Declaring Independence

Declaring Independence

Benary’s Managing Director Matthias Redlefsen shocked the varieties world during our Medal of Excellence awards presentations in July when he made a bold stand for independent breeding companies in his onstage remarks:

“If you look at how many businesses have lost their independence in the last two years, we’ve lost more businesses than in the last 25 years. I’m not blaming the ones who bought these companies, because they paid a lot of money for that. And I’m not blaming the guys who sold their businesses because they got a lot of money for that. I just think this is sad for us as an industry because I truly believe that great innovation comes from a free spirit and a free set of mind and we have to be very, very cautious of this.” (Click on the image to hear the whole speech.)

His statements gave everyone in the ballroom a moment to pause and reflect. We asked others with independent positions in the global supply chain how they view the latest consolidation trends.

Remain Independent

In our Top 10 Cuttings Producers survey, Fides B.V. says its strategy is to remain independent. When asked how the company views global consolidation of breeding and distribution channels, Fides says, “On a product basis, three to five breeders will continue the breeding. Further, we see a consolidation of the number of growers declining 5-10 percent per year but no decline in hectares.” To compete, Fides is continuously improving its assortment through breeding and investing in information technology for Web-based ordering and electronic data interchange.

Serve The Growers

Dömmen also plans to remain independent and feels the future belongs to those who best serve the growers. “As an independent company, we really depend on the grower. The grower has to ask the sales organizations to sell our products. We don’t have a dedicated sales force,” explains Dömmen’s Managing Director Perry Wismans. “We have to make sure we have the best genetics out there so the growers want to grow it and sellers want to sell it. It has always been our philosophy anyway, but it’s even more important now. We have to act in the interest of the growers.”

One prime example is the innovative multi-cutting Confetti Garden liners Dömmen pioneered. “We asked the growers, ‘What’s your struggle? How can we make your life easier?'” Wismans says “They said it’s hard for us to make nice mixed baskets when we order the plants from different producers and shipments are delayed or substituted. We developed this after listening to the growers and determining what their needs are.”

Keep A Positive Outlook

Paul Gaydos of GroLink Plant Co., which has production facilities in California and Brazil, views industry consolidation positively. “I think it is a good thing,” he says. “It forces small companies to find a niche and available opportunities in this changing environment. It is important for us to stay neutral and continue to work with these companies. One company cannot supply everything to everyone and do it well.”

Keeping A Cap On Varieties

Steve Rinehart, COO of Paul Ecke Ranch, also sees benefits in industry consolidation. “Global consolidation helps to restrict the large amount of new varieties hitting the market,” he says. “Truly there are more varieties of product than the market can bear. Consolidation helps to promote product leaps and true innovation by rewarding large volumes to innovative products. Global consolidation has driven Ecke to be highlighted as the last true North American breeding company.”

Possible Opportunities

Troy Lucht of Plant Source International (PSI) is in a unique position wearing three hats as a cuttings provider and a grower-retailer at Malmborg’s in Minnesota. “Breeder independence is something each breeder must decide for themselves,” he says. “That answer really depends on the products, size of company, breadth of product, production levels and market recognition.”

How can an independent cuttings provider like PSI compete against the larger companies? “Consolidation is a fact that we must deal with and how we respond is to figure out where the opportunities lie for us and where we need to scrutinize programs we are currently doing to optimize our production and our validity with customers,” he explains. “Is it tough to compete with the big conglomerates? Yes, but again, where are the openings? For PSI, we take orders as late as the Friday before the ship week, where the larger companies have to set cutoffs on Monday or Tuesday. This gives us an opportunity for last-minute orders.”

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