Rapid Expansion of U.S. Market for Horticulture Lighting

Rapid Expansion of U.S. Market for Horticulture Lighting 
Philip James, Partner, TRANSATLANTIC Partners LLC
[email protected]
    
The overall horticulture lighting market is expected to grow from $2.43 billion in 2018 to $6.21 billion in 2023, a CAGR of 20.61%. Here are some key highlights: 
 

• Europe is the largest consumer of horticulture lights, followed by North America (dominated by the US). 
• The European Union’s initiatives to boost the adoption of LED grow lights are expected to create more opportunities for the manufacturers of LED modules and lamps in that region. Philips Lighting (Netherlands) and Gavita (Netherlands) are the most prominent Europe-based lighting companies. 
• The key restraining factor impacting horticulture lighting market growth is the high cost of energy-efficient LED grow lights. In the future, the impact is expected to subside as the prices of LEDs are decreasing day by day. 
• Major companies in the horticulture lighting market: Signify by Philips Lighting (Netherlands), Gavita (Netherlands), GE Lighting (US), Osram (Germany), Agrolux (Netherlands), Heliospectra (Sweden), Hortilux Schreder (Netherlands), Lumileds (Netherlands), PARsource (US), Illumitex (US), Hubbell (US), Maxigrow (UK), Bridgelux (US), Eye Hortilux (US), and Lumigrow (US). 

 
The target key customers for this business are:
 

• GREENHOUSES accounted for the largest segment share of the horticulture lighting market in 2018. Greenhouses allow horticulture to be practiced in a protected environment (from natural elements, insects & pests) in a more cost-efficient way than indoor farming (such as warehouses), while ensuring optimum yield. Greenhouses are designed to trap natural sunlight and humidity, making it conducive for growing various types of plants either by using soil as a base or by adopting the hydroponic technique. 
  
  
• VERTICAL FARMING is changing the outlook of food production. Inter-lighting LED systems are encouraging cultivators to adopt vertical farming on a large scale. In vertical farming, plants are stacked in layers one above the other, utilizing the available space in the best possible way. With vertical farming, space and time are less of constraints on growth. 

 

• INDOOR FARMING requires horticulture light systems to act as the primary light source with the partial or complete absence of natural light. Indoor farming has benefited from the adaptive re- use of warehouses and industrial buildings. Signify by Philips Lighting has established GrowWise Center in the Netherlands, a city farm facility powered by LED lights to cultivate a variety of crops, such as strawberries, potatoes, herbs, and leafy vegetables. 

 

• CANNABIS.  This is a subset of indoor farming and is rapidly growing in the United States and other countries where marijuana has been legalized or decriminalized. In the United States California and Colorado are two of the most important regional markets. Advanced LED lighting now commands the largest share of lighting for this use. The U.S. legalized cannabis market reached $13.6 billion in 2019, a 32% increase over 2018, with expectations that sales could top $75 billion by 2027. It is of anecdotal interest that during the COVID-19 pandemic, California declared that cannabis shops were “essential businesses” and could remain open. 

 
Conclusion.  This rapid review suggests that there is plenty room for healthy growth in lighting for horticulture use in the United States. European companies with advanced technologies or an interest in technologies developed by U.S. companies may wish to consider expanding into the U.S through joint ventures or an M&A transaction with an existing LED lighting manufacturer.  TRANSATLANTIC Partners LLC currently has one LED lighting manufacturer for growing cannabis and horticulture for sale and can assist in structuring cross-border deals for European and other foreign companies looking at entering the U.S. market.