VBA - Bloemenveiling Aalsmeer

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VBA - Bloemenveiling Aalsmeer

Postbus 1000
Aalsmeer, NL-1430 BA
Netherlands
Telephone: (31 0297) 39 70 00
Fax: (31 0297) 39 00 39
Web site:http://www.vba-aalsmeer.nl

Cooperative
Incorporated: 1911
Employees: 1,991
Sales: EUR 1.75 billion ($2.14 billion) (2006)
NAIC: 424930 Flower, Nursery Stock, and Florists’ Supplies Merchant Wholesalers; 111421 Nursery and Tree Production

VBA - Bloemenveiling Aalsmeer, also known as the Aalsmeer Flower Auction, is the world’s leading flower and plant auction. Through VBA, more than 5.6 billion plants and flowers are sold each year. With the largest single trading facility in the world, at nearly 1 million square meters, the Aalsmeer, Netherlands, facility processes nearly 20 million flowers and more than 2.4 million plants and garden plants each day. VBA uses a clock-based system of descending bids, also known as the Dutch auction, which enables such high-speed, high-volume transactions.

A cooperative counting more than 3,000 flower growers from the Netherlands and from elsewhere around the world, VBA offers both auction services as well as direct sales and intermediation services through its MVA (Marketing & Verkoop Aalsmeer) subsidiary. Flowers remained primarily traded through VBA’s 13 auction clocks, and the cooperative’s five auction rooms account for 89 percent of VBA flower sales. In the potted plants and garden plants categories, MVA generates 55 percent and 48 percent of transactions, respectively. VBA’s range services include handling, logistics and shipping services for the flowers and plants sold at its auctions, including the operations of the Aalsmeer Shuttle, a suspended rail cargo handling system linking the auction house to wholesalers established across the road. The company operates a test center providing inspection, quality assurance, and random testing services.

VBA also sells flowers and plants directly through its Cultra wholesale center, which also stocks packing materials, pots, and other materials and equipment for professional florists. VBA has made significant inroads in expanding its international sales operations. At the midpoint of the first decade of the 2000s, foreign sales accounted for 35 percent of VBA’s flower revenues, and 63 percent and 74 percent of its sales of potted plants and garden plants, respectively. Germany is the most important export market, followed by the United Kingdom and France. With total revenues of EUR 1.75 billion, VBA claims nearly 45 percent of the total Dutch horticultural market.

PROTECTING GROWERS IN THE 19TH CENTURY

The development of agricultural and horticultural auctions in the Netherlands came in large part in response to the increasing urbanization of the country, itself a result of the industrialization of the workplace in the late 19th century. Farmers had traditionally sold their produce directly to customers. Yet the shift of the population away from the agricultural regions forced farmers to turn increasingly to the services of various wholesalers and intermediaries supplying markets and grocers in the larger towns and cities. As farmers became more dependent on wholesalers, they came under increasing pressure to lower their prices. A large part of the problem came from the lack of clarity in the market, as wholesalers negotiated with individual farmers. At the same time, a growing problem came from a number of unscrupulous wholesalers who often failed to pay farmers for their goods.

The creation of growers’ cooperatives and the development of produce auctions allowed farmers to turn the tables, often enabling them to eliminate the middleman to negotiate directly with their end customers. The country’s vegetable farmers were the first to adopt the auction system toward the end of the 1880s. During this period, the farmers adopted a descending bid system, which allowed transactions to proceed rapidly, while guaranteeing a minimum price. While farmers gained a degree of security through the auction system, the buyers also benefitted from the system as well. Among other things, buyers were able to gain a rapid overview of all the produce available, and choose their purchases accordingly. In response, farmers were encouraged to improve the quality of their own produce.

While much of the agricultural sector adopted the auction method by the turn of the 20th century, auctions remained far less common among the country’s flower growers. This changed toward the end of the first decade of the 20th century, as consumer demand for flowers grew. Flower production had also increased rapidly due to the introduction of heated glass greenhouses in the previous century. Flower growers then found themselves in a situation similar to the fruit and vegetable farmers previously, supplying the market through a series of middlemen. By 1899, the first flower auction had been established, at the famed Amsterdam flower market.

In 1911, the flower growers of the Oosteinde area outside of Aalsmeer decided to group together in order to launch their own flower auction. The first of these was held in the Welkom café on December 4, 1911. After testing the idea at several more auctions completed through the end of the year, held at one of the group’s greenhouses, the growers decided to adopt the auction method permanently. The new auction cooperative was given the name of Bloemenlust (loosely translated as “flower desire”), and its members began planning the construction of their first dedicated auction facility. This was completed in April 1912; by the end of the year, the auction had been reformed into a cooperative, with its growers as members. The initial building quickly proved too modest. After a series of expansions to the original facility, the auction moved to a new and larger building across the road from the first in 1922. By 1930, this building, too, underwent its own expansion.

In the meantime, a second flower auction appeared in Aalsmeer, grouping that village’s farmers; despite their close geographic proximity, a gulf remained between the Aalsmeer and Oosteinde religious and social cultures until after the mid-20th century. The Aalsmeer group’s first auction was held in January 1912, also at a café, the Drie Kolommen. This led to the formation of another flower auction cooperative, Central Aalsmeersche Veiling (CAV), that year. By September, CAV had moved into its own permanent facility.

If Bloemenlust focused exclusively on flower auctions, CAV adopted a more diversified approach. In 1917, the Aalsmeer village group began auctioning potted plants for the first time. Although flowers remained the cooperative’s largest activity, the potted plant auctions experienced steady growth. At first housed in the main auction building, the potted plant operation was transferred to its own dedicated building in 1920.

COMPANY PERSPECTIVES

Bloemenveiling Aalsmeer aims to offer the best marketplace experience for growers and buyers of floricultural products. This is achieved by establishing an optimal, coherent and transparent pricing policy regime, and by offering suppliers and buyers the latest, up-to-date logistical facilities. Bloemenveiling Aalsmeer is a cooperative: we work for our members. Profit is not an end in itself. Worldwide, we occupy a prominent position, a position that is strengthened by putting the wishes of our growers and buyers at the centre of our operations, and continuously innovating our service provision and logistical facilities.

In the years leading up to World War II, both Bloemenlust and CAV experienced strong growth. Backed by steady increases in flower production, the auctions helped develop the export market to such countries as Germany, the United Kingdom, and Switzerland, as well as the Scandinavian markets and neighbors Belgium and Luxembourg. Nonetheless, the domestic market, where the per-capita spending on flowers remained among the world’s highest, remained the primary focus of both houses.

MERGER IN 1968

While the export market was largely shut down during World War II, the auction continued to serve domestic demand. In the postwar years, however, growers in the Netherlands launched a massive investment in construction of new greenhouses, a trend that continued through the 1950s and the 1960s. Part of the surge in production came in order to satisfy the surge in demand from the international markets, with Germany emerging as the single-largest export market for Dutch flowers. Over the following decade, the United Kingdom and France, followed by other European markets, became major destinations for the flowers handled by the Dutch auctions.

Both CAV and Bloemenlust continued to expand their facilities in the postwar period. Bloemenlust developed a specialty in the rose and carnation categories, while CAV was especially active in tulips, lilacs, and potted plants. The auctions remained relatively matched in size, posting revenues of the equivalent of EUR 10 million in the 1950s. By the mid-1960s, however, the steady increases in volume passing through both the CAV and the Bloemenlust had placed their existing facilities under strain. Yet CAV, and to a lesser extent Bloemenlust, had reached the limit on extension possibilities at its historic location. Faced with the expense of building entirely new facilities, at new locations, the flower auctions were forced to consider the idea of merging their operations.

Historically, however, the two auctions had clung to their separate cultures and operations. A first glimmer of cooperation had appeared in 1921, when the two auctions agreed to establish the Jaapbollen Bridge as the limit of their respective territories. The prospect of a merger, although briefly discussed as early as 1912, appeared unlikely. The appearance of a new group of greenhouse operators in Aalsmeer’s Rijsenhout district placed further pressure on the existing territorial arrangement between the two groups. At the same time, the Aalsmeer market itself had come under pressure from a growing number of auctions that had sprung up in other parts of the country, challenging the Aalsmeer dominance of the flower market.

In 1964, the two houses turned to the cooperative Raiffeisenbank for mediation. The two houses soon launched discussion of a full-scale merger. By 1967, a proposal had been worked out, calling for the combined house to move to an entirely new facility. Although the benefits of a merger were clear, the measure met with some resistance, and was brought to a vote only in 1968. With a vote of 77 for the merger, the two auctions agreed to combine and form the single Verenigde Bloemenveilingen Aalsmeer (United Flower Auctions Aalsmeer, or VBA).

Construction soon began on a new auction facility in Aalsmeer’s Legmeerdijk. Completed in 1972, the new complex was more than twice the size of both former auction houses, and boasted six clocks in three auction halls, for a total cost of NLG 57 million (equivalent to approximately EUR 26 million). The combined operation of VBA then produced more than NLG 200 million (EUR 100 million) per year, dominating the Dutch market and placing it at the top of the global flower trade.

KEY DATES

1912:: Creation of the Bloemenlust and CAV flower auctions in Aalsmeer, in the Netherlands.
1921:: CAV and Bloemenlust agree to territorial limits.
1968:: CAV and Bloemenlust agree to merge operations, creating VBA.
1972:: Opening of new VBA auction facility in Aalsmeer; VBA is opened to flower growers from European Community.
1980:: Opening of Cultra cash and carry center.
2006:: VBA membership opened to flower growers from outside of European Union.

The huge auction house enabled VBA to grow even more quickly during the 1970s. By mid-decade, the cooperative’s revenues soared past the NLG 500 million (EUR 227 million) mark. By the end of 1982, the cooperative had doubled its revenues again. The cooperative’s explosive growth required it to boost its logistic operations, leading to the development of a stacking cart system, which featured adjustable shelves and permitted significant improvements in both auction and delivery speeds. The carts were initially used to support the plant auctions, after these were brought into the same facility as the flower auctions in 1973. In that year, also, VBA established its direct mediation service, Marketing & Verkoop Aalsmeer (MVA), which started out by serving the plants market.

WORLD LEADER IN THE NEW CENTURY

VBA added its own cash and carry outlet in 1980, called Cultra, which was established in order to serve the local florist and garden center markets. The new wholesale center enabled smaller businesses to bypass the auction process and make their purchases. This in turn benefited the cooperative’s auction operations, which were able to achieve still greater speeds once the smaller lots were removed from the clocks. Before long, Cultra proved an attractive alternative not just to local florists, but to an increasingly national and even international market that preferred to bypass the wholesale distributors in order to choose their flowers and plants directly from VBA.

The expansion of the European market, and the consolidation of the European Union, played an important part in VBA’s growth at the end of the 20th century. VBA had also begun to open its operations to an increasingly international membership, starting with the decision in 1972 to allow flower growers from other European Union members to trade at the auction. The collapse of the Soviet Union and resulting liberalization of the Central and East European regions provided new outlets for VBA’s exports—and later sources of new members following the incorporation of a growing number of former Soviet Bloc countries into the European Union.

Into the 21st century, VBA also faced the growing rivalry in the global flower market from such fast-risers as Israel and Kenya. While the Netherlands remained the clear capital of the international flower trade, with Aalsmeer remaining the world’s leading flower auction, VBA chose to embrace the competition. In 2006, the auction agreed to allow flowers grown outside the European Union to be traded in its auction halls. In order to accommodate the steady increases in volume processed through its site, VBA had steadily upgraded its facility. By 2007, the cooperative facility boasted more than 1 million square meters—making it the world’s largest—with a daily volume of nearly 20 million flowers and 2.4 million plants. VBA, which posted revenues of EUR 1.75 billion in 2006, had firmly established Aalsmeer and the Netherlands as the capital of the world flower trade.

M. L. Cohen

PRINCIPAL DIVISIONS

Cultra; Marketing & Verkoop Aalsmeer.

PRINCIPAL COMPETITORS

Ebro Puleva S.A.; toom Baumarkt GmbH; Atacadao Distribuicao Comercio e Industria Ltda.; EHEV - Entreprise Horticole et Espaces Verts; Bama-Gruppen A/S.