The hydroponics market - France (2023)

1.2 The global hydroponics market: current situation and main characteristics

Size of the global hydroponics market

The global hydroponics market is estimated to be worth $**.** billion in ****, and will grow at a compound growth rate (***) of **. *% between **** and ****, reaching a value of $**.** billion in ****. [***]

The hydroponics market is being driven by the world's growing population, which is spearheading demand for agricultural and food products in the market.Increasing capital expenditure in the agricultural sector is also propelling market growth. Governments are steadily investing in the development of the country's agricultural infrastructure to meet the food needs of the growing population. In addition, the demand for off-season crops is also expected to promote the practice of hydroponics, thus contributing to market growth. The growing popularity of the aggregate hydroponic system among indoor farmers due to its easy-to-install nature is further propelling market growth. In the coming years, increasing consumer awareness of the nutritional benefits of hydroponically grown produce is expected to drive market growth.

Global hydroponics market size World, ****-****, in billions of dollars Source: ****

Key players specializing in the implementation of hydroponic production systems include Signify Holdings (***).

Hydroponics, a growth segment in agritech

Hydroponics is one of the trends in agritech, where technology is expected to improve food production, and thus ...

1.3 Hydroponics, a possible response to a major global challenge: feeding a growing population while combating global warming

The world's population is set to reach ** billion by ****. Producing more food with limited resources, while trying to reduce greenhouse gas emissions, seems like a difficult equation to solve. Hydroponics may offer a solution to these problems, according to the FAO.

Hydroponics enables more intensive, "soil-less" production, as it takes up less space to produce more, thus reducing the pressure on farmland soils. By ****, we'll need to feed a population that will have grown by **%, and produce **% more food, given that half of the land that can be farmed is already farmed. What's more, this "above-ground" aspect makes it flexible and adaptable to almost any space.

Hydroponics reduces water consumption: on average, hydroponics uses between **% and **% less water than traditional agriculture. Water is a scarce, finite resource, and today agriculture is responsible for **% of freshwater consumption, and sometimes even for its contamination. In fact, only half the water consumed by agriculture can be recycled. French start-up Agricool claims that its processes enable it to use **% less water and nutrients, while operating ***% with renewable energies.

Hydroponics could help limit the impact of agriculture on the environment: today, agriculture is responsible for **% of the world's carbon footprint. By ****, greenhouse gas emissions will have ...

1.4 The hydroponics market in France

The hydroponics market represents a sub-segment of the following markets: fruit & vegetables and horticulture. As we do not have the necessary data to estimate the hydroponics market, we briefly analyze the fruit and vegetable and horticulture markets below.

The fruit and vegetable market in France

Iterfel is an organization that brings together the various activities in the fresh fruit and vegetable sector. On its website lesfruitsetlégumesfrais.com, Interfel reports that France is the *ᵉ largest producer of fruit and vegetables in Europe (***).

FranceAgriMer has published key figures for **** (***). The graphs below show the evolution of production value for all vegetables, then for all fruit.

Evolution of French fruit and vegetable production (***) France, ****-**** Source: ****

French production trends for all fruits France, ****-****, in millions of tons, in yield in tons per hectare Source: ****

The horticultural market in France

Between **** and ****, total sales for horticultural and nursery companies rose by **%. It will reach *.*** billion euros in **** .

However, in ****, the French horticultural sector will be hard hit by a decline in the number of operators, and its competitiveness will deteriorate. In ** years, due to strong competition, the number of French companies has almost been divided by *, with : Imports: *.** billion euros in **** Exports: ** million ...

1.5 Foreign trade in horticultural products, fruit and vegetables

France dependent on fruit and vegetable imports....

The chart below highlights that France imports more fruit and vegetables than it exports, which could leave room for French hydroponic fruit and vegetable growers. Indeed, its trade balance remained negative from **** to ****, rising from -$*.** billion to -$*.** billion .

Trade balance for fruit and vegetables France, ****-****, in billions of dollars Source: ****

And in horticultural products

The high consumption of ornamental plants by the French is at the root of a largely negative trade balance for the country . In fact, its imports amounted to *,*** million in ****, while its exports were just ** million euros. Thus, the trade balance was always negative between **** and ****, rising from -***.* million euros to -*,*** million euros.

Imports have risen by **% in * years, creating pressure for producers who are seeing increased competition in this market. Exports, on the other hand, have risen by **%, and are thus developing considerably, even if they remain a minority of producers' sales. France's main trading partners in this sector are its European neighbors.

Trade balance for horticultural products France, ****-****, in millions of euros Source: ****

1.6 2022 : Agricool urban farm placed in receivership

Second blow for French Tech. After Sigfox, Agricool was placed in receivership on January ** by the Bobigny Commercial Court. In June ****, the Agricool urban farm will be sold for **,*** euros. [***]

The Bobigny Commercial Court has approved the takeover bid from Vif Systems. This Lyon-based company designs and installs farms, containers and growing cabinets.

The start-up, which grows strawberries, lettuces and herbs in containers in Seine-Saint-Denis, has received offers from buyers. Since its creation in ****, it has raised €** million.

With a yield per square meter ** times higher than mass-market strawberries, a vitamin C content **% higher than average, and a better sugar content, the start-up was making a high-profile entry into the agricultural world. It has gradually extended its range to include salad and aromatic herbs, as well as its distribution network (***).

Industrial start-ups are much less attractive to venture capital (***), most of which charge subscriptions or commissions. These are models with relatively rapid returns on investment.

However, these start-ups in industry or agriculture need to do a lot of R&D, which is expensive. With its fund-raising, Agricool wanted to set up a **-container farm with forecast sales of * million euros. Staff numbers have fallen in recent months, from ** to ** (***).[***]

2.1 Analysis of demand for fruit and vegetables in France

French demand in general

In theFMCG and self-service fresh produce market, the volume of household purchases for home consumption declined in **** (***), though remaining above their pre-**** level. [***]

The table below is taken from FranceAgriMer's report on household purchases of fresh fruit and vegetables:

Source: ****

After a year of record purchases for home consumption in ****, household purchases of fresh fruit and vegetables are expected to fall in ****, both in volume (***), following the sharp rise already seen in ****. While household spending thus remains at a particularly high level, we note that the volume of purchases continues to improve, compared with **** and ****.

Diverse potential customers for hydroponics

For start-ups and urban farms, potential customers are quite diverse. The channels mentioned above, such as supermarkets, but also local channels (***) are also potential outlets for hydroponics. Foreign markets are also important potential markets, as access to land is sometimes more complicated in certain parts of the world. The Middle East, for example, is a magnet for start-ups wishing to establish their systems or operate farms there. Agricool already has a farm in Dubai. But foreign start-ups such as the American AeroFarms and the German InFarm are also on the case. [***]

2.2 Analysis of demand for horticultural products

Trend in French spending on horticultural products

In ****, **% of households purchased at least one outdoor plant (***), down on recent years due to a decline in average quantities purchased and average budget per purchasing household.

Average basket of outdoor plants in volume and value per purchasing household France, ****-****, in units, in euros and in millions of units Source: ****

More than half of Frenchhouseholds bought at least one indoor plant in ****. The average budget and the average quantity per purchasing household fall back to a level similar to ****, resulting in a drop in the sums spent and the volumes purchased

Average indoor plant basket in volume and value per purchasing household France, ****-****, in units, in euros and in millions of units Source: ****

What types of plants should I choose?

Outdoor plants account for the most sales by volume(***).

Weight of different plants in spending and quantities purchased France, ****, as a percentage of value and volume Source: ****

The French relationship with plants

Do you agree with the following statements about the presence of plants in your home? France, March ****, % (***) Source: ****

The graph above shows that the majority of plant consumers are interested in the decorative and "social" aspects of plants. Nevertheless, in ...

2.3 Hydroponics, a solution at the crossroads of several demand trends?

Determinants of demand for fresh fruit and vegetables

With hydroponics players often positioning themselves on fresh fruit and vegetables, the graph below highlights that two purchasing criteria prevail: seasonality (***).

Main criteria when buying fresh fruit and vegetables France, ****, in Source: ****

With regard to"seasonality", hydroponics doesn't normally depend on the seasons to produce, so it could play tricks if strawberries are sold in supermarkets in winter, for example.

As for the"origin of the product" aspect, despite the appeal of local produce, the French remain attached to the notion of "terroir", whereas hydroponics seems to be at the antipodes of this notion, since it involves "soil-less" production. [***]. What's more, this "soil-less" dimension can also be assimilated to an "unnatural" approach, and therefore not quite in line with growing consumer demand for natural products. In this way, some consumers might equate hydroponics with ultra-productivist, "augmented" agriculture. Generally speaking, it is also the introduction of technology into a process considered as natural as agriculture that can be called into question.

"labels"

What's more, concern about the presence of pesticides (***). This could benefit a company like Agricool, which produces pesticide-free strawberries using a hydroponic technique. [***]

Source: ****

Through its applications in urban agriculture, hydroponics ...

2.4 Agricultural market trends in France

Changing profile of farmers

The profile of farmers has changed significantly over the past decade, with an aging population of farmers and a lack of generational renewal.

According to the French Ministry of Agriculture, ***,*** farms have disappeared in the last ten years, a drop of **%, even though the agricultural surface area has remained stable.

In ****, ***,*** people will have permanent jobs on farms. This is the equivalent of ***,*** full-time jobs, down **% in ** years. Currently, **% of farm managers and co-managers are aged ** or over, a figure that has risen by * points since ****. "This shows a definite ageing of the farming population and the need toengage in a proactive policy encouraging generational renewal in agriculture ", acknowledges the Ministry. "A major challenge".[***]

change in average age of farm managers France, ****-****, % of total workforce Source: ****

So, as hydroponics makes it possible to produce right in the heart of cities, it could attract new "farmers " who might see more interest in this innovative production method than in traditional large-scale farming. The boom in urban agriculture underscores this trend.

3.1 Segmentation and dynamics of hydroponics players

Market segmentation and player typology

Three ways of segmenting the hydroponics market (***) are proposed below.

A first way is to distinguish between players who offer solutions for implementing hydroponic production systems, in which case their offer is aimed at producers such as urban farms. GHE is a good example, and also offers complementary products such as specialized fertilizers. In a more high-tech vein, this is also the case with FUL (***). For their part, growers using hydroponic techniques can constitute a second market segment. In this second segment, we can distinguish "urban" farms from hydroponic production on a larger scale, further away from the cities. Some players, such as Agripolis, are present in both segments.

A second possible segmentation is to differentiate players according to the type of hydroponics they use, or offer. Hydroponics, in the broadest sense of the term, encompasses different techniques: hydroponics, aeroponics and aquaponics .

Finally, a distinction can be made between high-tech and low-tech hydroponics, depending on how intensively the technology is used in the production process. Generally speaking, the more you produce in a closed, controlled environment, the more high-tech the system. For example, Agripolis takes a low-tech approach, using sunlight and open air, whereas Agricool, FUL ...

3.2 The production process for hydroponics and its derivatives

General definition

Strictly speaking, hydroponics is the simplest soil-less cultivation technique, and one of the first to have been developed. In a broader sense, it encompasses various techniques (***).

The term " hydroponics" comes from the Greek "hydro" meaning water, and "ponos" meaning work. It is thus an "above-ground" form of agriculture that does not require soil to grow, but proceeds by "working the water". A nutrient-rich water solution delivers nutrients directly to the plants, whereas in traditional agriculture or gardening, bacteria and fungi break down organic matter, releasing minerals that are absorbed by the plants via the water in the soil. Roots are supported by an inert, neutral ecosystem called substrate. They thus come into direct contact with the nutrient solution, while retaining access to oxygen. In hydroponics, water can be continuously recycled in a closed circuit, via pumps or gutters.

Some of the most widely used substrates are :

Coco fiber: the most widespread, as it is the most efficient, ecological and recyclable; peat: derived from the decomposition of plant species, popular because it's easily biodegradable and inexpensive; perlite : a form of volcanic rock, appreciated for its high drainage and oxygenation capacity.

It's important to use pure water (***), as the chlorine often ...

3.3 The cost structure and the question of profitability

Main cost items

It all depends, of course, on the sophistication of the system installed, as the heterogeneous nature of hydroponic cultivation makes it difficult to carry out a pertinent analysis valid everywhere.

Installation (***).

The energy required to power LED and aeration systems. Here too, prices can vary widely depending on the size and sophistication of the products. [***]

The cost of skilled labor for complex systems, which require both maintenance and monitoring of the data collected on the plants, as well as considerable technical knowledge.

Hydroponics is highly dependent on the cost of nutrient inputs and fertilizers.

Nitrogen, potassium and phosphorus are the basis for the production of chemical mineral fertilizers, generally referred to as "NPK fertilizers". Another category of fertilizers is natural or organic fertilizers (***). In theory, both types can be used for hydroponic production.

The graph below gives a good overview of price trends over the last few years. The majority of the French fertilizer market depends on imports, and is therefore highly exposed to the international market and fluctuations in raw material prices. As a result, import prices accurately reflect the price available on the French market.

Import price index for nitrogen products and chemical fertilizers, base *** **** France, ...

3.4 Urban agriculture: a prime location for hydroponics?

One of the most popular applications for hydroponics is urban agriculture, particularly through the installation of vertical urban farms. Urban agriculture is a solution recommended by the FAO and the UN to meet food security needs. It also responds well to the challenges of urbanization, especially as it can have both social benefits (***). According to the UN, **% of the world's food consumption could come from urban agriculture by ****. [***]

On average, according to [***] For example, for the past * years,Agripolis has beenmaintaining Europe's largest urban farm in Paris on the roof of the Parc des Expositions. The maraïchères crops extend over **,*** m* and gave rise to the first harvests in June ****. The aim is to produce one tonne of fruit and vegetables a day, using a vertical "aeroponic" system. The fact that it produces via a closed water system, with organic nutrients and without the use of pesticides should appeal to local consumers [***]. On its website, Agripolis claims that its columnar growing methods via aeroponics offer * to * times higher yields than traditional agriculture. Agricool, on the other hand, has opted for an original technology derived from hydroponics and claims yields *** times higher than conventional agriculture - **m* in their containers ...

3.5 Out of town, hydroponics competes with traditional greenhouses for larger-scale productions

There are also hydroponic farms (***) in the countryside for products such as tomatoes and lettuces. This requires larger-scale production.

In France, for example, **% of tomatoes are grown above ground using hydroponic techniques [***].France produced around *** tonnes of tomatoes in ****, so *** tonnes of tomatoes would be produced hydroponically. France's biggest tomato producer is Savéol.

While hydroponics is particularly used for tomatoes, other vegetables such as cucumbers and peppers can also be grown hydroponically. For example, in ****, Serres Modernes du Val de Loire invested €** million in a high-tech farm to produce *,*** tons of peppers a year. [***]

These figures were not released in ****, but those for production in **** and investments in **** confirm the existence of a new trend: hydroponics in the countryside .

4.1 Main products that can be grown hydroponically

Source: ****

Hydroponics is particularly well suited to growing certain vegetables (***), fruit and horticultural produce.

On the other hand, many products cannot be grown using this "soil-less" logic, as they require soil. This is the case for certain fruits such as apples and pears, as well as most cereals and potatoes. These products are essential for human consumption, but cannot be grown hydroponically.

Other uses

Some players are looking to cultivate rare and little-marketed species, to bring them back into fashion [***]. It is also used in research by scientists to carry out experiments...

4.2 Getting started with hydroponics? Steps to follow

Steps to follow before starting hydroponics according to GHE (***)

General Hydroponics Europe offers a method for producing plants yourself using the hydroponics technique. The company also sells and installs customized hydroponic growing systems. It also offers a wide range of fertilizers, supplements and pH regulators for hydroponics. The company is a leader in this field in France.

The first choice is that of cultivation, which requires a local market study to estimate which products could be sold in the region. This means opting for products with high added value and strong local demand (***).

The second step is to analyze the water to be used. It has to meet the requirements of hydroponics, and then the right fertilizer has to be chosen. The next step is to install the hydroponic cultivation system, which is what GHE proposes to do.

GHE offers production estimates. In theory, hydroponics can be up to **% more productive than on land, for the same surface area. In practice, this depends on many factors, such as water quality, the grower's knowledge, plant varieties and so on. On average, ** lettuces are planted per m* for an average production of ** heads per week. [***]

More high-tech hydroponics systems

Many start-ups have chosen ...

4.3 Supply trends in urban vertical farms

Trends among urban farms

We can imagine a typology of three types of vertical urban farms, which respond to different trends in demand and operate thanks to different business models.

Low-tech, open-air urban farms, which don't necessarily focus solely on yield, because the problem with growing crops in the city is that it's much more expensive than in the country - according to Les Echos, up to ** times more on the roof of a building. The economic model of these farms includes other sources of income than product sales: events, visits, rental of plots for cultivation, etc. They therefore play on the social impact of their activities. They therefore play on the social and environmental impact of urban agriculture. Such is the case with Aeromate.

Small-scale, high-tech "indoor" urban farms, which focus on high-end niche products (***). [***]. According to Les Echos, the micro-sprout segment is the new "green gold", attracting new urban farmers who often use hydroponics. These young shoots are particularly appreciated for their nutritional quality, with up to ** times more nutrients than at adult size.

Larger-scale, high-tech peri-urban farms, which need more space to be profitable. For larger-scale crops (***), we can imagine that these larger-scale peri-urban hydroponic productions also have ...

5.1 Regulatory framework

The traditional regulatory framework for fruit and vegetable trading activities

Decree **.**** of **/**/**** lays down health regulations for fruit and vegetables. They must be: of sound quality, clean, whole and have reached a sufficient degree of development and maturity; Decree n°**-**** of **/**/**** modified by decree n°**-*** of **/**/**** The treatment products used must be indicated on the packaging and on the slate for citrus fruits and products treated after harvesting; Decree of December *, ****:Prices are freely determined, but their display is strictly regulated;

[***]

The Egalim law for balanced trade relations in the agricultural sector

The aim of the Egalim law is to re-establish balanced commercial relations between producers and supermarkets, and to make healthy, sustainable food accessible to all consumers. This law has been in force since October ****.

Finally, as mentioned in the study, hydroponic products are not eligible for organic and terroir labels (***) under European regulations.

6.1 Segmentation of hydroponics players

• General Hydroponics Europe
• Agricool
• FUL Ferme Urbaine Lyonnaise
• Agripolis
• Aeromate
• InFarm
• InVivo
• Les Sourciers
• Azuvia
• VIF Groupe
• GrowLed
• Culture Indoor
• Permaculture & Cie