On the up & up

State of the Industry Report - Cover story

As sales continue their steady upward trend, confidence in the market is stronger than ever.

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September 30, 2020

Photo © Olha | Adobe stock; Illustration © Good Studio | Adobe stock

As with most things in 2020, Greenhouse Management’s State of the Industry Report looks a little different than it has in past years.

After a bumpy and extremely uncertain start to the year, sales for many skyrocketed after the Easter weekend. Today, confidence in the industry (which had already been on the upswing in recent years) stands at an all-time high.

Five years ago, the number of growers who were ‘confident’ or ‘very confident’ that the industry would grow was only 36%, but that number has grown fairly steadily over the years, hitting 40% in 2018, 59% in 2019 and a whopping 67% this year.

And that’s for good reason. A full 90% of growers expect to turn a profit this year, with nearly two-thirds expecting an increase in net profit over last year.

Looking forward to 2021, vegetable and herb plants will likely be gaining greenhouse real estate following this spring’s high demand for edible plants, along with indoor foliage plants as the houseplant craze continues to gain popularity.

Read on for more insights into the current state of the industry and the changes that came with this year. — Kate Spirgen

About these greenhouses

The data on the following pages was collected via an online survey of more than 120 greenhouse growers in the U.S. and Canada. Everyone surveyed indicated that they are owners, operators or managers of a greenhouse facility.

Responses that do not total 100% are due to rounding and/or no responses.

What they’re growing

The biggest increase we’ve seen this year has been indoor foliage plants, which isn’t surprising considering the emergence of ‘plant parents’ and the rising popularity of houseplants. Succulents, on the other hand, have dropped by 10 percentage points since last year’s report, falling back to the same numbers we saw in 2016 and 2017.

While the number of greenhouses growing annuals/bedding color and perennials hasn’t varied greatly over the past five years or so, cannabis has been steadily growing from just 1% five years ago to 10% today, jumping 6 percentage points this year alone. Cut flowers are also seeing more popularity this year as more growers are now devoting space to them than in the past five years.

Crop production

With the resurgence of interest in vegetable gardening during the COVID-19 outbreak, edibles are in high demand. The number of growers expecting edibles to see the biggest increase in production this year grew by 15 percentage points, while the number expecting to increase production over the next year increased by 14 percentage points since last year’s survey.

Herb plants are seeing a similar rise, with more growers planning to see an increase both in 2020 and in the next 12 months than in the past five years: 14 and 10 percentage points, respectively.

Sales and profits

Confidence in the industry skyrocketed this year as the majority of growers increased prices and overall sales. Looking at the boom in gardening this year, growers are expecting next year to be lucrative as well with 67% either ‘confident’ or ‘very confident’ that the industry will grow next year. In contrast, last year, that number was 59% and two years ago, it was at a mere 40%.
Despite an extremely wet spring in many parts of the country, growers reported that this year, the weather had less impact on sales than it has in years past. Overall, the vast majority of growers said the weather had no impact on their sales, and the number of growers who said weather had a negative impact dropped by 30 percentage points.

Production

More growers than ever are implementing sustainable practices like biocontrols, recycling, composting and water-saving measures. In previous years, about 35% of growers said they had not put any new sustainability measures in place. This year, that number was only 27%, with the biggest increases being in IPM and biocontrols, and composting, both up 8 percentage points from last year.

The lasting impacts of COVID-19

When we first asked growers how COVID-19 was affecting their businesses in March, their outlooks were drastically different than what they are today. While we didn’t see much change in terms of how much of an impact growers felt overall, many more growers are now seeing an increase in sales because of the pandemic. Back in March, only about one-tenth of operations reported an uptick in sales. Today, nearly two-thirds are seeing more sales and the number of growers seeing a decline in sales has dropped 45 percentage points since March.

So while things were looking pretty bleak before Easter, sales and confidence in the industry has rebounded due to improved spring and summer sales.

We asked growers how the COVID-19 pandemic has affected their business or the industry at large. Here’s what they had to say in their own words.

Editor’s note: Responses have been edited for length and clarity.

“COVID, although we were unsure at first, had a significantly positive effect on our business. When paired with the perfect weather (honestly, one of the top spring seasons of my career), it all brought in so many new customers. Sales were unlike anything I have seen, and it didn’t stop. Our summer season was incredible and fall is starting off on the right foot as well.”

“I don’t really know. Easter was a huge loss. Spring was much better. I don’t know what next year will bring.”

“Our customer base was 90% restaurants until COVID. We were forced to reinvent our business model to direct to consumers and to retailers instead. It’s been a challenge!”

“Labor is very difficult to find because of high unemployment wages!”

“COVID-19 has been a game changer. Predictability of the future cycles is unattainable, and it seems it is a big guessing game.”

“Some areas of business like plant rentals and events are greatly impacted, while exterior services are up.”

“People have had more time to take an interest in gardening and I think that this will have a positive effect on future growing seasons.”

“It has forced consumers to spend time in their own home environments and gardens, and the realization of a need for plants, both outdoor and indoor plants, was very well seen during this COVID pandemic.”

“Mail-order and direct-to-consumer orders were up while large public jobs were down. Our number of orders increased while the average size of orders decreased.”

“The margins are too slim for a lot of people to be able to hold on. Those that were on firmer financial footing before the beginning of the year have a better chance of getting through whatever the market has in store for us in the coming two years.”

“The mishmash of laws and statutes across city, state and county borders made for a “hold on to your hats” mode. The biggest wonder is whether or not people will have less money to spend next year and whether we will have the same issues finding help.”

Labor

Spot Illustrations © merfin | Adobe stock