Imported plant prices set to rise

The price of imported plants could rise by up to 10 per cent as garden centres restock this autumn following exchange rate falls post-Brexit influencing suppliers' approach.

Planterias: garden centres fortunate that Brexit vote came when volumes were low but restocking will cost more - image: HW
Planterias: garden centres fortunate that Brexit vote came when volumes were low but restocking will cost more - image: HW

Importers say prices are rising as feared because sterling is weakening against the euro, but many are resisting passing on extra costs or are waiting for the market to settle. However, growers, traders and retailers are saying the volatility has come at as good a time as it could because July is the quietest time of the year.

De Jong Plant's Danny de Bruin said: "We do still trade to the UK, mostly with an export company but also on our own by direct trade. The market is still good but the last weeks we have seen some stores with a little trouble in selling because of the bad weather. Also the pound-to-euro rate is having some effect on the market. All our products are more expensive now. We will see how the market will develop with all the Brexit issues."

Andre Doordin of Profitplant, another Dutch company, said Brexit has made an impact on the exchange rate for everybody, though he has not seen a loss in volume because of it, adding that any sales decline in the summer was due to poor weather. "Trade slowed quite a bit after Brexit but that was more to do with bad weather," he confirmed. "We do have to adjust prices with the exchange rate. I don't think anyone will be able to hold them. It's not something we'd do on a weekly basis because we want to offer stability on price."

Garden Centre Fresh's Brian Redman said the company was able to hold prices for the first few weeks after Brexit and it is keeping to price guarantees. But with exchange rates dropping from £1.37 to £1.17 against the euro at one point, he said it is "inevitable" that imported product prices will rise across all industries. "It's not just our industry. It's going to be every importer," he added.

"At some point European companies that bought their sterling will run out." He said it is lucky the vote came as garden centres destocked planterias and volumes were low. "It hit at the right time of year in some respects - not when volumes are going out."

But Redman said restocking in autumn will inevitably cost garden centres more. The issue will be a hot topic among growers at Plantarium in Boskoop, the Netherlands (24-27 August), he added. He expects buyers will accept price rises if they are properly explained. Some importers could be in for a "tight time" with reduced margins until sterling stabilises, he suggested.

Alton Garden Centre director Andy Bunker said: "Where we are paying for plants in euros and working out the conversion rate you notice that. But there's not been too much yet. Realignment hasn't kicked in. But big suppliers from Holland say if sterling stays as it is, there's got to be an adjustment by 10 per cent. In exchange rates £1.40 is too high, £1.30 is about right and £1.20 is too low. If it stays at £1.15 there's no doubt there's got to be a 10 per cent increase coming in. But I don't think it will go much below £1.10 in the next year and it will realign."

He added: "I think we will have one year of volatility then people will ask 'what was the panic?'. Because of the time of year being the quietest for garden centres, it's the wrong time of year to see the effect. We're starting to think about Christmas, and that's a more relevant one."

UK-based growers say they may have to raise prices too because imported young plants, new pension contributions, imported materials such as fertilisers and labels and the new National Living Wage have hiked costs by around five per cent for many of them.

Buckingham Garden Centre planteria manager Ed Beach said: "We source a lot of British-grown first but we do have a flying Dutchman come in on a Monday morning and some of his prices have gone up, but not massively, so we've not necessarily had to change our price point. Come autumn, it could be a different story. We're looking at bare root for hedging plants and that's what probably is going to make a bigger change for us."

But some growers are swallowing the exchange rate changes. Danish Christmas tree supplier Kortegaard is keeping wholesale prices at 2015 levels despite Brexit-induced changes to the exchange rate. Kortegaard supplies Danish, Scottish and other EU-sourced trees to UK garden centres.

Many Christmas tree suppliers did not set prices ahead of the Brexit vote in June and are waiting for currency levels to stabilise before setting them for this season. But Kasper Kortegaard said: "We have already set our prices for 2016 and we are maintaining those prices regardless of the current situation. The price level is the same as in 2015. We believe things will stabilise once the new Government will get a chance to get to work. The situation is of course concerning, but we have decided not to panic and carry on as usual."

Bunker said if Kortegaard holds prices other big Christmas tree suppliers will follow suit, but there could be a 10 per cent increase for Christmas 2017 should exchange rates stay the same. There will be a "bun fight" on poorer-quality trees, which are in oversupply this year, he added. "Some people in the industry from overseas are in trouble and they've got to move trees."

He said wholesale prices have fallen across the board over the past two or three years, meaning retailers have been making more margin so they are more likely to hold retail prices. This is despite the glut of cheaper trees, which Bunker said garden centres will strive to show their customers are lower-quality than their offer.

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