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A rise in the amount of renovation work being carried out in Europe by so-called DIY experts, enthused by the large number of home improvement shows on television, is helping to boost the water heating equipment market.
Latest research from international consulting company Frost & Sullivan shows the
European Residential Water Heating Equipment Market was worth $3.37 billion in 2000, a rise of 1.5% on the previous year. It is forecast to continue growing steadily upwards, reaching $3.59 billion in 2006.
Virtually all homes in the top five European nations (UK, France, Germany, Italy, and Spain) have hot water systems. The majority of sales are reliant on replacement sales in the form of either direct, like-for-like sales or a new solution replacement.
"The consequence in a market such as this is undynamic activity levels, where patterns and trends in sales at a total market level are largely outside the hands of the manufacturers," research analyst Paul Alexander explains. "Europe has seen a significant rise in the amount of renovation work being conducted, which is seen a major help to the market. During a renovation, it is often the case that a new water heating systems will be fitted and on many occasions, this involves the purchase of an upgraded system. The natural consequence is for total market revenues to be increased."
The study split the market up into seven sections: gas storage, electric storage, indirect cylinder, gas instantaneous, electric instantaneous, combination boiler, and solar storage.
The combination boiler sector was the key growth area, accounting for over two-thirds of the whole sanitary water heating market in 2000. It is also the most dynamic market, with strong growth being experienced, particularly in Spain and the UK. It is largely the growth of this sector that is causing the steady erosion rates seen in many of the other product categories, but the trend is helping the total market, because these combi units command higher selling prices.
The combination boiler market was worth $2.33 billion in 2000, with 3.1 million units sold. Frost & Sullivan forecasts this will increase to $2.62 billion and 3.7 million units in 2006.
The study also found consumers are becoming more environmentally aware, making the more economical units increasingly popular throughout the water heating sector, especially in the form of condensing and low nitrogen oxide (NOx) systems in the boiler market. These are products that can command significantly higher selling prices. As they become more popular, average selling prices are being pushed upwards and the total market revenue size is becoming greater.
An increasing number of environmentally aware homeowners are also turning to solar storage to heat their water, with the market worth $547.8 million in 2000, an increase of 15.8 percent on the previous year.
However, the study found there is still low product awareness: "Even the people who know about the existence of such a technology will often presume that it is not a realistic option for them - particularly in the colder northern European countries - to install such a system in their own home. They will often have very little idea as to who to contact, even if they were interested," the study says.
The study found several European governments and local authorities are offering increasingly large financial incentives to encourage the sales of small-scale solar water heating systems. There are also many examples of governments trying to make the process of making a claim simpler and the final payment quicker.
Frost & Sullivan predicts the solar market will reach 367,500 annual shipments, with an associated revenue of $1.1 billion in 2006.
Overall, Germany holds the largest share of the European Residential Water Heating Equipment market with 30.9 percent, in 2000. Italy and France were found to be the next largest markets during 2000, with revenue shares of 22.3 and 19.1 percent, respectively. The UK was fourth and Spain fifth.
Frost & Sullivan is an international marketing consulting company that monitor a comprehensive spectrum of environmental markets for trends, market measurements and strategies. This on-going research is utilised to complement a series of research publications to support industry participants with customised consulting needs.
European Residential Water Heating Equipment Market
Report Code: 3644; Publication Date: May 2001
For more information contact:
Nikki Cole
Nikki.cole@fs-europe.com
Tel +44 (0)20 7343 8325
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