Springtime Indicator: Flower Industry Snapshot

By offering quality products at competitive prices, developing countries have been able to open up their markets to more trade partners across the globe.

For this month's Featured Indicator, I was inspired by indicators of springtime. And while winter seems to be holding on with all of its might to these early spring days, there are still signs of springtime popping up through bits of snow on the ground. As soon as springtime comes rolling around, the flower section in the grocery store and at the farmer's market seems to explode with color and brightness. With so many options for flowers in the grocery store, do you know where those bright pink roses or yellow tulips come from? If you're thinking that those flowers are grown in the USA, you are probably mistaken, as the United States is a net importer of flowers and other plants.[1] While there is a domestic flower growing industry, in 2015 the U.S. imported almost $2 billion worth of flowers and others plants.

As shown in the first graph in the infographic below, the Netherlands commands the largest share of worldwide exports of Flowers, Trees and Plants; however, developing countries in the Southern Hemisphere, like Kenya, Ethiopia and Ecuador, have been gradually increasing their market share over the last decade. By offering quality products at competitive prices, these countries have been able to open up their markets to more trade partners across the globe.

One significant factor in the shifting dynamic of worldwide flower exports is the improvement of global container shipping across the Atlantic and Pacific Oceans. Improvements in the conditions within the containers has made ocean travel more viable for a variety of flowers that were previously excluded from this type of transport due to their limited shelf lives. Additionally, there are significant cost savings when shipping sea freight compared to air freight, making it an attractive option for exporters. To facilitate the increased number of shipments coming and going across the globe, the world's largest ports are improving their capacity and technology to continually increase efficiency.[2] For more on changing dynamics in worldwide container shipping, revisit last month's indicator, which gave a nod to the massive Panama Canal expansion and discussed possible effects on worldwide supply chains as domestic and international ports look to expand their capacity due to the canal's widening.

In terms of market demands, consumers have turned to the lower end of the flower market, preferring flowers from the supermarket and DIY-stores, as opposed to boutique flower shops selling higher end speciality flowers. On top of this, the market is still recovering from the 2008 recession, as discretionary spending was significantly cut during tougher economic times. The future demand in this market can be characterized as "unsteady," as demand for flowers has not increased in the world's largest consumer markets, namely the U.S, Europe, and Japan. Developing countries with notable income growth will be the greatest potential for future demand.[3]

Check out a snapshot of the flower industry in the infographic below and let Camoin Associates know your favorite springtime bloom in the comments below or on Twitter @camoinassociate.

 

 

 Sources for Infographic

1.       International Trade Center, List of exporters for the selected product. Based on Harmonized Tariff Schedule : 06 Live trees, plants, bulbs, roots, cut flowers etc. http://www.trademap.org/Country_SelProduct_TS.aspx

2.       IBISWorld Report, Plant & Flower Growing in the US, NAICS 11142, October 2015.

3.       IBISWorld Report, Plant & Flower Growing in the US, NAICS 11142, October 2015.

4.       IBISWorld Report, Plant & Flower Growing in the US, NAICS 11142, October 2015.

 

 


[1] Categorized under NAICS 11142

[2] World Floriculture Map 2015, Rabobank International, released January 2015.

[3] World Floriculture Map 2015, Rabobank International, released January 2015.

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