Dole, Sunkist Test Power of Flower Branding
Two companies known for pineapples and oranges are moving beyond the produce bins to the floral departments of grocery stores.
In doing so, Dole Food Co. and Sunkist Growers Inc. are testing the power of familiar brands in a $15-billion business dominated by flowers without a strong name identity.
Dole and Sunkist both are experienced in selling and distributing perishable products, have strong brand recognition with consumers and bring to the market existing relationships with supermarket chains.
These consumer brand giants are poised to significantly boost sales. Although the United States is the largest market worldwide for fresh flowers, it ranks 13th in per capita consumption--just behind Slovenia.
But Dole and Sunkist face risks. If the quality and freshness of their floral bouquets suffer--something not entirely within their control--the reputations of their overall brand names could as well.
Floral industry surveys show that Americans limit their purchases because they consider fresh flowers a poor value--too expensive and not long-lasting enough.
So, flowers with the Sunkist name will come with a seven-day replacement guarantee, and packaging is stamped with a sell-by date, like milk. Dole is timing its delivery schedules to supermarkets so that its flowers never sit on supermarket shelves for more than two or three days.
Such guarantees are new to the supermarket industry and are generally not offered in the flower industry.
No company has successfully introduced branded flowers to supermarkets and mass merchandisers before, according to Brad Cohen, industry analyst with New York-based brokerage Sands Bros. & Co. In the mid-1980s, Westlake Village-based Dole briefly tested sales of Hawaiian-grown flowers in the Northwest market, but abandoned the program.
Supermarkets in Southern California wouldn’t discuss Dole or Sunkist flowers when contacted. The majority of Ralphs flowers are sold under its own store label, Forget me Not. Albertson’s, which sells generic flowers, is considering a private-label brand, said spokeswoman Anne Alenskis. At Vons, flowers are not branded.
The branding approach is being pushed across the nation. A test of Sunkist-brand bouquets started in March in Florida stores, which the company declined to name. Dole is working with Dominick’s, a unit of Safeway Inc., in the Chicago area to fine-tune delivery and display of flowers in advance of introducing brand-name bouquets.
The move into branding is part of a larger trend of consolidation in the highly fragmented floral business, one of the last still dominated by mom-and-pop businesses and with few national brand names.
Dole and Washington-based U.S.A. Floral Products Inc., a flower wholesaler that has licensed the Sunkist name, are buying up growers, importers, wholesalers and bouquet makers--consolidating what insiders say is a diffuse distribution system. The companies have been able to trim costs and the time it takes to get flowers to market--factors essential to the potential success of their Dole and Sunkist brands.
But the moves come amid heightening competition in the industry, as part of a retail trend that has emphasized consumer lifestyle products.
Ft. Lauderdale-based Gerald Stevens Inc., led by former Blockbuster Video executives, was formed last October and is buying up florists with the goal of building a 1,300-store national floral chain in five years. Gerald Stevens also seeks to create an Internet and phone-order business.
Another competitor is 1-800-Flowers, a New York-based floral chain founded in the 1980s that owns or franchises 150 stores and has links with 2,000 independents through its toll-free telephone number and Internet Web site.
And, of course, there are the 40,000 independent florists. While some florists will choose to sell out or close their doors rather than compete, others will benefit from the increased awareness of flowers generated by the increased advertising, industry insiders said.
Although supermarkets offer consumers a convenient place to shop for flowers, one big hurdle facing Van Nuys-based Sunkist and Dole is that they must rely on supermarket employees to properly maintain flowers and remove old bouquets from the shelves. Dole and Sunkist are training supermarket employees on flower-handling.
The other challenge for these floral marketers is getting Americans to think of flowers as an everyday item for their homes, not just as something to buy as a gift or for such holidays as Mother’s Day, the second-biggest sales period next to Christmas.
To nudge shoppers in this direction, Sunkist bouquets come in colors keyed to interior design trends. Dole has been testing a program of three-bunches-for-$10 at a Chicago supermarket chain, packaging the flowers by color so consumers can customize their selections.
So far, U.S.A. Floral, with the Sunkist brand, is further ahead than Dole, which is still focused on improving its product and determining what programs will work best for supermarkets. U.S.A. Floral expects to roll out Sunkist flowers nationally later this year. Dole plans to introduce its brand in early 2000.
They are planning to ramp up advertising, which should be a boost for the entire industry, a light advertiser given its size. Total flower advertising runs less than $100 million, a drop in the bucket for a $15-billion business.
“Everybody that has gotten into the business in the last 20 years has had high ambitions,” said Jim McCann, chief executive and founder of 1-800-Flowers. “If some of them spend money on marketing, it would be good for the whole category.”
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Flower Power
Annual sales of all fresh floral products--cut flowers and potted and bedding plants--in billions. Cut flowers account for about 40% of sales.
Growing Sales
1998: $14.6 billion
Petal Pushers
Where fresh floral products are purchased, in percentage of transactions and sales.
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% trans % trans % $ value Retailer (all floral) (cut flowers) (all floral) Florist shops 12% 35% 33% Supermarkets 22 41 14 Toll-free numbers 1 2 3 Garden centers 20 2 22 Discount chains 14 3 7 Department stores 5 2 2 Home improvement 12 0 8 chains Mail-order catalogs 2 1 3 Other 12 14 8
% $ value Retailer (cut flowers) Florist shops 64% Supermarkets 19 Toll-free numbers 5 Garden centers 2 Discount chains 1 Department stores 1 Home improvement 0 chains Mail-order catalogs 0 Other 8
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Sources: American Floral Endowment Consumer Tracking Study, 1997-98, Gerald Stevens Inc.
