Consolidation Waves

If you wanted to track the business pressures and dynamics of our industry for the last 20 years, one of the best places to look is the Top 100 Growers report we publish each May. All the challenges and opportunities growers face and embrace are magnified at this level.

The underlying theme has been consolidation at all levels with the most dramatic shifts being retail customers into just a few large mass merchant, home improvement and supermarket chains.

Growers have responded with their own consolidation plans to try to reclaim market dominance but have had lackluster results. In the late ‘90s, our Top 100 Growers became a shopping list for growers backed by outside investment firms. There was a race to be the first to put together a national grower company and take it public.

Hines Horticulture in California won that race in 2000, but the victory was fleeting. This year, Hines sold off its East Coast facilities in Pennsylvania, New York and Florida to Costa Nursery Farms and Kurt Weiss Greenhouses – the two most dominant players in the East, which continue to remain family owned.

Reflecting on what happened with Hines, one industry observer in Florida told me, "They just let so much of that business decline – customer relations, everything. They could not hang onto that business or keep it stable."

The latest consolidation wave to hit has been in grower supply channels, both manufacturing and distribution. Prime examples include Syngenta purchasing growing media company Fafard last summer and then cuttings giant Fischer USA last month.

The Top 100 Growers report itself has always been a work in progress. In the early years, foliage and fern producers using shade structures were prominent, and then we made a decision to restrict this ranking to those who have invested in environmentally controlled greenhouses. We’ve gone back and forth on whether to include Canadian growers and have always grappled with how to account for major players who grow a lot outdoors. Is it the output or the method we are measuring?

Also, where do vegetables fit in? There are big operations producing hydroponic vegetables. Produce, vegetables and herbs are a big part of a bedding plant grower’s mix. A vegetable and herb specialist like Bonnie Plant Farm probably should be part of Top 100. We’re going to see even more interest in these product lines with retailers seeking eco-friendly and organic programs.

You also can see the rise and fall of key crops in Top 100. When I started at the magazine 14 years ago, cut flower growers were on top, and Kitayama Brothers was No. 1. Soon after this, we would see large cut flower operations disappear from Top 100. Most of this was due to an inability to compete against imported flowers and the attractiveness of rising real estate values.

The older operations that are still growing cut flowers have become importers and wholesalers themselves and downsized production considerably. Some have clearly gained from the consolidation and fallout. The Sun Valley Group in California has doubled production in the last seven years, moving from No. 22 to 11 and is still focused on fresh cut flowers.

Others have advanced by switching crops. Matsui Nursery, which was once a large rose grower, is now 100 percent potted orchids and has advanced from No. 21 to 15.

Today, the most dramatic gains are being made by annuals growers serving retail giants like The Home Depot, Lowe’s and Wal-Mart. For the sake of our industry, we hope those retailers continue to thrive.