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Horticultural LED Market: Is Amazon Showing The Way?

 

Emerging applications, including urban farming, will help market grow by 16.4 percent CAGR between 2018 and 2023

The horticultural LED lighting market reached almost $3.8 billion in 2017, currently driven mainly by greenhouse applications. But future growth may be dominated by new types of farming, according to Yole Développement and PISEO (both part of the Yole Group of companies).

In Yole's latest Horticultural LED Lighting report, greenhouse applications will not maintain their leadership in the mid and long term and are only the tip of the iceberg. Emerging applications, including urban farming, are likely to make the horticultural lighting market boom with a 16.4 percent CAGR between 2018 and 2023.

In this context, it is not surprising to discover Jeff Bezos’ support for a vertical farms project in China. In a recent article, a journalist announced a 300 vertical farms project in China, supported by Amazon CEO Jeff Bezos and Alphabet Executive Chairman Eric Schmidt.

According to this article, a start-up named Plenty has raised more than $200 million, thanks to the Softbank Group and investment funds. Entering the Chinese market, Plenty hopes to tap into the country’s growing demand for organic foods.

“Vertical farms, especially developed in cities, is probably the most relevant solution we found to produce fresh food and vegetables", comments Pierrick Boulay, technology & market Analyst at Yole.

“The world population is growing and almost 80 percent of the world’s population will live in cities and megacities by 2050. As a consequence, vertical farms will clearly be part of our future."

“LED technology is a key enabler for the development of the vertical farming industry", adds Joël Thomé, general manager at PISEO. “Thanks to optical radiation versatility, easier integration, and long-life span, crop yields under artificial LED lighting will increase dramatically."

Indoor farming should develop strongly in the largely urbanised Asian areas, especially in China, as this region faces severe soil and water pollution. The Plenty start-up is but one example.

Penetration of this market by Amazon and Alphabet is not an isolated example and must be strongly considered by others in the future. According to Yole and PISEO, the horticultural lighting market is expected to reach $17 billion by 2027 thanks to a boom in indoor and vertical farming applications.

Such figures clearly highlight the attractiveness of this sector.

Amazon’s new positioning confirms the added-value of vertical farms in answer to the evolution of the world’s population and food resources. But it is also strong confirmation of the diversification strategy of the giant Amazon in penetrating the whole foods grocery chain.


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