Costa sells majority interest, mental wellness, succulents and check out a show

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News and Inspiration from the world of foliage and tropical plants GrowerTalks MagazineGreen Profit Magazine

Tuesday, August 08, 2017

Debbie Hamrick Subscribe
 
Tropical Topics
COMING UP THIS WEEK:
Costa Sells Majority Interest
What Markel Said
Mental Wellness
Succulent Bouquets
Speaking of Succulents
The Landscape Show

Costa Farms Sells Majority Interest

Big things seem to happen when I leave the country for a little vacation (more on that vacation later). The latest happening was Costa Farms, the world’s largest producer of indoor plants as well as growers of bedding plants, tropicals and landscape materials, selling a majority share of its business to Markel Ventures. Don’t be worried if you’ve never heard of Markel Ventures. That business’s primary undertaking is underwriting specialty insurance products. The Ventures division, however, finds and invests in strong, mid-sized businesses in all sorts of markets, including commercial bakery and food processing, trucking, construction—and now horticulture.

Markel Ventures bought a majority share of Costa’s U.S. and international nursery operations. This doesn’t include the land—and Costa has purchased quite a bit of land and the nurseries on them in recent years. GrowerTalks’ Chris Beytes did the leg work on this reporting while I was chasing leprechauns in Ireland. What follows are the basics of Chris’s conversation with Costa’s CEO Jose “Joche” Smith:

“Joche told me that the family and the company’s board had for some time been considering finding an investment partner to help them continue to grow the business. However, they didn't have any interest in going the venture capital route, with a partner that was only interested in fast returns and a quick flip. Someone mentioned Warren Buffet’s firm, Berkshire Hathaway, as a long-term strategic investor. But some research indicated that Costa was just too small to be of interest to them. But that idea led them to Markel Ventures, which likens itself to Berkshire Hathaway, but on a smaller scale.

“Said Joche, ‘We thought the right thing to do was to partner with somebody that gave us a little bit more liquidity and more options going forward to grow our business. The relationship with this kind of partner is just so unique. It’s nothing like a strategic buyer that comes in and takes over your business. And nothing like a private equity firm, that has a very short horizon and a lot of pressure to get a quick return.’

“The deal with Markel has allowed Costa to eliminate all of their long-term bank debt and provides capital to grow the business in a way that’s more strategic than in the past. He says they’re putting more resources into business development and have made a hire in that capacity.

“’I think we’ll be more methodical and deliberate [in our acquisitions] and not just sort of opportunistic, waiting for those things to fall in our lap,’ said Joche.” 

What Markel Said

Chris interviewed the folks on the other end of the sale, specifically Bruce Kay, managing director of Investor Relations for Markel. In a nutshell, Markel:

  • Looks for companies that have good business models, generate a good return, have great management teams and a proven track record;
  • Doesn’t pretend to know how to run the businesses they invest in but instead provide the capital for these businesses to weather any ups and downs in economic cycles so the company can focus on customers and not put out fires;
  • Is planning to be hands-off and let Costa do Costa.

What is the Smith family planning? They’ll be at this for at least another nine years per the sales agreement. I’m interested in how Costa plans to proceed as far as its own acquisitions now that this investment injection will allow them to be planful. How will this reshape the Florida nursery industry? Stay tuned.  

Mental Wellness

We know plants are good for people. Buy a bouquet of flowers for someone and if it doesn’t make them smile or if it doesn’t touch their soul in some way, you should check for signs of life (or for a rock where their heart should be).

But plants have a positive impact on people in a much deeper way. They impact a person’s mental wellness. And this year, the Garden Media Group is saying that “Nature’s Prescription for Mental Wellness” is impactful enough for it to be the theme for the 17th annual 2018 Garden Trends Report.

Now, I won’t go over each of the report’s seven trends (I am doing that over in my buZZ! e-newsletter), but I will pull out a few points that are relevant to the tropicals/interiorscaping/houseplant industry:

  • “Wellness” has economic chops. The global wellness economy—spas, resorts, workplace wellness programs—reached $3.7 trillion in 2016, and it’s just going to grow. Gardens and nature go a long way to relieve stress and reduce anger. We’re in the right field!
  • With the global climate in flux, corporate interiorscaping and residential in-home plantscapes provide a stable source of “green” and a daily dose of nature—so important for our city dwellers.
  • And of course, interior plants help clean the air. I’m not sure if this indoor plant benefit is one that is getting out onto the public radar as much as it should. With “natural wellness” gaining more relevance each year, you’d think now would be a great time for folks to be receptive to bringing plants into their homes and workplaces to do a job, not just be pretty and green.  

Succulent Bouquets

I mentioned bouquets above, which reminds me about colleague Allison’s recent forays into her favorite store, Target. She’s noticed her local Target is carrying not just bouquets, but bouquets with succulents in them amongst other more traditional cuts.

As you know succulents are everywhere. Succulents as bouquets are not unusual—we spotted them at Cultivate and other shows a year or two ago. But long-lasting succulents tucked in with other items that fade away more quickly—that’s new, or new to me, at least. Do folks pull them out and save them? Or do they chuck the whole lot out?

Allison said with a price of $19.99 they seemed to be moving well, as a new batch were in the store the next time she visited. They aren’t differentiated—as are other items such as LiveTrends products—but are displayed with the rest of the flowers. Her sleuthing powers tell her they come from Encore Floral.  

Speaking of Succulents

Trendy succulents could be as popular internationally as they are Stateside. On my visit to Ireland two weeks ago, I spotted a garden center across from Bunratty Castle and stopped in for a look. Succulents took up a nice chunk of the store’s limited bench space.

Plants—they connect all the peoples of the planet. Pretty cool.  

The Landscape Show

The 2017 edition of FNGLA’s Landscape Show is happening in just over a month. It’ll be held at the Orange County Convention Center's North Concourse in Orlando, Florida, September 14-16.

I have never been to the Landscape Show and realize it’s a show mostly for the landscape and woody ornamental segment of our industry, but I hear good things about the show from all contingents—even you tropicals folks. It’s been redesigned and reimagined over the last year or so and those changes have made a big impact on attendees. And if you think it’s not for you, think again. There’s a session on designing and maintaining vertical gardens, a review of new and new-to-you landscape plants—many of them tropicals—and a bunch of vendors that are right up your alley. Take a day and visit! Need more reasons? Head over to the Landscape Show’s website and take your pick.  

Thanks for letting me in your inbox this week, folks. Much appreciated! Meanwhile, comments, questions, quandries? If so, just drop me a line at ewells@ballpublishing.com.





Ellen Wells
Editor-at-Large
Green Profit


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