August 2011

2011 Spring Season Review

How were your spring sales and production this year?

“Markets which started strong with double digit sales growth/comps could not sustain it and bottomed out later in the season. The reverse happened with markets which started very poorly. They were able to make up much of the early losses but most did not make it into positive numbers. “Short term (and lower price point) crops like annuals and vegetables fared better with consumers than longer term crops such as perennials and shrubs/trees. Overall, the continued housing slump, lack of lending, and continued concern over employment keep any near-term growth prospects to a minimum.” -Dean Chaloupka, Visions Group LLC

“Our spring was fine. We sell young plants through much of April and our finished sales don’t start until late April. Because of this we missed the pain of trying to sell April crops with all the cold weather.” -Doug Cole, D.S. Cole Growers

“Overall, FPG’s production units were flat, as compared to 2010. For our core customers, production was up over 2010, but we did eliminate most contract-grown material for other greenhouse companies in 2010. This shift freed up space for our core customer needs in 2011. Through mid-July, 2011 sales dollars were up over last year, but individual customer results varied significantly.” -Scott Lueder, Floral Plant Growers

“We are flat on our perennials sales but have had a good increase in our Buffalo Grass plugs.” -Danny Takao, Takao Nursery

“Challenging is the word I keep hearing people say. It was not a happy time. It was very difficult to stay motivated. It wasn’t awful, but it certainly was not good. We see a real problem in the market right now. I happen to believe it’s our own doing. I don’t think it’s the weather; I don’t think it’s the economy.” -Lloyd Traven, Peace Tree Farms

How did the weather affect your production?

“In discussions with growers and retailers around the country, sales trends basically mirrored the weather. Nice temperatures with minimal rain brought sales increases of 3 to 6 percent. Below normal temperatures and significant precipitation brought similar sales decreases of 3 to 6 percent. Of note is the fact that there appears to be support at the consumer level for the lawn and garden category but little sustained growth within lawn and garden spending year over year.” -Dean Chaloupka

“The weather could have been better, but we really didn’t see much disease pressure from the dismal spring.” -Doug Cole

“Timing consumer demand this year was our greatest challenge. The volatile Midwest weather tested the FPG team, but excellent in-season execution made all the difference. The day-to-day demand swings were very dramatic. As an example, we finished April more than 25 percent behind our YTD sales plan. Just one week later, we had a great Mother’s Day weekend, which was followed with a late spring frost in our northern markets. Throughout the season, our entire in-store merchandising and greenhouse operations teams did an excellent job protecting the product from adverse weather. When the weather was good, we were ready and the customers were buying.” -Scott Lueder

“Since we are young plants the weather doesn’t impact us as much as our customers. They had their challenges with the rain this year like our fellow growers across the country. We were in a major drought, so which is the worst of the two?” -Danny Takao

“We lost April of course. We just totally lost the month. It was rainy, it was really cold. We just didn’t have the opportunity to sell the material, and we started to get backed up. Then it got very cold during May.

“It certainly affects us. But even when the weather turned, it wasn’t like the faucet opened up. That is part economy, part weather, and I am convinced the consumers just don’t care anymore about what we do. They have seen it a million times. We’ve got to generate excitement to the consumer.” -Lloyd Traven

How did fluctuating fuel prices impact your bottom line?

“With respect to high gas or transportation prices during the spring, it seemed to have much more of an impact on suppliers costs and their bottom line as most prices were negotiated in fall 2010.” -Dean Chaloupka

“We have been buying futures in natural gas. This created a budget that has become stable. Sometimes our payments may not be as low as they could be due to fluctuations, but overall I believe it puts us in a good position. We work with Hess that uses software to purchase futures at set targets. It isn’t always right, but we trust it to do better than average.” -Doug Cole

“Heating and delivery costs are two of our biggest cost drivers. Diesel prices reached their first-half 2011 peak directly in line with our peak delivery period. Propane, which is used to heat one of our greenhouse facilities, was also dramatically higher in 2011. Both the higher heating and diesel costs negatively impacted our margins this year.” -Scott Lueder

“Like most growers, we have absorbed all increases and didn’t pass them on to our customers.” -Danny Takao

“Fuel prices are very close to putting us out of business. Our fuel bill was as high as our labor bill this year. It has affected us horribly. The way fuel is right now I just don’t see how we can continue. It is such a high percentage for us.

“We just got word that our USDA grant has been approved, and we’re waiting on two large state grants. We’re going to be putting in a biomass system. That will not quite take the issue off the table, but it will certainly turn it around dramatically.” -Lloyd Traven

What did you learn this year that you will apply to your business next year?

“We confirmed that in the category of hanging baskets, calibrachoa is king and combos are still hot. We are seeing a upswing in fuchsia hanging basket sales in our area. The old has been reinvented.

“As to pot crops our Elatior Begonias have become a signature crop for us in both 4″ and 6” pots. We continue to grow more spring through fall.

“This is our second year producing spring product in a 12 cm pot (just under 5 inch) that we have printed. The line is call ‘Northern Performers’ John Henry makes the matching Portrait label. We don’t call it branding; we call it merchandising. We are not convinced that the consumer will remember the pot. We are convinced the that merchandising looks professional, trustworthy and adds value to the plant.” -Doug Cole

“We always learn a lot each year, but for 2011 our greatest learning was really just a confirmation that despite all the economic issues facing our consumers, the consumer demand remains strong for our category. Give customers great quality plants plus excellent in-store merchandising and the customers will be there to buy our products again and again.” -Scott Lueder

“We were hoping in 2008 that the economy would have improved slightly in 2012, but after traveling around the country, I’m not encouraged with the housing market. There is very little housing development, especially in California, Arizona and Florida. The new turn around year we are hearing in California is now 2015. So we will continue being lean with both production and cash flow. My advice to everyone is try an stay positive even though it’s taking longer to recover.” -Danny Takao

“I found out how critical March and April are to us. I don’t think any of us really realized how important the month of April is to sales. You should not do more in May than you’re already doing. You’re filled, you keep it filled. You’re just not going to generate 20 percent more sales. You’re already maxed out. Yes, you can do more business in June probably. But June was pretty good. So, it’s April to me that is the key. What you have to do is you have to hit the shoulder of spring. February 15 through April 7 is the window for us, and we are aiming at all the crops with hardy flowering that we could put into that window. At the same time, we work it back further where we say the time to start growing or propagating that stuff is now.” -Lloyd Traven