Speculation over Kinglea failure dismissed by Tesco

Tesco has dismissed speculation that it could be partly to blame for bedding plant supplier Kinglea Plants going into administration.

Industry figures said Kinglea's predicament was partly because of price pressures from major retail customers. Leading buyers of Kinglea Plants, which has taken down Danish exporter Boeflora AS, include Tesco and DIY retailer Wilkinsons.

Both Boeflora AS and Kinglea customer Garden & Leisure operations director Carol Paris said: "Price pressure is a genuine concern for suppliers. The margin on plants is not generous at all so if they do get people putting pressure on prices that is not good."

HTA director-general David Gwyther added: "This is a sign of the pressure on prices that big high street chains can exert. We do have concerns about price pressures in the industry."

But a Tesco representative said: "We work with a great range of suppliers. It is in our interest that we continue to have long-term relationships with them." The situation could also lead to bedding plant shortages in the UK, some retailers claimed. Kinglea Plants owes more than previously thought.

Boeflora AS serviced Kinglea with mainly hanging basket and bedding plants and went out of business last month after Kinglea ran up a EUR3m debt with the firm.

Paris added: "Our understanding with (G&L parent company) Truffaut is that Boeflora went into ad-ministration because it was owed a large amount of money from Kinglea Plants."

A Notcutts representative said: "We have visited Kinglea and spoken to the director and the administrator. Our reserve is secured for this season and we have other alternatives available to us."

Paris added: "It is still being run by administrators and is still trading but I don't believe that it is fulfilling all its orders. People who order from it are looking for free stock from elsewhere. Supply of hanging basket and bedding plants will become an issue if it doesn't continue to trade."

Gwyther explained: "Because of the exchange rates, these guys can't just go abroad and buy expensive plants."

Paris said: "Another big issue is people cancelling orders, which also puts pressure on prices when they don't take returns. Growers can't prepare for the next stage, which is an issue as well. Volcanic ash has not helped either. Some suppliers couldn't get liners from Israel, which has put production back."

Boeflora UK managing director Richard Priestley said: "Boeflora UK is fine. We do supermarket business rather than garden centres. Boeflora AS was the parent company. We were bought by Zion Group in Holland, our principle flower suppliers."

Priestley added that Kinglea had taken Boeflora AS down, owing the Danish company EUR3m. A representative from administrators BDO said several parties were interested in buying Kinglea.

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