bulgaria (roses), Chile (alstroemeria), China (gypsophila), Czech Republic (roses), Japan (aster), Macedonia (roses), Peru (carnation), Poland (gypsophila), Singapore (other summer flowers), Sweden (roses), Taiwan (gypsophila), Vietnam (gypsophila).
Every other year, Proflora takes place in Bogota, Colombia, and Solano was very pleased with this year's edition. (Click here for the FloralDaily photo report) "We had a great Proflora, which is our main promotion event. This year, we had a lot of high quality buyers attending the trade show, and also the quality of the flowers was excellent - as we heard from all the people attending the trade show. So, in general, it was great and it was one of the first times we had some lectures and seminars - usually we don't have that. In the future we're going to keep having them".
Outlook for 2020
Solano has high hopes for 2020. "In many ways 2020 can be a great year also - but things like Brexit still produce uncertainty. The UK is an important market. Even if it is not an important market to some, when something happens there, it can have an effect on the international flower market. The trade issue with China and US is another uncertainty. However, apparently they are reaching an agreement and that will be important for our market. Another trend that could be a challenge for the industry in a certain way is sustainability. The Colombian flower industry and especially in Asocolflores, we've been committed to sustainability for many many years. Florverde almost 25 years old, close to MPS. So that is something we need to keep in mind and everyone needs to work on. Sustainability will be a key issue again for the years to come."
But all in all Solano is positive on the future of the industry. "Colombia is committed to supplying flowers to consumers and our markets, and we keep relying on the strength of the diversity of our portfolio that we can offer. Another thing we have to offer is not only the product itself, but also that our flower growers are reliable suppliers of flowers. I think growers will continue concentrating on increasing productivity, more than acreage. Increasing productivity is key in terms of being more competitive. There might be some increase in acreage, but it won't be significant."
According to Martinez, 2020 will be an adjustment year in all growing countries, but should be a steady year in terms of market share and growth.
In 2020 Expoflores will organize the second edition of their international flower trade show, named Expo Flor Ecuador 2020. It will be held from September 23-25, 2020 in Quito, Ecuador.
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