The Dawn Of Design
Graphics, sourcing, and recycling are all weapons in the war between costs and profits being fought by pot companies.
June 23, 2008
Marco Wilschut, co-owner of Dutch pot producer Van Krimpen B.V., is stuck in Amsterdam traffic while driving back from a press conference hosted by the Horti Fair Innovation Awards Committee — a conference at which his company was nominated for two awards. Needless to say, despite the traffic snarl, his spirits are high. "We spoke with about 15 European journalists about two of our products," he relates. "It was good free publicity, and they were very interested in our offerings."
As well they should be. The two products, one a labor-saving improvement on the common hanging basket and the other a new packaging design for bulb sales, span the breadth of the dilemma facing today's pot and tray producers. Companies from around the globe are being asked to do more for the growers they serve, to juggle lead times in ordering cycles with higher input costs, and all of this at a lower price than ever before. How are they coping with the stress? By diversifying offerings, rethinking business strategies and trying to reduce costs wherever possible.
It all comes down to marketing. The old way of letting the plant sell itself is over as breeders, growers and retailers alike are trying to nurture and grow their brands, their plants and their design-savvy customer base, all at the same time. The days of the black plastic pot at retail are rapidly waning, and for good reason. Many of today's pots actually rival the flowers they contain for consumer attention. However, this movement toward designing and branding brightly-colored, information-packed pots is squeezing the pot producers in the process.
"Many retailers are waiting later and later to order their plants for the springtime, and so sometimes we don't have enough time to get out in front of our orders, to produce and print and price and barcode everything the way growers want it," observes Wilschut. "And it's getting more difficult every year."
These market developments have been leading to grower complaints that pots don't arrive in enough time or quantity to produce the crop they want when they want it — a charge that many pot companies will admit (off the record) has some merit. "The many options cause more manufacturing to be to specific orders, where we previously manufactured more to inventory," explains Alan Druskin, vice president of marketing at East Jordan Plastics. Druskin is careful to point out that, as for East Jordan, "We have been able to fill our orders on time, but that is because we have been careful to not overcommit our production capabilities."
Such prudence has sometimes meant not taking new orders the company would have trouble filling, he explains, allowing East Jordan to keep the trust of their customer base. Even so, East Jordan has continued to diversify its offerings alongside everyone else.
"We have met the new requirements of our growers and their customers by adding new products to our line, producing products in a wide range of colors, labeling pots, flats and packs, and offering 8-color graphics on our pots," notes Druskin.
Why add more production pressures to an already stressed system? Simply put, because it's helping everyone make more money. Consumers will pay more for an attractively packaged plant, which enables growers and grower/retailers to increase their own margins and which, in turn, makes them amenable to paying more themselves for their container orders.
Also, their customers, from the smallest roadside hoophouse to the biggest big box grower, are building brands of their own. Many pot companies have added marketing and design resources to deal with these challenges — resources pot company executives say have now come to play an expected part in the manufacturer-customer equation.
"We offer our customers our in-house design team," says Jack Shelton, president of Poppelmann Plastics. "They work with the customer free-of-charge to develop the art." This level of collaboration, though more intensive than ever before, is a potential benefit from manufacturer all the way down the line to the consumer.
Spend Money, Make Money
"The trend towards these printed containers is very attractive from a consumer perspective," says Floragem marketing director and Greenhouse Grower columnist Laurie Scullin. "We're able to give species-specific information, how-tos, garden design, care and cultural information, in both English and Spanish, right on the pots. They're more useful and more attractive at the same time." All of this is allowing growers and retailers to connect to the consumers they serve.
"We've seen over and over in all the survey work done that if you better package plants, they sell through faster and allow more margin," Scullin explains.
Bulbs, for instance, have been sold in unattractive mesh sacks, almost like potatoes or onions, for years. Van Krimpen saw a niche for doing the same thing with bulb sales that had already been done with other potted plants — accessorize with
"We developed our new packaging design with de Vroomen, a big bulb exporting company that wanted to sell in the garden centers in the United States," remembers Wilschut. "In the packages we developed, you can see the bulbs in the pots with high quality printing on the surface. If you compare this container to the price of a plain black or green pot, it is more expensive, but growers should see enough sales to make it worthwhile."
Those who receive our BenchRunner e-Newsletter (available for a free subscription at our Web site, www.greenhousegrower.com) have read about Proven Winner's new guarantee program, in which growers who use PW-branded pots are offered a money-back guarantee of higher sell-through rates.
Scullin points out the precision required to print containers that are species- or category-specific and get them to growers with the correct UPC information is going to force the container companies to be as precise as the tag companies currently are.
"It's putting extra pressure on the pot producers to perform more and better services," he points out, noting the consequences of a wrong shipment or label could have both financial and legal consequences these days. The container compliance issues of the last few years have made retailers legally responsible for the accuracy of the numbers printed on the pots sold under their roofs, giving yet another edge to what is already a variable-filled equation.
The container companies are stepping up to the plate, going to bat for their customers in whatever way possible. "We offer a whole range, from the very basic version just to comply with the requirements of the retailers, to the latest premium marketing containers," comments Poppelmann's Shelton. "We'll do simple printing or labeling on our pots so the growers can comply with the weights-and-measures regulations. Our TekuVision range features standardized even volumes," he notes.
However, Shelton is quick to add, "In addition to this basic information, more and more customers choose to have individually designed artwork on their pots. This can include plant pictures, care instructions and company logos. When printed like that, the pots really become a very attractive marketing instrument." These days, as Scullin points out, it really does all go back to the marketing, and it's only fitting that a successful marketer can sum it all up nicely. "When the dust settles, better-packaged plants at retail will benefit everyone."
If there is a silver lining to the sky-high cost of petrochemicals, it lies in the fact the companies involved in producing plastic products are being forced into a less wasteful method of doing business. Though initially painful, such streamlining has produced more competitive companies that are using post-consumer plastic — called "regrind" in industry jargon — to produce more cost-effective pots.
Van Krimpen, for one, uses more than 95 percent post-consumer recycled material for its basic plastic pots, although Wilschut notes, "Even companies that use as much recycled material as we do are having to raise prices 5 or 10 percent, because the competition for recycled plastic has now become just as high as for the new raw materials." For the standard black and terra cotta pots, Van Krimpen uses 100 percent recycled plastics. "Only when we have to make custom colors do we use new raw materials," explains Wilschut.
Poppelmann's Shelton tells a similar tale of petrochemical industry problem-solving. "The extraordinary increases in raw material prices have, of course, affected us significantly. And the increase in energy cost, our second-biggest cost factor, has increased the pressure even more. These two factors together have made it very difficult to keep the price level where it is now." According to Shelton, Poppelmann has been using recycled materials for both economic and environmental reasons for years, adding "But, of course, the prices for the recycled materials are increasing also."
Scott Blackmore of Belleville, Mich.-based Blackmore Company explains his company is moving along the same lines. "We do some recycling and purchase recycled plastic when possible and when the supply is there. We're also working on replacing some plastics with degradable products." When asked if this decision is as much of a marketing effort as a response to the cost of oil, Blackmore's answer is a curt negative — "It's all economics," he says.
Biodegradable and other non-plastic pots are another obvious option for cost reduction up and down the line, one that is growing through the increased use of systems such as Blackmore's Ellepot line and the Fertiss line of paper-wrapped media. However, until a reliable system for printing on and otherwise merchandising these items comes into common usage, they will struggle to compete for retail space in the increasingly colorful world of the printed pot.
Around The World?
Globalization is not a one-way street, nor is it a simple subject for open discussion. Originally, one major focus of this article was to be the shifting of production to overseas locations, specifically China. However, perhaps due to some negative associations with such a trend, on-the-record industry perspectives were hard to find. Also, in the floriculture industry as a whole, other issues (such as product perishability, for one) are at work and are perhaps impeding the wholesale shift to overseas manufacturing that has run rampant through other sectors of the economy.
Also, as discussed above, the marketing needs of the growers are impacting ordering and fulfillment schedules, making the long lead times needed for such a shift to "slow boats from China" less economically attractive to some companies. However, in researching this article, a reverse trend also surfaced in which some overseas companies, such as Van Krimpen and Poppelmann, are eschewing China and instead looking to establish North American manufacturing locations as a way to reduce costs and become more competitive.
Global manufacturer Poppelmann Plastics, for one, is trying to cut costs and become competitive with domestic producers by getting closer to their large-market, North American customer base. "Our direction is not to go offshore, but to start production in the United States," explains Shelton. "We have our first North American production facility under construction in Claremont, North Carolina and will be producing the majority of our U.S. sales in North Carolina in early 2007."
Van Krimpen's Wilschut says, "Because of the recycled materials we use here in Europe, and because of the high level of automation, we've found that it's not interesting economically for us to pursue China as an option. Energy prices and raw material prices are more or less world market prices, and besides, transportation and export costs out of China are very high."
However, Wilschut sees larger containers and ornamental pots as targets for Chinese production "because investment in the new molds is a lot cheaper, where as here and in the U.S. a large part of the total investment in production is the molds."
As for Van Krimpen's new Easy Basket, "We're starting to ship in a couple months, but in the long term we're really looking to produce it in the U.S. because we're facing transportation costs of eight cents per basket. We're looking to license our patent on the system, or make a corporation with a U.S. company, so we're not spending so much money shipping air."