The Floral Insight Newsletter—May 28th, 2024
Greetings from the Wizard!
Before we dive into the Wizard’s Wand, we’d like to update you on our recent activities.
Firstly, The Bloom Show will be at Floriexpo! We’ve partnered with Floriexpo and have a special promo code, Bloom2, for free registration for our community.
We’re also thrilled to announce that we’ve been invited to the Seminario de Floricultura in Ecuador to host a panel discussion. Sahid, our host, will be joined by four top growers from Ecuador: Marcus Bustamante of Tessa Corp., Sean Hug of Bella Flor, Eduardo Chiriboga of Esmeralda, and Melisa Fuenmayor of Jet Fresh Growers. They will discuss international trends and more.
In addition, The Bloom Show has been invited to Expo Flor, further extending our collaboration to bring this fantastic convention to our audience.
We are excited to welcome United Selections to our list of preferred vendors. We are proud to support and collaborate with such an amazing breeder and we are particularly impressed by their spray roses. Look out for emails and more information about this great vendor starting next month.
Starting next month, we will also be accepting new vendors into our portfolio. If you’re interested in increasing market share and brand awareness for your company, please email us at connect@newbloomsolutions.com.
And now on to the Wizard Wand.
Sorry for missing a few editions of the Wizard’s Wand but with early Easter and a very busy Mother’s Day season, time was a bit in short supply.
The Wizard has lots to write about for this May’s edition. Mother’s Day seemed to be a very strong holiday for most. However, the world is changing dramatically in terms of how people are buying flowers.
A little about the economy and its influence on business and consumer behavior.
Our economy basically remains strong. The economy continues to outpace expectations. The stock market hit record levels in May. Higher interest rates have been a headwind for some fixed income returns. 2024 GDP growth forecasts have increased, as has equity market growth for certain sectors.
Inflation has not gone away and the Fed is not dropping interest rates anytime soon. Powell has maintained rates between 5.25% and 5.5%. It appears that it will take longer than expected to get the inflation rate down to 2%.
One item that is not a victim of inflation is diesel fuel. Retail diesel prices are now near levels not seen since the beginning of last summer.
Labor costs have increased by 4.7% in the first quarter of 2024. Productivity gains have slowed. Coupling these two items together suggests continued inflationary pressure and higher producer prices as well as higher import prices.
The average salary of supply chain professionals exceeded $103,000. The more certifications and degrees, the more it could result in a $25,000–$35,000 additional salary.
Despite the flower business flourishing with demand, consumer sentiment did sink which could suppress spending in the coming months. Shoppers have delayed big ticket purchases because of interest rates and inflation.
Logistics still suffered as Chinese exports suffered from the Red Sea issues and had to use alternative and much more expensive air cargo. Mexico remained the largest US trading partner, followed by Canada and China. Maersk, a very large ocean shipping company, moved forward with plans to grow it’s air cargo business this year with the purchase of 777 cargo planes from Boeing.
Here are two of many recent articles about what is happening to the largest US grower and to many growers in Kenya, courtesy of Floral Daily.
The flower business is still very fragmented and somewhat confused. Like many other industries, there are lots of options as to where to make your purchases. E commerce is more alive than ever, as are mass-market sales. Traditional retail and wholesale are steadily being challenged as more and more retailers jump supply lines to save on costs. Mass Markets continue, in some cases, to be outlets for some of the worlds’s production at prices that are hard to compete with. Production increased post-COVID because many farms saw that during covid they could not satisfy demand. Unfortunately, not all this demand still exists. Some of this demand came from people buying more flowers for their home as they were not traveling and were working from home so it was nice to have flowers in the house. Pricing has also become higher for flowers since before covid due to many of the factors discussed above.
We see problems in other industries, such as fast food, where sales have suffered due to high prices and now to combat lost sales, companies like Burger King, McDonald’s, and Wendy’s are all entering a price war to bring back lost sales. Even buying a car has become negotiable again and the ads have come back on TV and Radio!
Airline tickets have dropped for the 2024 season. Memorial Day set all kinds of records for the largest air travel day ever.
The real problem is that some farms, distributors, retailers, and e-commerce companies are facing issues that some cannot manage, and labor costs, transportation costs, insurance costs, product costs, and more are eating them up. Downward pressure on prices with upward pressure on prices is a horrible match. These companies must reinvent themselves and change their model to one that can survive in this current flower world.
Warm regards and thanks for reading my rants,
The Flower Wizard