ASSET MANAGER Market prices, transparency and responsibility

By: Matthias Hucke *

Iam writing this article four weeks prior to Mother’s Day. In Germany, I had a conversation with a German colleague about the situation within the flower business over the next few weeks. He told me that after the Mother’s Day festivity, he would again have to choose a rose farm to work with. They had been putsch in the last few years, but last year it was evidenced that the farm with which he worked, sold to his competitors at up to 25% or more below their own prices, and are obviously not willing to change this.

I was able to verify this through conversations with the clients themselves and by way of mistakenly sent invoices for a competitor received by email on several occasions. The market is no longer the same as it was 20 years ago, things are verifiable and there is more transparency.

Remembering the past

After this phone conversation I thought about the issues discussed in our conversation for quite some time. When I first started in the flower business more than 30 years ago, my older colleagues told me that back in the 70s and 80s, they sometimes had an advantage of more than half a year over the competition regarding some products. Competitors took a long time to figure out where the flowers were coming from and in the meantime, money could be made on exorbitant margins.

I thought about my own experience from about 15 years ago. Back then, we were working together with a very good rose farm in Ecuador. We were buying over 50 boxes per week. Business went smoothly. We helped each other. Unfortunately, we couldn’t buy all their production, so the farm started selling very cheaplto Dutch colleagues.

They weren’t the best varieties, but they were good ones. Within our own domestic market, the farm’s product was often offered at our landing price. We evidenced this going on for six months, we kept pointing it out to our partner again and again. We gradually bought less and less and as nothing changed, we ended collaboration overnight.

Other German colleagues were of the same opinion. Today, the farm has not a single customer in Germany. Due to the lack of knowledge regarding the local situation -even then, the Netherlands and Germany were not two different markets- and because of the absence of a brand strategy, this farm ended up losing its very good reputation and its sales market due to its own mistakes.

I could list several farms from Ecuador and Colombia that have suffered a similar fate in Central Europe over the past 20 years. Other reasons often influenced as well, such as problems regarding quality, changes of personnel in purchasing or sales, or a change in the sales strategy.

Business with transparency

Germany is still the second most important cut flowers market in the world. As in other sectors, markets are gradually becoming more transparent. New platforms and social media take care of the rest. There are now many forms of cooperation and exchange between importers, but also between flower wholesalers. People know each other, trust each other more, and talk about prices.

Both the German and Swiss markets have a reputation for paying the best prices. In addition to many South American farms, more and more African farms are pushing into direct sales and have their representatives or even their own local companies on site. Additionally, more and more colleagues from the Netherlands, Italy and even the Czech Republic, who have not only been offering their products for a long time in their own countries, are also striving to enter the lucrative markets of Central Europe. During the years 2020 and 2021 of the pandemic this worked wonderfully. The market grew massively in many European countries and were two extraordinarily good record years. For many observers it was clear that, although this growth was quite welcomed, it would not last.

By: Matthias Hucke