| Per capita expenditures for fresh-cut flowers, potted flowering plants, and dry/artificial flowers have changed over the years with considerable year-to-year volatility. Several factors such as income, brand and generic advertising, purchasing occasions, and attitude of the buyers can influence consumer expenditures on different flower types within the group. Understanding the demand for flowers is useful to help the flower industry to be proactive in addressing demand issues. Actionable variables such as generic and brand advertising, and innovative selling methods are important factors to influence the future direction of the industry. Hence, it is important to have a complete definitive understanding of demand drivers for fresh-cut flowers and their substitutes including the relative importance of entry and transactions.; To measure factors influencing the demand for flowers such as prices, seasonality, and demographic variables, the demand for flowers in the different forms was estimated using the Almost Ideal Demand System (AIDS) to examine household behaviors in the U.S. flower industry. The model for fresh-cut, potted, and dry/artificial flowers explicitly accounted for differences in outlets, purposes, purchasing occasions, growth, income demographics, and prices. These variables were incorporated into the likelihood specification of the AIDS model, including the weight prices often referred to as the Stone Index. Note that Stone Index was not used, rather the parameters included in the weighting were part of the likelihood specification. The actual estimation was completed using the maximum likelihood function that also accounted for possible correlation in the equation residuals.; A fresh-cut share as gift-giving was higher relative to that for self-use, while potted shares and dry/artificial shares were slightly higher for self-uses compared to gifts-giving. Monthly shares and expenditures on fresh-cut flowers and dry/artificial flowers from florists were higher than through supermarkets, while shares and expenditures on potted flowering plants from supermarkets were higher than through florists. From the projections, the fresh-cut flower industry would benefit from an overall growth in consumer spending on flower products, while both the potted flower industry and the dry/artificial flower industry lost their shares as total incomes increased for the long-run period. |
