More thorns than floral fragrance
The flower industry is struggling to recover from lockdown blues
● The flower industry in SA is in turmoil after the Covid-19 lockdown caused demand to crash, which has now led to a shortage of blooms and sky-high prices for those that are available.
And although demand is slowly picking up as the lockdown regulations are eased, some businesses have had to cut staff as they struggle to recover.
Producer Adene Nieuwoudt, CEO of Adene’s Farm Flowers in Wolseley, Western Cape, says that when the lockdown began in late March she went from delivering several tons of flowers every week to zero.
She says hiring labour to harvest the flowers — the farm produces between 100 and 200 different species — was simply too expensive for an operation with an estimated R300,000 in monthly expenses that suddenly had no cash flow.
André de Wit, CEO of Multiflora, says a lot of growers had no choice but to throw away flowers that were ready for sale when the lockdown kicked in.
Many chose not to plant their perishable product because they were uncertain about the future.
Multiflora, a specialised flower auctioneer in Johannesburg that has about 300-million flower stems pass through its doors every year, has experienced a 30% decrease in purchases by florists who cater to the events market such as weddings and birthday parties.
But there has been an increase in retail consumption since the lockdown regulations eased.
De Wit says that despite this pick-up in retail demand, flower supply for auction is at only about two-thirds of the normal level. This, he says, is one of the factors that has driven up the price of most flowers, especially roses and chrysanthemums.
Half the flowers grown in SA are for the local market, and according to De Wit, roses are still the most popular, followed by lilies.
Leeandra Flynn, CEO of the boutique florist Fields of Colour, which supplies hotels, corporate offices and the wedding industry, says her company used to deliver flowers to about two dozen upmarket hotels and at least one or two weddings a week.
Fields of Colour now relies mainly on online orders, especially from businesses that are sending flowers to clients and staff.
Flynn’s orders for hotels have dried up because most are still closed.
Those that are open are operating at an occupancy of 7%-12% and will only order flowers when they are at least at 50% capacity, she says.
It’s not a brilliant time to be in the flower industry. It’s horrible
Michael Sham
Organiser, Johannesburg Flower Show
Flynn, who used to spend between R20,000 and R50,000 at the flower auction every second day, spent less than R5,000 last week — not only because she is making less than 10% of her normal turnover, but also because flowers have become so expensive.
She says roses have about tripled in price to between R11 and R12 per stem, and she suspects many of the flowers are being exported.
But specialist flower exporter René Schoenmaker, CEO of AFG Worldwide, says exports are also down.
He says his business has been hit not just by limited air freight capacity, which is making the export of flowers three to four times more expensive, but also by the weak rand, because transport is billed in dollars.
He says the cost of air freight now erodes 75% of the margin on sales.
Schoenmaker says his business is “limping along” at 20%-30% capacity, whereas to make the margins required for profitability it should be running at 95% capacity. “It’s tough and it doesn’t look like it’s going to get any better.”
He says AFG Worldwide is now exporting to only about a dozen countries, compared with 55 before the pandemic hit.
Schoenmaker says he had to close one of his companies and retrench five members of his 13 permanent staff.
“I need to restructure my business to survive this.”
Exports account for a substantial portion of South African flower production.
According to the South African Flower Export Council, 80% of exports go to Europe, 12% to the Americas and the rest to Japan.
SA ranks 15th in global exports of bouquet
It’s tough and does not look like it’s going to get better. I need to restructure René Schoenmaker
CEO, AFG Worldwide
flowers, according to WorldExports.com, with the Netherlands ranked first and Kenya fourth.
Schoenmaker’s main export to the Middle East is chrysanthemums, and to Europe it is proteas and other types of indigenous fynbos.
“It’s not a brilliant time to be in the flower industry,” says Michael Sham, organiser of the Johannesburg Flower Show. He is considering whether to cancel this year’s event, which is due to take place at the end of October.
He refers to the industry in terms of “carnage”. “It’s horrible,” he says, for the growers, florists and consumers. But, he is hopeful and believes that SA’s flower industry will bounce back.