Market Monitor Composite Decking Demand – US Agricultural To gain an understanding of homeowner higher-end market, largely due to more Fertilizer and interest for spending on composite deck- color options. Still, 67% said there is a Farm Equipment ing in 2023 vs. 2022 in the US, Grassroots preference for Trex, while 7% said AZEK, commissioned interviews with deck build- and 26% said it depends on the project. Spending – Brazil ers/contractors and home improvement Looking ahead, 37% of sources expect retailers. 45% of sources who commented sales of composite decking will remain said overall demand for decking is flat in 2023 vs. 2022, while 26% said it will trending flat vs. the same period last year, increase, and 23% said they were unsure while 36% said up. and it will depend on the economy. One According to sources, 97% said customers source said, “Interest rates on purchasing prefer composite over wood decking, a new house are going up, so demand primarily due to easier maintenance for new homes is going to go down, and and longevity. At the same time, all said there is going to be a higher percentage customers are willing to pay for composite of people staying in their homes instead To gauge farm income expectations decking vs. wood decking, especially since of moving. As a result, a deck, pergola, or for 2023 vs. 2022 and track spending the cost premium is minimal with today’s some other outdoor innovation is going to intentions, Grassroots commissioned price of hardwoods. mean a smaller loan than an addition or interviews with operators of large Regarding market share, 80% of sources new home. Composite decking will drop farms in Brazil. 55% of sources expect said there has been no change in market slightly, but not as much as the housing their net farm income to decrease in share among composite decking brands market as a whole.” 2023 vs. 2022 due to bad weather over the past 24 months, while 20% said and price increases of fertilizers, TimberTech (AZEK) is gaining on the diesel, electricity, and transport, while 30% expect it to remain the same because of higher soybean prices and better productivity. Air-to-Water Heat Pumps – Europe 65% of sources have made no changes in intended acreage for To track the sales outlook and competitive 93% in Spain, 87% in Italy, and 73% in corn for 2023 planting allocations vs. landscape for air-to-water (ATW) heat France due to cost benefits, existing 2022, while 25% have decreased it, pump systems in key European markets, and future government regulations and 10% have increased it—down Grassroots commissioned interviews with pushing for more energy-efficient heating an average 5% overall. At the same heat pump distributors and contractors solutions, and ongoing or new financial time, 90% expect soybean allocations in France, Germany, Italy, and Spain. aid programs. One source in Germany to remain the same in 2023. Large Sources reported that sales momentum said, “The sales momentum will definitely farms in Brazil use the totality of the in 1Q 2023 is expected to rise vs. 4Q 2022 continue upwards. If I am right, solar and area, growing corn during winter and for 87% in Germany and 60% in Spain, as ATW pumps will become mandatory for soybeans during the summer. ATW heat pumps become more widely new construction in Germany.” Regarding recent fertilizer price installed in new construction and for When asked about market share, sources increases, 40% of sources expect replacing traditional boilers. It is expected said that Daikin is the leading brand to keep farm receipts flat due to a to stabilize for 67% in Italy and 60% in in all countries, followed by Mitsubishi rise on soybean prices, while 35% France, after a significant sales increase (Mitsubishi Electric) in France, Italy, and expect a decrease greater than 30% starting several years ago when govern- Spain, and NIBE in Germany. Atlantic because purchases occurred when ment incentive schemes were deployed, (Groupe Atlantic) is the third-leading fertilizer prices were at a peak, and and due to product shortages. brand in France, Buderus (Robert BOSCH) 25% expect a decrease of up to 30% Regarding sales growth, sources reported in Germany, Samsung in Italy, and due to purchases at a lower price and that overall demand for ATW heat pumps Panasonic in Spain. a reduction in the farming area. One is expected to increase in the next two source commented, “The next harvest to three years for all sources in Germany, will be the most expensive in history. I am anticipating an income decrease of around 30%. Besides this incredible increase in the price of fertilizers, (Cont. on page 3) 2