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The Sweet Smell Of Money

Two hundred heads turn as one to watch as a trolley laden with flowers comes into the hall. Buyers eye their prey like cats watching birds from a window sill. The babble dies to a whisper. Then someone coughs in the chilly air.

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The four gigantic clocks ringing the trading pit light up. The trollies squeak as they are wheeled under them.  A sweet scent wafts across the floor as the numbers count down.

This is the buyers chance to get the best price of the day. Hands hover above a small digital keyboard. Along the wooden benches, they line up with military precision. Cups of coffee are left steaming and forgotten.

The aim of the game is to push the button at the last possible moment as the clock counts down to zero.

The clock counts down from R6 ($0.6). The auctioneers stare at the digits, oblivious to anyone around them. It hits R4.65 ($0.5) and stops. Every lily on the trolley is sold. The trolley squeaks away.

The chatter begins to rise again. Someone shouts: “Leave some for us next time boet, we all need to get lilies you know.” Then, heads turn to the next trolley.

Roses are wheeled in. The chatter stops. The game begins again.

This is all in a day’s work for auctioneer Tjaart Kilian. For him, getting up at dawn is a breath of fresh, scented air. He knows the rising sun means it’s time to sell a million flowers.

In a large warehouse in the industrial district of Johannesburg, South Africa, 60% of the country’s flower buyers haggle over a business that sees a turnover of R380 million ($3.8 million) a year.

There are 600 growers and 300 buyers. On exceptional days Multiflora ,the company that runs this floor, can pack 90,000 stems within five hours of going under the gavel. Valentine’s Day and Mother’s Day brings in R2.5 million ($253,000) on average.

In the middle of it all is André de Wet the managing director of Multiflora.

“We are tiny compared to the larger auctions in the world. South Africans are per capita very small consumers of cut flowers compared to Europe,” he says.

Tiny compared to Aalsmeer Flower Auction in Holland, the largest flower house in the world, where up to 20 million flowers are sold a day.

On a chilly Johannesburg winter morning, the Multiflora warehouse is ringed by frosty fields. It’s cold inside too, but the colours are warm. In the air is the sweet scent of daisies, roses and lilies. Kilian knows his way around a complex maze of flowers, trolleys and red crates that keep the flower business moving; he should know he’s been here for 13 years.

“First impressions are everything for a flower. When you are classifying flowers you are looking for consistency and for little variation in quality. You check the flower, you check the leaves you check the stems. The size of the stem is a factor, if you hold a stem outward it must be able to carry the weight of the flower,” says Kilian.

The perfect flower crate will be given the letter C says Kilian. Beware the grower who categorizes his flowers incorrectly. Multiflora inspects every sellers buds daily. Should your stems be below par, they get re-categorized and suffer the penalty of being sent to the back of the queue. In a business where freshness and time is of the essence the penalty helps keep the seller honest says Kilian.

Before he started selling daises Kilian worked for 20 years as a service technician in a laboratory. He says his passion for plants blossomed at home, through a hobby of bonsai trees.

“When I had the opportunity I took it. You get tired of maintenance after 20 years. It’s a different experience when you get here. In the morning, with the smell of the flowers, it’s a whole lot different from the steel industry,” he says.

For auctioneers, the first days on the job are tricky. Not only do they have to gain an intricate knowledge of flora, which takes about six months, they also need to learn how the computer system works. Even with a healthy knowledge of plants in his back pocket, Kilian remembers ending his first day exhausted.  Take him to any flower shop these days and he will guarantee you get the best for your money. Most of the people who find out he is a flower auctioneer think he is crazy.

“The first thing they say is: ‘Can you speak fluently? Can you speak quickly?’… And it’s a completely different system from a normal auction. So when you say you auction flowers, they have got absolutely no idea what you are talking about,” he says.

Deep in the heart of the warehouse is a room with four gigantic clocks. At precisely 7AM, the sound of a bell beckons a train of flowers that go on sale. This is not your average clock. It is a digital clock that counts down cash instead of time. Starting at a high price, the hand drops until a buyer, by pressing a button, stops the clock to bid for a crate of flowers.

The system was invented by a Dutch cauliflower grower in the 1870s to reduce the time growers spent at auction says de Wet.

“It frees growers from the price determination process and the task of bidding and allows them to focus on production. The auction also provides a central location for buyers to meet suppliers, allowing for efficiencies in the logistics of product redistribution and quality control,” he says.

With the clocks in action, the auction can handle one transaction every four seconds.  All the information required for a buyer, quality and quantity, is on screen.

If the clock hits zero, the flowers are taken off the auction and then shipped to a dumpster to be destroyed. The company used to give unsold flowers away, but stopped after too many people began to re-sell them.

Buyers have a set budget for the day says Kilian. They work on a credit system and this seems to fuel the bidding process.

“Some of the guys run a very tight budget; they go mad over one or two rand per stem,” says Kilian.

There are four people who manage the clocks. Their job is to watch for betting trends and monitor the demands.

“Sometimes if you get a big demand for flowers, instead of the price going down it will go up.”

On days like Mother’s Day and Valentine’s Day the bidding war can push prices through the roof says Kilian. The auctioneer has got the option, if he sees the demand for flowers is high, to raise the prices even higher and into the next day if they think it’s worth it. Other peak demands are Tuesdays and Thursdays, the best days for buyers to ship their flower bunches to the airport and the coast ready for the weekend rush.

“That’s the experience of being an auctioneer knowing on certain days when to set the clock higher and who’s going to be buying that day. You have to be on top of it all the time. You have to sit there and concentrate each and every second. You cannot blink. You cannot make a mistake on the price. You have to concentrate… until the flowers are pushed,” he says.

Kilian enjoys playing mind games with the buyers by setting prices at higher costs when flowers are trending. Raising the prices keeps everyone on their toes and forces the bidders to think about how little they can pay before the flowers are gone.

Flower buyers are few. Auctioneers know everyone by name so they can guess who’s going to be buying what flower and adjust their prices accordingly. Nothing too overpriced, says Kilian with a wink.

Once the auction is complete, each bunch of flowers is tagged with a sale-sticker and then distributed to a buyer’s depot where they are repackaged and boxed for retail.

Every flower counts for Multiflora, who makes their money by charging 8% commission sales says de Wet. It knows competition is on the rise.

“Buyers for supermarkets and large retail store chains are becoming increasingly sophisticated, purchasing larger volumes and coordinating purchases across different markets and indeed, some large retailers are bypassing the auction and their commissions to source directly from growers,” says de Wet.

The journey of a stem can stretch from Nelspruit to Angola. Some customers fly their flowers across the continent; others sell them around the corner. All part of a million-flower-a-day business that gives off the sweet scent of millions of dollars.

Entrepreneurs

From The Arab World To Africa

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Sheikha Hend Faisal Al Qassimi; image supplied

In this exclusive interview with FORBES AFRICA, successful Dubai-based Emirati businesswoman, author and artist, Sheikha Hend Faisal Al Qassimi, shares some interesting insights on fashion, the future, and feminism in a shared world.

Sheikha Hend Faisal Al Qassimi wears many hats, as an artist, architect, author, entrepreneur and philanthropist based in the United Arab Emirates (UAE). She currently serves as the CEO of Paris London New York Events & Publishing (PLNY), that includes a magazine and a fashion house.

She runs Velvet Magazine, a luxury lifestyle publication in the Gulf founded in 2010 that showcases the diversity of the region home to several nationalities from around the world.

In this recent FORBES AFRICA interview, Hend, as she would want us to call her, speaks about the future of publishing, investing in intelligent content, and learning to be a part of the disruption around you.

As an entrepreneur too and the designer behind House of Hend, a luxury ready-to-wear line that showcases exquisite abayas, evening gowns and contemporary wear, her designs have been showcased in fashion shows across the world.

The Middle East is known for retail, but not typically, as a fashion hub in the same league as Paris, New York or Milan. Yet, she has changed the narrative of fashion in the region. “I have approached the world of fashion with what the customer wants,” says Hend. In this interview, she also extols African fashion talent and dwells on her own sartorial plans for the African continent.

In September, in Downtown Dubai, she is scheduled to open The Flower Café. Also an artist using creative expression meaningfully, she says it’s important to be “a role model of realism”.

She is also the author of The Black Book of Arabia, described as a collection of true stories from the Arab community offering a real glimpse into the lives of men and women across the Gulf Cooperation Council region.

In this interview, she also expounds on her home, Sharjah, one of the seven emirates in the UAE and the region’s educational hub. “A number of successful entrepreneurs have started in this culturally-rich emirate that’s home to 30 museums,” she concludes. 

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Entertainment

Kim Kardashian West Is Worth $900 Million After Agreeing To Sell A Stake In Her Cosmetics Firm To Coty

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In what will be the second major Kardashian cashout in a year, Kim Kardashian West is selling a 20% stake in her cosmetics company KKW Beauty to beauty giant Coty COTY for $200 million. The deal—announced today—values KKW Beauty at $1 billion, making Kardashian West worth about $900 million, according to Forbes’estimates.

The acquisition, which is set to close in early 2021, will leave Kardashian West the majority owner of KKW Beauty, with an estimated 72% stake in the company, which is known for its color cosmetics like contouring creams and highlighters. Forbes estimates that her mother, Kris Jenner, owns 8% of the business. (Neither Kardashian West nor Kris Jenner have responded to a request for comment about their stakes.) According to Coty, she’ll remain responsible for creative efforts while Coty will focus on expanding product development outside the realm of color cosmetics.

Earlier this year, Kardashian West’s half-sister, Kylie Jenner, also inked a big deal with Coty, when she sold it 51% of her Kylie Cosmetics at a valuation of $1.2 billion. The deal left Jenner with a net worth of just under $900 million. Both Kylie Cosmetics and KKW Beauty are among a number of brands, including Anastasia Beverly Hills, Huda Beauty and Glossier, that have received sky-high valuations thanks to their social-media-friendly marketing. 

“Kim is a true modern-day global icon,” said Coty chairman and CEO Peter Harf in a statement. “This influence, combined with Coty’s leadership and deep expertise in prestige beauty will allow us to achieve the full potential of her brands.”

The deal comes just days after Seed Beauty, which develops, manufactures and ships both KKW Beauty and Kylie Cosmetics, won a temporary injunction against KKW Beauty, hoping to prevent it from sharing trade secrets with Coty, which also owns brands like CoverGirl, Sally Hansen and Rimmel. On June 19, Seed filed a lawsuit against KKW Beauty seeking protection of its trade secrets ahead of an expected deal between Coty and KKW Beauty. The temporary order, granted on June 26, lasts until August 21 and forbids KKW Beauty from disclosing details related to the Seed-KKW relationship, including “the terms of those agreements, information about license use, marketing obligations, product launch and distribution, revenue sharing, intellectual property ownership, specifications, ingredients, formulas, plans and other information about Seed products.”

Coty has struggled in recent years, with Wall Street insisting it routinely overpays for acquisitions and has failed to keep up with contemporary beauty trends. The coronavirus pandemic has also hit the 116-year-old company hard. Since the beginning of the year, Coty’s stock price has fallen nearly 60%. The company, which had $8.6 billion in revenues in the year through June 2019, now sports a $3.3 billion market capitalization. By striking deals with companies like KKW Beauty and Kylie Cosmetics, Coty is hoping to refresh its image and appeal to younger consumers.

Kardashian West founded KKW Beauty in 2017, after successfully collaborating with Kylie Cosmetics on a set of lip kits. Like her half-sister, Kardashian West first launched online only, but later moved into Ulta stores in October 2019, helping her generate estimated revenues of $100 million last year. KKW Beauty is one of several business ventures for Kardashian West: She continues to appear on her family’s reality show, Keeping Up with the Kardashians, sells her own line of shapewear called Skims and promotes her mobile game, Kim Kardashian Hollywood. Her husband, Kanye West, recently announced a deal to sell a line of his Yeezy apparel in Gap stores.

“This is fun for me. Now I’m coming up with Kimojis and the app and all these other ideas,” Kardashian West told Forbesof her various business ventures in 2016. “I don’t see myself stopping.”

Madeline Berg, Forbes Staff, Hollywood & Entertainment

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Entrepreneurs

Covid-19: Restaurants, Beauty Salons, Cinemas Among Businesses That Will Operate Again In South Africa As Ramaphosa Announces Eased Lockdown Restrictions

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South Africa’s President Cyril Ramaphosa addressed the nation announcing that the government will further ease the country’s lockdown restrictions.

Restaurants, beauty salons, cinemas are among the businesses that will be allowed to operate again in South Africa.

The country is still on lockdown ‘Level 3’ of the government’s “risk adjusted strategy”.

President Ramaphosa also spoke on the gender based violence in the country.

“It is with the heaviest of hearts that I stand before the women and the girls of South Africa this evening to talk about another pandemic that is raging in our country. The killing of women and children by the men of our country. As a man, as a husband, and as a father to daughters, I am appalled at what is no less than a war that is being waged against the women and the children of our country,” says Ramaphosa.

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