Where Does Market Consolidation Leave Growers?

John Terhesh is Founder and Principal at DPC Horticulture, a new venture that works with nurseries and garden centers to help businesses with everything from strategic planning and financial performance to operations and leadership development. He also has years of experience on the growing side, working at companies such as Breezy Hill Nursery and Willoway Nurseries.

Terhesh recently posted the following article on LinkedIn on the effects of consolidation on the floriculture supply chain. Give it a read and let him (and us) know what you think! Comment below, or on the original LinkedIn post here.

“Suppliers are consolidating, private equity is buying up landscape companies and wholesalers, and growers are getting caught in the middle. As input suppliers get bigger, we have fewer places to buy from and less negotiating power. On the other side, our customers are getting bigger, giving them more leverage over pricing, payment terms, and service expectations. Meanwhile, we’re all still competing against each other to sell essentially the same plants. It’s a pretty good arrangement, assuming you’re not a grower.

I don’t think we’re at a breaking point yet, but I do worry about where this leads over the next 10 to 15 years, especially for independent growers doing less than $10 million in sales. Other industries have gone through similar consolidation;, for example, the cattle industry has only four major meatpackers that control about 85% of steer and heifer purchases.

I think we can learn something from how their producers responded. Some vertically integrated, meaning they took control of more of the supply chain by getting into distribution, retail, or selling directly to the end customer. Others formed cooperatives, allowing independent businesses to combine their purchasing power, share distribution costs, or sell collectively without giving up ownership of their companies.

The third option is finding a niche. Grow something, or provide a service, that you’re exceptionally good at and that isn’t easily replicated. If you’re selling the same products as everyone else, competing on price becomes a pretty miserable long-term strategy.

I don’t want to see the smaller independent growers disappear, and I certainly don’t think every nursery needs to become a $50+ million operation. But I do think the days of being an all-purpose grower, doing a little bit of everything and competing primarily on price, could become increasingly difficult.

In 10 years, will being a good grower be enough to stay in business?”