Bloom & Wild’s (B&W) revenue increased 3X in 2021 as gifting flowers emerged as a key way to express feelings and stay connected with loved ones during COVID. The closure of brick & mortar stores due to lockdown measures also directed shoppers to online shopping. Over 90% of B&W’s orders are long-range, where the sender and the receiver are not co-located.

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B&W’s revenue is expected to cross £200M in 2022, partially because of the acquisition of two large competitors: Bloomon (Netherlands) and Bergamotte (France).

B&W innovated across both the supply chain and the user experience:

From the farm to the mailbox: B&W sources flowers directly from growers, unlike other flower delivery companies (online and physical). It receives the flowers at its fulfilment centers and despatches these to customers through its shipping partners. This reduces costs, transit time, and ensures customers get fresh flowers.

Product innovation: B&W is the first company in Europe to launch letterbox flowers where flower buds are placed in a slim box that can be slid through the recipient’s letterbox. This solves a key problem of missed delivery due to the receiver not being home. The boxed flowers are shipped through Royal Mail/shipping partners with tracking and an improved delivery experience.

Better mobile UX: B&W invested significantly in creating an in-house tech team to build a smooth mobile ordering experience. As millennials and Gen Z prefer ecommerce transactions on mobile, this strategy differentiated them from other online flower platforms with sub-optimal mobile user experience. In 2018, ~50% of orders came from their app, and ~62% of traffic came from mobile.

Demand prediction technology: B&W uses advanced forecast models and prediction algorithms to place orders with growers, reducing wastage, and transit time of flowers.

B&W competes for wallet share with physical retail channels such as florists, supermarkets, and ecommerce companies such as Interflora. In the UK, B&W’s primary competition is supermarkets with ~50% market share of cut flowers. However, in France, it competes with florists with ~65% share.

The share of ecommerce in flower delivery in Europe varies from ~5% (Germany) to ~20% (UK). In the ecommerce category, Interflora was the largest player in the UK till 2020, with revenue of £102 million. However, in 2021, B&W overtook Interflora as the largest ecommerce player. B&W benefitted due to its centralized supply chain that does not rely on local florists, many of who suffered due to COVID-related restrictions, for order fulfilment.

Over the next several years, ecommerce’s share of the flower delivery market is expected to continue to grow, mainly at the expense of local florists.

There are two main upside cases for B&W:

Deeper penetration in the flower market: B&W’s share in the flower market is ~1% which means there’s a lot of headroom for growth. It is experimenting with brick & mortar channel through a partnership with Sainsbury’s to expand its user base beyond ecommerce shoppers in the UK. Another avenue for growth is corporate flower gifting, with companies sending flowers to employees, clients, and business associates. B&W already has companies such as Tesla, UBS, and Meta as its corporate customers.

Shift to adjacent market: Personalized gifting is a large market in Europe, expected to grow to ~£11 billion by 2027. The recent entry of Moonpig, a leading European personalized gifting player in the flower market, highlights the commonalities between the two markets. B&W can leverage its supply chain excellence and technology such as predictive models to enter this adjacent market.

Post-COVID return to normalcy: COVID-19-related lockdown measures fuelled B&W’s growth in 2021. As the pandemic eases out, B&W may struggle to grow its revenue at last year’s pace. Shoppers could prefer to support local businesses such as florists and high street shops that have struggled due to COVID-related restrictions, potentially impacting short-term revenue.

Managing international acquisitions: B&W recently acquired two of its competitors - Bloomon (The Netherlands) and Bergamotte (France). As it has no prior history of completing large-scale acquisitions successfully, it may struggle to integrate the operations and people from these companies. This could limit the revenue improvement and operational efficiencies that B&W may be hoping to achieve from these acquisitions.

Supply chain: B&W sources ~60% of its flowers from Kenya, increasing its exposure to any geopolitical or air cargo issues that can disrupt its supply chain. Most of its competitors source flowers from The Netherlands flower market and aren’t directly exposed to this risk.

The European flower market is extremely fragmented and no player has market share of more than 1%. Thus, we look at Bloom & Wild’s future growth in context of its pre-pandemic growth. Our base case estimates revenue to grow at a CAGR of 24% (~1/3rd of its average pre-pandemic growth rate) to reach £514 million in 2027. The growth is driven by the increase in ecommerce share in the flower market and above-average synergies from the acquisition of Bloomon and Bergamotte.

For the bear case, we estimate Bloom & Wild’s revenue to grow substantially slower than pre-pandemic growth at ~17.5% and revenue stagnation at £369 million. Our bull case assumes high synergies from Bloomon and Bergamotte and an accelerated shift to ecommerce even post-COVID.

We estimate Bloom & Wild to grow at a CAGR of ~40% in our bull case (~2/3rd of its average pre-pandemic growth rate) to reach revenue of ~£1 billion in 2027. We expect B&W to maintain a valuation/revenue multiple of ~3X.