Perhaps the biggest challenge for growers serving large retailers is maintaining a healthy, diversified customer base. Kawahara Nurseries in Morgan Hill, Calif., could serve as a model for growers striving to do just that. While the family business has grown dramatically serving The Home Depot, Orchard Supply Hardware and Costco, the Kawaharas have never lost sight of their roots serving independent garden centers and landscapers. “We’re the smallest big grower around,” says Ken Portue, vice president of sales. “We have to be able to react. That’s our strength.”
Ranked at No. 40 on our Top 100 Growers, Kawahara serves the San Francisco Bay area. Their extensive offering spans 50 product categories, 300 types of plants in 2,000 varieties and colors. Branding has been an effective way to differentiate, even though it makes production more complex. Kawahara developed the Garden Jewels brand of premium annuals in 2002 for Orchard Supply Hardware. Home Depot specifies its own brands. Kawahara showcases its vegetables and herbs with the Prize Winners and Essence Collection brands. “Our California Premium brand is for independent garden centers,” Portue says. “We highly value our independent garden center customers. That’s all there was the first 40 years and we have not gotten away from who we were.”
Owners Dave and John Kawahara come from a long line of farmers. Their grandparents grew strawberries in Northern California and parents, Sam and Jean, founded Kawahara Nursery in the late 1940s as a small nursery in the East Bay area. In 1953, they moved to San Lorenzo, built greenhouses and began their journey producing seed annuals, perfecting production of the most innovative varieties.
Business was taking off and the Kawaharas were outgrowing the San Lorenzo facility. In 1982, they built the headquarters location in Morgan Hill. “The family believed there was a lot more demand for bedding plants,” Portue says. “They were ready to invest in the operation and grow. They also were experimenting with growing plugs from seed and conducting extensive trials.”
The commitment to automation began with a Blackmore seeder. The family was also among the first pioneering bedding plant growers to really invest in covered greenhouse production in California. Many growers, especially in Southern California, rely extensively on outdoor production and have less control over timing and quality.
Growing Signature Crops
Kawahara has distinguished itself from other growers by hanging its hat on key crops. For instance, the company has always been known for impatiens and has wrapped its logo and identity around that famous flower. Kawahara will sow more than 5 million seeds of impatiens this year. “Once the season starts, we can’t run out of impatiens,” says Keith Francis, head grower and general manager who came to Kawahara from Goldsmith Seeds in nearby Gilroy. “We transplant impatiens every week and turn crops every three to four weeks.”
Kawahara also spent years perfecting cyclamen production. Normally grown as an indoor blooming potted plant, the company saw great potential as a bedding plant. “Cyclamen are our key crop for the fall,” Sales Manager Dave Fox says. He sees firsthand how they have become a landscape staple in the Bay Area, especially with red and white during the holiday season.
Up until nine years ago, Kawahara was a seed-based business. Industry consultant Jerry Montgomery of Florida persuaded the company to consider adding crops that were very strong or emerging in the rest of the country, including zonal geraniums, hanging baskets and vegetative annuals. “One of the first things he asked us was, ‘Where are your geraniums? You’re missing America’s No. 1 plant!’” Portue says. Montgomery backed his position up by presenting USDA data that showed California is the No. 1 state for wholesale geranium sales.
Today, geraniums are Kawahara’s top gallon item. Did producing geraniums take away from the seed annual business? No. It just added new dollars. “We want to identify those types of products that will not replace dollars but add dollars,” Francis says. “We’re looking at new products, new sizes and new margins.”
Kawahara’s next growth spurt came in 2000, when the family purchased a hydroponic rose range in Gilroy. This is where all the vegetative annuals are grown and the site where Dutch flower breeder Kieft Seeds hosts its pack trials early this month. All plants produced here are brought to the loading docks in Morgan Hill for shipping. Kawahara also contracts with several other growers in the area to produce plants in gallon pots.
When asked what sets Kawahara Nurseries apart, Montgomery has high praise for Dave and John Kawahara as owners and the way they value their employees and customers. “Their No. 1 strength is they are one of the few companies that really under promises and over delivers,” he says. “They never made claims they could not back, personal or business wise. They have a unique company and culture that’s as good as any I’ve ever seen in the industry.”
The Kawaharas have invested in the infrastructure and leadership team to manage growth. “Our strength is the ability to execute through communication. We always push for that,” Portue says. “We’re a close-knit group. John and Dave are right there every day. With any successful company in our industry, the owners are there all the time.”