Although stores are closed due to the lockdown, the floriculture sector has had a good year in 2020, but this year has become a little more ambiguous. ABN AMRO wrote in a sector report on Friday that a prolonged shutdown, Brexit and high transport costs could slow the recovery.
Last year, we mainly bought flowers and plants online, but we did so with enthusiasm. According to transaction data from ABN AMRO, online sales at flower shops doubled in 2020. The biggest jump was in April. At the time, spending on online flowers was 271% higher than the previous year.
ABN AMRO confirms that the Internet accounts for only a small portion of total flower sales, so the chance of fully collecting lost physical sales is slim.
Spring is an important period for flowering
Now that more attention is paid to greenery in the garden, homes and offices, next year will still be beneficial to the flower sector, ABN AMRO believes, but external factors could put a key in the business. In normal times, spring is a very important period for garden centers and flower shops because the Dutch are already looking forward to summer and starting to brighten their garden. But if the lockdown continues for a long time, the sector may lose a lot of income.
The question is also what will happen when the economy is re-opened. On the one hand, ABN AMRO expects more bankruptcies and thus more unemployed, but on the other hand, the bank also sees a scenario where people enthusiastically resume their spending and spend their saved money. That could mean good news for the floriculture sector.
Brexit and transport costs are affecting the sector
Finally, both imports and exports represent a major source of uncertainty. With 880 million euros, the United Kingdom is the second largest exporter of Dutch farmers and many of them are still suffering from additional administrative and customs costs due to Brexit. However, one bright spot is that the so-called phytosanitary control that must be carried out on flowers and plants destined for the UK has been postponed until the beginning of 2022.
But it is mainly import, and in particular the associated transport costs, that weighs on the sector. The Netherlands imports flowers and plants worth more than 1 billion euros, a large part of which comes from other continents. Now since airlines do not operate nearly as much passenger flights, they are charging more for freight traffic.
Rates rose to record highs and ABN AMRO expects to remain elevated for the rest of the year. This is bad news for flower shops, but on the other hand it can also be affordable for Dutch farmers’ prices. Sellers are more likely to purchase their flowers and plants locally.