Grocery Chain Cuts Mexico Flower Deal : Merchandising: Lucky Stores has formed joint venture with Garden Grove’s California Floral Distributors to make flower arrangements at a Tecate <i> maquiladora. : </i>

Supermarkets have found that selling cut flowers is a profitable business--so much so that one grocery-store chain has decided to skip the middle man and make bouquets itself.

Lucky Stores, based in Dublin, Calif., has formed a joint venture with California Floral Distributors in Garden Grove to buy flowers directly from growers, then make finished bouquets and arrangements at a maquiladora to open later this year in Tecate, Mexico.

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

California Floral and Lucky’s 20,000-square-foot maquiladora, now under construction 70 miles from San Diego, will employ 65 people when completed and perhaps as many as 100 within a few months, said John O’Connell, president of California Floral Distributors.

Supermarkets, having discovered that flower displays are highly profitable, are devoting increasing amounts of floor space to them. Up to now, most chains have bought bouquets, floral arrangements and stemmed flowers from distributors who deliver them directly to the store.

Lucky, with 420 stores statewide, will become the first grocery chain actually to prepare flower arrangements itself.

“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.”

The cut-flowers market is worth $350 million a year in California. Increasingly, that business is being done through mass merchandisers such as supermarkets rather than at florist shops, said Catherine Miele of the California Cut Flower Commission in Sacramento.

Cut flowers sold at the state’s grocery stores accounted for 42% of total revenue last year, up from 37% in 1981. The rest are sold at retail florist shops.

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

Lucky will not arrange all of its flowers at first but will start out small until it can judge the success of the Tecate operation, O’Connell said. Lucky’s decision to open its own plant in Tecate will not affect growers, he said, who will simply be selling their flowers to the partnership rather than to a distributor.

Half a dozen distributors now sell finished floral goods to Lucky.

Don Beaver, president of California Grocers Assn., a trade group in Sacramento that represents 8,000 grocery stores statewide, acknowledged that flower sales are very profitable.

“Cut flowers is a profit center, and it’s 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 that large grocery-store chains in the past have gone to producing their own dairy products, baked goods, and health and beauty aids “once the volume and profitability is there.”

“This is exactly the next step to go into,” he said, “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 also is an indication of the intense competition among supermarket chains. “There’s lots of money being made off this stuff,” Pruitt said.