The economic crisis is not shaking the European flower and plant markets to any essential degree, according to a study by Marianne Altman of a Luxembourg marketing research firm, released Oct. 17 by IPM Essen. The European Union continues to be the largest producer worldwide, with 40 percent of global revenue, and the most populous consumer of flowers and plants, with 500 million Europeans.
However, the study identified a need for greater market growth in Europe to allow for inflation and compensate for the falling demand in the crisis countries in southern Europe.
European potted plants have been exhibiting a positive balance of trade for years. But the European Union’s foreign trade deficit in cut flowers is rising even further because of flowers grown in the energy-favored production locations in Africa and South America. In Greece, Spain and Portugal, the flower and plant markets are suffering from the economic crisis.
Sales of cut flowers and potted plants are being stabilized, the study found, by high demand in Germany and England, and growth markets in Eastern Europe.
The biggest global player, the Netherlands, can consolidate its dominance in the international trade even further, Dr. Altmann surmised, even though purchasing channels are becoming more varied in the main consumption countries. Direct imports into European retailers are weakening the traditional market entry point, the Netherlands.
Moreover, Internet trade is increasing on the wholesale trade level and experts expect greater changes in the distribution channels in the future due to the Internet.
According to Eurostat, one of the key sources for the study, imports of cut flowers into the E.U. rose in the first half of 2012 compared with the same period last year. The largest importer of cut flowers, the Netherlands, raised its import values from South America and Africa by about 10 percent. Direct imports by Germany also were up 10 percent in the first half of 2012, primarily from Kenya and Ethiopia. These increases could be caused by price rises, the study noted.
From January to August 2012, Dutch supplies of cut flowers to Germany increased by nearly 9 percent, and to England by nearly 14 percent. Russia, the largest growth market in Eastern Europe, raised imports of cut flowers by 26 percent in the first half of 2012. The Netherlands was able to increase its exports to Russia by 40 percent due to improved logistics.
According to Eurostat, intra-European trade in potted plants has grown by about three percent. Lower demand in Greece, Spain and Portugal is compensated by higher imports from Germany, the Netherlands, Poland and other Eastern European countries.
With flowering potted plants, their advance into the gift sector has increased demand, although high quality is demanded in order to counteract a trading-down problem (for example, phalaenopsis orchid sales rose by about 30 percent in July 2012, while the average price declined by 14 percent).
The study predicted transport costs will rise even more substantially in the future and affect global trade in flowers and plants.