By Nathaniel Meyersohn, CNN Business
(CNN) — A dozen roses at Kroger stores usually costs around $10. During the Valentine’s Day stretch, they go for double.
Why are flowers so expensive around Valentine’s Day? The rush for flowers creates international logistics bottlenecks and elevated transportation costs for a limited supply of perishable flowers.
“It’s an old economic adage. Supply and demand,” said Charles Hall, professor of horticulture at Texas A&M University. “It’s really expensive just to get them to the market.”
Refrigerated trucks
Flower shops around the country have been preparing for Valentine’s Day, the industry’s busiest day, for months.
Kroger, the country’s largest florist, started getting ready for Valentine’s Day last spring with growers in Colombia and Ecuador. The two countries were the biggest flower exporters to the United States during last year’s Valentine’s season, according to US Customs and Border Protection.
“It’s pretty complicated,” said Jennifer Lien, Kroger’s director of floral merchandising. “We have to keep a cold chain going. We have to make sure that the products keep the quality going from Colombia to Miami and then throughout the country.”
Kroger’s floral team first estimated how many roses the company would need at its thousands of stores around the country. More than 250 million roses are produced for Valentine’s Day, according to estimates from the trade group Society of American Florists.
The grocery store also had to prepare its supply chain to preserve fresh stems along the journey from South America.
Flowers are fragile and have a short shelf life. Any mistake along the route could spoil them. Although improvements in cooling technology and preservatives in recent years have helped growers and retailers keep flowers fresh for longer, it’s a high-stakes trip to stores.
Chris Drummond, who owns Penney’s by Plaza Flowers in Philadelphia, said the temperature in refrigerated trucks is set to 34 to 35 degrees. “It keeps the flowers from getting moldy,” he said. “We want to keep the flowers really cold.”
Drummond buys flowers for his two stores from growers overseas and through wholesalers in the United States. He also buys from farms in the Netherlands, a top exporter of flowers to the United States.
Companies in Holland use an auction system to sell flowers. Drummond retains a broker who sits in on auctions and bids for flowers. “It’s got to be the most efficient auction in the world,” he said.
Kroger placed its orders for Valentine’s Day roses around three months ago. Farmers in South America cut the roses at greenhouses and boxed them up in coolers before sending them to the airport. They fly in cold planes and land at Miami International Airport, the busiest airport in the country for flowers.
During last year’s Valentine’s season, US Customs and Border Protection in Miami processed around 1.3 billion stems, or more than 90% of the total imported flowers to the United States.
After clearing inspection for bugs and bacteria, roses hit cold trucks headed for Kroger’s distribution centers. Then it’s straight to fridges at stores.
Higher costs
In the lead-up to Valentine’s Day, every flower retailer and wholesaler in America scrambles to get planes full of boxed flowers off the ground in Bogota, Colombia, and Quito, Ecuador.
Demand for flowers dropped off during the Great Recession in 2008 and 2009, but it’s picked up in recent years.
That’s forced companies to hire extra workers in both South America and the United States to help with logistics during the rush.
While Kroger is able to use its size and scale to keep costs down, smaller players like Drummond say they’re feeling the effects of higher transportation and labor costs in a tight jobs market.
“At every link in the chain, there’s an increase in costs,” he said. “The biggest thing I’ve noticed this year is the difficulty finding labor. Go try to find temporary help that wants to work in a 34-degree cooler.”
High costs and razor-thin profit margins have pushed thousands of local florists shops out of business in recent years. The number of private florists has dropped 45% since 2001, according to the Bureau of Labor Statistics.
“Profit margins have eroded over time for the floral industry,” said Texas A&M’s Hall.
So when Valentine’s Day rolls around, florists have a chance to recoup some of the money they lose during slow months.
The-CNN-Wire
™ & © 2019 Cable News Network, Inc., a Time Warner Company. All rights reserved.
