Consolidation

Chris Beytes

Back in September, I was in Orlando to moderate the closing session of AmericanHort’s 2014 Plug & Cutting Conference, which was titled “Industry Consolidation: Its Meaning for You Today & Tomorrow.”

My panelists—Bill Swanekamp (Kube-Pak), Will Healy (Ball Horticultural), David Van Wingerden (Green Circle Growers/Express Seed) and Kate Santos (Dümmen)—are four very smart cookies and I didn’t want to go into the lion’s den unarmed. Which is why, in the run-up to the conference, we took the time to discuss the topic at length via email.

During some of that pre-event email banter, Will Healy, in his usual breezy and irreverent way, posed some interesting questions that a grower might ask about consolidation’s impact on his or her business. We wound up not addressing them specifically in the session, but I thought it might be fun to take a stab at them here.

Am I stupid for still wanting 512 plugs? Or is the elimination of this size just another way to make me do something that I don’t want to? I see all the suppliers dropping sizes and making me do a size I don’t normally want and because of consolidation there are no options.

You can want anything you want. That’s the great thing about running your own business. But it doesn’t mean your plug supplier makes money offering what you want. So if you can no longer get it, assume it’s due to lack of demand. Which would make me question why I want it if nobody else does. If a 512 or whatever is in short supply, grow it yourself—and considering offering it to other growers if you think it’s a hot item.

When will the product introduction merry-go-round end? Every year, breeders keep adding more crops, which keeps reducing the batch size due to fixed demand. For a young plant supplier, batch size is the death of the business.

Never. Because the first question out of every grower’s mouth is, “What’s new?” If you’re a young plant supplier, you have two choices: Either keep dropping old varieties to make room for new ones and risk losing customers or find a way to deal with smaller batch sizes and make that a competitive advantage.

How do I say no when the big guys keep saying yes?

As a customer yourself, think about how much you hate hearing no. “What do you mean you can’t fix it today?” In business, your job is to find a way to say yes—or to at least negotiate a compromise. When you can’t say yes, look for options that say, “I’ll try.” Such as, “I can’t do that, but I can do this” or “I can do that if you’ll also let me do the other thing.” Saying, “I’ll try” builds bridges. Saying “no” burns them.

With consolidation comes opportunity. What don’t the big guys do well that I could find a niche in?

The things mentioned above. Unusual sizes. Small batches. Saying yes when others say no. I’ve quoted many times Anna Ball’s saying, “For every trend, there’s a countertrend,” and that applies here. Big guys can’t do everything. Ford doesn’t offer bespoke paint options like Rolls Royce. Depot doesn’t sell individual nuts and bolts like Ace. You can offer those countertrends in one of two ways: either in competition with the big guys, or else TO the big guys, for them to offer in turn to their customers (think contract growing).

Are there any examples from other industries where consolidation has launched new opportunities?

Sure. Starbucks started as a one-location coffee bean purveyor, then grew to dominate the world, putting many old-school coffee shops out of business. But in the process they launched the gourmet coffee trend, which opened the door to all sorts of upscale coffee roasters, big and small.  Or McDonald’s, which killed off most mom & pop burger joints—which are coming back today as Five Guys, Smashburger and the local pub serving $20 Wagyu
burgers.

Or cut flowers. Many of you grew cuts a generation or two ago. Consolidation took most of that production offshore, so you replaced it with pots or bedding plants. Maybe it’s time to give cuts another look.

They’ll go great on the tables at upscale coffee houses and burger joints. GT