Many in the bedding industry say UK growers are better placed to succeed in spring 2017 than the poor-weather spring of 2016, with indications that imports could decrease because of exchange rate changes. The positive message has come despite the news that Ornamental Plants of Tarleton, Lancashire, has gone into liquidation.
Ornamental Plants folded in January owing £2.7m. The £7.9m-turnover firm reported that 79 per cent of turnover was with one customer in its last accounts - up from 63 per cent the year before - and industry figures have warned that spreading the risk is increasingly important for growers, while flexibility is another attribute garden retailers are seeking. The grower was believed to be mainly supplying tight-margin, added-value bedding product to Homebase but had debts of £2.6m.
Some growers now see diversification as the answer to the sector's challenges, with nurseries such as leading player Neame Lea growing, trading and supplying more customers, which has spread the load. Managing director David Ball says: "Our investment over the past few years has focused on maintaining the lowest cost of production of a range of product areas including cut flowers, ornamental plants and culinary herbs. This has been in order to mitigate the biggest risk that we have in the plant industry, the weather, by being involved in market sectors where this has less of an impact. Investment has been key to this and will continue to be as we ensure that we are as efficient as possible and are best placed to mitigate as many cost inflation pressures as possible."
By contrast, Burston Nurseries managing director James Alcaraz has simplified his offer after a tough spring in 2016. "Diversification is great but comes at a cost because you have to find your market and shoehorn your way in. We're simplifying what we do to maximise profits. That's what it's all about for us."
In the USA, Metrolina director Art van Wingerden said at the recent British Protected Ornamentals Association conference that implementing technological efficiencies and marketing new ideas through dialogue with big retailers, rather than spreading risk, are drivers for his $200m-turnover bedding nursery, which supplies US retail giants Walmart, Lowes and Home Depot.
Tillington Group plant buyer Andy Bunker says when growers are reliant on a multiple "it worries the hell out of you", while nursery consultant Neville Stein adds: "Don't have all your eggs in one basket - it's an incredibly risky strategy. It's a more dynamic marketplace now than 30/40 years ago and anything can happen. If a big customer gets taken over and they change their strategy ... Take risks you're comfortable with and if you're uncomfortable reduce them and have more customers."
Reasons for optimism
However, there is more optimism among growers this year thanks to hopes for better weather and import substitution. Plants for Europe's Graham Spencer says: "There seems to be more optimism but the worry is that one or two are in a bit of a spot finding that costs are increasing and if they have not hedged against that they might have a problem if young plants, compost and fertiliser prices increase because of the exchange rate. I don't see a lack of orders."
Simon Earley of young plant supplier Earley Ornamentals says 2017 shows more promise than 2016. "For the spring there are more positives. With sterling like it is imports are going to be less and that will give more opportunities to British growers," he points out.
Bunker says a colder January than last year has meant a subdued start to the season, but sales are only 10% down in a weak month and the positive is dead autumn bedding will need replacing. "Winter has killed them off. For the past three or four years there's nothing wrong with their pansies by April, but now the average gardener is going to pull them out in March and think what they're going to put in."
He adds that it might not be too long before a glut of primroses hits the market because some sales have not happened, adding that he can sell 20 trolleys in a good January or four if the weather is not so good. January 2017 saw colder, frostier weather than in recent years nationwide.
For some seasonal plant growers, the 2016 season was squashed into six or seven weeks from mid April, with sales up to 50% down in March and early April, so, given a normal weather year, they expect better in 2017.
Bunker says "strong growers are getting stronger and the weak are getting weaker", while Stein says: "It's always been very difficult being an ornamental plant nursery. But I think Brexit will provide more opportunities for import substitution though a fragmented marketplace may see small growers contract to bigger ones."
He adds that communication between growers and retailers is most important, with ideas such as pot colours and timings needing to be discussed in advance. "Some growers are too regimented."
Ornamental Plants directors Colin Bowers and Michael Brookes have set up Florna Plants and are believed to be supplying value-added products to Homebase. Ivan Ambrose is now believed to be supplying more to Homebase while Avoncross is another big bedding supplier to the retailer.
Imports Heading up or down?
Royal FloraHolland has said plant imports to the UK are down 11% since the Brexit vote. But speaking at the recent HTA Contact conference, Dutch grower and Anthos board member Jan De Vries said the UK "can't do without Europe" regarding plant imports, adding that a "new form of free trade (agreement) will certainly come about", not least because 25% of Dutch production is going to the UK. But he said trade agreements "will be focused on plant health", which he suggested could be protectionist.
The euro is now worth £1.16 compared with £1.40 before the Brexit vote on 23 June 2016. Last month, prime minister Theresa May said the UK will leave the EU single market, which allows free movement of goods, services and workers between its members and makes trade agreements with individual countries.
Dutch importers are fighting back and are believed to be aggressive on pricing to supply new Homebase owner Bunnings, taking the hit of the euro, which UK suppliers, many of whom want renegotiation, are not.
The Dutch are not raising prices but expect their loss this year to equal more business in 2018. UK growers Avoncross, Ivan Ambrose and Florna Plants are among Homebase seasonal plant suppliers.
From the biggest European nursery show, IPM Essen, held last week in Germany, Plants for Europe's Graham Spencer reports that the "main topic is the impact of Brexit, particularly ongoing uncertainty about impact on plant variety rights and plant health, and also labour".
The mood at Essen was generally optimistic in spite of the wider uncertainty across the world. Spencer points out: "Uncertainty with Brexit is the bigger issue than what's actually going to happen. People can plan for something if they see what's coming in."