The global Refrigeration coolers market is expected to grow from USD 3.6 billion in 2022 to USD 4.8 billion by 2027, at a CAGR of 6.0%.
Growing investments in refrigerated warehouses/cold storage, rising demand for frozen and processed foods worldwide, rising demand for innovative and compact refrigeration coolers, and growing adoption of natural refrigerant-based systems in various commercial and industrial applications will drive the demand for this market in the near future.
COVID-19 Impact on the Global Refrigeration Coolers Market
COVID-19 had a significant impact on the refrigeration industry due to the severe impact on the manufacturing sector in different regions due to the pandemic lockdown. Indoor climate control, process cooling, and food cold chain technology areas had to face a severe downturn due to abruptions in manufacturing, production, and demand and supply in refrigeration components due to the sudden lockdown in 2020.
Process cooling areas cover different cooling processes, essential in many industrial and commercial sectors. These cooling processes require different refrigeration process equipment, for instance, refrigeration coolers being used to cool, refrigerate, extract heat, or maintain temperature during manufacturing or production or storage in different industries. But the sudden lockdown halted various manufacturing and production processes in the refrigeration coolers market. Various component manufacturing players had to deal with issues leading to the production of state-of-the-art process cooling technologies. This includes, for instance, chillers (e.g., industry, process, and water-cooled), evaporative cooling equipment (e.g., cooling towers, evaporative condensers), as well as dry and fluid coolers. All these components had to face a reduction in sales due to challenged demand and supply conditions.
The cold food chain mainly includes cooling technologies used to process, preserve, transport, and display foodstuff. Food processing industries, food warehouses (chilled and frozen), refrigerated vehicles, and supermarkets are thus elements of the same chain. Due to the lockdown, demand for cold food requirements was drastically reduced, resulting in the demand for refrigerated coolers along with other components to also be reduced.
However, with ease in lockdown in countries such as China, India, the US, and Germany, and vaccines being rolled out by numerous countries since December 2020, the manufacturing sector is expected to pick up the pace gradually in the coming months, and the refrigeration coolers market is expected to recover by mid 2022.
Refrigeration coolers Market Dynamics
Driver: Rising investments in refrigerated warehouses/cold storage facilities
Increasing demand for online grocery shopping and frozen food in the purview of the COVID-19 pandemic has encouraged e-commerce companies to invest in refrigerated warehouses and cold storage. The US has started deploying cold storage facilities in port-centric and coastal markets as well as in proximity to highly populated metro areas. Factors such as the limited availability of land in metropolitan areas are encouraging cold storage companies to set up their facilities in proximity to these areas. Lineage Logistics acquired several cold storage companies of North America, such as Southern Cold Storage, Allied Cold Storage, and Western Distribution Services, in 2020. On the other hand, Americold invested USD 2 billion (approximately) in cold storage acquisitions in 2020. The company’s strategy also involves an investment of USD 400-500 million in the new construction of refrigerated warehouses.
Restraint: High installation costs and other expenses
The installation cost of industrial refrigeration systems is high as the cost of components such as compressors, condensers, and evaporators is high. Control systems used in these refrigeration systems are expensive, and this increases the total cost of installation. Refrigerants such as ammonia and certain hydrocarbons are flammable and corrosive. Similarly, exposure to high concentrations of ammonia is toxic and life-threatening if inhaled. Therefore, safety equipment are required when working with ammonia-based refrigeration systems. Ammonia-based refrigeration systems should be made up of high-cost materials such as steel and aluminum as ammonia reacts with and corrodes copper, which increases the overall initial cost of the system. Safety equipment should be installed to avoid leakage while working on CO2-based refrigeration systems as this leakage may cause serious health hazards and suffocation. Other expenses such as regular maintenance, staff training, and the high cost of energy also increase the overall operational costs, thereby restraining the market growth.
Opportunity: Increasing demand for FMCG products
The rising demand for fast-moving consumer goods (FMCG) has propelled the demand for smart refrigeration, cold storage chain logistics, and transportation. Increasing online shopping and e-grocery has increased the demand for refrigeration units for the storage and cooling of these products. Since some foods are highly perishable, refrigerated logistics has narrow time windows to deliver these products. Transporting food from a warehouse or retail outlet to a consumer location also has become expensive and complicated. For example, there has been a spike in demand for meal kits delivery and e-grocery items in the US. This sudden increase in perishable food products and groceries has increased the demand for cold-storage spaces. The COVID-19 has also impacted the lifestyle and eating habits of consumers. Consumers have opted for cooking in their homes than ordering food during the pandemic. These factors have increased the demand for refrigeration coolers.
Challenge: Lack of skilled personnel along with high safety concerns
As natural refrigerant-based systems have gained traction, the demand for ammonia and carbon dioxide as refrigerants has gone up significantly. This increase in demand is due to the fact that these refrigerants have zero ODP and low GWP. For example, ammonia is a standard refrigerant used in industrial refrigeration facilities worldwide, and it is environmentally friendly and complies with the low-GWP standard. However, ammonia is also regarded as a poisonous gas, and its accidental leakage in facilities can lead to severe industrial accidents. Exposure to lower concentrations of ammonia can lead to temporary blindness, eye damage, skin diseases, or other pulmonary diseases, while exposure to higher concentrations can be fatal. The inner system leakage of such gases can even contaminate food items kept inside the refrigeration system. Hence, the lack of skilled personnel, along with growing safety concerns, is acting as a major challenge for the growth of the refrigeration cooler market.
Evaporator and air cooler component type is expected to witness the highest market share during the forecast period
Evaporator and air cooler component types are expected to contribute a major share in the refrigeration coolers market during the forecast period. Refrigeration is driving massive growth in commercial and industrial applications with advanced refrigeration systems. These components are widely used in several applications, resulting in the availability of different shapes and sizes as per specific requirements. For instance, a line of large capacity coolers is available for industrial and commercial cold storage, especially where food safety, efficiency, and reliability are paramount. Furthermore, these coolers provide versatility for commercial cold storage applications and major retail environments such as restaurants, supermarkets, convenience stores, beverage storage, and more.
Commercial application is expected to have the largest market share during the forecast period
Commercial application is expected to contribute a major share in the refrigeration coolers market during the forecast period. The commercial applications cover a wide range of premises from small cafes to supermarkets and refrigeration requirements from frozen to chilled produce in different areas, including hypermarkets, mini stores, convenience stores, grocery stores, hospitality centers, and small retail stores. For larger supermarkets, energy use is typically considered as a whole, including the building HVAC, water use, lighting, and commercial refrigeration, with heat recovery being a key contributor to minimizing energy consumption, particularly where space heating is a seasonal requirement. Hence, here the usage of refrigeration cooling equipment plays a key role. For smaller stores, heat rejection from display cases can contribute to additional air-conditioning load or provide useful heat in cooler climatic conditions. All these factors are expected to drive the market for refrigeration coolers in commercial applications.
Asia Pacific is the leading Refrigeration coolers market in terms of market size as well as CAGR, globally, by value, in 2021
APAC is expected to contribute to the highest CAGR during the forecast period in the refrigerated cooler market. The highest CAGR of the market in APAC is attributed to the increasing demand for refrigeration cooling units from the commercial and industrial applications in this region. APAC comprises countries such as China, India, and Japan, which are leading countries globally in terms of having higher refrigerated warehouse capacity, and the global market players are experiencing strong demand from countries such as China, India, Japan, and South Korea. Growth is mainly driven by the refrigerated warehouse, food & beverages processing, and meat and poultry processing applications. The growing population in APAC creates a high demand for food, thereby creating opportunities for food processing facilities in this market. Furthermore, government subsidies in setting up cold chain networks are strengthening the cold chain infrastructure across the region.