Growers Optimistic Amid Economic Turmoil
Sales are down this fall but spirits remain mostly high among growers, despite the current state of the economy. We asked a few top growers, including some of our Ones To Watch, how market conditions are affecting their own greenhouse operations and th
October 21, 2008
Sales are down this fall but spirits remain mostly high among growers, despite the current state of the economy. We asked a few top growers, including some of our Ones To Watch, how market conditions are affecting their own greenhouse operations and their plans for the coming year.
Abe Van Wingerden, president of sales, marketing and merchandising
Metrolina Greenhouses; Huntersville, N.C.
"We do not plan any large-scale changes in 2009 versus what our original plan was. Yes, we are tightening expenses, but our expansion plans continue, we will still do the full amount of contract growing we had planned and our long-term goals are still in place. We still feel good about 2009 and the ability to drive sales in a tough environment. Reasons we are bullish:
"Our scan data in the fall has been 20 percent stronger than last year on mums and pansies - and still well ahead of 2006, as well. We have historical data that shows the garden consumer will still shop (if not more) during a downturn in the economy. The data suggests that when the economy is tough, people cut expenses. The first two expenses they cut is traveling and going out to eat. That puts consumers at home more, and when they are at home, they might not do the $5,000 kitchen remodel - but they will invest $50 in plants. They do this because it is a relatively cheap hobby, but more importantly, because it makes them feel better. That is what plants are all about.
"Our plans with our customers are better. We have less duplication across sizes, we have better container and basket designs/colors, and our efficiencies in pulling and shipping are better. We can get 10 percent more out of the greenhouse on our best day than we could last year with better processes and technical system upgrades. The season will peak, and we will be able to drive it even more on the peak days with our investments over the off-season.
"Somebody has to be bullish. If we all produce 10 percent less, we will sell 10 percent less, and that is no fun.
"We bought 10 new trailers, 4,000 new carts, and we continue to invest in the business. We are well positioned for the long-term, and we can endure a tough season if we need to, but I feel like 2009 will be one of our best ever."
Pamela Youngsman, sales manager
Skagit Gardens; Mount Vernon, Wash.
"We have been talking with a lot of our garden centers and growers about 2009. I would say there's optimism, which may be a bit surprising, especially in the Northwest because the weather was so bad people are feeling like things can't get any worse than they were this year.
"With the economy in its current state, traffic has just plummeted. There's optimism that when spring comes, as long as we have some good weekends, that should change. We think people will want to plant. If they're not traveling, they'll want to do something to add color to their world. There's a lot of talk about vegetables.
"We had a good summer as far as July sales went. June was also very strong. I think in the last month, it's been a little bit quiet. On the grower side, we are seeing some people make changes to orders. It's not in a certain region of the country. It's a grower here, a grower there. There hasn't been a big number of changes to orders.
"I have talked with some growers who will be making changes to their programs. The overall vibe from growers is that they may be more conservative next year, but they're optimistic."
Andy Ambrosio, sales and marketing manager; Wenke Greenhouses; Kalamazoo, Mich.
"We are seeing pansy sales this fall soften the past three weeks due to (a) the gas shortage in Atlanta that recently was abated, (b) a warmer-than-normal early October, (c) persistent drought in the Southeast and (d) the hammering of the consumer's 401k and home values.
"Instead of planning on our previous double digit growth we have experienced for the past seven-plus years, we are planning a flat to slight increase (next spring). Direct costs are going up for almost all inputs, so we have to increase our pricing accordingly.
"Any improvement in weather will be a positive. In fact, many retailers we have spoken to said that should the weather improve and the economy at least stabilizes, we could have flat, year-on-year retail sales.
"Overall, we are concerned that the tail spin on the economy and on people's financial/home values will make it more challenging. Having dramatic cost increases does not bode well, and I fear many growers had a challenging 2008. So there is the potential for supply contraction over the next 12 to 18 months.
"Ultimately, it comes down to the weather. I once thought weather accounted for 85 percent of a negative impact on flower sales and the economy 15 percent. Now, it may be more like 60 percent weather and 40 percent the economy."
Denise Godfrey, sales
Olive Hill Greenhouses
"As far as what we are doing in 2009: We are down a bit and trying to make the most of things by adjusting our numbers, reducing the ones that are not selling as strongly, increasing the few varieties that are and working to diversify with new varieties.
"I am hoping everything shapes up next year after the elections are done. We are just thinking about ways to infuse a bit more vigor into the market and determine how to get into different market sectors."