The cold storage market - France

1.2 A fast-growing global market

The global market

The cold storage market has grown significantly in recent years, particularly from strict regulations governing the production and supply of temperature-sensitive products. Analysts forecast annual growth of **.*% over the coming years.

trend in sales of cold storage services World, **** - ****, US$ billion Source: ****

Based on temperature type, the market has been segmented into chilled and frozen products. The frozen segment dominated the market in terms of revenue in ****. Rising frozen food consumption in emerging markets such as India and China is the primary driver of the frozen food segment worldwide.

Leading cold storage and logistics suppliers in Europe

Leading cold storage suppliers Europe, ****, in thousands of m* Source: ****

The above list is based on the total capacity of temperature-controlled space operated by IARW members. Companies operating in France include :

Kloosterboer NewCold Advanced Cold Logistics Nichirei Logistics Group, Inc.

1.3 French market growth slowed by health crisis

Estimating the sales generated by the cold storage and warehousing sector at around *.** billion euros excluding VAT in **** is possible. The sector's growth accelerated sharply from **** onwards, before slowing down in ****, as shown in the graph below.

refrigerated warehousing sales trend France, **** - ****, € million excl CAGR: + *.*% Source: ****

Logistics real estate in France is enjoying positive momentum and attracting investors. This is due in particular to the overhaul of supply chains and the development of massive warehouses enabling products to be centralized and meeting the strong demand from e-commerce. [***]

2.1 Overview of customers in the sector

The customers of cold storage operators can be segmented as follows:

Producers and importers of agri-food raw materials Manufacturers of fresh and frozen food products; The foodservice sector; Distributors; Pharmaceutical and medical industry players.

The development of the cold storage market is closely linked to the demand for perishable goods that need to be kept cool. Whether for the catering industry or the retail sector.

Concerning the storage of pharmaceutical and medical products, in **** in France, * to *% of drug volumes are said to be "cold. " Vaccines account for **% of drug volumes. Finally, blood products are supplied by some * million blood donations in ** establishments. These products, in particular, require storage in refrigerated warehouses. [***]

Pharmaceutical logistics expenditure by type World, ****, US$ billion Source: ****

On a global scale, the pharmaceutical cold storage supply chain accounts for just **.*% of the sector's total expenditure, making it a marginal business segment compared to perishable food packaging.

Pharmaceutical sales by type of transport World, ****-****, USD billion Source: ****

2.2 The development of e-commerce is having a major impact on the cold storage market

E-commerce sales France, ****-****, Billions of euros Source: ****

E-commerce in France has grown by leaps and bounds, reaching ***.* billion euros in ****. Although business growth rates have slowed since ****, they still record double-digit growth.

Spending on food should follow the same trend

The top ** e-commerce sites by number of customers in the first quarter of **** were [***]:

Amazon: **.*** million customers Leboncoin: **.* million Cdiscount: **.* million E. Vinted: **.* million Fnac: **.* million E.Leclerc: **.* million Booking.com: **.** million Carrefour: **.** million Lidl: **.* million Leroy Merlin: **.* million Three of the ten most-visited e-commerce websites in France (***) are food sites. The boom in e-commerce is no escaping the food trade, and its strong growth should ultimately favor refrigerated transport.

The Covid ** crisis has had a considerable effect on online food purchases. Indeed, in **** in France, only *.*% of FMCG purchases (***) were made online, whereas this share rose to **.*% of FMCG purchases in the first months of ****. [***] This suggests a growing need for refrigerated storage for products destined for delivery or the drive-thru.

French consumers who opt for this mode of consumption account for *.*% of everyday purchases, a higher percentage than in the UK and the USA.

Food delivery and drive-through are driven by a demand attracted by time-saving and simplicity, ...

2.3 Dynamics and functioning of the frozen food sector

As the main customers of companies specializing in cold storage, the relative weight of the different channels and players enables us to estimate their importance for the companies present in this market.

B-to-B distribution of frozen foods

Business-to-business distribution can occur between a frozen food manufacturer (***).

Wholesalers (***) offer a wide range of products to downstream companies, then deliver them. On the other hand, logistics service providers, such as Martin-Brower France, act as delivery agents between the manufacturer and the consumer company.Cash & Carry companies, such as M&M Quality Food, enable companies to obtain their supplies from the same place at all times - this can be compared to large-scale distribution for companies.

B to C distribution of frozen foods

The business-to-consumer segment corresponds to the distribution between a company and a consumer. A survey carried out by YouGov in **** gives us an idea of the distribution channels for frozen foods preferred by the French.

Response to the question, "Which retailer do you usually buy your frozen foods from?" France, ****, in Source: ****

when it comes to selling frozen foods to consumers, it's important to distinguish between two types of retailers:

Generalists who offer a variety of products that are not restricted ...

3.1 Geographical distribution of production and number of players

To determine the number of companies and employees in the area, we used NAF code **.**A, which stands for cold storage and warehousing. The NAF code is a code assigned by INSEE to any company listed in the SIRENE catalog. With the help of the Urssaf website and this NAF code, we created the graphs below.

Number of companies in the business sector France, ****-**** Source: ****

As can be seen from the graph above, the number of companies in the cold storage and warehousing sector has been relatively stable over the last ten years, fluctuating between *** companies at its highest (***) over the decade.

Number of people employed in the sector France, ****-****, in units Source: ****

In contrast to companies, the number of people employed in the sector has only increased since ****, rising from **,*** in **** to **,*** in ****, representing a **.**% increase in headcount over the decade.

Source: ****

Observation of the breakdown of employees by region shows a high concentration in Île-de-France and to a lesser extent in Hauts de France (***).

3.2 Sector companies and new disruptive players

The following companies make up the cold storage sector in France.

These companies include the leading "pure players " in cold logistics: STEF, Olano, Sofrilog... and generalists such as XPO, who have integrated the cold storage business.

Disruptive new players

From housing to urban transport, from Airbnb to Blablacar, the collaborative economy is affecting more and more sectors. Stockbooking, Europe's leading collaborative storage platform, has the potential to shake up the logistics and storage sector.

On the one hand, warehouses are under-occupied by an estimated **-**%, while on the other, companies are looking for short-term storage solutions. [***]

The start-up, founded in ****, is backed by FM logistic. Other players have since entered the sector, including real estate consultancy JLL (***).

Users register online and access sites listed and rated by the platform's team, providing transparency on service quality.

The emphasis is on the speed of execution, with time-to-market reduced to just a few days while leaving the user free to continue with the provider or change later.

With over ** suppliers and ***,*** m* of available space, Stockbooking has more than *,*** users after just over two years in business.

The business model is based on a subscription formula for the storage space provider and on a ...

3.3 Cold store activity

The purpose of a cold store is to receive goods requiring this type of storage and hold them for a specific period of time. Activities in these warehouses are essentially concerned with handling operations. There are two main activities in these warehouses:

Forklift operators Order pickers

Forklift operators

These are the leading players in refrigerated warehouses. They carry out several types of operations:

Unloading deliveries and transporting them to storage locations. Moving pallets within the cold store. Remove goods from the warehouses and place them in the trucks and railcars that are to carry the orders. Provide order pickers with the necessary pallets. Reclaim goods if necessary.

It's easy to see that forklift drivers do most of the moving of goods in warehouses, so their tool of choice is the self-propelled forklift truck.

Order pickers

Goods arrive from manufacturers in vast quantities. However, customers only want a certain quantity of this mass except for substantial orders. This is why order pickers repackage the products ordered in the form of heterogeneous pallets. They, therefore, have several operations to perform, such as :

Fetch the products required for the orders from cold storage(***) After the forklift drivers have deposited the required pallets in the ...

4.1 Cold storage services

There are three types of cold stores, depending on the desired temperature:

Positive-cold warehouses, with temperatures between * and **°C, for storing different types of products with a short use-by date (***). Negative-cold warehouses, with temperatures below *°C, generally between -**°C and -**°C, and down to -**°C. In logistical terms, these are similar to conventional warehouses, except for insulation and cold production, and enable the storage of frozen products. Multi-temperature warehouses can be used for positive-temperature storage, negative-temperature storage, and, in some cases, dry goods storage.

Cold stores can also be segmented by the type of equipment used:

The traditional warehouse has mobile or non-mobile pallet racks and pallet stacking systems (***). On the other hand, the single-platform warehouse is particularly well-suited to groupage and deconsolidation operations. It incorporates a cold room and a large number of loading and unloading docks The mezzanine refrigerated warehouse is most often used for order picking. Pallets are moved vertically by forklift or freight elevator. The high-bay cold store is designed for the transport of goods. The premises are over ** meters high and require a trans-stocker.

Source: ****

4.2 Awards: From purchasing mobile cold rooms to building refrigerated warehouses

The selling price of mobile cold rooms is mainly linked to * factors:

Volume Number of pallets Temperature range

Source: ****

Finally, according to STEF and Cryologistic, the investment cost of a new warehouse is around *** euros per cubic meter, with amortization over a period of ** to ** years. [***]

The evolution of cold storage costs in France can also be observed through the indices of the Union Syndicale Nationale des Exploitations Frigorifiques, based on the composite index of variation of all costs. The four sub-indices are

storage index (***) electricity cost index services index (***) support index (***)

Electricity cost index for cold storage France, ****-****, base *** = *th quarter **** Source: ****

If we look at electricity prices, we can see that they have been rising steadily, particularly since the start of ****, with record highs in the first two quarters of ****. In * years, the electricity cost index has more than doubled, rising from ***.** on **/**/**** to ***.** on **/**/****. [***] This sharp increase can be explained by the tense context with Russia, in view of the conflict in Ukraine, which escalated in February ****. France is partly dependent on Russian energy, particularly natural gas, which exposes the country to sharp price rises for certain resources such as electricity.

change in the relative weight of ...

4.3 Automation could shake up the sector

Racking optimization to boost cold storage efficiency

Traditional static and dynamic racking systems must contend with the growing importance of warehouse automation. Warehouses are increasingly turning to digitalization to optimize employee movements, for example. Mecalux explains that there are three levels of automation within a warehouse.

Source: ****

The low level of automation corresponds to a warehouse where printed order forms are used, but where employees make their own picking and routing decisions. Automation can be enhanced by using WMS software (***).

Finally, advanced automation corresponds to a level where products "move towards people", i.e. mechanical processes are put in place to optimize the path of stored units. This can be achieved via roller or chain conveyors, or Pallet Shuttle systems. Products move automatically to the operators.

To improve employee productivity, companies are increasingly using WMS software. A document published by Gravittax shows that shelving companies are now emphasizing dynamic storage solutions as part of warehouse automation. [***]

Examples of cold store automation

Mecalux presents * types of innovation for logistics centers:

The supply and installation of mobile base racks for the two cold rooms of Iberfresco, a company specializing in the packaging of frozen vegetables; The creation of a new *,*** m* warehouse with ...

5.1 Difficulties in finding manpower and controlling costs within a strict regulatory framework

The refrigerated warehousing industry struggles to attract workers due to the difficult working conditions imposed on its employees. [***]

Cold storage logistics represent a health and food safety issue and are therefore governed by French and European regulations. For example, the European regulation **/**** requires cold chain operators to use temperature recorders at all chain stages.

Cold stores are a particular category of real estate and may be classified as an installation Classée pour la Protection de l'Environnement (***) and are thus subject to various regulations and obligations in terms of equipment, particularly about insulation, lighting, fire, and leak prevention, temperature control, and ventilation. [***]

The **** Finance Bill, with the end of the reduced rate of the Taxe Inférieure de consommation sur les Produits Énergétiques (***), from which players in the energy chain have benefited up until now, is a significant step forward. this could create additional financial difficulties for cold storage operators. [***]

The cold storage business consumes a lot of energy, which means that market players have to meet real CSR challenges and manage storage and electricity costs.

Note: in this study, the NAF code used is **.**A: operation on behalf of third parties of cold storage installations or refrigerated storage facilities, ...

5.2 Regulated production

The use of HFCs (***) to maintain products at below-ambient temperatures is already regulated.

At the European level, Regulation ***/****, known as "F-Gas II", in force since January *, ****, "significantly reduces and will reduce by **** the quantities of HFCs placed on the market". [***]

However, the French government has announced that taxation on this type of product has been envisaged since **** as part of its climate plan. Ammonia was to replace HFCs, as was already the case in Denmark. [***]

According to Valérie Lasserre, General Delegate of UNTF, USNEF, and Transfrigoroute: "In warehousing, the challenge is above all financial. Alternatives to HFC fluids exist, but many French companies have been forced to build or convert existing facilities using HFCs, due to the above-mentioned difficulties in using ammonia". New regulations could therefore increase pressure on warehouse costs.

6.1 Segmentation

• XPO Logistics
• Rhenus logistics
• Sofrilog
• Olano
• Delanchy
• Nagel Group
• Somatref
• Iris Logistique
• Newcold
• Logistisud
• Stockbooking
• ID Logistics
• Tesson Groupe - Dartess
• Stef
• Godfroy Entrepôts