Since the entry of large supermarket chains into the floral industry, the business has consolidated significantly in regard to where floral products originate, how they’re transported and who buys them.
Prior to the emergence of mass-market floral retail, most floral shops sourced their products from local and regional nurseries and greenhouses. However, severe spikes in fuel costs coupled with a drop in fuel supply in the 1970s made it too expensive for many growers to artificially heat their facilities and continue operating.
Some closed down, while others relocated to South American countries like Colombia and Ecuador, where they began businesses designed to grow year-round and export products to the United States. Around the same time, Europe and Asia also began large export operations, giving American consumers access to products that had never been previously available.
Today, industry-wide consolidation has resulted in the majority of American floral products being sourced from a few central distributors that emerged from these earlier changes in the global floral market. What exists now, in many cases, are single consolidated grocery chains sourcing floral products from just a few distribution channels.
According to PMA’s report “Trends in Mass Market Floral,” 2015 saw 70 percent of floral products in the United States provided by central distributors. Of the different types of retailers, nearly all chain supermarkets sourced their products from central distributors. As retailers get smaller or more independent, their reliance on centralized distribution decreases significantly.
Of the centralized distributors, the study cited South American farm direct and Miami bouquet manufacturers as the largest sources of pre-made arrangements and bouquets for mass-market retailers, representing 41 percent and 38 percent of the market share, respectively. U.S. growers and shippers come in a distant third with 14 percent of the market.
According to the study, this trend toward centralized sourcing has emerged from the ease with which large grocery chains can deal with a single distribution channel. Full-service and self-service operations are distinguished only by their preference for the top three distributors, the report shows. For instance, self-service operations “sourced almost exclusively from South American farm direct, with Miami bouquet distributors being a distant second.”
Full-service retailers, meanwhile, sourced most from Miami bouquet manufacturers, followed by South American farm direct and U.S. growers/shippers.
Mixed-service operations tended to spread their sourcing out more, including the top three while adding in U.S. growers/shippers, U.S. grocery/service wholesalers and U.S. wholesale florists as significant sources.
According to PMA’s “U.S. Floral Industry Overview,” this sourcing consolidation can have risks. The study notes that “an increased dependence on producers in one country or geographical area puts retailers at significant risk. Catastrophic weather events or significant political changes can drastically influence sourcing abilities unless risks are mitigated through sourcing diversification.”
The study also points out that consolidation has had major effects on the transportation of floral products. Under most circumstances, this has resulted in increased efficiencies throughout the transportation process, but the study notes that peak times for the industry can result in limited transportation options because flowers aren’t a high-income cargo for air carriers. Also, the emergence of Miami as a centralized import destination means issues with a single port can create problems throughout the U.S. floral market.