European Refrigeration Controls Markets

Abstract

Increase in Price Competition Calls for Better Product Differentiation

The slowdown in trading conditions and supermarket investments across Europe in 2004 have obliged refrigeration controls manufacturers in the region to look for new opportunities and to defend their shares more aggressively. In dealing with the resultant price competition, market participants need to work on differentiating their product lines and offering better value propositions. The good news is that, as clients are forced to upgrade their current refrigeration control products, the growth in sales of programmable controls will increase the value of the market. This will be detrimental to stand-alone devices, which are likely to lose popularity in a gradual manner.

This Frost & Sullivan research service analyses the European markets for refrigeration controls. The study has been segmented into programmable and stand-alone controls and provides a detailed analysis of the drivers and restraints for these markets. Furthermore, country by country forecasts provide insight on the futuristic demand for comfort controls and knowledge of trends across different geographic regions is likely to help in designing appropriate market strategies.

Introduction of Energy Efficiency Legislations Necessitate New Product Development

As European countries begin to accord greater importance to energy efficiency, participants in the European refrigeration controls markets are being required to introduce new products that comply with legislations promoting environmental-friendly solutions. Also, new laws on energy efficiency are helping promote more sophisticated products and the increase in supermarket, logistics, and industrial investments is becoming the leading market driver. While new legislations and chain reorganisations are expected to force the UK market to invest in top segment solutions, over in Germany new regulations are expected only in the longer term and would then stimulate demand for high-tech solutions.

In terms of the protocols used, while some companies use their proprietary ones such as Danbus (Danfoss), other manufacturers predominantly operate on LON, OPC, E.LDS or Modus. "End users are becoming more interested in open protocols as they can install different branded devices that comply with each other," says the analyst. "However, since the approach is more conventional in certain European markets, manufacturers are trying to persuade their customers to go for open communication solutions as higher average prices could compensate their current difficulties."

Distribution Channels Draw Greater Importance

While distribution of refrigeration controls in Europe is currently split between wholesalers, contractors, partners, and original equipment manufacturers (OEMs), the importance of safeguarding product margins is pushing manufacturers to look for new distribution channels or reorganising the existing ones. In terms of value, the distribution is split among installers and contractors at 21.4 per cent, OEMs at 30.9 per cent, and wholesalers at 47.7 per cent.Overall, the wholesalers position in Europe is rather stable and their market share may grow in the future only if they are able to provide more technical support to customers.

The market for refrigeration controls is forecast to grow between 2005 and 2011 despite the current difficult trade conditions. The key to success for manufacturers is to develop their unique selling points. "Among the key competitive factors, value for money is of greatest importance in the European markets for refrigeration controls, closely followed by brand reputation," says the analyst. "Developing new and advanced products, as well as offering enhanced services with a strong focus on monitoring seem to be critical for ensuring success in this challenging market."