The state of ornamental horticulture in Germany

Figures released by market analyst Agrarmarkt Informations-Gesellschaft (AMI) and Close to Green, the trade publication of the German Association of floral wholesalers and flower importers (BGI), reveal that in the first nine months of 2023, the combined cut flower, houseplant, garden plant, potted herbs, and nursery stock market in Germany stood at an estimated €8.6 billion. This market value is below the pandemic value of 9 billion and down 3.5 per cent from €8.9 billion in 2022.

Cut flowers accounted for the largest share (35 per cent) in 2023, followed by bedding/patio plants (20 per cent), fruit trees and woody plants (16 per cent), flowering houseplants (11 per cent), green foliage houseplants (six per cent), perennials (six per cent), bulbs (three per cent), potted herbs (three per cent). With the exception of potted herbs – increasingly added to dishes, cocktails and green smoothies – sales values were down across all categories.

Recovery slower than hoped

Last month, Germany’s Minister for Economy and Climate Protection, Robert Habeck, said that the country was slashing its 2024 growth forecast to just 0.2 per cent, down from a 1.3 per cent estimate made earlier. It’s a sign that the country’s economic recovery is slower than hoped, undermined by market volatility, the global rise of authoritarianism, and a sputtering world trade alongside high interest and inflation rates.

All factors that negatively impact many sectors of the economy and ornamental horticulture in Germany are no different.
Though energy costs and inflation are slightly falling, many German growers continue to be on edge because of hampering consumer demand and confidence.

In 2023, the houseplant market faced a decline, with a market value standing at €1.5 billion.

Spending habits

In terms of spending habits, the national spending on flowers and plants per capita was €102 in 2023, down from €107 in 2022 and down from €108 in the pre-corona year 2019. This calculation is done by dividing the €8.6 billion market value by Germany’s total population of 84.5 million people (Federal Statistics Office Destatis) in June 2023.

However, the €102 figure needs adjusting. In 2023, net immigration – representing the balance between arrivals and departures – has remained the sole driver of population growth. But 0.3 million more people in 2023 within Germany’s borders than in 2022 does not automatically mean higher expenditures on flowers and plants, considering that the basic subsistence allowances or low-pay immigrants receive do not leave much room for the purchase of luxury items such as ornamentals.

Decrease in exports to Germany from the Netherlands

The latest export statistics released by Dutch industry body VGB and market analyst Floridata at the start of this year (2024) reflect this narrative. They showed that exports of flowers and plants to Germany increased in 2020 and in 2021. In 2022, they remained strong but were down slightly compared to 2021.

Then, in 2023, they fell by 2.3 per cent – from €1,767m in 2022 to €1,709m in 2023. This compares to an overall 4 per cent decrease in exports from the Netherlands to its key export countries. Yet, compared to the dramatic 7 and 10 per cent drop in exports to the UK and France respectively, Germany did not perform as badly.

Regardless of the importance and relevance of flowers and plants, the pertinent question is as to whether consumers can afford flowers, plants and other horticultural products in times of inflation, gloom and doom, and crisis.

According to the German Institute for Economic and Social Research (WSI), Germans’ purchasing power is declining despite rising wages. Average wage increases of 5.6 per cent in the first half of 2023 were offset by price rises of 7.4 per cent for consumers. The result is a decline in average real wages in Germany.

Today, inflation in Germany is slightly receding, and the salaries of employees are rising more than consumer prices. According to data from the Federal Statistical Office, the inflation rate in November 2023 fell to 3.2 per cent – the lowest since July 2021.

‘Shrinkflation’ in plants

Interestingly, when analysing the primrose market in 2023, AMI found that ‘shrinkflation’ – a form of inflation that consists of reducing a product’s size while maintaining its retail price – is not only the exclusive domain for food and beverage but also applies to ornamental plants.

In the early weeks of 2023, AMI began putting primrose sales at food retailers and discounters under scrutiny. Primroses herald the arrival of spring, with sales peaking between January and April when they provide colour and cheerfulness in the early, still dark months of the new year.

2022 marked a memorable year for the primrose industry when, after the gloom and doom of the coronavirus, life more or less snapped back to pre-pandemic levels. Sales of the boldly coloured and soul-soothing primroses went through the roof.

In 2023, when economic indicators signalled a very challenging year, demand for primroses again was buoyant. Many growers were satisfied with sales, although a price analysis for primroses between 2019 – 2023 indicated a shift towards smaller pots.

To compensate for the increased production costs, apparently, there had been a ‘downsizing’ of products while maintaining the retail price; in other words, ‘shrinkflation’ also hit the flowers and plants bought in various sales outlets.

While in 2022, the trend was towards buying flowers locally, the market returned almost back to normal in 2023, with imported flowers dominating the supply chain.

Mixed weather conditions

Mixed conditions brought a wet spring, warm summer, the warmest September month on record and a relatively overcast October for Germany. A lack of spring sunshine hammered outdoor plant sales. In March, the weather wasn’t encouraging shoppers to get outside to garden just yet.

In fact, the small upward trend in houseplant sales for that month indicates that people spent more time indoors.

Cut flowers

In 2023, Germany’s cut flower market stood at €3bn, down 3 per cent from the previous year.

While in 2022, the trend was towards buying flowers locally, the market returned almost back to normal in 2023, with imported flowers dominating the supply chain.

In 2023, Germany was again one of the world’s largest importers of cut flowers. The most significant supplier was the Netherlands, with almost 85 per cent of the total. According to Germany’s federal statistical office, the Netherlands was followed at some distance by Italy, Kenya, Ethiopia, Costa Rica and Israel.

Houseplants

During the pandemic, the houseplant industry had two very unusual years with crazy trading in tropical foliage plants and flowering houseplants.

In 2023, the houseplant market faced a decline, with a market value standing at €1.5 billion. With an almost five per cent contraction from 2022, sales of tropical foliage plants fell more than sales of flowering houseplants, down three per cent.

However, in a pre-pandemic comparison, foliage houseplants benefited from the increased attention they gained during the pandemic. At €0.5 billion (based on retail prices), they performed almost 11 per cent better than before the pandemic in 2019.

Bedding and patio plants

In the umbrella category, garden plants, bedding and patio plants remain the most important individual segment, standing at €1.7 billion and accounting for 20 per cent of the total market.

Unseasonably cold and wet weather in spring impacted sales, with customers hardly in a buying mood, which reduced earnings by five per cent in the year-on-year comparison up to and including September 2022.

Woody plants make up the second most important segment within the garden plant category, with a share of 16 per cent or just under €1.4 billion (based on retail prices). This segment remained around three per cent below the previous year’s result. Perennials, with six per cent of the total market or €0.6 billion (based on retail prices), suffered a drop of around four per cent. Flower bulbs, which account for three per cent of the total market, dropped around five per cent in the year-on-year comparison.

The tree market continues to BE buoyant

A summer 2023 study by the tree nursery associations of Schleswig-Holstein and North Rhine-Westphalia found that the strong demand, as seen during the pandemic, has subsided.

Despite a challenging business environment, the horticultural market proved to be relatively stable compared to other industries. The predicted declines have not been as severe as feared.

This suggests a combination of growing interest in gardening and greenery in general, as well as an increasing awareness of the importance of nature and green spaces for health and well-being.

The study entitled “Gardening and Living Green – Prospects until 2030” (Branchen-REPORT Garden-Living, Gardening und Lebendes Grün – Perspektiven bis 2030) sees much potential growth for the horticultural market.

The report’s best-case scenario predicts a significantly better development than the long-term trend. According to the report, a growth potential of around 21 per cent to EUR 17.7 billion by 2030 is possible if the most popular communication and information sources of the target group continue to be used and consumers continue to be enthusiastic about flowers and plants.

Production area

Although the number of businesses has been dropping considerably for many years, the average size of the businesses has greatly increased.
Furthermore, the latest figures from the German government’s farming statistics (as published in AIPH’s International Statistics Flowers & Plants) show that 6,263ha of flowers and plants were grown under protection and in the open field in Germany in 2021 compared to 6,588 ha in 2017. The area down to nursery stock production was 7,235ha in 2021.

According to the AIPH Yearbook, in 2021, about 3,123 main or part-time businesses worked in areas with cut flowers and pot plants in Germany.

This article was first published in the March 2024 issue of FloraCulture International.