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Despite a relatively high purchasing power, U.S. flower consumption lags behind Western Europe, which is the largest flower consumer. Cultural differences account for some of this disparity, but U.S. consumers have traditionally been dissatisfied with flower quality and vase life in particular. However, retailers are tackling this problem, according to a new Rabobank report, "U.S. Floriculture."

"The U.S. flower market is primarily an impulse market with approximately three quarters of flowers sold as gifts. Other countries, such as Switzerland, Norway and the Netherlands, also use flowers as decorations and throughout their homes," said Rabobank Assistant Vice President of Food & Agribusiness Research and Advisory (FAR) Marieke de Rijke. "However, U.S. consumers are not used to buying flowers for personal use."

According to the Flower Council of Holland, each year Americans spend about $31- based on current exchange rates -- on cut flowers while the Swiss, for example, spend more than $100. Primarily a shorter vase life and cultural differences account for this disparity. De Rijke said, "in order to make flowers more common and to lift flower consumption, retailers, particularly supermarkets, are increasingly offering a vase-life guarantee."

Unfortunately, that guarantee may only be part of the equation for keeping customers -- especially as input costs rise and competition from importers increases. According to the report, "today, 75 percent of U.S. flower consumption is originating in Colombia, and the cut flower trade flow from South America to North America is the world's second largest." Year-round production, low land values, low labor costs and little or no energy use make markets in Latin America more attractive for low-cost flowers.

"In order to stay in business over the past two decades U.S. growers have started to focus on producing higher quality flower varieties. As a result, traditional cut flowers such as roses, carnations and chrysanthemums are now rarely produced in the United States. Growers are mainly producing orchids, lilies tulips and gerberas," said de Rijke. "Over the past decade, the U.S. flower industry has gone through a 'survival of the fittest' with the most efficient producers left."

Although flower consumption in the United States is relatively low, the industry has been consistent in growth, and has opportunities to blossom. But, in order to maintain this growth, innovations such as high-quality niche varieties with a long vase life, sell-by dates and innovative marketing must be put into place.

While quality can help flower growers prosper, current economic conditions are putting pressure on the industry's low 2 percent annual growth rate. In order to see the flower industry blossom, there is need for innovation, which can occur, according to the report, at all stages of the flower industry. For example:

• A 'smart label,' which monitors surface temperature during transportation, could be used to ensure cut flowers are kept cold and quality high.
• Sell-by dates for flowers so they maintain their quality and ensure consumer confidence.
• Exporting niche cut-flowers to Canada may offer expansion opportunities because currently all flowers produced in the United States are sold domestically. 

The premier bank to the global food and agriculture industry, Rabobank is a global financial services leader providing institutional and retail banking and agricultural finance solutions in key markets around the world. From its century-old roots in the Netherlands, Rabobank has grown into one of the 25 largest banks worldwide, with over $800 billion in total assets and operations in over 35 countries. Rabobank is the only private bank in the world with a triple A credit rating from both Standard & Poor's and Moody's, and is ranked among the world's safest banks. In the Americas, Rabobank (www.RabobankAmerica.com) is a leading financial partner to the entire American food and agribusiness industry and is a specialist in sophisticated, customer-driven solutions in the Global Financial Markets and Corporate Finance arenas. Rabobank also provides retail and commercial banking services in California; leasing; and real estate lending, operating loans, input financing and crop insurance to American agricultural producers, input suppliers and agricultural manufacturers.

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