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Dole Fresh Flowers president Scott Greenwood talks about the fresh cut flower industry, challenges to his company and industry efforts to increase fresh floral consumption.

Q. What impact has the expiration of the Andean Trade Preference Act had on the flowers Dole ships from South America into the United States?

A. The expiration of ATPA and the renewal of tariffs on South American flower imports, effective Dec. 5, 2001, has applied additional pressure on an industry that is already experiencing some difficulties. Consumption growth of fresh cut flowers in North America is marginal and the industry is in oversupply.

The added cost of the tariff, which will have to ultimately be passed on to the consumer, may further reduce consumption, which in turn will affect retailers, wholesalers and growers/distributors. To date, we have not seen a major shift in the product mix we are shipping from the farm.

Q. Is Dole doing anything to try and hasten renewal of ATPA?

A. Dole is working with industry associations, including Asocolflores, the Colombian Association of Flower Exporters, to lobby Congress and the executive branch.

Q. How much of Dole's flower production is in South America? In what South American countries does Dole have production facilities?

A. Dole maintains growing and production operations exclusively in Colombia and Ecuador. It is estimated that our company accounts for up to 20 percent of production output from Colombia. All Dole farms are ISO 9000 and ISO 14001 certified, and we are very proud of our position as the only grower in the world to have achieved this status. Dole does not grow any flowers domestically.

Q. How much of the flowers Dole produces in South American are shipped to the United States?

A. More than 90 percent of our production is shipped into North America. Our International Export division also ships product into the European Union, Russia, Asia, South America and the Caribbean.

Q. Coming over from Dole's food division, what do you see as the biggest difference in the production and marketing sides of the food and floral divisions?

A. Dole is a diverse agri-company with a number of different food divisions. The flower division has many similarities to our vegetable division. It is highly perishable, there are distinct selling channels in wholesale and mass market, and it relies on a complex logistics system to ensure maximum quality and freshness.

The fresh cut flower industry is also unique. The manufacturing base is still very fragmented as is the wholesale distributor/retailer channel. The significant number of varieties of flowers and combinations of value-added products such as bouquets and arrangements add a lot of complexity to the business. The lack of branding and manufacturer generated marketing differentiates the floral division from our other food divisions as well, though we see this as long term opportunity to differentiate Dole from our competition.

Q. U.S. growers often hear of the advantages that offshore or foreign production facilities have over domestic operations in regards to workers, government restrictions, environmental regulations, chemicals available, etc. What obstacles have your foreign production facilities had to deal with?

A. There are a number of advantages in producing in South America including lower operating costs, skilled labor and very good growing conditions. One of the primary obstacles in producing in South America is distance. Maintaining the cold chain from the farm in Colombia through to a retailer in Seattle is a major feat and I believe we do an excellent job at this.

Security issues in the production countries and through U.S. Customs are a challenge but the industry has built a solid infrastructure to accommodate this.

Government regulations on environmental controls and human rights in countries like Colombia are well established and responsible manufacturers respect and follow these regulations.

Finally, one has to take into account the effect of foreign exchange volatility that American growers do not have to contest with.

Q. Do you expect more consolidation in the U.S. floral industry?

A. The industry will continue to consolidate, but it will take time. There are many competitors on the growing/distribution side. As with most industries, the good ones will grow and the weak ones will fall away. We are also seeing consolidation in both the wholesale channel with some acquisitions and buying groups being established. Similarly on the mass-market side, some customers are starting to centralize their operations to capitalize on the strength critical mass provides.

Q. Wasn't Dole a major supplier to USA Floral? How did its financial collapse impact your company?

A. USA Floral was one of Dole's many customers. Its financial collapse had very little impact on our company.

Q. What do think went wrong with the consolidation efforts of USA Floral on the wholesale side and Gerald Stevens on the retail side?

A. Both of these companies were created around the time Dole entered this industry and each of the three entities pursued a different business model. I believe the Dole model of vertical integration coupled with the equity of the companies we acquired has enabled us to survive and maintain our business position.

Q. There's nothing on the Dole Web site related to Dole's Fresh Flower line. Has Dole done much promotion of its Fresh Flower line of products?

A. You first have to differentiate between customer and consumer marketing. Very little effort has been expended on consumer marketing in the industry as a whole, and it has been driven through association efforts. While we have done some customer marketing, we have tremendous potential to build our general thrust on carrying a message to both the customer and consumer.

A lot of people have asked about our position on the Dole brand. Given the 100 years of heritage and the equity we have built in the consumer's mind, we have been cautious about how this might play a role in the flower division. However, I think you will see much more effort to both customer and consumer marketing over the coming months.

Q. Have you been satisfied with the results of the Flower Promotion Organization's Flowers. Alive with Possibilities marketing campaign?

A. It takes a significant amount of money and consistency of effort to move consumer behavior. I have reviewed the research by the FPO on this campaign and it is encouraging, but it will take time to translate awareness into an identifiable consumption gain. We have not drawn a correlation between the campaign and consumption of our products specifically.

Q. Is there a possibility of Dole launching its own line of branded organic cut flowers or a branded line of container plants?

A. I believe new products and innovation are important to the long-term viability of any company. As a leader in this industry, we are looking at a few opportunities that capitalize on our core competencies and position us for the future.

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© 2002 Branch-Smith Publishing