A Dynamic And Changing Greenhouse Supply Chain

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Jerry Montgomery

As usual, the California Spring Trials offered the chance to see many new varieties and marketing programs and a wonderful opportunity for personal networking. This year in particular, however, it caused me to look harder at the changing face of the supply chain.

The recent changes have caused, in my estimation, a shift in the power and importance of a number of key industry companies. Consider some significant shifts:

• The Dümmen Group took control of Fides Oro’s bedding plants and perennials and its related brands, Ecke, Oglevee, Fides and Bartels. That makes Dümmen the most powerful and influential vegetative breeder/producer serving the North American market. Dümmen and Agribio will be two completely separate companies owned by H2Equity, a new company to be announced and the management.

• Syngenta Flowers sold its grower distribution company, Syngenta Horticultural Supplies (SHS), to the Griffin family, a leading supplier of hard goods in the eastern U.S., and a highly respected organization.

• McHutchison, a well-respected, 140-year-old brokerage company, announced it has revived the Vaughan name by starting a new division, Vaughan Horticulture, that will focus on the large grower sector.

• Effective early May, Syngenta Flowers is dropping McHutchison as an authorized broker of its genetics.

• Industry veteran Gary Falkenstein announced he will launch ePlantSource, a highly efficient online brokerage company sometime around June 2013.

Dümmen’s Dominant Role Can Be A Game-Changer
With the Dümmen Group controlling so much of the production that serves North America, it is clearly now the No. 1 vegetative annual supplier. Not only does Dümmen own the Red Fox brand, but it also controls both the production and marketing of Ecke, Oglevee, Bartels, Fides and Oro. Dümmen is also the exclusive annuals supplier for the HGTV brand that is launching this spring.
Some of the questions I have about how the Dümmen Group will manage the No. 1 breeder-producer serving the North American market are:

• How will it position two poinsettia brands: Ecke and Red Fox?

• What is the market positioning for the Oglevee and Red Fox geranium brands?

• What will its broker network look like? Currently Dümmen USA has six brokers.

• How will the Fides brand be differentiated from the Red Fox brand?

Over the past five to six years, Dümmen has had exponential growth in the North American market by offering some unique marketing programs:

• It introduced to the market the Confetti concept of offering three unrooted cuttings (URCs) packaged separately and shipped from the production farms.

• It set up rooting stations for a Confetti liner: Bobs’ Market in West Virginia and Hart’s Nursery in Oregon — two of the best rooting stations in North America.

• Dümmen began marketing a line of petunias under the name Potunia with varieties that had an ideal habit for pot production.

• It offered complementary packaging for the Potunia brand to encourage growers to adopt the concept — and wow, did it work.

• For the 2012 season, it offered guaranteed delivery for URCs to the marketplace — an issue many producers have been struggling with for years.

Many are wondering what is the future marketing look like for the Dümmen Group now that it controls more well- known brands. I would speculate that there will be more innovative marketing and Dümmen will continue to be a growing force in the North American vegetative cutting market.

McHutchison News Grabs Attention
Another much-talked-about change is the de-listing of McHutchison by Syngenta Flowers that has been surprising to many in the industry. McHutchison is a highly respected broker that I believe ranks No. 4 among U.S. brokers. By de-listing McHutchison, Syngenta Flowers has also effected the Vaughan Horticulture division that will focus on the large grower sector. It’s hard to imagine why a breeder/producer would eliminate such potential for distribution support, especially after selling its wholly owned broker company.

Supplies Respond To Downy Mildew
Not a lot has recently changed in the seed supply chain except that Benary has established a breeding location in Watsonville, Calif., not only to breed for the North American market but to have a stronger marketing presence.

Another issue that has changed some of the dynamics in seed usage is the catastrophic outbreak of downy mildew that is devastating the Impatiens walleriana market. Although it has wreaked havoc with impatiens producers, some have responded with alternative products that are filling the void.
PanAmerican Seed ramped up its promotion of the seed New Guinea impatiens Divine series that has been hugely successful in filling the void. Sakata has benefited tremendously by massive increases in the use of SunPatiens and currently has a marketing program of compact varieties, positioned for a high-density 306 container. Syngenta Flowers launched a New Guinea seed type named Florific during the recent Spring Trials.

Count On Continual Change
Over the past six months, the industry has witnessed significant changes in the supply chain and has witnessed changes driven by outside forces, namely downy mildew. Although the changes have been somewhat surprising to say the least, I think there are many more to come in the near future.

Change is inevitable and leads to many new opportunities for those who embrace it. Unfortunately, those who fight change are always left behind, as witnessed by the decline in the number of growers over the past 10 years.  

Jerry Montgomery (mrplug@cfl.rr.com) is a veteran of the floriculture industry who has worked for distributor companies, breeders and large growers with a focus on sales and marketing. As an industry consultant, Montgomery works for large growers, distributors and breeder/producers. His focus is to understand the market dynamics from breeder to consumer through intense retail travel, visiting about 2,700 stores since 2008.

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