'too good to be true' orders need examining

Here's are a handful of stories about scams affecting other florists.

• Like White, Dave Daniels of Dave's Flowers and Gifts in Newburg, Ore.,  received an e-mail order for a large number of roses from a man posing as a reverend. At first, Daniels thought, "Wow, quick money." But when the e-mailer tried to rush the transaction and refused to discuss order details, Daniels got suspicious and called the credit card company to confirm the owner's information. None of it matched.

"I then called the fraud division at the bank and they took the information I had and said they would proceed from there," Daniels says. "I slept very well the next night. I'm a small shop and [that loss] would have devastated my whole operation."

• Last year Vincent Petrovsky, AAF, AIFD, of Heaven & Earth Floral Inc. in West Palm Beach, Fla., received several orders for a $250 fruit basket, $250 flower arrangement and a large plush bear to be delivered to Palm Beach.

"Luckily for me, the credit card was never approved," Petrovsky says. "One can never be too careful and the old adage applies, if it [sounds] too good to be true, it probably is."

• A credit card company recently told Terry Mason of The Master's Flowers in Broken Arrow, Okla., he was liable for a $150 fraudulent order his shop filled last spring. Mason received the wire service order in April from a "customer" in San Francisco. When the order was processed, a salesperson failed to heed a system warning indicating the zip code and address didn't match. After the credit company notified Mason of the fraud, he e-mailed the order recipient, who told him the sender was in South Africa. A week later, however, the shop received another order from the sender. This time Mason knew better. "I contacted our local police department to report the card," he says.

• Kathy Weil at MyFlorist in McLean, Va., says after reading last week's scam story in Wednesday's E-Brief, she received a similar phone call that very afternoon.

"The caller said he was a reverend and wanted to order 1,200 roses for pick up and would e-mail the credit card information to our shop," Weil explains.  "As soon as I heard what was going on with this order, I printed out the [ E-Brief article] and circulated it to the staff. When the email came through we informed this person we were not interested in doing their order and to find another shop. Other shops need to be very aware that this scam is continuing."

oil price forces change to flower flow

Soaring air freight prices this year are hastening a switch to sea transport in what will mark a tipping point for the global cut flower industry, according to the world's biggest rose supplier, Ramakrishna Karuturi.

Bangalore-based Karuturi, who aims to produce 1 billion stems a year by 2010 from his flower growing bases in India, Kenya and Ethiopia, says seaborne exports represent the new reality in the $US30 billion a year global flower trade.

"This is a disruptive element, with the potential to bring cargo costs down by at least 60 percent -- and 40 percent of a rose’s cost is freight," he told The Australian.

The value of a flower begins to wilt as soon as it is cut. Hence, high-value flower exports to key markets in Europe, Japan and the U.S. usually are air freighted to get them into customers’ hands as quickly as possible.

But the spike in oil prices - including aviation fuel - in recent years has accelerated work by flower growers and shipping companies on the seaborne alternative and its associated storage technology.

Karuturi believes the trend to sea freight, using special refrigerated containers where temperature, humidity, and other factors can be remotely monitored, will have a far bigger impact than just a cost saving for shippers.

"It is far more disruptive than just cost. It will lead to a big increase in consumer demand, and it means growers will have to extend the product life by four weeks," he said.

For example, it would mean growers in Africa or Latin America could begin shipping roses to say, Europe and the United States in January, well in advance of the peak sales date of Valentine’s Day on February 14, rather than the air freight rush that now takes place in early February.

"The cost/supply spikes associated with Christmas, Valentine’s Day, Mothers Day, Chinese New Year and Russian Mother’s Day could be a thing of the past," Karuturi said.

According to Karuturi, sea freight for flowers was initiated about eight years ago by a grower in Ecuador, for the U.S. market. Karuturi will ship his own first containers of flowers next month, from India to Singapore, and from his major production bases in Africa to Europe. Shipping roses to Australia is also on his horizon.

"It (sea freight) has been baby steps so far, but now it’s reaching traction." In Karuturi’s view, the trend to sea freight will "decimate" the European business. "Flowers will no longer be expensive," he declares.

The Netherlands has been at the centre of the world’s flower trade for decades, handling imports from growers in Africa and elsewhere, and supplying wholesalers and retailers throughout Europe. Colombia and Ecuador are the big suppliers to the U.S., while China has the largest area under cultivation for floriculture.

But since 2007, when Karuturi bought the Kenya-based Sher Agencies from its Dutch parent for about US$70 million, Karuturi has been the world’s rose king. At the same time he has added a flower business in Ethiopia, built from scratch.

"In terms of size, Kenya is bigger now (about 150 hectares under greenhouse), but Ethiopia is being ramped up and by December this year will be bigger than Kenya," he said.

For Karuturi, Ethiopia offers a better growth outlook than Kenya, where contiguous land is not available. Equally promising because of its proximity to the U.S. market is Latin America, where Ecuador, Colombia or even a greenfield site in Brazil are possibilities for Karuturi.

"We have been seriously looking at Ecuador. We want to offer a better product portfolio and de-risk our business model. Essentially it is a northern hemisphere-southern hemisphere arbitrage play. It is good to broaden the base of our production."

Karuturi, who trained as a mechanical engineer and whose family still has business interests in cables, transmission towers and processed food, insists he is "just a farmer" with a passion for agriculture.

"Five years from now, I hope that roses will only be 25 to 30 percent of our company (Karuturi Global Ltd) revenue."

While roses are ringing up the company’s cash registers – particularly in the fast-growing Indian market – what really excites Karuturi is a US$1 billion agricultural project in Ethiopia, covering a massive 340,000 hectares, where he plans to grow rice, sugar cane, palm oil and vegetables.

"That is the sort of scale you could once only think of getting in Argentina, Brazil or Australia. I couldn’t get that much land in India. But we have obtained the land in Ethiopia on long-term 50-year lease."

Karuturi aims to break ground on October 8 this year. The location is Gambella in the west of Ethiopia close to the south Sudan border, where a tributary of the Blue Nile runs through the land.

"We’ve bought the farm equipment, and lined up agricultural experts from the U.S. and Latin America to guide us in large-scale farming. We will be in production by February 2009, opening 10,000 hectares in the first quarter, and then adding 10,000 hectares a month after that," he said.

Within 14 months Karuturi hopes to have built a sugar mill, rice mill, ethanol processing plant and a palm oil refinery. Initial funding for the project is $US100 million in private equity, $US100 million from Karuturi and US$200 million of debt. In a year’s time, Karuturi plans a second round of funding.

Karuturi says his eventual goal is to create an Asian food multinational along the lines of Cargill, ConAgra and Del Monte. "These are my benchmarks."

But in the meantime, there’s a burgeoning flower demand to meet. India now accounts for less than 20 percent of Karuturi’s flower business, but the rapid growth of the Indian middle class is fast changing that picture. From college kids to middle managers to high-flying CEOs, everyone, it seems, wants to buy roses.

"This year, for Valentine’s Day, we were embarrassed by the demand," Karuturi said. "In fact, it was crazy – we had too many orders. We had to stagger our deliveries from February 14 to 17. In 2009, we’ll be delivering all through the week, not just on February 14.

He notes a growing sophistication in the Indian market; customers want chocolates, bottles of wine or cake to go with their rose orders, spending on average about $40 to $50 in 2008.

It’s not all one-way traffic for this Indian flower grower. Later this month (August) he’ll take delivery of his first batch of Australian flowers – waxflowers and proteas – imported from Craig Musson’s Wafex export business in Western Australia. With their long life, the flowers will retail in India as a premium product, Karuturi says

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billionaire bids for struggling flower firm

Shares in Flying Brands surged by a third today after the troubled flowers and gardening mail order firm received a bid approach from Scottish billionaire Sir Tom Hunter.

Scotland's richest man already owns a 29.9% stake in the Jersey-based firm which said it had received a "very preliminary approach" from West Coast Capital, Hunter's investment vehicle.

"This approach is at a very early stage and there can be no certainty that it will lead to an offer being made for the company," Flying Brands said.

Shares jumped 17.5p to 71.5p on the news, giving the firm a market value of £4.4m.

Hunter bought his stake for 312.5p a share in November 2006. It is understood that he is not prepared to pay a premium for the firm.

The entrepreneur owns two garden centre chains, Wyevale and Blooms, but had to concede defeat in May in his battle with Tesco for control of the Dobbies garden centre business.

A week ago, Flying Brands reported a sharp fall in its first-half profits to £1.2m from £2.7m, with sales down 5% at £18.9m, and the company scrapped its half-year dividend.

It also shut its Greetings Direct business, which it acquired in 2006, after an "extremely disappointing" trial of the loss-making greeting cards business in the US. The company is taking a £1.7m hit from the closure and losses, and has warned this would cut profits by £1.5m this year.

Like many CD and DVD retailers with offshore operations, Flying Brands benefits from a VAT exemption on goods priced below £18 that are imported by individuals into the UK from outside the EU. It is known as "low value consignment relief".

The firm's Flying Flowers business buys flowers from Kenya, South Africa, Colombia and the Netherlands, sells them online and delivers them to people's homes in styroform boxes designed to keep the flowers fresh.

It is the largest flowers-by-post brand in the UK – despatching nearly 1m bouquets a year - but has been hit in the past by postal strikes. Sales fell to £4.8m in the first half, resulting in a £500,000 loss including costs related to a new internet site.

The gardening business, which delivers bedding plants, bird feed and gardening tools, fared somewhat better with sales of £11.2m and profits of £1.6m. The firm also sells audio books and DVDs through mail order.

Founded in 1981, Flying Brands floated on the stock market in 1993. It is now run by Tricia Killen, who took over as chief executive in June after spending 23 years at Reader's Digest.

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successful market launch: pink heaven

Lilium longiflorum Pink Heaven

It had to happen eventually, a coloured trumpet lily. The breakthrough came last year. Since its introduction more than 115,000 stems of ‘Pink Heaven’ have been sold.
White trumpet shaped lilies are the classical ones and are traditionally used for funerals. This is a very limiting image and excellent news that a breeder has at last successfully developed a new colour for this timeless beauty. Finally this longiflorum will have the opportunity to break into a market other than that for funeral flowers.

The breakthrough is there. Sales of the festive ‘Pink Heaven’ grew from 15,000 stems in 2006 to 80,000 stems last year. This year, i.e. up to the end of May, more than 21,000 have been sold. The forecast for 2008 is that this number will increase strongly in response to the subtle colour (dusty pink), the large trumpets and the strong, sweet fragrance so familiar in the white variety.

Lilium longiflorum ‘Pink Heaven’ (VBN product code 27659) was deservedly nominated for the 2008 FloraHolland Cut Flower Award. The cut flower is available virtually al year round.