Roses have scent of money

Jewelry, perfume, fashion and accessories certainly fit the bill as luxury brands. But could fragrant flowers, like roses, be added to that category?

Definitely, according to Pu Yi, founder and CEO of roseonly, a Beijing-based startup formed in 2013.

"Just like Tiffany in the US, and Mikimoto in Japan, roseonly is gradually becoming a new signature luxury brand embraced by the country's middle class. We want to become a homegrown Chinese luxury brand," says Pu.

Such an aspiration may be sound ambitious but is it realistic?

The company, which spells its name with a lower-case 'r', has had unprecedented success in China selling premium roses imported from Ecuador in South America to upwardly mobile, newly wealthy upper- middle-class consumers. Its bouquets are among the hottest gift choices for young Chinese.

Prices range from 999 yuan ($143; 138 euros; 117) for an 11-rose bunch to 9,999 yuan for a 99-rose bouquet. The startup expects the sales in 2016 via outlets in multiple cities and online stores to reach around 250 million yuan, up from 130 million yuan in 2015, 61 million yuan in 2014 and 14.6 million yuan in 2013. It expects sales to exceed 300 million yuan this year.

Annual sales revenue has been surging, probably due to roseonly's unique packaging and marketing, which emphasizes not the imported roses themselves but a once-in-a-lifetime expression of love for one special person (who is, usually, the buyer's girlfriend, fiancee or wife).

Information about buyers and bouquet recipients is stored in a database at the time of purchase. This information cannot be changed later.

That means a customer can buy at roseonly only once - no repeat purchases by the same customer for a different recipient is allowed.

This seemingly self-defeating strategy has paid off - the sales figures are proof.

If more proof is needed, twice in recent months, roseonly witnessed sales surges. The latest was during the Christmas-New Year week.

"We've seen a 40 percent rise in sales during the Christmas season," Pu says.

The earlier spike was around the Qixi festival, or the Chinese Valentine's Day, in August.

"If my boyfriend buys me an expensive roseonly bouquet, it contains more than a bunch of roses; it signals his loyalty and a reassuring promise," says Wang Qin, 23, a Beijing resident.

Investors may have caught a whiff of potential profits in roses. Angel investors chipped in with funds two months after roseonly launched. Tencent, owner of the WeChat app, poured $10 million into the startup.

In 2014, IDG capital and Accel Partners invested more than $10 million (9.6 million euros; 8.1 million), followed by 190 million yuan from Genesis Capital, Prosperity Investment and Echo Capital.

All that money over the years has helped roseonly to open 28 outlets in Beijing, Shanghai and other first- and second-tier cities. It is the biggest flower vendor on Tmall, Alibaba's online marketplace.

The florist is now valued at $100 million, according to TechinAsia.

Not surprisingly, roseonly wants to go beyond the Chinese mainland. It plans to open shops in Malaysia, Hong Kong, Taiwan, Japan, South Korea and Singapore in the years to come.

Pu describes the brand's target demographic as men and women between the ages 25 and 45, with stable incomes and an appreciation for high-quality goods and affordable luxuries.

According to a report by McKinsey, generational change and the rising prosperity of inland cities will power consumption for years to come.

By 2022, more than 75 percent of China's urban consumers will earn 60,000 yuan to 229,000 yuan a year, the McKinsey report says.

"There will be not only challenges but also plenty of opportunities for companies whose strategies reflect China's new constellation of rising incomes, shifting urban landscapes, and generational change," says Pu.

To ride the trend, roseonly has launched new offerings such as bouquets of exotic flowers, which it bundles with jewelry pieces in exquisite gift packages.

"We will expand the business to the high-end gift market," says Pu.

"We've so far come up with many love-related jewelry gifts like bracelets, necklaces and earrings, and will cooperate more with some of the world's renowned designers and celebrities.

"The jewelry market has more potential than the flower market, and the gift market has even more."

Most of roseonly's jewelry gifts are designed to be rose-related, and target younger women and girls. The company also sells tailor-made gifts during peak seasons, such as a snowman necklace during Christmas and limited-edition designer jewelry associated with celebrities.