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Presented To : Dr. Manohar Pandit
Case Study Analysis : Are Colombian Flowers Experiencing a
U.S. Drought?
Presented By :
Ms. Chetna Koli (A-07)
Mr. Amit Kadam (A-26)
Mr. Nitin Rathod (A-31)
Mr. Ashish Mishra (A-40)
Mr. Vikas Padwal (A-49)
Mr. Abhishek Belsare (C-01)
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Are Colombian Flowers Experiencing A U.S.
Drought?
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World Flower Market-Flower Industry Overview
Floriculture Item Sales at All Retail Outlets in U.S.
Source-U.S. Bureau ofEconomic Analysis, May 2012
Year Sales
2011 $32.1 billion
2010 $30.5 billion
2009 $29.6 billion
2008 $33.0 billion
2007 $34.6 billion
2006 $33.7 billion
2005 $31.1 billion
2004 $29.4 billion
2003 $28.2 billion
2002 $27.7 billion
2001 $26.7 billion
2000 $25.3 billion
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Where Flowers Come From (2010)
83 % cut-flowers production from :
Holland
Colombia
Ecuador Kenya
73% cut-flowers imported by :
Germany
U.K.
Holland
France
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Flower market trends in U.S.A
Size of the floriculture industry: US$19.4 billion
Specialty-cut flowers increased their share in sales toUS homes.
Ten years ago, half the sales of ornamental productsin supermarkets were flowers, today they representtwo thirds.
Fresh-cut flowers make up 75% of the transactions inflorist shops.
Internet sales of flowers held its participation atbetween 5% and 6% of the number of transactions.
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The Colombian Flower Industry
1,000,000 Colombians depend on floriculture
7,266 hectares
60% of the workforce are women
95% of total production is exported
Colombia is: the first supplier of flowers to the United States
the first supplier of carnations worldwide the second largest flower exporter in the world
75% of air cargo exported from Colombia in the last 10 yearwere flowers
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The Colombian Flower Industry cont
Colombias 2nd leading agro export (cut-flowers),
distributed to 89 countries, makes it number2 exporterworldwide.
Colombian Flower Producers Firms divided in two :
Asocolflores (large exporters)
Fedeflores (medium-to-small sized colombian-ownedfarms)
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Key Local Characteristics For Flower
Industry Development
Ideal Climate
Low-cost Labour
Suitable Transportation
Proximity to U.S. Market
The Colombian entrepreneurship
Abundant water resources
Good air connections
Colombia leveraged the Flower Industry
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Exchange Rate Currency
COP-Colombian Peso
USD-United States Dollar
COP/USD = 1,788.27518
USD/COP = 0.00056
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Colombia
America
Strong Air Connections
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ColombiaUnited States Relations
Mutual cordiality during the 19th and early 20thcenturies.
Key Issues:--Fighting communism
-War on Drugs
-Threat of terrorism
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Timeline Of Colombian Flower
Industry
1960s - Colombia cut flower industry began
1969 - 1st Multinational Columbian CompanyFloramerica
1970s - Colombia quickly grew to be a major exporter of cut
flowers to the US and many other countries
1974 - Colombia accounted for 83% of all imported cut flowers inthe U.S.
1980s -second largest exporter of cut flowers
1991- President Bush Sr. passed the Andean Trade Preference Act(ATPA)
2009 - more than 80% of all cut flower exports to the United States
(U.S.) were from Ecuador or Colombia
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ATPDEA
Andean Trade Promotion and Drug Eradication
Act ,2002
Extension of ATPA, 1991
Help to Bolivia, Ecuador, Peru & Colombia
Elimination of Tariff Duties
Expiry of ATPDEA IN 2011, US importers had to pay 3.2to 7% tax on Colombian flowers
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USAID
U.S. Agency for International Development
Social aid, Funding aid by U.S. to Colombia
Result-
1,72,000 Jobs (92,000 directly associated withfloriculture)
Corporate Responsibility
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US-Colombia
Free Trade Agreement: Allies Get Closer
Free Trade Agreement (FTA)
Eliminating the trade barriers
Colombia will have an upward trend in terms oftrade and investment relations
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Current Challenges For The Flower
Industry
Excess Supply with unmatched Demand
Seasonality of Sales within U.S.
(Mothers Day & Valentines Day)
Distribution Channel (Supermarket Standards& pricing)
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Tools To Navigate The Current Challenges
Relying in intimate knowledge of the Industry
High quality flower industry
Future technological advances
Identify individual firms Strengths andweaknesses(growth potential)
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Supply > Demand
Expanding the Pie
Marketingcampaign
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Understanding U.S. Culture
Top Five Cut Flower, Flowering/Green Plant and
Garden Plant Purchasing Holidays in the U.S.
Christmas/Hannukkah
Mother's Day
Valentine's Day
Easter/Passover
Thanksgiving
Top Five Non-Calendar Occasions to Purchase Cut Flowers,
Flowering/Green Plants and Garden Plants in the U.S.
Home decoration
Birthday
Sympathy
Anniversary
(Source: Ipsos-Insight FloralTrends Consumer Tracking Study, 2005 as cited bySAF, 2005)
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Fedeflores Are To Be Given Attention
Make information accessible to SMEs
Improve financing possibilities for SMEs
Targeted research and training for SMEs
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Potential Market - Europe
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Questioning Sustainability?
Is European market Sustainable?
Swiss spend77(US$112)22(US$ 29) spent by Americans
Check - Flow Route Euro conversion Rate Freight & Tariff
Consider the local and global aspects of each of theseareas
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Conclusion
Global trade is not about protecting selectedgroups of producers but about affordingconsumers choice, quality and price, and it
seems that Colombia's flowers will carry onblooming in the American market andothers too
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