Product Family

No one is quite certain how Valentine’s Day emerged as an annual celebration of love and romance.One legend points the origin to a third-century Roman priest named Valentine who persisted in marrying men and women in spite of a decree from Emperor Claudius II that cancelled all marriages and engagements in Rome. Another suggests that Pope Gelasius at the end of the 5th century established February 14th as Valentine’s Day to counter a rather bawdy Roman festival called Lupercalia held on the same day.In France and England during the Middle Ages, February 14th was commonly believed to be the day when birds began their mating season, as Chaucer noted in his poem The Parliament of Fowls:


“For this was on St. Valentine's Day,

When every fowl cometh there to choose his mate.”

Written circa 1381, it is the earliest print reference to Valentine’s Day.

By the 18th century, Valentine’s Day was popularly celebrated in Great Britain, France and the U.S., and friends and lovers in all social classes commonly exchanged small tokens of affection or handwritten notes.While its origins may be murky, the desire to celebrate love and intimacy has universal appeal, and Valentine’s Day is second only to New Year’s Eve as the world’s most celebrated event.And for many people, Valentine’s Day often involves flowers – especially roses.The Language of FlowersIn the early 18th century Charles II of Sweden is believed to have introduced the Persian custom known as “the language of flowers” into Europe. According to this tradition, particular flowers were understood to have a specific meaning. In Victorian times, for instance, many floral lexicons were published so that messages could be communicated via flowers; indeed, a detailed conversation could be conducted by exchanging bouquets.Roses, of course, represented beauty and love, and a single red rose was commonly understood to say “I love you.” So it was virtually assured that once the “language of flowers” spread across Europe, roses would become a Valentine’s Day mainstay.Hundreds of millions of roses are being grown for Valentine’s Day (accurate global statistics are unavailable). But whatever the number, the volume is remarkable considering that roses are highly perishable, and much of the Northern Hemisphere is still clinging to winter on February 14th. In fact, the ready availability throughout the year of reasonably priced roses is a great example of how globalization and improvements in transportation networks have transformed certain industries.An Industry TransformedBefore the 1970s most cut flowers were grown in greenhouses by relatively small producers and sold locally. When oil prices skyrocketed starting in 1973, the cost of growing roses and other cut flowers in heated greenhouses also skyrocketed. Consequently, production shifted to places where the climate and soils support year-round production, and where there is abundant fresh water. Today, most cut flowers are grown in just a few countries.For example, cut-flowers are now Columbia’s second largest agricultural export, after coffee, and 90 percent are shipped to the U.S. and Canada. Kenya is the world’s third largest exporter of cut flowers, and the majority of its production is devoted to roses. More than one-third of the cut flowers sold in the EU are grown in Kenya. Other countries where cut flower production has increased dramatically include Ecuador, Ethiopia, Zimbabwe and Malaysia.Protection from Farm to FloristAccording to Pascal Matthey, Head of Global Lines Risk Engineering at AXA XL, “For a highly perishable and time sensitive product like roses, every stakeholder has to have the proper resources to keep the flowers cool and fresh. Once roses are cut, they first need to be cooled down slowly, and then packed carefully for transport. While en route, the humidity, temperature and air quality must be strictly controlled at every point along the way – from the farm to the florist.”In fact, one of the key factors enabling the transformation of the industry was the creation of an efficient “cold chain” of transport and storage, including daily airfreight connections to key destinations. Kenya’s floriculture industry grew rapidly, for example, after an air terminal dedicated solely to flowers and vegetables was established at the Nairobi airport, which is located less than 60 miles from the flower growing region around Lake Naivasha.It takes just two-three days for a rose grown in Kenya to be delivered to a florist in France. After it is cut in a field by Lake Naivasha, it will be transported by refrigerated truck to the refrigerated air terminal in Nairobi, where it will be flown in a refrigerated cargo hold to Holland where it will be transferred to a refrigerated warehouse. Once there it most likely will be auctioned to a wholesaler who will, in turn, sell it to a retail chain or an independent florist. The journey from Holland to the buyer in France will often involve another flight in a refrigerated cargo hold followed by delivery in a refrigerated truck.At any point along the way, a breakdown in the refrigeration equipment could result in a shipment of wilted roses. And while the “language of flowers” doesn’t include a definition for a wilted rose, it’s safe to assume that a single wilted red rose does NOT mean “I love you.”The risks are especially pronounced when it comes to events like Valentine’s Day and Mother’s Day. For every participant along the value chain, their overall profitability is highly dependent on their ability to capitalize on these occasions; the stakes are high. At the same time, every link in the chain is operating at peak capacity in the days leading up to these events, so the possibility of something going wrong at some point along the way is heightened.For the intermediaries along the value chain, especially wholesalers, Trade Receivables insurance also helps protect profitability. Joe Blenkinsopp, AXA XL's Global Head of Market Development & Distribution, Global Political Risk, Credit & Bond, describes cut flowers as a “classic cash-flow cycle business.”He notes that “Flower wholesalers, like other intermediaries, need working capital to pay for their inventories, in this case, flowers at auction. The risk to the wholesaler is if a retailer defaults; that could wipe out its profits for a year at least and might destroy the company in its entirety. This risk is especially pronounced during peak periods like Valentine’s Day which account for a disproportionate percentage of a wholesaler’s annual sales. Trade Receivables insurance protects a wholesaler against the possibility of a default, and is well suited to fast turnaround business with large seasonal spikes.”There is no question that Valentine’s Day is a popular event, even if its origins are uncertain. And although it has no “official” status, in countries where it is a traditional part of the calendar, around 60 percent of adults will observe it in some fashion ─ and more than half of them will buy red roses. After all:


“What’s in a name?

That which we call a rose by any other name would smell as sweet.”

Shakespeare, Romeo and Juliet



More Articles

Global Asset Protection Services, LLC, and its affiliates (“AXA XL Risk Consulting”) provides risk assessment reports and other loss prevention services, as requested. This document shall not be construed as indicating the existence or availability under any policy of coverage for any particular type of loss or damage. AXA XL Risk. We specifically disclaim any warranty or representation that compliance with any advice or recommendation in any publication will make a facility or operation safe or healthful, or put it in compliance with any standard, code, law, rule or regulation. Save where expressly agreed in writing, AXA XL Risk Consulting and its related and affiliated companies disclaim all liability for loss or damage suffered by any party arising out of or in connection with this publication, including indirect or consequential loss or damage, howsoever arising. Any party who chooses to rely in any way on the contents of this document does so at their own risk.

US- and Canada-Issued Insurance Policies

In the US, the AXA XL insurance companies are: AXA Insurance Company, Catlin Insurance Company, Inc., Greenwich Insurance Company, Indian Harbor Insurance Company, XL Insurance America, Inc., XL Specialty Insurance Company and T.H.E. Insurance Company. In Canada, coverages are underwritten by XL Specialty Insurance Company - Canadian Branch and AXA Insurance Company - Canadian branch. Coverages may also be underwritten by Lloyd’s Syndicate #2003. Coverages underwritten by Lloyd’s Syndicate #2003 are placed on behalf of the member of Syndicate #2003 by Catlin Canada Inc. Lloyd’s ratings are independent of AXA XL.
US domiciled insurance policies can be written by the following AXA XL surplus lines insurers: XL Catlin Insurance Company UK Limited, Syndicates managed by Catlin Underwriting Agencies Limited and Indian Harbor Insurance Company. Enquires from US residents should be directed to a local insurance agent or broker permitted to write business in the relevant state.