Eye of the beholder: Agriflora CEO Alvaro Varela knows that shipping flowers from Colombia to the US market is as much a science as an art

Latin CEO: Executive Strategies for the Americas, May, 2000 by Luis Zalamea

The maxim that beauty lies in the eye of the beholder is especially true in the business of growing, importing and marketing fresh-cut flowers. While the industry might seem glamorous to outsiders, it is actually highly complex and competitive, subject to natural risks, logistical minutia, product perishability and seasonal ups and downs. Compounding its challenges, the business operates in a buyer's market most of the time. No poets need apply as CEOs, only experienced and imaginative marketers.

One such expert is Alvaro Varela, 52, president and CEO of Agriflora Corporation, which ships flowers to the US market from farms in Colombia and Ecuador. Growing steadily for two decades at an average rate of some 19 percent a year, the company now sells US$50 million a year in wholesale flowers, It ranks third among 50 major flower importers in Miami, the principal gateway for floral imports into the US.

Still a family-run company (Varela's two brothers, a daughter and a nephew also work there), its ambitious goal for the next three years is to double in size to revenues of US$ 100 million annually. This will involve new acquisitions of flower farms in Costa Pica, as well as penetration into new US markets via the acquisition of bouquet assembly companies in the Midwest, in the South and on the West Coast. In the Northeast, Agriflora is already active through its subsidiary New England Bouquets, which serves regional supermarket chains.

Part of the reason Varela believes he can successfully double sales is his investment in technology During a tour of the main Agriflora premises--a sprawling 36,000-square-foot headquarters in Miami, with more than 50 employees--Varela explains the process: "The flowers are grown in our farms abroad in plastic hothouses in ideal conditions of altitude, temperature and moisture. They are harvested, [de]hydrated, cooled, classified and packaged in boxes for the three-to four-hour flight to Miami, made at night for lower temperatures, because this is the only unrefrigerated part of the process."

On arrival, the flowers are inspected by the US Customs Service and carrier airlines, then brought to Agriflora's warehouse for re-hydration, refrigeration and re-shipment. The inventory remains in Miami only 24 to 72 hours. "This means we can deliver on our overriding motto: freshness guaranteed," says Varela, ever the marketer. Particularly impressive is the quality-control section, where blossoms and stems are chosen at random and inspected. If they show flaws of any type, they are immediately photographed in color for e-mailing to the farm of origin for corrective action. This is followed up by phone and fax reports. In addition, a computerized system with up-to-the-minute inventory services some 600 wholesale customers in the US and Canada.

A native of Bogota, Varela came to the flower business after an extensive career in advertising and marketing, including seven years with pharmaceutical company Merck Sharp and Dhome International -- first as marketing manager for Central America, then for Brazil. In 1979, still only 33, Varela found a perfect match for his marketing savvy: the budding business of importing flowers from Colombia, then in its infancy. After a year's stint at a small importing firm to learn the business, Varela and his brother Mario (now in the seafood business) invested US$50,000 to incorporate Agriflora.

The firm was originally located in a small warehouse near Miami International Airport, which now houses just the kitchen for the main plant. Nearby in an even more modern 44,000-square-foot facility, 30 additional employees are busy at two subsidiaries created in 1987 to diversify sales: Emerald Farms Inc., which services the wholesale flower trade, and Emerald Bouquets, which assembles bouquets for supermarket chains.

At its inception, Agriflora had to buy from independent growers in Colombia who had no marketing capabilities in the US. As profits started to increase, Varela re-invested US$15 million over two decades to acquire farms -- first six in Colombia, and later four in Ecuador. Now the company grows 60 percent of its product line, mostly different species of roses, carnations, "filler flowers," and new varieties of exotic flowers selected from European and US breeders.

As an industry, importing flowers from Latin America to the US shows nothing but promise, and few of its old stigmas. Varela recalls that, back in the 1980s, shipments of flowers from Colombia were so commonly used to smuggle illegal drugs that Colombian airline Avianca stopped carrying flowers altogether. "Fortunately," he says, "highly sophisticated X-ray equipment used now by Customs and the airlines at both ends have solved this problem for good."

Today flowers are big business in the US, with US$2 billion in wholesale and US$15 billion in retail sales annually Almost all -- about 97 percent -- imported flowers (which supply two-thirds of the US market) come through Miami. They are grown mostly in Latin America -- especially in Colombia, Ecuador and Costa Rica. The biggest markets for Agriflora are New York, Pennsylvania, Connecticut, Maryland, Massachusetts, Kansas, Missouri and Texas. Its most important clients are major wholesalers and large supermarket and retail chains.