A worker at Oserian Flower Farm packs a Bouquet of roses for export. Photo/FILE
Kenya’s leading flower firm, Oserian has struck a strategic alliance deal with a Dutch horticultural company, a move that is expected to spark fresh rivalry in the sector.
In a deal announced yesterday, Oserian — through its Mavuno Network of operations — said it has consolidated its operations with Dutch Flowers Group (DFG) so as to boost efficiency.
“The strategic alliance will strengthen both companies and result in more sustainable consumer value to the retail sector from source to consumer,” the firms said in a joint statement.
Industry analysts said the consolidation of businesses by Mavuno Network and DFG signalled attempts by firms to maximise on returns amid growing competition and cost pressures that continue to erode earnings of most horticultural companies.
“The two partners are multinationals and they certainly face different challenges in the various markets they operate in. They are trying to build on each other’s strengths so that they emerge stronger and more competitive ,” Jane Ngige, CEO, Kenya Flower Council said.
Analysts said Oserian’s move is in step with fresh trends in the international scene where multinational firms are striving to create higher efficiencies through economies of scale.
As part of the deal, Mavuno Network will from May 1st cede the operations of four of its subsidiaries—Bloom, Fast Track Flowers, Airflo and World Flowers— to DFG.
“Mavuno Network will focus on production, new product development and joint marketing with Dutch Flowers,” the two firms said. “This will also ensure that Dutch Flower Group maintains the most important place among global players, with procurement offices in all main production locations in addition to Kenya, the statement read.”
Recently two other multinationals in Kenya’s horticulture sector—Homegrown and James Finlays— merged their operations following a buy-out deal that saw Homegrown’s mother company — Flamingo Holdings — bought out by James Finlays Limited as the latter strives to firm its grips on cut flower and vegetable sales worldwide.
Under pressure
Prior to the merger, Homegrown’s business in Kenya had been under pressure shackled by rising infrastructure, power and labour costs.
Experts say the mergers in the horticultural sector will help cut-back on rising costs and boost competitiveness.
The Mavuno Network has seven units including Kenyan-based Oserian and Airflo that focus on flower production and air and sea freight services respectively.
The group with a presence in 60 markets also has in its fold UK-based World Flower and Fast Track Flowers that distribute ready flowers to consumers in the US and UK.
The association also comprises of Netherlands-based East Africa Flowers which serves as its administrative unit that handles logistics and order fulfilment.
Other Dutch-based units of Mavuno are Bloom which directly sells ready flowers to retailers in Europe and the Tele Flower Auction which runs an online auction system, enabling growers to and buyers to set order volumes and prices.
DFG said its alliance will grow its turnover to an estimated Sh113.4 billion this year compared to Sh93.8 billion realised in 2010.
The entry of DFG in the Kenyan scene also signals growing confidence in the local horticulture sector which earned Sh78 billion in foreign exchange in 2010 compared to the Sh71.6 billion realised the previous year.
Horticulture exporters are optimistic of a good performance this year.
