FloraHolland has determined their course. Marco van Zijverden CEO of the Dutch Flower Group, with a turnover of more than EUR 1.4 billion, is not enthusiastic. He is in favour of off-nursery auctioning, but it looks as though that is no longer on the cards. ‘We are certainly pro auction, but if it goes haywire, we may decide to organise purchasing differently.’
‘What would you like to talk about?’ Marco van Zijverden asked me as I joined him, but I don’t have to say much because the foreman of the Dutch Flower Group (DFG) immediately started talking about FloraHolland’s plans. At the General Members’ Meeting, the members agreed to the plans for The New Auctioning. That means virtual auctioning, no more auction rooms, and a 24/7 online transaction platform. According to Marco van Zijverden, these plans are not revolutionary. He admits being surprised by the auction’s chosen direction.
Why surprised? You are a member of the buyers’ platform.
‘Yes, we are a member of the buyers’ platform and we have been involved in developing the plans. However, we were informed at a very late stage, shortly before the General Members’ Meeting, that FloraHolland would deviate from the plans of off-nursery auctioning and that the 6 am clocks would stay, after which the members voted in favour. It now appears that the course has been determined. I’m very surprised by the speed at which decisions are being made all of a sudden and I’m certainly not the only one.’
What’s next? The course has been determined.
‘It looks as though it has. There is a meeting scheduled with Lucas Vos, CEO FloraHolland, and then we will hear more about it. They didn’t start a buyers’ platform for nothing; it’s important to act on advice from within the group.’
I understand you had a different opinion?
‘I’m not saying that all my ideas should be taken up, but I’ve always been in favour of off-nursery auctioning. The logistical advantages that can be achieved with this would be huge. It would mean a different way of working. You buy the flowers one day, and they are delivered to you the next. It is possible though. Import is a good example, but so is the way our worldwide customers are purchasing.’
There are plenty of buyers who are happy that off-nursery auctioning is no longer on the cards.
‘Off-nursery auctioning is easier for bulk orders than for smaller orders. I totally agree on that. Some of the buyers want to see the products. I think that off-nursery auctioning would mean you would buy by name and establish a relationship with the growers. I think that the quality would also improve. But this is no longer going to happen. It is sad to see that what is supplied is often not what was bought. In a professional world, growers should be reliable. The other issue that I’m not happy about is FloraHolland’s logistical performance. Flowers are being delivered to the box too late. This can be prevented with off-nursery auctioning.’
How important is the clock still for you?
‘You have to look at it per company. The clock is important for companies who deliver to importing wholesalers. Companies supplying retail can do without an auction clock. Overall, more than 60% of products are purchased directly from the growers. Because we are in favour of the system, everything we buy off FloraHolland members is charged through their systems.’
You are an important partner for the auction with a turnover of more than EUR 1.4 billion.
‘Yes, the auction depends on us, but we depend on them too. We are absolutely pro auction. We have a good relationship; Lucas and I meet regularly. But we cannot enforce anything. If it goes haywire, we may decide to organise purchasing differently.’
What is your definition of “haywire”?
‘I recently heard that Lucas Vos said that everyone could become a member of the auction within a day. I don’t like this kind of statements. Why in a day? Will these customers arrange their bank guarantee within a day? I don’t think so. Our customers are carefully screened and analysed financially. We don’t take any chances, and that’s what FloraHolland has to do as well. They say that everyone is welcome, but they should not promote remote buying to foreign customers.’
Why not?
We are fully in favour of transparency, but the current market transparency doesn’t work in favour of the growers. Foreign remote-buying customers often buy from the bottom of the market, which sets a low price level affecting the price-setting. Because of all public supply banks, the transparency for plant sales is very high with the result that growers and trading companies are being played off against each other. This way, we will end up in a downward spiral. If the prices were 5% higher, then everyone would earn more and growers would have more resources to invest in innovation. FloraHolland is opening up the entire system, and they should feel the consequences. There will be more trade outside FloraHolland in order to achieve the margins.’
So FloraHolland has work to do?
‘It is time for action. FloraHolland said they would reduce costs by EUR 100 million, but I haven’t noticed anything yet. So it’s time for action. The auction should also introduce a more differentiated pricing scheme for growers. FloraHolland has to anticipate on bulk orders that sell 99% of their products directly. They should introduce an enhanced rate. If they don’t get their calculations right very soon, it will be too late, and these big growers will leave the auction.’
Do you have any other message for Lucas Vos?
‘I find the mechanisation of the logistics very exciting. Plans for a big sorter were already being discussed a few years ago, and these plans are seeing the light of day again all of a sudden. This is the way FloraHolland wants to mechanise distribution. FloraHolland will get fifty additional docks. The products for the foreign remote-buying customers will be ready for dispatch in one small step. If that’s what they want, that’s fine, but ultimately they will weaken their position. The auction should not step in our shoes; they should facilitate.’
What about the China story? To what extent are you involved in that?
‘The auction will get this sorted out, along with the trade. That’s not a problem. But I think the current approach using external advisers is a waste of money. China is not a major market for import products, and it never will be. It will never be a billion euro market. I estimate the size of this market at a maximum of EUR 40 to 80 million, and the trade can organise this perfectly well on their own. You don’t need a special programme using consultants. I also think that the plans to set up a Dutch consumer brand will be a waste of money. That’s not going to work. You’re dealing with a diverse and international product; the quality of the flowers varies too greatly.’
Do you see any missed opportunities?
‘We are, together with Holex, the market leaders in the export to the United States. There are still opportunities for DFG to increase our share in the major US supermarkets. I can also see opportunities for the online flower sales. We organise the online flower sales for various European customers, organising the entire process, ultimate e-fulfilment: from the purchasing of the flowers to delivery to the consumer. We don’t put our name to this; we work together with our customer. We are testing an innovative packaging product at the moment: a special plastic sheet in which flowers remain fresh for three days, dry and at room temperature, without losing their quality. This means that flowers can easily be delivered along with the groceries. This kind of development can have a positive effect on flower sales.’
How is business for Dutch Flower Group?
‘Currently, we are increasing our turnover by 5%. That’s slightly less than last year when we ended up with a growth rate of 7%. Russia is having a huge negative impact. But overall, I’m confident about the future. OK, young people are buying too few flowers and plants. That’s being seen as a threat, but I think it actually makes sense. I didn´t either when I was twenty. That’s something for later. Look on the bright side; the ageing population means that we do have an enormous group that is interested in our product.’
Cindy van der Zwet
cvanderzwet@hortipoint.nl
Marco van Zijverden: ’We may decide to organise purchasing differently.’
