Market competitiveness
for Cut Flowers
‘The competitive forces that shape your market’
Management summary
The most important market outlets in Europe are supermarkets and flower shops. The buying
power of concentrated European supermarkets is high. For niche products the supplier power
may be higher. The threat of substitutes for cut flowers is present. The threat of new
entrants is limited but nearly impossible to predict since the supply side is changing rapidly.
Taking this into account the degree of rivalry is high and might increase more in the midand long term future .
Buyer power: growing dominance of supermarkets
Considerations for action

Strong buyer power due to
concentration: The majority of
flowers in Europe are handled by a
small number of Dutch wholesale
traders that supply retailers and
florists throughout Europe.
Additionally, the number of

Try not to compete on price only, but
add value and differentiate your
products; this will become more and
more important in the future.
Source: CBI Market Information Database • URL: www.cbi.eu • Contact: [email protected] • www.cbi.eu/disclaimer
CBI Market Competitiveness Cut Flowers
supermarket buying organizations is
limited and as a result they are
concentrated with increasing buyer
power towards producers and
traders.

The specialised florists are
fragmented and have specific
needs. Flowers shops demand
small quantities of varieties of
flowers and logistical services. The
wholesale traders orientated on this
market are specialised in supplying
small quantities distributing specific
flowers throughout Europe. The
majority of these wholesale traders
buy their flowers at the Dutch
flower action. The auction serves
as matchmaker and as a common
marketplace. The auctions clock
system and the characteristics of
supply and demand equalize the
balance of power between supplier
and buyer.

Use of the Dutch flower auction if you
wish to supply the fragmented florist
shops through Europe.

From time to time there is a

shortage of flowers. During specific
periods, like mother’s day and
Valentine’s Day there is a shortage of
flowers so the buying power for buyers is
lower in these periods. During Valentine
especially red roses are popular.
The price in a certain year is not a
guarantee for prices in the next year.
Degree of rivalry: strong rivalry on the EU market
Considerations for action


There are two major streams of
flowers on the EU market. The
domestic EU production and the nonEU production. The competition
between the different streams creates
a high level of rivalry and fierce price
competition. The majority of the
bouquet fillers are being produced
overseas. The smaller rose type
production has completely
disappeared in Europe due to the
fierce price competition from mainly
African countries. Also competition on
quality takes place. For example the
best quality roses are being produced
in Ecuador and this is effecting the EU
production.

The supply of non-EU produced
flowers is increasing. Especially
Latin American flower producers and
exporters are looking for an
alternative market in the EU,
increasing the rivalry on the market.
Imports from Africa in the EU are also
increasing, but the consumption
growth on the EU market is limited.
In the direct market, African and
Latin-American growers are
increasingly becoming rivals: more Thybrids from Africa (Ethiopia, Kenya)


Retailers have strong buying power and
sustainable produced flowers become
more and more important. Therefore, try
not only adhere to law and regulations,
but also try to comply with their CSR
strategy.
Longer term partnerships are preferred
by EU buyers. However, they are critical
before agreeing to such a commitment.
Try to understand and follow EU trends
and be a trustworthy partner.
Work on a sustainable relationship with
your buyers. Give them correct
information about your quality and
flowers. Aim to become a ‘preferred
supplier’.
Source: CBI Market Information Database • URL: www.cbi.eu • Contact: [email protected] • www.cbi.eu/disclaimer
CBI Market Competitiveness Cut Flowers
compete directly with Ecuadorian and
Colombian roses. In the past, Thybrids were only supplied by LatinAmerican and Dutch growers.

Growers of cut flowers show
opportunistic behaviour. When
prices are high of a certain product in
a period, growers tend to switch to
that product since switching costs in
the sector are often low. This
behaviour results in additional supply
and lower prices and makes the
market very unpredictable.

Increase the number of clients interested
in your products offered at the auction
by creating awareness about your
products.
Threat of new entrants: increasing supply form Latin America
Considerations for action

It is difficult to enter the EU
market for inexperienced
growers. To supply the EU market
producers requires, amongst others, a
considerable investment and access
to advanced knowledge about
growing quality flowers. Therefore for
inexperienced producers it is difficult
to enter the EU market. This lowers
the threat of new entrants.

Breeder rights are strictly regulated in
the EU. Having a license or exclusive
partnership with breeding companies
may give you the ability to distinguish
yourself from competition.

There is growth in existing
countries which results in new
supply to the EU market. In
addition, any other country with
suitable climatic conditions and
reasonable infrastructure might
supply the EU market with flowers in
the near future. Therefore the threat
of new entrants is always there.

Certification systems can help you enter
the European market. Look which kind of
systems exist and are relevant.

Latin-American producers are
increasingly looking for
alternative markets. This includes
(direct) markets in the EU, since the
profitability on their main market
(US) has decreased in recent years.
Between 2003 and 2012 the imported
quantity on the EU27 market has
increased significantly from Colombia
(+10%) and Ecuador (+90%).

Work closely together with buyer and
build sustainable relationships. Supply
your buyer with reliable and continuous
information about your flowers.
Threat of substitute products: particularly true for bouquet fillers
Considerations for action

Flowers are usually given as a
present and this market is
threatened by various substitute
products. Consumers are also able
to give other presents within the
same price range to family and
friends. Also the Importance of
artificial flowers has increased.
Especially the quality of artificial
flowers has increased in recent years.
They are becoming more and more
identical compared to real flowers. In

If possible, find a product which is novel
to the EU market, niche markets will
become more important in terms of
growth. There is always a niche market
for unusual or special products.
Source: CBI Market Information Database • URL: www.cbi.eu • Contact: [email protected] • www.cbi.eu/disclaimer
CBI Market Competitiveness Cut Flowers
addition artificial flowers are none
perishable compared to fresh flowers
and are often used as home
decoration.


Substitutes from other countries.
Flowers produced in developing
countries can easily be substituted by
flowers produced in developed
countries like the Netherlands.
However the farm gate price and
quality are the main determinants for
traders to buy flowers.

Bouquet fillers are substitutable.
Bouquets fillers are often substituted
by other cheaper bouquets fillers in
order to reduce costs. Also flower
varieties are often substituted by
other varieties with a similar colour, if
they are offered at more competitive
prices


Work closely together with a breeder and
wholesale trader. Be sure to pay
royalties in order to safeguard the future
development of new flower varieties
Make sure to supply your buyer with
reliable and continuous information
about your flowers.
If you supply the market with bouquet
fillers, make sure that you understand
the dynamics of the market. If price the
most important feature, be sure keep
your costs low.
Supplier power: DC exporters have limited bargaining power
Considerations for action

Supply of cut flowers from DCs is
growing fast. In the lower and
middle segment there is now a
buyers’ market. The bargaining power
of DC exporters is limited: prices are
determined by the balance between
demand and supply. Only in niche
markets, exporters may develop
some bargaining power. Niche
products may be in short supply in
certain markets or periods, generally
increasing supplier power for these
specific products

Build sustainable relations: work closely
with a wholesale trader.

Variety choice is important.
Product differentiation and
productivity in the floricultural
industry is determined to a large
extent by the choice of variety. Not
every breeding company supplies the
latest varieties to every exportergrower. The choice of variety often
determines both price and bargaining
power.

Promotion through storytelling: show
end-users where a product comes from
and who the farmer is. This can increase
your buying power since it might
enhance the demand for your products.

Transport. Often there is a limited
number of forwarders and airplanes
in DC’s which is decreasing the
bargaining power of the exporters
since they are heavily depending on
freight forwarders in exporting cut
flowers.

Find good logistics and cooperation with
reliable distribution companies. In the
future distribution will even play a more
important role. Identify the possible
bottlenecks solve them jointly with your
logistic partners.
This survey was compiled for CBI by LEI Wageningen UR
in cooperation with Milco Rikken (CBI sector expert)
Disclaimer CBI market information tools: http://www.cbi.eu/disclaimer
Source: CBI Market Information Database • URL: www.cbi.eu • Contact: [email protected] • www.cbi.eu/disclaimer