The Economics of Everyday Things - 39. Houseplants

Episode Date: March 11, 2024

Interest in houseplants has exploded in recent years. But what causes floral trends, and prices, to grow? Zachary Crockett sows a few seeds. SOURCES:Justin Hancock, director of research and development at Costa Farms.Brian Williams, co-owner of Brian's Botanicals.Sarah Williams, co-owner Brian's Botanicals. RESOURCES:"Bidding Wars and $1,000 Succulents: The Wild World of Rare Houseplants," by Hannah Holland (The Washington Post, 2023)."Houseplants Boomed During the Pandemic. Gen Z and Millennials Say the Popularity Is Here to Stay," by Lucia Starbuck (KUNR, 2022)."The Most Iconic Houseplant Trends Through the Decades," by Wretched Flowers (Architectural Digest, 2021)."Meet the Plantfluencers," by Penelope Green (The New York Times, 2018).

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 kind of 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 when Brad does a new one called Colicasia 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 starburst in the center of a black leaf and you run around thinking you're going to be a millionaire.

The Williams's have good reason to believe there's big money in house plants. According to the National Gardening Association, sales of indoor plants and accessories nearly doubled between 2019 and 2021. House plants are now a $2 billion year industry. And according to Big Shots in the plant world, the 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 $10,000 or $15,000 because this is the only one of that plant in existence right now.

For the Freakonomics 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 poms. The fad cooled in the early 20th century, but it 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. He've probably encountered their houseplants, 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. Geez, that's pretty brutal. The company sells hundreds of plant varieties. The Costa Farms Houseplant portfolio is kind of split into two camps. You've got the tried and true that we've been growing for decades. Golden Pothos, Hartley Philodendron, Snake Plant, and then you've got the brand new things. Xamiococcus, it's a really cool plant from Africa. It almost looks like it's plastic,

has these thick rubbery leaflets. And you know, it's what 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 Rimland. 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. 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. Costa 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 you know this little bit of no light and infrequent watering. So you're 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. Costas 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 plant makes it through all of those tests and we say, okay, this is going to be a good one. Then we go through market tests to make sure it's actually going to sell before we start bulking out numbers. Costa sells its plants wholesale to nurseries and big box retailers. And after all that work is said and done, you can find one of their snake plants or ferns for around 20 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 h 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 going to find this time? There's that little bit of magic. During the pandemic when everyone was stuck at home, more 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 boom 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, 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 raffetaphora tetrasperma. 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 Alakazia Kaching Mask, Kana Maui Punch, Kaleakazia Bikini Teeny, Kaleakazia Redemption, Kaleakazia Black Ripple. Our new one we released today, Kaleakazia Cleopatra's

Kiss. A lot of our customers want the newest thing. They don't want to 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 of 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 friends would take 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 are 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 U.S. 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 going to get. Some plants will take me two to 12 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 kind of 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 four to $8,000 per plant. And it's a gamble. We 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 house plant can fetch big bucks. There was a plant called Spiritus Sancti. I mean, I was after this plant for 10, 20 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. But a relatively new trend in house plant science has threatened the lucrative nature of rare plants. It's a process called 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 100,000 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 rare house plant growers. Take for instance that Spiritus Sancti plant that once sold for $22,000. The prices dropped so dramatically that people won't even touch it. Even though it's one of the most beautiful plants you can possibly imagine, I think everybody's just like worried to see how low it will go. For 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 Thai constellation. Thai 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. 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 let down for the plant parents who were aching to be able to see tie consolation come to them at an affordable price. I saw some people that were selling it online in a 10-inch diameter pot for like $1,200 each.

These complicated pricing dynamics create a dilemma for rare plant growers. If I spent $800 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? But 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.

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. For 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. Music

I'm just curious, do you kill house plants like the rest of us? Oh, absolutely. Music The Freakonomics Radio Network. The hidden side of everything. Music Stitcher.