Esbenshade's Greenhouses: A Realistic Approach
A mature industry is limiting growth for some operations, but Esbenshade's Greenhouses is creating value where others aren't to remain viable.
August 3, 2010
As much as Roger Esbenshade wants to believe industry growth opportunities exist, the best approach for Esbenshade's Greenhouses, the Top 100 operation he owns with three brothers, is to accept the notion that the industry has plateaued.
Like other operations, Esbenshade's had its share of growth over the years. Roger's father, Lamar, founded the business more than 50 years ago as a small grower-retail business that successfully developed into a Southeast Pennsylvania midsized wholesale operation with three garden centers of its own today.
Today's industry, however, is vastly different than the one Lamar entered more than a half century ago. Yes, Esbenshade's has strong customer relationships with independent retailers in its region, and its garden center stores are good sources for the operation's decision makers. But the fact, Roger says, is there really aren't new sales to be had. Instead, success is better measured by market share, and the growers regularly expanding their operations are simply taking market share from others.
"I feel the industry has matured a lot," says Roger, who serves as Esbenshade's production manager. "We've refocused a little bit on trying to do a better job with the customers we're currently working with rather than trying to find new customers. There probably are a few growth opportunities out there but I don't think there are a whole lot of new sales."
As bleak as Roger's outlook seems, it's arguably an accurate one. Esbenshade's likely won't experience the growth over the next 50 years that it did over the previous 50, but Roger, his brothers Fred, Scott and Terry and his sister Linda Bomberger, are shaping the business around value that works for both the operation and its existing customers. One area Esbenshade's is creating value is in price.
"I think it's important for us to price products so customers can maximize their profits," Roger says. "The only way I can survive is if our customers survive. So our approach is not how much we can get for a product, but how we can price a product so our customer stays in business."
In addition to price, Esbenshade's is adding value in its product offerings. Four years ago, for example, Esbenshade's was interested in creating a premium annuals brand for its garden center and independent retail customers. As a Master Nursery Garden Center member, Esbenshade's piloted the Garden Elements program in 2007 that's only available at select garden centers and nurseries in the Eastern United States.
"We were interested in doing something in a branded line," Roger says. "It turned out [Master Nursery] was interested in doing something, too, but it hadn't found a grower who was interested in it. Our concept wasn't exactly like Master Nursery's concept, but they quickly agreed to some of our ideas. Our idea was based on a container program, and we were looking to produce products for containers and baskets."
Garden Elements is the one brand Esbenshade's produces. Lately, though, the operation is dedicating more time and space to premium hanging baskets and combinations. Esbenshade's has had so much demand for premium hanging baskets, in fact, that it can hardly grow anything beneath its hanging basket system.
The increased demand has mostly been for combo baskets, Roger says, while Esbenshade's single-crop basket offerings are tapering off. Linda is largely responsible for designing combination planters, as she conducts her own combo trials on site over the summer.
"Linda really has an eye for what looks good together," Roger says. "She'll see if things will work out - sometimes I don't think certain crops will work well together - but they do in the end. A lot of what we do in combos is not easy to do. We'll put a geranium and calibrachoa together, but they're not easy to grow together."
Yet, the end results are combo baskets customers won't find anywhere else.
Big On Biomass
Among the greenhouse projects Esbenshade's has tackled over the last decade are flood floors, Boomerang hanging basket systems and biomass heating. The operation has been burning wood chips to heat its greenhouses for at least 20 years, Roger says, and the system has probably saved Esbenshade's some money - although there were years when fuel prices were so low that wood chips were actually more expensive.
Esbenshade's last updated its biomass heating system about seven years ago, and it's currently in the midst of installing a new biomass system that's capable of producing electricity the operation can use or sell to its electric company.
"To do this project we need some different equipment," Roger says. "Electrical cogeneration isn't common in our industry but it's common in industries that generate a significant amount of waste wood product. In Pennsylvania, there's net metering so you can put your electricity into the grid today and take it back tomorrow. If you use more than you generated, you pay for it. If you use less, they pay you."
Roger anticipates the project paying for itself in just a few years, and if electricity rates climb - which he expects - Esbenshade's will see additional savings.
"Overall, [biomass] has probably saved us some money," Roger says. "It's a lot of investment and it's definitely prone to mechanical breakdowns. It's not as rosy as you might think."
A Family Affair
Brothers and sisters working together isn't always a rosy proposition, either, but the Esbenshade siblings involved in the operation have found a way to work together seamlessly. While Roger is in charge of production, Fred serves as an office manager who focuses on production scheduling; Scott is in charge of facilities and shipping; and Terry is garden center general manager.
There's also Linda, making five of Lamar's and Nancy's nine children active in the business. Unfortunately, Lamar died earlier this year, but his children still carry his passion for the industry and his philanthropic nature. The Esbenshades' effort earlier this year designing hoop houses as shelters for the homeless in Haiti is just the latest example of the family's goodwill.
And from a business standpoint, the Esbenshades function well together because of their overall interest in the business.
"We're always giving input to each other about things we think could be helpful, and because we have the overall interest, we don't just say something is somebody else's responsibility," Roger says. "We all take an interest in seeing the business improve."