Kenyan flower growers, who have moved on from open auctions to long-term direct sales contracts and heightened health and social standards, are now turning to making the world’s most fashionable and appealing flowers, in an increasingly competitive world market.
Kenya is one of the world’s largest exporters of flowers, yet exporters are now having to be agile in finding new markets, and staying ahead in existing ones, in the face of fierce competition from China, and the impact of financial belt-tightening in the country’s traditionally strongest flower markets.
It’s an equation that has seen pathfinders heading out to discover the best new markets to tackle, with a recent delegation sent to Russia and returning with news of a strong appetite for flowers, for those ready to brave the market from Kenya.
How many flowers the world buys is subject to debate, but best estimates put the market at around $40bn to $60bn, of which four-fifths of the buying is concentrated in just six countries: Germany, the USA, the UK, France, the Netherlands and Switzerland. On the supply side, Kenya is now one of the world’s three largest suppliers of cut flowers, alongside Malaysia and Thailand, and having recently overtaken Ecuador, to make it to the top three.
But while the market continues to grow, it has its own fashions, and each market has particular preferences, for instance, the newly rising Russian flower buyers prefer a very large flower bud, which means developing the right flowers to capture this untapped market. Following the visit of Kenya’s own high-powered delegation to Russia, some 200 hectares, most of them outside the traditional flower growing areas, have been dedicated to the growing of these large budded flowers.
The drive comes against a backdrop of fierce competition, for while flower growers in Latin America have benefitted from relatively constant prices in their main market of the USA, flower prices have fallen, at times sharply, in Kenya’s main market of Europe.
As well as the pain of austerity measures across many European nations, now bowing with hefty government debts and suffering scant economic growth, which has limited consumers’ spending power, the continent has also become the main target market for expanding suppliers in Asia, and notably China.
Parts of Asia enjoy ideal climatic conditions for the growing of flowers. But exporting flowers from Asia to Europe had traditionally presented challenges in handling and transporting such perishable goods for such long distances. However, with recent years furnishing many Asian nations with ample investment funds and will, Asian competitors have now created efficient flower sectors rooted in state-of-the-art facilities controlling humidity, temperature and air quality to deliver an attractive product to the European market.
Growers everywhere rely heavily on an efficient post-harvest chain of handlers, storage and transport. Indeed, in the absence of a "cold-chain" it is practically impossible for even the most efficient producers to sell their produce in the main northern hemisphere markets.
This was clear to the Dutch growers who nearly a century ago set up the first auction, which allowed them to get fair returns on their efforts and enabled Holland to become a principal producer and the major cut flower trading nation in the world. It was also essential to growers in such countries as Colombia and Kenya who, despite having no sizeable domestic market of their own, managed to achieve spectacular production growth thanks to a concentration on flower handling and storage.
With Asia now equipped to deliver similar preservation levels to the point of sale, Kenyan producers have moved to improve and secure better distribution channels. For many years, some 70 per cent of Kenya’s flower markets were sold through the flower auctions in the Netherlands. The Bloemenmarkt flower market is one of the largest in the world, while the Aalsmeer Flower Auction, also in the Netherlands, on its own, spans flowers ranging from the traditional Dutch tulips to roses and gerber daisies across 13,000 different types of flowers, and auctions more than 20 million flowers a day.
However, as new tie-ups between Asian growers and Dutch auctioneers saw the auctions emerge as zones of concentrated competition and daily price contests, many Kenyan growers moved to ship their flowers directly to international wholesalers and retailers.
This shift to direct sales channels to supermarkets and retail outlet has been marked, with large retailers, such as Wal- Mart and Tesco, having sharply increased purchasing directly from growers under long-term contracts. This has even seen producers combining to serve contracts, and the development in some cases of dedicated shipping arrangements to guarantee a steady volume of supplies – which was never necessary when facing auctions. For example, Dole Fresh Flowers now has its own chartered flights to deliver daily flowers to the US.
Growers have also been moving to supply more to the slowly expanding local flower markets.
However, at the same time, new flower centres have emerged in locations such as Dubai, Tel Aviv, and Kunming, China, opening new gateways to Asian producers, and turning Kenyan growers increased attention to market growth through better quality.
Roses grown in Africa are often of varieties with large blossoms and impressive looks compared to those grown in India or the Republic of Korea, and are reasonably priced for their superior quality. For these reasons, demand for African roses is growing in Japan, where they are now enjoying major sales at supermarkets and mass retailers.
Consumers in importing countries have also become better informed and socially and environmentally conscious about the sources of the flowers they consume, leading to higher demands on growers for service guarantees and corporate responsibility.
Kenyan growers have pulled ahead of many export competitors in satisfying the increasing number of codes of conduct in the flower trade, such as the Dutch milieu programma sierteelt (MPS), Flower Labelling Programme (FLP), Fair Flower and Fair Plants label (FFP).
Now, with many Kenyan growers having rushed to conform to stringent phyto-sanitary requirements and heightened terms, conditions and care for workers, the new frontier, as the industry now examines Russia’s love of huge flower buds, lies in the development of flowers that will simply capture foreign consumers hearts and wallets, ahead of all the other flowers from everywhere else.