Recipe for Success
If you are in the horticulture business in North America, then you already know that Costa Farms is a big grower — in fact, the Miami-based company is the largest grower of indoor plants in North America.
The company specializes in foliage and bedding plants and has production facilities in Florida, North Carolina and Pennsylvania. Costa also has operations in Costa Rica, the Dominican Republic and the Far East. Its indoor houseplant division sells plants in retail stores across the nation, while its bedding plant division is focused more on the southeast and eastern portion of the United States. Costa also has its own merchandising, transportation and young plant companies.
Jose Costa founded the third generation family business in 1961. Today, Jose's grandchildren Jose and Maria Costa-Smith along with Maria's husband Jose "Joche" Smith run the company. Jose's original 30-acre tomato farm has blossomed into a company that currently employs more than 3,000 workers and its growing area spans more than 3,500 acres.
During the 2011 Big Grower Executive Summit in February, Costa Farms provided attendees with a behind-thescenes tour of several of its facilities in south Florida and sat down with attendees for dinner and a special "Meet the Owners" discussion in the company's extensive (and beautiful) trial gardens.
Last month, Costa president Jose Smith sat down with Big Grower to discuss how the company has gotten to where it is today and how it continues to grow in today's challenging economy.
A Grower Grows
Costa Farms is a company that continues to grow — and it has really grown in the past 10 years. In a time when the industry has seen a lot of consolidation, the management team at Costa continues to find unique, and appropriate, growth opportunities for the company. Since the beginning of 2011 alone, Costa has acquired First Foliage and Bernecker's to expand its already industry-leading foliage offerings.
During its first 40 years, most of Costa's growth was "organic" — adding a few acres here and there or leasing additional greenhouse space from someone else. But as the company entered the 21st century, acquisitions have moved the company into a whole new stratosphere. "The appetite for growth is prevalent throughout the entire organization," Smith states.
When it comes to acquisitions, Smith says, "Every deal is different." He says some are simple like taking over a small grower's mortgage payments or taking over someone's existing assets. But some of them can be much more complex like the First Foliage and Bernecker's purchases.
But all of the purchases fit into the company's growth strategy. Smith says his team is always looking for opportunities that make sense to its existing business and the potential for new business.
With Costa's proven track record, Smith says the company has "a very strong relationship with our banking partners." Whenever a significant acquisition opportunity has come up "and we needed help to get something done, they have been very supportive," and helped Costa make the deal.
To the outside world, these acquisitions are very transparent. Smith says as the company "finishes digesting" its latest acquisitions over the next few months "we will definitely be looking for more opportunities to grow."
A Fresh Perspective on Marketing
Helping fuel the company's growth over the past decade has been its major investment and commitment to marketing as well as research and development. Smith says in the 1990s, the company didn't really focus on or have a thorough understanding of the importance of marketing or R&D.
"A few years ago we thought 'marketing' meant going to a couple of trade shows and then doing something corny in your booth to attract attention," Smith shares.
"There were a lot of really good things going on here, but we never did a good job communicating those things to our customers."
Costa went outside the horticulture industry to find a new perception of marketing. About four years ago, Charlie Acevedo joined the company as vice president of sales and marketing. Prior to joining Costa Farms, Acevedo worked in the beer industry. Smith credits Acevedo with helping the company understand and appreciate what marketing could be and its value to the business.
"We wanted to get a fresh approach. It has been a big help to us by going outside the industry" to get a different perspective on the company and its products.
"We just sort of took it for granted that people in the industry knew us and what we did," Smith says. "The buyers [at the big box retailers] knew us fairly well, but the store personnel didn't know who Costa was or what our capabilities were.
"We did not target the operators or the people that actually work in the garden centers that are actually dealing with our product." By creating new marketing programs and raising the profile of the Costa brand, it "has brought us a lot of opportunities in our industry."
Marketing is a "big, big part of who we are today," Smith says.
Costa Farms' marketing efforts have also allowed the company to find new ways to make direct contact with today's consumers. In 2009, Costa created a marketing campaign promoting the benefits of indoor houseplants (see sidebar). The marketing program is called O2 for You (www. o2foryou.org).
While the O2 for You campaign does not promote Costa specifically, it does promote the houseplant product category to consumers. At the time of its introduction, Smith said the campaign was created "to help people associate the health benefits of indoor plants just as they do with blueberries and antioxidants."
Smith says the exposure that the O2 for You program has generated for Costa has led to different types of industry partnerships, joint ventures and even acquisitions with other growers, retailers and suppliers. More recently, the company has gotten very active in the social media area. "Social media has been very helpful" in raising the company's profile and reaching out to consumers.
"We've got contests going on all of the time and our retailers really appreciate that. It is incredible how the feedback we get from our consumers can affect some of the products that we have," Smith says. "We get compliments and criticism" that often get discussed at great length during management meetings at Costa.
Costa's marketing team and message is continuously evolving to meet the needs of the company and the marketplace. "We have to find different ways to connect with our [retail] customers and consumers. We will be introducing some new and exciting [marketing programs and products] in the second half of 2011."
Developing R&D
Not only has Costa ramped up its marketing efforts in the past decade, but it also has made a major commitment to research and development. "You build a lot of credibility at different levels with the types of trials and research we are doing," Smith says.
Costa Farms has an R&D mission statement that is a reflection of the company’s overall mission statement (see sidebar on page 3). The R&D mission statementstates: "To work cooperatively with breeders and suppliers as a TEAM. Develop SOLUTIONS through R&D Trials. Provide our retail partners with the best products for the GROWTH of their business and ours."
The three senior level people that drive Costa's R&D efforts are Dr. Kate Santos, Mike Rimland and L.J. Contillo. Smith says their combination of scientific intelligence, production know-how and industry experience provides the company with an excellent foundation for research and development.
One of Costa's biggest R&D projects is its extensive trial gardens at Costa Color's facilities. At the Season Premier Garden, Costa trials the newest genetics from many different breeders. South Florida's mild winter climate lets Costa emulate the spring growing conditions from around the country so breeders and growers can see the garden performance of a variety. The company also does a warm season flower trial and even has a small home on its property where landscape and cut flower post-harvest trials are done.
"We really pride ourselves in our trials gardens," Smith remarks. And as gorgeous as the trial garden is Smith says, "It is not a show garden. It is a good, honest look at how a product is going to perform."
And the trial gardens continue to grow. Last year Costa doubled the area trials gardens to approximately an acre and Smith says they will expand them even more in 2011.
The success of the trial garden has provided new opportunities for Costa too. Smith says the company has developed a level of trust with many of the breeders and they are now working on some exclusive agreements to develop new products with them.
When Dr. Kate Santos joined Costa as director of research and development about two years ago, "we made a major commitment that we would dedicate the resources that we needed so we could become a very serious player in R&D," Smith states.
In addition to variety trials in the garden, at any given time, there are probably 100 different R&D trials taking place at Costa. Santos and her research team are working on many different things such as media selection, new production techniques, sustainability options and things like that.
Costa has also has partnered with the University of Florida to do research on consumer reactions and preferences to floriculture products. They are studying consumers' physiological reactions to such things as fragrance, color and form to see "what really makes them tick."
Instead of developing a product and then figuring out how to take it to market, this type of multi-disciplinary research will give Costa the information it needs upfront to bring new products to today's consumers. "Let's figure out what [consumers] want and then go out and do it," Smith says. "This will allow us to get a competitive edge and bring the best products to market."
It's in the DNA
Smith says Costa Farms will continue to grow because of its people, the products and solutions it provides its customers.
"We are going to continue to grow, that is for sure," Smith says. "We have a certain DNA here that does not allow us to say we are going to stop growing."
"I love the team we have here. They are a great group of people that have done a phenomenal job" in getting Costa Farms to where it is today.
SIDEBAR 1
Promoting Houseplants with a Purpose
In 2009, Costa Farms launched its O2 for You campaign (www.o2foryou.org) to help educate consumers about the benefits of having plants in the home and at work and to spread the awareness of the dangers of indoor air pollution.
"If you go to the O2 for You website (www.o2foryou.org) there is very little mention of Costa Farms — on purpose. We want this to be an industry initiative," says Costa Farms president Jose Smith.
Smith says retailers like Lowe's have gotten behind the program and are promoting it but he would like to see even more retailers get involved. He would also like more growers to participate in the program.
He says Costa has had discussions with other growers and other lawn and garden suppliers and hopefully in the future more companies will jump on board the O2 for You program. "We are continuing to move the program forward and it would be great if others joined us."
SIDEBAR 2
On a Mission
Costa Farms' mission statement is: "To develop the best TEAM in the industry, create SOLUTIONS for our customers and position ourselves to capitalize on GROWTH opportunities."
Jose Smith is passionate about the company's mission. "Those three words [Team, Solutions and Growth] sum up what we do." It "is not just lip service or something on a plaque up on a wall somewhere. People here know what it is and what we are about."
Smith says the people are by far the single biggest asset of the company. "We have to have, to develop and to recruit the best team in the industry," Smith declares. "The kind of people we try to attract and to develop have a high desire to succeed and a high desire to win."
When it comes to solutions, Smith says that it is a given that his customers expect high quality plants from Costa. But they also want and need additional things like Costa's marketing expertise or R&D capabilities to help them be successful. He said one of the goals is to be "as indispensable as possible" to Costa's customers.
Smith says for the last 10 years,Costa Farms has seen double-digit growth each year. He attributes much of that growth to the culture and the people at the company who have made Costa's customers successful.
"At the end of the day it is about delivering results, bringing [our customers] new products to the market at a fair price and making them profitable!" Smith states.
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