Flower Trade Lures Lucky to Mexico Site : Joint venture: Supermarket chain to buy flowers directly from growers and then make finished products at a <i> maquiladora</i> in Tecate.

Supermarkets have found that selling cut flowers is a big and profitable business, so big that, for Lucky Stores at least, it makes sense to wholesale and “manufacture” the finished commodity--bouquets and other arrangements--itself instead of buying the flowers from wholesalers.

Dublin-based Lucky and California Floral Distributors of Garden Grove, heretofore one of Lucky’s largest wholesale suppliers, have formed a joint venture to buy flowers directly from growers and then make finished cut-flower products at a maquiladora in Tecate to open later this year.

Maquiladora s are foreign-owned plants operated in Mexico that take advantage of low-cost labor to make goods destined principally for the U.S. market.

Lucky’s 20,000-square-foot maquiladora is under construction in Tecate, 70 miles from San Diego, and will employ 65 people when completed. But the payroll could grow to 100 over the space of a few months, said John O’Connell, president of California Floral Distributors, Lucky’s partner in the venture.

Attracted by high profits, supermarkets have been devoting increasing amounts of floor space to flower displays in recent years. Up to now, most supermarkets have bought the floral bouquets, arrangements and stemmed flowers from distributors who deliver the flowers to supermarkets’ doors.

Lucky, with 420 stores statewide, will become the first chain to actually prepare and manufacture flower bouquets and arrangements itself, instead of simply buying them from wholesalers, distributors and other middlemen.

“Lucky will have its own private-label roses to go along with baked goods and milk,” O’Connell said. “They are going to try to do their own conditioning and packaging (of flowers) as opposed to buying them packaged and conditioned from someone else.”

Cut flowers are a $350-million business in California, and more and more of that business is being sold through mass merchandisers such as supermarkets and less through specialty florist shops, said Catherine Miele of the California Cut Flower Commission in Sacramento.

The percentage of total cut flowers sold at the state’s grocery stores increased to 42% last year, up from 37% in 1981. The rest are sold at retail florist shops.

Vons, an Arcadia-based chain with 342 stores in California and Nevada, plans to have between 150 and 170 full-service floral shops operating within their stores by the end of this year, up from 100 at the end of 1991 and only 50 at the end of 1990. Each full-service floral center in Vons is staffed by a full-time florist.

Lucky won’t make all its flowers at first but will start out small and grow larger, depending on the success of the Tecate operation, O’Connell said. He insisted that Lucky’s decision to open its own plant in Tecate will have no impact on growers in San Diego County and elsewhere in the state. Lucky will simply start buying some of its flowers directly from growers instead of using a middleman.

For the time being, Lucky will continue to buy some of its cut flowers from wholesalers. Lucky executives did not return phone calls to explain their plans.

Of the six or seven floral distributors that up to now have sold finished floral goods to Lucky, several are said to be worried about their future. Such is the power of Lucky as a customer, however, that three floral distributors contacted declined to comment for the record. They were reluctant to have even the names of their companies printed.

Don Beaver, president of California Grocers Assn., a Sacramento-based trade group that represents 8,000 grocery stores statewide, acknowledged that flowers are viewed as a very profitable segment of business.

“Cut flowers is a profit center, and it is a growing one,” Beaver said. “The industry has found that if you can put flowers where the shopper traffic is, people will buy flowers. They see them, they are reminded of them and they will buy them.”

Beaver said large grocery chains have in the past gone to producing their own milk, baked goods and health and beauty aids “once the volume and profitability is there.”

“This is exactly the next step to go into: your own direct buying and merchandising of the products by the store’s own personnel instead of having an outside organization doing the buying and distribution.”

Dave Pruitt of Seacoast Greenhouses in Leucadia, a flower grower and distributor, said Lucky’s move is also an indication of the intense competition among the chains. “There’s lots of money being made off this stuff,” he said.