Behind The Sale: Why Dümmen Orange Bought Florexpo, And What It Means To You
Dümmen Orange recently announced it has acquired the product portfolio of Florexpo Costa Rica, a leading specialist in the production of perennials, herbs and annuals. During the fall of 2015, Dümmen Orange will start up production of perennials at its upgraded Antigua Flowers Guatemala farm, formerly the Ecke II facility in Antigua, Guatemala. The Altmanns, who founded Florexpo, as well as some of the key managers in the Florexpo team, will be assuming roles in this new endeavor.
“In its long history Florexpo has built a good assortment, an outstanding sales network and a professional team of employees,” Perry Wismans, managing partner at Dümmen Orange, said in a press release. “With this move, Dümmen Orange takes the next step in realizing its growth strategy – aimed at creating synergies in technology, production and sales. We realize these synergies by distributing a variety of breeding programs and cross selling these products to our existing customers, who benefit from increased choice, greater reliability, more stability and high production quality.”
The Altmann family says it is pleased with this opportunity, both for their management and their customers.
“We feel fortunate to become part of a larger, global, and professional organization. Long term, this will offer security in quality for our valued customers,” says Fernando Altmann, Managing Director of Florexpo.
After the announcement, Greenhouse Grower caught up with Kate Santos, operations manager for Dümmen Orange, to find out a few more details about the sale, including what was behind Florexpo’s decision to sell its portfolio to Dümmen Orange, what will become of Florexpo’s Costa Rica facilities and how Dümmen Orange will fulfill the demand for young plants previously supplied by Florexpo.
What The Sale Means For Florexpo Customers
Dümmen Orange will adopt Florexpo’s unique model of using a select group of brokers for its perennial sales. Florexpo perennials and herbs will continue to be selectively distributed by three brokers: Ball Seed, McHutchison/Vaughan’s and Gloeckner. Dümmen Orange’s existing perennial program will be integrated into the Florexpo program starting April 1, 2016. Florexpo annual products will be integrated into the Dümmen Orange annual program produced at Oro Farms, Guatemala, and be available through the existing Dümmen Orange annuals broker network.
The transition of production of all Florexpo products will be finalized by April 2016. Florexpo’s key management will relocate to the new production location, Antigua Flowers, Santos says.
“Macho (Fernando) Altmann will maintain the position of program manager and has a key role in assuring the current year production is on track and that the transition to the new facility is strategically implemented. Fernando Altmann Sr. will also be involved to ensure and support a successful transition. Estuardo Arriaga, the current manager of Oro Farms, will transfer to manage the new perennial program at the Antigua Flowers facility.”
According to Greenhouse Grower’s 2014 Top Cuttings Producer Survey, Florexpo served 26 breeders. Santos says the market will determine the best varieties available, and Dümmen Orange will continue to support and partner with independent breeders, serving as a production platform for their product distribution.
“In partnership, the three partner brokers and Dümmen Orange’s product managers will develop the future program together,” Santos says. “By having two farms at different altitudes, we will be able to offer a higher quality product. The market will decide what products are the best without suffering any production shortages. We believe in and respect the work of the different breeders and we want to help them grow their businesses.”
Also, according to Florexpo’s 2014 Top Cuttings Producer Survey, the operation produced 120 million cuttings. Santos says between the two farms in Guatemala, Oro Farms and Antigua Flowers, Dümmen Orange will be able to fulfill this supply, in addition to its current output.
“The Antigua Flowers facility can support the supply currently delivered by Florexpo,” she says. “In addition, the Antigua Flowers facility is better suited for perennial production. The elevation is higher, which creates a more desirable temperature for growing perennial stock. The greenhouses are new, modern and will provide a higher standard for sanitation. Light and humidity levels are also very beneficial to stock production at this facility. Plus, there is a large, local, well-educated, workforce available close to the Antigua Flowers Farm.”
Dümmen Orange Is Improving Phytosanitary Requirements For Top Quality Plants
The Antigua Flowers greenhouses are currently being retrofitted with new plastic, benching and irrigation systems. Sluices are also being installed in each individual greenhouse. The goal, Santos says, is to not only improve phytosanitary standards for its farms, but to raise the bar for the entire industry. That means raising the standards in annuals production and perennial production, a category that historically has not been held to the same phytosanitary standards as annuals.
“We want to be at the forefront of offering a completely clean source for unrooted perennial cuttings,” she says. “Due to the challenges we have had in the past, we are laser-focused on production excellence, to the extent that we have brought on board the best crop and phytosanitary specialists, who have redefined what optimization and testing procedures should be for our organization and our industry. Many of our new protocols have been elevated to the level of food crop standards.
“With these new protocols, customers can be confident in the quality and reliability of the product they purchase from Dümmen Orange, whether annual, perennial, potted crop or cut flower. During the trial period in the new farm, there will also be duplicity on the production in order to guarantee the best possible quality.”
The initial response by both third-party breeder partners and grower customers has been positive and enthusiastic, Santos says. Robert Bett, CEO of PlantHaven International and an important licensor of these products, says he supports the new strategy.
“With the new production location in Guatemala, we see a great future for our breeder partners by having access to modern propagation techniques, high phytosanitary standards, plus the benefits of continuing the specialized sales support,” he says.
Florexpo’s Decision To Sell
The cost of continuous investment into the facilities in Costa Rica to remain competitive in the market for young plants, the increasing cost of labor and value of land in Costa Rica, and the opportunities available to the Altmann family to invest in other ventures were all factors that played into Florexpo’s decision to sell its product portfolio to Dümmen Orange.
The expenses of upgrading the current facility to capture efficiencies required to stay competitive were a major consideration in the Altmann family’s decision. Aggressive industry consolidation over the past several years and increased phytosanitary requirements have led to customers demanding a higher level of technology implemented into the farms, to offer a more reliable and higher quality product, which would have required Florexpo to invest in two locations with the newest technology.
“The upgrading of the farm infrastructure, required by a more demanding market, would have meant splitting the production to two farms in different climate conditions,” Santos says. “This is achieved by the Dümmen Orange facilities in Guatemala.”
The rising economy in Costa Rica and the growing tourism trade has contributed to labor shortages on farms like Florexpo. But beyond labor, continued development around the farm presented both a problem and an opportunity for the Altmann family.
“More than the cost of labor in Costa Rica, was the cost of opportunity of not developing the land for real estate,” Santos explains. “When the Altmanns started Florexpo more than 30 years ago, the land was 100 percent farm land; today the city has grown around the farm, creating a big opportunity for the family.
The Altmann family had an opportunity to invest in property development by developing the land for middle class housing, Santos says.
“The lots in the first stage are already being sold,” she says. “Currently the Costa Rica economy favors this type of investment over agriculture, based on the location of the farm and its proximity to San Jose, Costa Rica, which is growing rapidly.”