Rare Plants and Market Economics

For Brian Williams? Plants are a way of life. My dad has always been into plants. And he started the nursery. out of our backyard when I was a kid. I kinda grew up playing in the backyard jungle with all these tropicals and stuff. Today, he runs a business called Brian's Botanicals with his wife Sarah. They sell rare houseplants, over the internet and out of their store in Louisville, Kentucky. and they're constantly on the hunt for new and unusual plant breeds. I remember I bred this new one called Callcasia Redemption and We were walking out through the field and they were only maybe a foot tall. And all of a sudden there's a big giant pink star burst in the center of a black leaf and you run around thinking you're gonna be a millionaire. The Williamses have good reason to believe there's big money in houseplants. According to the National Gardening Association, Sales of indoor plants and accessories nearly doubled between 2019 and 2021. Plants are now a $2 billion year industry. According to big shots in the plant world Competition to breed the next big thing? Has never been more intense. Some of the breeders when they come out with a new plant and they bring it to one of the local shows. You know, they may be selling it for ten or fifteen thousand dollars because this is the only one of that plant in existence right now. Economics Radio Network, this is the Economics of Everyday Things. I'm Zachary Crockett. Today, house plants. Keeping plants inside the home is an idea that goes back at least a few hundred years. During the Victorian era, the bourgeoisie turned their living quarters into veritable jungles of ferns and parlor palms. The fad cooled in the early 20th century. picked up again during and after World War II. When houseplant propagation was streamlined and offices were designed to look more homey. The hippie and environmental movements in the 1960s and 70s helped popularize indoor foliage even more. But houseplants only became a serious commercial product in the past few decades. And that's largely thanks to one company. Or a family run farm. We're a little bit on the big side. That's Justin Hancock. He's the director of research and development at Costa Farms. You've probably encountered their house plants, even if you don't know it. Three of our biggest customers are Lowe's Home Depot Walmart. But you can certainly find Costa Farms plants at places like Ikea and Costco, as well as a large number of grocery stores and independent garden centers. Costa is one of the biggest houseplant growers in the world, with more than 5,200 acres of land across Florida, North and South Carolina, and the Dominican Republic. Their aim is to make houseplants affordable for everyone. but it's a pursuit that has earned them a few unfriendly nicknames in the plant community. The puppy mill of houseplant growers. Jeez, that's pretty brutal. Company sells hundreds of plant varieties. The Costa Farms house plant portfolio is kind of split into two camps. You've got the tried and true that we've been growing for decades. Golden pothos. partly philodendron snake plant. And then you've got the brand new things. Zamio Colcus, it's a really cool plant from Africa. almost looks like it's plastic. It has these thick rubbery leaflets. And you know, and so it brings this, hey, this is a plant you practically can't kill. And it's stylish at the same time. Costa employs an in-house plant hunter named Mike Rimlin. He travels the world in search of exotic plants that will grow well. And have mass appeal. We don't harvest plants from the wild. We work with other growers, we work with backyard breeders. You know, we go to plant markets. trade shows wherever there's the possibility of finding something new. When Mike Rimland finds a new species with potential He brings back something called a mother plant, or a stock plant. Casta uses it to propagate hundreds of others just like it. One of the most important things the company looks for in a new plant is domestic durability. It has to grow well in the average home. If you can't grow it successfully, then there's no point in us bringing it to market. To test plants for hardiness, Costa sometimes puts them in the actual homes of Costa employees. We have different house types we test them in, and then Mike also has what he calls the closet test. where he will put it in an air conditioned closet for two weeks. And not do a single thing to it. and then observe it how it comes out. And you know, that's a good indicator of, hey. You know, this may not do well in the average home. if it can't hold up to This little bit of no light and infrequent watering. Sort of putting it in a torture chamber. Exactly. Don't necessarily love that terminology, but it's accurate. Once a plant survives the closet torture, It also has to stand up to shipping conditions. Custis plants travel long distances in trucks, from the farms to store shelves. And then it has to hold up at retail long enough to have a chance to buy it. So once a a plant makes it through all of those tests and we say, Okay, this is gonna be a good one. Then we go through market tests to make sure it's actually going to sell. Before we start bulking up numbers. Costa sells its plants wholesale to nurseries and big box retailers. After all that work is said and done. You can find one of their snake plants or ferns. for around 2 to 30 bucks. For certain plants, Costa won't even turn a profit. Some of these plants it costs us more. to be able to grow it than the wholesale price that we sell it for. but they're essentially subsidized by other plants that grow faster and can make up for them. It tends to be certain hanging basket varieties, especially uh Hoyas. that fall into that category where it's just impossible to be able to grow it. at the price that the retailer wants to be able to retail it at. Why even sell them then? It gives people a reason to go to the stores and look. You know, with plant enthusiasts. They talk about like the thrill of the hunt. About going to the store and what am I gonna find this time? There's little bit of magic. During the pandemic, when everyone was stuck at home. People sought out that magic. In the past few years, houseplants have seen an enormous influx of new customers. particularly young people. A wave of plant influencers on social media are driving trends. And rare plants? The ones you can't find at home depot? are getting more attention than ever. This is the biggest plant boon that anyone's ever seen. That's coming up. Brian Williams has been running Brian's Botanicals for 25 years. But in recent times. He's noticed a shift in the market. It's one thing when people come in and they're like, I want a houseplant. But it's another thing when some young girl come in and she's like, I want a Refidophora tetrosperma. Williams and his wife Sarah have leaned into this demand by specializing in rare plants. The stuff that's not on the mass market. So we have Alakasia Kaching mass. Can a Maui punch? Alacasia bikini teeny. Policasian Redemption. Policia Black Ripple. Our new one we released today, Call Acadia Cleopatra's Kiss. A lot of our customers want the newest thing. They don't wanna find their plants at Home Depot or Lowe's. They want something different. Finding these new plants can be a bit of a journey. When Brian was first coming up in the plant world, The older folks in the business would tell him wild stories. Trudging through jungles in the 1970s and 80s. I mean, that's the glory days of plant collecting. You could just go to about any country and my friend would take, you know, four suitcases and When they left, they would leave all their clothes with the locals and everything, just what they had on their back, and then fill it with plants. and then take them back and put them in their collections. And that's how it normally was for many years, but Restrictions of bringing stuff in and bugs and everything has changed that. These days, the process is less Indiana Jones and more science nerd. Brian frequents botanical gardens, reserves, and nurseries. Sometimes abroad, sometimes in the US. He looks for species with certain characteristics he likes. Then, he takes them home and cross-pollinates them, in the hopes of creating a new superbreed that the world has never seen. I mean it's basically plant sex. It's a numbers game and it's just a lot of trial and error to see what you're gonna get. Some plants will take me uh Two to twelve years to breed. So it's just a whole process of getting the right genetic material to the point where I like it. You definitely need to know what's out there and then You also have to kinda be imaginative enough to figure out what the market needs even if they don't know they need it. When Brian thinks he's got the next big thing He applies for a plant patent. An intellectual property right that protects new varieties. This can cost $4,000 to $8,000 per plant. And it's a gamble. Will you put all our work in up front? And it works or it doesn't work. So we don't get paid until the back end when the other people actually purchase. the plants to grow themselves. When all goes well, the payoff can be worth it. Because in its early days, a new houseplant can fetch big bucks. There was a plant called Spirit of Sanctie. I mean, I was after this plant for ten, twenty years. It's a philodendron that was found on one farm in Brazil. It has a long, narrow leaf looks like a sword. that hangs down and it's maybe about three to four feet long. I think at one point those plants were selling for $22,000. A relatively new trend in houseplant science has threatened the lucrative nature of rare plants. It's a process call tissue culture. And it's kind of like a cheat code for propagating plants at scale. Tissue culture is a process where you can take a small piece of plant material. and you hit it with different hormones. and the hormones will tell the plant material to Either bud out or produce roots or produce leaves. And within a year or two you can produce a hundred thousand plants or more. Tissue culture labs around the world are now investing in the development of new house plants. And once those rare and incredibly expensive plants are mass produced in a lab, The economic equation changes dramatically for warehouse plant growers. Take, for instance, that Spiritus Sancti plant. that once sold for $22,000. The prices drop so dramatically that like people won't even touch it. Even though it's one of the The most beautiful plants you could possibly imagine. I think everybody's just like Worry to see how low it will go. Big growers who want to sell plants as affordably as possible. Tissue culture is a welcome development. But it doesn't always work as planned. Justin Hancock of Costa Farms says that sometimes the labs have their own incentive for controlling production. He recalls a recent story about a plant known as the Tai Constellation. High Constellation is perhaps the queen of houseplants right now. It's relatively slow growing. It's really big, it's really eye catching, it's really gorgeous when it's grown well. And my understanding is that one guy in Thailand had a tissue culture lab and He was controlling the numbers and there were relatively small numbers of it going out. And so the prices of it were really, really high. And Costa Farms looked at doing it. We were working with a lab. Unfortunately, things didn't work out. And it was a giant, giant, giant letdow for the plant parents who We're aching to be able to see Thai consolation come to them. At an affordable price. I saw some people that were selling it online. in a ten inch diameter pot for like twelve, fifteen hundred dollars each. These complicated pricing dynamics? Create a dilemma for rare plant growers. If I spent eight hundred dollars to buy this cutting, I've grown this cutting out. Am I going to be able to beat everybody else? and make my money off of it. Or is the value of this plant going to decrease so much because nobody's willing to pay the price that I need to make my money back on it? Brian Williams. has his own way of navigating the market. You see the price usually start to come down and people kind of panic a little bit, but For me, I've been in the business for a while. I've seen this come and go. Mm-hmm. What I like to do is just buy as many as possible and set on them. If you set on them for two or three years, the price drops, everybody quits, and then nobody can find it again and everybody wants it again. The economics of everyday things, I'm Zachary Crockett. This episode was produced by Julie Canfer and Sarah Lilly, and mixed by Jeremy Johnston. We had help from Daniel Moritz Rapson. Just curious, do you kill houseplants like the rest of us? Oh absolutely. Freeconomics radio network, the hidden side of everything.