Scotts to Buy into a Plant Brand?

Chris Beytes

That’s the message from Scotts Miracle-Gro Chairman and CEO Jim Hagedorn to interested stakeholders during an analysts and investors meeting on December 10. Jim announced during the presentation that Scotts wants to become a minority investor with a livegoods company. He said they’ve been “pretty heavily” involved in talks this past spring with one company in particular, which he called an “industry-leading brand” with a “significant presence” in the current retail channels.

Why livegoods? Jim explained thusly:

“People don’t go out and buy soil and plant food for fun. They buy our products because they are gardening. And frankly, I don’t like that answer. I want us to be more than a dirt and fertilizer company. We want to be a gardening company. Livegoods puts us closer to the consumer. It makes us even more relevant in their lives.”

So why buy into an existing brand instead of developing their own Scotts or Miracle-Gro plant brand? They’ve tried—repeatedly (see below). Actually, it looks more like they’re looking for a partner. Says Jim, “We don’t need to be—and probably don’t want to be—an outright buyer. We don’t need to own greenhouses and livegoods inventory to accomplish our goals. We also don’t necessarily need to put our own brands on live plants. There are good plant brands already in the market that have high levels of consumer acceptance—or ones that could have.”

Who’s it going to be? There’s no word on that yet. Jim told the audience that a letter of intent is in place, but the proposal isn’t far enough along to name names. (Word is a deal will be announced by the end of January.)

An interesting aspect of the partnership is that Jim says Scotts Miracle-Gro has been doing plant genetics research. “It would be great to bring some of that technology to the livegoods category,” he told those in attendance.

Also mentioned during the strategic review: plans to get more involved with organics and natural products (“If we don’t do it, someone else will.”), hydroponics (the market is young, urban, West Coast and entrepreneurial) and precision irrigation and Internet-controlled technology (“the connected yard,” is what Scotts calls it).

Scotts’ prior livegoods experience:

• Testing at Lowe’s from 2002 to 2005, with Miracle-Gro plants in 1.5-pint pots for $4.98. Scotts handled variety selection. The test ended when the two companies couldn’t reach terms.
• Independent garden center tests between 2006 and 2008.
• Testing at Home Depot 2011 to 2015 in the upper Midwest and Northeast, with Miracle-Gro Plants in 1.5-pint pots for $6.98. Scotts partnered with Syngenta, with Syngenta selecting the varieties.

Launching a brand, especially into the big boxes, is tremendously challenging, as more than one breeder or distributor has learned. That’s probably why Scotts wants to partner with an already entrenched brand rather than start from scratch … again. GT