Industry profitability has been eroded over the past five years by price competition from supermarkets.
Melbourne, Australia (PRWEB) April 18, 2015
Operators in the Floriculture Production industry in Australia have struggled against adverse trading conditions over the past five years. It has faced stagnant demand for flowers by Australian consumers, rising import penetration and dwindling export earnings. According to IBISWorld industry analyst Anthony Kelly, “Cut flowers are considered discretionary spending, and traditional flower arrangements may be readily substituted with other products such as chocolates, gift vouchers and charity donations.” The industry is projected to generate revenue of $388.0 million in 2014-15, down by 0.6% on the previous year due to the deterioration in consumer sentiment and the continued decline in sales to the Flower Retailing industry.
Over the five years through 2014-15, industry revenue is projected to decline by an annualised 2.1%, corresponding with the deterioration of domestic demand conditions in the aftermath of the global financial crisis and heightened import competition. Import penetration has doubled as a share of domestic demand over the past five years to total 9.2%, while industry export earnings contribute less than 2.0% of industry revenue in 2014-15. “Supermarkets and convenience stores have been expanding their sales of cut flowers and seeds, which has had a mixed impact on the industry,” says Kelly. It has increased consumers' exposure to flowers, but has also fuelled intense price competition. Industry profitability has been eroded over the past five years by price competition from supermarkets, rising production costs and the inflow of cheaper imports from low-cost producers. The industry displays a low level of market share concentration.
The Floriculture Production industry's prospects are forecast to improve marginally over the next five years, supported by stronger household consumption and consumer sentiment, and broader consumer exposure to flowers and foliage displays through supermarket chains. There may also be improved opportunities for growers researching and developing new flower varieties.
For more information, visit IBISWorld’s Floriculture Production industry in Australia report page.
Companies in the industry grow or produce cut flowers, foliage and seeds, either outdoors or in greenhouses, cold frames, cloth or lath houses.
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