SECTOR Home | What's New | About SECTOR | Meetings | Publications | Discussion Forum | Contact Us | Links | Site Map

SAP 2.64/WP.120

The Dutch flower sector:
Structure, trends and employment

Paul Elshof
Food World Research and Consultancy

Part 5

Retail structure

Generally speaking the purchase of flowers in the main markets of Western Europe and the United States follows a regular pattern: 50 per cent are bought as gifts, 20-30 per cent are bought for the buyer's own use, 10 per cent are bought for use in cemeteries, and 10-15 per cent are for institutional use. Differences exist: the Dutch buy more than the average for their own use -- 42 per cent instead of the 20-30 per cent -- while the French buy an equal proportion (43 per cent) for cemeteries, compared to the average 10 per cent. The presence or absence of marketing outlets affects end use. In Japan, where Dfl.11 billions-worth of flowers was sold in 1994, the limited number of sales outlets (no street vendors) restricts buying for own use and most flowers are bought for business use. In the United States flowers are only bought by wealthier people because of their luxury categorization. As much as 89 per cent are bought from florists, where margins are high, the norm being 300 per cent, contributing to the limited utilization of flowers. However sales through supermarkets are rising because of their lower prices and easier access.

Sales outlets in Europe as a whole and the Netherlands and Germany are shown in tables 7 and 8. These figures are collected by the auctions on behalf of their members. The high consumption levels in the Netherlands and Germany can be attributed to the well-defined network of florist shops and their low margins -- 100 per cent as compared to thrice as much in the United States. The same goes for street and market vendors. Supermarkets generally charge somewhat more -- 125 per cent.

Table 7. Points of sale structures in Europe (in percentage of the market)

	Cut flowers			Pot plants
	1987	1992	1997	1987	1992	1997
Individual florist shops	57	52	44	42	34	25
Chains of florist shops	2	4	7	2	4	7
Garden centres	9	10	11	20	26	31
Supermarkets	10	10	14	20	21	23
Street vendors	17	18	17	12	10	8
Others	5	6	7	4	5	6

Table 8. Points of sale structure in the Netherlands and Germany (in percentage of the market)

	Cut flowers		Pot plants
	1992	1995	1992	1995
Netherlands
Florist shops	54	52	49	48
Street vendors	9	11	4	3
Markets	13	18	11	9
Growers	2	1	3	2
Garden centres	3	3	15	18
Supermarkets	16	14	16	19
Others	3	1	2	1
Germany
Florist shops	49	51	31	31
Growers	20	17	22	18
Garden centres	2	2	9	11
Street vendors/markets	11	12	7	6
Supermarket chains	12	15	25	26
Others	6	3	7	8

3. Cost structure

In the whole production chain of cut flowers, the degree to which the different actors contribute to costs varies; the same is true for their gross profit margins. A breakdown of the consumer price is shown in table 9. Around two-fifths goes to the growers and retailers each, 12 per cent goes to wholesalers, and 3 per cent to the auctions. The low shares claimed by wholesalers and auctions attest to their efficiency, which is of course the attraction of the auctions for foreign suppliers. In the total chain the cost structure for different cost factors in percentage is: labour 47.2; interest/depreciation 24.2; energy/transport 8.5; plant materials 6; and other costs 14.1. This is shown on the bottom bar in figure 1, derived from the Rabobank study. The cost contribution of the different actors shown in table 9 is also reported in figure 1 on the right-hand side and the gross profit margin figures on the left-hand side.

Table 9. Costs and profits in the flower chain

	Cost contribution (%)	Gross profit margin (%)
Growers	42	-
Auctions	3	55
Wholesale trade	12	22
Retail trade	43	43
Source. Rabobank, quoted in Rabobank, "A view of international competitiveness in the floristry industry", June 1992. All figures used here are taken from this publication.

International Labour Organization (ILO): Contact us | Site map |

Copyright and Permissions 1996-2008 International Labour Organization (ILO) - Disclaimer