“The Royal FloraHolland 2020 strategy seems to be successful – customers relations are flourishing and both members and employees seem optimistic despite uncertain prospects.” CEO Lucas Vos is remarkably positive despite the fact he has to admit that the existence of the auction is no longer a given for all members. “The floricultural industry is doing well and that’s partially because the cooperative brings stability.”
by Arie-Frans Middelburg
afmiddelburg@hortipoint.nl
Lucas Vos isn’t the kind of person who will come up with the standard answer ‘good’ when he’s asked ‘How are you?’. This passionate man generally wears his heart on his sleeve. If he doesn’t like the way things are going, he’ll say so.
Vos expressed his concerns about the Royal FloraHolland 2020 strategy for example, on several occasions. In the beginning of 2016, he felt it was all going too slow. He was referring to the new auctioning system in particular, back then. “We were in a bit of a strange situation because Rens [former financial director Rens Buchwaldt, Ed.] was leaving. That put things on hold for a while. But now that Steven [financial director Steven van Schilfgaarde, Ed.] is here – really great how he could join us so quickly – I feel that things are starting to move along.”
Diversification
So, when we ask Vos today how it’s going with FloraHolland 2020, he says ‘very well’. And it sounds genuine. “Working out the new auctioning system wasn’t easy, but we have reached a solution that’s widely supported. It centres around diversification. There are always more solutions to a problem, and our choice was very much determined by the market. I’m pleased with what we’ve put together and also with the annual plan for 2017.”
But what happened exactly? Dutch Flower Group (DFG), one of the large stakeholders, felt that the new auctioning system wasn’t implemented fast enough. Other parties seemed relieved because they thought that the new system was abandoned. And now it turns out that the new auctioning system will be introduced after all. Did pressure from DFG lead to a change in strategy? Or not?
What did you eventually decide regarding the new auctioning system? Initially, you wanted the ‘af-tuin veilen’ system, but that changed later on?
“It seems that there has been some unclear communication. At regional meetings, which were held before the General Members’ Meeting (GMM), we explained that the ‘af-tuin veilen’ auctioning system would incorporate afternoon auctioning sessions. Then, when I said at the GMM that we weren’t going to have any auctions in the afternoons, many people seemed to think that we weren’t going ahead with the entire ‘af-tuin veilen’ system. But that’s a misunderstanding; disconnecting the sales moment from the logistical moment has always been a crucial element of our plan.”
Dutch Flower Group (DFG) is in favour of ‘af-tuin veilen’ and wants it to happen soon. How much influence does someone like Marco van Zijverden have on decisions regarding the new auctioning system?
“In general, all customers influence this process. We discuss ideas through a Customer Platform. So yes, we do give our customers influence. And growers, too. Because growers and customers define the market place, that’s where they come together. Marco has been very focused on the timeframe; “go ahead, immediately.” But if you asked him now, I think he’d be happy about the solutions that we propose and to see us moving along. But yes, he’ll want to see progress in 2017.”
Does DFG have more influence than others?
“DFG has a larger platform. They’re not the only ones, though. Our growth comes mostly from the large customers, so they get a larger platform. This includes companies like Lemkes, Waterdrinker and Van der Plas. I’d like to point out that we have strong customer relations. We had this ‘Certi incident’ a while ago. As a result, we intensified the dialogue with our customers. The fact that things have improved between auction and customers, is all thanks to those customers. They approached us more than before.”
We heard you sent an angry email to VGB regarding the Certi incident?
“Yes, I was very upset. VGB was talking about Certi via the press. I don’t think they would like it if we’d done that. That’s not how we treat each other. VGB’s Board came over. We had a great meeting, in my opinion. Their Board members indicated that they sometimes feel as if they’re a trade union. That’s not what they want to be. They want to speak with us about the future of the floricultural industry, at a strategic level. It was great to hear that. It’s exactly what I want too!”
And you must have discussed Certi as well?
“No, they didn’t want to talk about that. Not at the level at which Royal FloraHolland and VGB interact with each other. The customer [Frans Timmermans, Ed.] isn’t a VGB member, so VGB shouldn’t talk about Certi at all.”
Is it hard, having to balance growers’ and customers’ needs and wishes?
“Yes, it always is. That’s why we always speak of ‘our members and their customers’. Some ideas aren’t popular among members and other ideas aren’t popular among customers. We try to make choices that are good for the horticultural sector.”
Back to the new auctioning system and diversification. Aren’t you afraid that Royal FloraHolland is once again, trying to be everything for everyone?
“Well, that’s a risk of course. But when I said that Royal FloraHolland wants to be everything for everyone, I was referring to our portfolio of 180 services. We used to develop a new service for anyone who asked for one. We’re no longer doing that now. Our core business consists of bringing together supply and demand. That’s what we’re for and there are several solutions to achieve this.”
Have all unnecessary services and projects been ended yet?
“That’s a process – I’ve seen it before, in other companies. After a while, the number of services goes back up again. When Steven joined us, he said: “You’ve got so many projects here.” Will that be reduced in the future? I don’t really want to go into too much detail, but the number of services and projects will go further down in 2017. We’ve already reduced it to 60.”
Lucas Vos continues by saying how well the floricultural sector is doing. Better than any other agricultural sector. Better than for example fruit farming and pig farming. And we don’t have to worry about bird flu in the floricultural industry. Rabobank recently confirmed to Vos that the floricultural sector is in a relatively strong position. Vos says that this is partially because of the cooperative. It brings stability. No, the cooperative is not under pressure, he assures. “Members’ engagement is increasing. More people than before are attending the regional meetings and the FloraHolland 2020 sessions. That’s a good thing. Having only 5% of the members come to the GMM is unacceptable. Some way or another, members have to be more engaged.” But Vos admits that finding people to join the Council of Members is no longer a given.
So you’re saying that the auction is not under pressure, but the existence of the auction is no longer a given either?
“That’s right and that’s exactly why rapid changes are necessary. We are a means to an end. Growers are professionalising and are starting to skip links of the chain. In the direct trade between grower and retailer, we’re no longer playing a big role. But payment through the auction is appreciated. The fact that we lobby in Brussels and The Hague is appreciated and the fact that we can add value with our logistic means is also appreciated. There are still many reasons to make use of the auction. The trade with the discount stores is currently our main challenge. We aren’t adding any value to that segment at the moment. We’re really exploring our role in it.”
Some growers and customers are worried that FloraHolland is being led by the discounters too much.
“No, we aren’t being led by the discounters, but by the consumer. If discount stores come with a better proposition, we can’t ignore it. But we wouldn’t say goodbye to other distribution channels just like that. Large bunches of flowers like this [Vos points at a large bouquet on the table in his office in Aalsmeer, Ed.] aren’t going to disappear. And we can add much more value to that. But we have to find out what we can do for the discounters; we might be able to assist in the area of sustainability for example.”
In the coming years, the auction is going to decrease in size. Does that mean we’re going to see one round of redundancies after another?
“The downsizing will lead to a cost reduction of €100 million. One of the things we’ll focus on is reducing the number of properties we have. That’s a piece of advice I got from a number of people, when I first became CEO of FloraHolland. Many fruit and vegetable growers have learned a lesson from their time with the Greenery; they had a lot of money locked up in the cooperative. We have to make sure that we return funds in time and in a responsible manner. With fewer properties and a smaller balance sheet, we can reduce the amounts of the member loans.
One hundred people will be made redundant though?
“In the coming year, we’re going to make some drastic changes with regards to management staff; 100 people will be leaving. This mostly concern the HR and communication departments. We’re acting now, because we’re expecting to see the consequences of the new auctioning system in 2018 and 2019. So, we’re planning ahead. It’s only fair to the growers that we’re downsizing. More and more things are done through the internet and we have to respond to that. Whether we have to make changes at a global level, remains to be seen. It could be that our presence on the international market is going to be stronger, maybe in the way of commercial presence or in the field of logistics. We might consider something around Istanbul, or in China.”
Are there going to be more redundancies after 2017?
“That’s hard to say. We’re going to reduce our costs by € 100 million. That’s what we’re focusing on right now and we don’t know yet what 2018 and 2019 will bring. I do know that there will be fewer jobs. But we’re taking things one year at the time now.”
It seems like Vos doesn’t want to be pessimistic; he reiterates his belief in FloraHolland 2020 and the annual plan for 2017. “It’s supported by the Advisory Councils, and I’m pleased to see members getting more engaged. There’s more involvement because people are making more money. Growers are confident. And our employees are too, despite the fact that the future is uncertain. Customer relations are, apart from the one hick-up [the Certi incident, Ed.], better than ever before. That’s all really great.”
But what will 2017 bring? Vos says that’s hard to know. “What’s going to be the exact impact of Trump’s presidency? No idea. What are the consequences of Brexit? No idea. What if Marine Le Pen comes to power in France? No idea. What if Angela Merkel isn’t going to be re-elected? No idea.”
He isn’t too worried about the Netherlands. We’ll always have our coalition government. “Our budget for 2017 is pretty aggressive, based on a 3% turnover growth. We’ve had a 4% growth the past year. We are of course very dependent on the weather and the exchange rates and those are things we have no control over.”
We don’t hear or see too much about another ambition that FloraHolland has, which is to increase flower sales among European consumers. What about the collective promotion?
“I agree that the collective promotion isn’t too visible and as a consumer, I’d like to know how those €14 million will be spent. I am pleased, though, that members and customers have expressed that the expenditures for collective promotion should go up rather than down. But we need to show the impact of it. It would be good if the Flower Council of Holland could give some insight into the effects of promotion. Personally, I’m not a big fan of product specific promotion. There’s no proof that this has any effect.”
There are a lot of rumours. People say that Vos is taking up a position at Port of Rotterdam. Will Lucas Vos stay around until 2020?
(Laughing) “I heard those rumours too at the Trade Fair. Whether I’m still here in 2020, I don’t know. That’s quite far from now. But if it was up to me, I’d like to execute FloraHolland 2020. I want to show that I’m not just capable of drawing up a good plan, but I can put it into effect as well. So if the growers will have me, I’ll stay on. Honestly: I’m not considering any other offers at the moment.”
