Opportunities in Asia and the Middle East markets for

SAFEC Market Research
Opportunities in Asia and the Middle East markets
for South African Cut Flowers
4th October 2013
Purpose of this presentation
 This presentation summarises the key findings of market research undertaken in:




the UAE
Russia
Thailand
India
 additional research was also conducted in the Netherlands to fully understand the role
of the flower auctions in re exports and the impact on the selected research markets.
 Work was undertaken in July and August 2013 and involved both desk and in market
research.
 These findings identify the opportunities to develop and deliver a promotional campaign
within these markets for South African cut flowers – particularly proteas.
2
Summary Points
 A marketing/promotional campaign is justified in:
 Russia & the UAE
 There is low level trade in imported flowers in India (due to high domestic production
volumes).
 Thailand is a significant flower exporter, but imports are totally dominated by China and
other SE Asian based suppliers – neither the NL or Kenya are active in the market and SA
has no track record of supply.
 Russia offers opportunities for both direct sales and via the NL To develop the market, a
two tier campaign is proposed:
 in the NL auction – with the trade (posters, advertisements, website etc).
 in market – importers, wholesalers and consumers (posters, advertisements, website
and attendance at trade shows).
 The UAE offers potential for both SA chrysanthemums and proteas, however further
development is required to improve the quality (of chrysanthemums) and to develop an
fuller AYR supply.
3
Import volume of fresh cut flowers, 2001 - 2011
Imports of cut flowers, 2001 and 2011
70
'000 tonnes
60
 Imports of cut flowers have grown in all of the
research markets.
 In 2011, Russia imported the highest volume of
cut flowers – just over 60,000 tonnes, an increase
of 288% from 2001’s import volumes.
50
40
30
 Thailand’s imports grew by
7,856 tonnes
between 2001 and 2011, reaching just over 9,000
tonnes in 2011.
20
10
0
Russia
Thailand
2001
UAE
India
2011
 Imports into the UAE increased by 168% between
2001 and 2011, reaching 3,862 tonnes in 2011.
 India’s imports were the lowest - and totalled
NOTE: HS Code accessed - Live trees and other plants; bulbs, roots
and the like; cut flowers and ornamental foliage // Cut flowers and 520 tonnes in 2011, however this is from a
flower buds of a kind suitable for bouquets or for ornamental
starting level of just 1 tonne in 2001.
Source: UNCT & Promar estimates
purposes, fresh, dried, dyed, bleached, impregnated or otherwise
prepared. However dried cut flowers have been removed from this
data set.
4
Import volume of other cut flowers, 2007 - 2011

Other cut flower imports, 2007 - 2011
12
'000 tonnes
10
No specific HS code exists for proteas, instead they fall
under code (060319 - Cut flowers & flower buds of a kind
suitable for bouquets/ornamental purposes excluding roses
and chrysanthemums).
 Russia imported the largest volume of other
cut flowers – 10,692 tonnes in 2011, an
increase of 16% between 2007 and 2011.
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 Thailand’s imports have grown by 81% in this
time period, rising from 3,760 tonnes in 2007
to 6,796 tonnes in 2011.
6
4
 The UAE has grown by 16% within the
reporting period, increasing from 979 tonnes
to 1,294 tonnes in 2011.
2
Russia
Thailand
2007
UAE
India
2011
Source: UNCT and Promar estimates
 India has seen the highest % growth,
increasing by 181% between 2007 and 2011
but rising from just 28 to still only 79 tonnes
in 2011.
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Key Findings – UAE
 In terms of volume, the cut flower market is primarily made up of largely commodity
products such as roses and chrysanthemums. Other products traded include gypsophilia,
lilies, hydrangea and orchids.
 Cut flowers are mainly used in decoration (hotels, weddings, events, government
buildings), second as gifts, and thirdly for personal use (via retailers).
 This market is still underdeveloped in terms of the offering of cut flowers via retail outlets
– this is however developing and growing.
 Wholesale operators dictate events in this market - there is no ‘formal’ auction market,
but wholesalers/importers will trade with one another.
 There is diverse competition from the likes of Kenya, Holland, Egypt, Malaysia, Ethiopia,
and Thailand. Importers will either go straight to the source for flowers or buy on the
Dutch auction.
 Holland is important - they are very strong suppliers, the quality is good & they provide an
assortment of flowers and smaller volumes.
 The most popular colours are red (50%), white (25%) and mixed (25%).
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Key Findings – UAE (continued)
 SA is known for the supply of chrysanthemums, proteas and greenery (fillers).
 Proteas are used – through all channels (retail, wholesale, and hospitality). It is recognised
as a hardy product, with a positive vase life and the overall response regarding the quality
of the SA protea is very positive.
 Proteas are viewed as a niche product (tropical) - and therefore volumes are minimal.
 Importers/wholesalers report that the SA season is short and are looking for more variety
and fuller AYR supply – they would encourage the SA sector to develop this.
 Australia and NZ are competitors of the SA protea. The quality is competitive with SA, but
high logistic costs act as a barrier – this is a strength of the SA sector – competitive
logistics costs and shorter travel time.
 In terms of SA chrysanthemums - quality is good and is generally better than Malaysia and
Ecuador. However, SA varietal development is believed to be limited.
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Promotional Activities – UAE
 Very little promotions are carried out by SA competitors (apart from attending trade
shows).
 Customers/florists are not knowledgeable regarding ‘speciality/niche’ products, and they
require further information regarding these products.
 Importers/wholesalers acknowledge that more could be done to promote SA
specialities. This could range from:
Attendance at trade shows would raise the awareness of SA flowers.
Providing knowledge and demonstrations to event organisers/florists illustrating how to
use proteas. This would also help to raise the profile of the SA flower sector.
 Importers, however query the success of a large promotional SA campaign, particularly as
proteas are only in the market for a short period of time.
 Some florists and importers that source from the Netherlands use a flower directory from
the Flower Council of Holland.
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Promotional Activities – UAE
Above: A selection of cut flowers
for sale, florist.
A florist display in a
shopping mall (above)
and left, a flower display
in a retail outlet
(Spinney’s)
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Promotional Activities – UAE
Example of imported flower packaging (flowers
have been imported from Holland to the Dubai
Flower Centre)
An arrangement for display in the public sector.
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Key Findings – INDIA
 India is among the world’s largest producer - cut flower production in 2012, reached 75.4
million tonnes.
 Imported cut flowers are a fairly small sector in comparison with just 830 tonnes
imported in 2012.
 Thailand is the dominant supplier. In 2012, it accounted for 80% of the total market,
supplying 660 tonnes. The large majority of these imports are orchids.
 China and the Netherlands have been other consistent suppliers, albeit with low
volumes, of 40 tonnes and 20 tonnes respectively in 2012.
 There is virtually nil import activity in regards to cut flowers such as chrysanthemums
and proteas.
 Imported flowers are mainly purchased by middle/upper class consumers for social
occasions, such as decorations for weddings, grand parties and religious festivals.
 Large hotels (typically 5 Star) also purchase imported flowers for floral displays in lobbies
and meeting rooms.
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Key Findings – INDIA (continued)
 Cut flowers are not sold in modern supermarket retailers - instead the selling of cut
flowers to end consumers is focused in two key areas: florists and traditional road side
sellers.
 There are a large number of modern retail florists across the country, with over 140 in
Bangalore alone. These will typically have dedicated websites.
 Imported proteas are available in India, but it is a very niche and low volume market.
 A number of different varieties can be found for sale, but knowledge is still lacking, with
colours used as differentiation, rather than varietal names.
 The most commonly imported proteas are Banksia, Telopia, Leucadendron, and
Leucospermum.
 Proteas are good for decorations, because they have a long shelf life and stand out from
the domestic flowers often used:
“For proteas, a shelf life of 10 – 15 days is crucial due to their high cost”.
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Key Findings – INDIA (continued)
 Although often supplied from the Netherlands, these were also being sourced from other
destinations, such as NZ, Australia (and SA):
“The proteas we purchase from the Netherlands are of a high quality as they source them
from a number of other destinations, like Australia and NZ.”
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Promotional Activities – INDIA
 Some promotional material (posters and a flower directory) from the Flower Council of
Holland was seen during trade visits in the west of the country, particularly in Pune.
“No promotional activities are undertaken in this market, unless done so by a florist at
their own cost. We have our own in house promotions, but this is not supported by any
external sources or countries.”
 As well as the directory, large posters with all available varieties would be displayed.
 This allowed end consumers to browse the images and select which ones they wanted to
purchase.
 As imported flowers, outside of orchids, hold such a small % of the market, promotional
activities are not common.
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Promotional Activities – INDIA
Floral decorations being made at a local market in Kolkata.
The wholesale flower market at Kolkata.
Left:
Typical wedding
flower decorations
surrounding the bride
and groom. Visual
appearance and smell
is very important.
15
Promotional Activities – INDIA
A covered market in Kolkata where floral decorations are constructed and sold to locals.
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Promotional Activities – INDIA
Examples of floral decorations sold in modern retail florists in India
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Key Findings - RUSSIA
 In 2012, Russia was the fourth largest importer of cut flowers, behind Germany, the
Netherlands, and the UK.
 Russia produces relatively small quantities of flowers & the market is nearly totally reliant
on imports.
 Nearly all the Russian imports come via the Netherlands.
 Exact volumes of imports can be difficult to estimate, due to the high percentage of reexports from the NL and the high volume of trade entering through the grey market –
maybe as much as 40%.
 Roses are the most developed product.
 Carnations and chrysanthemums are also well developed, due to bouquets being popular
with customers.
 Exotic flowers (including proteas) are at a very early stage of market development.
 Orchids are popular, but supply is dominated by Thailand. Other exotic flowers have
irregular demand, and are viewed by importers and wholesalers as being erratic in terms
of supply
 Flower purchasing is the strongest in major cities, particularly Moscow and St. Petersburg.
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Key Findings – RUSSIA (continued)
 Flowers are mainly purchased for special occasions, and only as gifts for others.
 Unlike the European market, flowers are not typically often bought for decoration in the
home.
 Purchasing of exotic flowers, such as orchids is undertaken directly, evident in the high
imports from Thailand – and this is on the increase.
 Longer stemmed flowers sell best in Russia, and this is the case as well for proteas.
 Proteas have a 10 – 15 day vase life - this is a problem in the Russian market, as the
transport time can be quite lengthy.
 The Netherlands views of SA proteas – very high quality, with all the varieties which they
need being available.
 However, SA is very expensive, and the importing of them to Holland and then shipping on
to another country increases the end cost.
 This is too high for many customers in some areas of Russia.
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Key Findings – RUSSIA (continued)
 Some respondents import some proteas from Ecuador.
 they acknowledge that there are not as many varieties available when compared with
SA, but proteas can be bought in mixed loads with other flowers such as roses,
reducing the cost.
 it is more cost efficient to import flowers from Ecuador via the Netherlands, than
directly to Russia.
 Customers purchase flowers through florists, chained kiosks, and some supermarkets.
 Retail outlets, will buy an assortment of flowers in bunches before arranging into
bouquets.
 Wholesale markets are used by the smaller florists and kiosks.
 Larger, and more specialised stores, such as supermarkets and large florists, work directly
with importers.
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Promotional Activities – RUSSIA
 Advertising is widely carried out - including the participation of trade shows, websites,
direct marketing, along with outdoor and in-store advertising.
 Wholesalers and importers will carry out marketing targeted at retailers and florists. The
cost of this is often shared, or the cost of flowers reduced as a promotion.
 The Netherlands is very strong in providing promotional materials, providing information
on flower varieties and seasonal availability.
 Flora Russia is a large, international three day trade show - however, 90% of exhibitors are
rose producers.
 Russian importers used Ecuador as a good example for the use of the internet. Importers
preferred the way in which ordering could be done on-line.
 To have the most impact, information should be produced for both the Russian and the NL
markets.
 The Russian exotics market is very new, and so trade education is needed & it will be a
market of slow growth.
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Key Findings - RUSSIA
Dutch Flower Lorry
Dutch Flower Auction
Bottom left and right: Examples of branded packaging.
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Key Findings - RUSSIA
Florist flower display
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Key Findings -THAILAND
 Imports of cut flowers are modest at just over 9,000 tonnes per annum plus c. 6,000 tonnes of
“other flowers”
 This volume has grown, however, from c. 1,000 tonnes just 10 years ago.
 The culture of using artificial flowers is strong - and they can be 50 – 70 % cheaper than fresh
flowers.
 Thailand has developed a substantial export business for flowers over the years, especially for orchids
to other Asian markets, the EU and US.
 Imports are totally dominated by supplies from the likes of China and Malaysia - c. 90% between
them.
 Both these countries supply Thailand on the basis of acceptable quality and highly competitive prices.
 There is also some ad hoc trade from other Asian based suppliers, such as Vietnam and Indonesia.
 The NL has almost withdrawn from the market & Kenyan exports (to Thailand) have never really got
off the ground.
 SA flower exports are just about unheard of - there is no track record of supply and/or accurate
knowledge of the SA floricultural sector is just about zero.
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Key Findings –THAILAND (continued)
 Flowers are a strong part of the Thailand culture - especially for religious festivals and occasions.
 All imports in Thailand are traded through the main wholesale market based at Pakklongtalad Road.
 There are c. 10 importers/wholesalers based there.
 Trucks tpyically arrive from China every 2/3 days and loads are shared by importers.
 Imported flowers are mainly distributed to independent florist shops – seldom to hotels and/or
modern retailers.
 Modern retailers such as Tesco/Lotus & Big C are hardly involved in the flower sector, but this will
change in the future.
 SA flowers are virtually unheard of in Thailand.
 Proteas have only been seen by the most experienced of Thai traders – this is rare.
 With no commercial knowledge of how the SA flower sector works – views of how it might be
structured etc are highly varied.
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Promotional Activities – THAILAND
 The concept of promotions for the cut flower and floricultural sector in Thailand is poorly
developed.
 There is almost no promotional activity at the POS - be it in modern retailers and/or
specialist florist shops with the exception of occasional price discounts.
 Some high class (florists) might offer some floristry type classes.
 Some international hotels might a “Flower Week” - but these will be locally based.
 Chinese and other Asian traders visit the market from time to time - but these are B2B
type activities.
 Kenyan growers and exporters did visit - but this was a few years ago and no real trade
developed as a result – we assume this was organised by the likes of the Kenyan Flower
Council and Fresh Produce Export Association of Kenya.
 Netherlands based traders seldom visit the Thai market and are of an ad hoc basis.
26
Promotional Activities – THAILAND
Below: Big C
Right:
Supermarket on
Siam Paragron
Right: Tesco Lotus
27
Promotional Activities – THAILAND
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Promotional Activities – THAILAND
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Promotional activities proposed & next steps
Market
UAE
Activities
Justification
 Very little promotion, if any, is delivered
 Attendance/exhibitor at trade shows
 To educate customers/florists
should be encouraged.
regarding
‘speciality/niche’
products.
 Shows include Hortifare (5th – 8th
November 2013, Holland), WOP (17th –
 To raise awareness of SA
19th November 2013, Dubai) and IPM
flowers.
(28th – 31st January 2014, Germany).
 Providing knowledge and demonstrations
to event organisers/florists showing how
best to use proteas.
 Promotions (posters, articles in trade
publications, advertisements in the
flower directory) could be undertaken
directly in the UAE and the Netherlands.
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 To present the versatility of the
protea flower and its hardiness
in hot climates.
Promotional activities proposed & next steps
Market
India
Activities
Justification
 This market is mostly served by the  Small import volumes will
domestic market, therefore very little
arrive from the NL auction.
international promotional activity is seen
in this market.
 Without spending direct in this
market, promotions in Holland
 Possible grower/export visits - inward
(on the back of other research
and outward in the future
markets) will also benefit SA
exporters in the Indian market.
 Advertisements in the directory from the
Flower Council of Holland.
 As well as the directory, large posters
with all available SA varieties will help
consumers select flowers they would like
to purchase.
31
Promotional activities proposed & next steps
Market
Russia
Activities
Justification
 Promotion in the NL market (flower  Flora Russia is a large,
auction) as well as direct in Russia is
international three day trade
required.
show, enabling producers from all
around the world to meet with
 Promotional activity should include:
importers and other businesses.
 Attendance at the main trade show  This will provide SA exporters
(Flora Russia).
with the opportunity to explore
this market and identify key
 Development of SA flower website.
players.
 Direct marketing – posters and instore
advertising
(direct
to  The Russian exotics market is very
retail/importer and wholesaler).
new, and so trade education is
needed, it will be a market of
 Information should be provided on
slow growth.
flower
varieties
and
seasonal
availability.
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Promotional activities proposed & next steps
Market
Thailand
Activities
Justification
 Inward trade mission to SA for a small  There is almost zero knowledge
group
for
Thai
flower
of SA as a flower supplier to
importers/wholesalers - and even
Thailand - what is “known” is
exporters – development of any trade
often incorrect.
with Thailand for flowers probably has
to be a two way thing.
 SA flower exports to this market
are starting from scratch.
 Follow up with small scale trial  The promotional culture in the
shipments as might be appropriate.
Thai domestic market is not at all
well developed.
 Small scale promotional work maybe in
market - but difficult to justify at this  There is only very modest activity
stage – maybe with other SA products
taking place in the market vis a
vis promotion.
 Attend trade fairs such as HORTI Asia but which are not dedicated flower  This might change as modern
trade events. Other new trade shows
retailers become more involved in
for horticulture are being planned for
this sector.
2014.
31