Refrigeration Service Today: Steady Growth Forecast for Walk-in Coolers and Display Cases

Oct. 10, 2013
With construction activity continuing to pick up steam from 2012 to 2017, the IBISWorld study says the walk-in and cabinet cooler manufacturing industry is poised for a rebound of its own.

If you’re a refrigeration contractor involved in the installation of walk-in coolers and food cases, you’ll be happy to know that business is about to get better. A report from the IBISWorld research group says key external factors that impact the purchase of these units will grow at a steady pace, energized by a rebounding construction sector.

Consumer demand for refrigerated storage declined in 2009, as economic activity slowed in all industries. However, with construction activity continuing to pick up steam from 2012 to 2017, IBISWorld study says the walk-in and cabinet cooler manufacturing industry is poised for a rebound of its own.

According to the report, the value of nonresidential construction is forecast to grow at an average annual rate of 7.1% between 2012 and 2017, creating demand for the industry’s participants. Revenue is expected to grow at an annualized rate of 3.7% between 2012 and 2017, to total $3.7 billion. A 2.1% increase is anticipated in 2013.

Restaurants and drinking establishments represent a significant source of demand for the walk-in cooler and refrigerated case industry. Most establishments require commercial size refrigerators for storing perishable foods. When these establishments are performing well, their owners are more likely to replace and upgrade older refrigeration units. IBISWorld says this external driver is expected to increase, creating a potential opportunity for the industry.

Industry performance is highly dependent on the activities of what are called “downstream” buyers. When the U.S. economy hit rock bottom in 2009, consumers tightened their purse strings and opted to eat at home rather than at restaurants. Case manufacturer revenue plunged 10.3% during the year. Recessionary constraints defined the industry through much of 2010 as well, and revenue declined for the second consecutive year. IBISWorld expects revenue to decline at an average annual rate of 0.8% over the five years to 2012, to just under $3.1 billion by the end of the year.

Cooler Industry Outlook
Much as the walk-in cooler and case manufacturing industry suffers when its downstream buyers suffer, it benefits from strong demand conditions. As the economy recovers, industry participants will face mounting demand from restaurants, grocery stores, and refrigerated storage facilities. With consumer incomes growing, demand for restaurants’ services will increase. As these food establishments experience mounting demand and profit, they will be more likely to upgrade or replace existing coolers and freezers.

Additionally, demand from refrigerated storage operators will remain strong, propped up by growing demand from grocers and apparel manufacturers. These key downstream markets will support cooler and freezer manufacturers’ performance. IBISWorldprojects that industry revenue will grow to 2017 at an average annual rate of 3.7%, including a 2.1% increase in 2013, to reach a total $3.7 billion by the end of 2017.

Influence of ‘Green’ Building
Adding to the replacement market will be unit sales brought about by new construction in line with “green” building practices. IBIS World’s report says “green” building practices will lead to growth in the commercial replacement market. Such practices will become standard through the next four years. Energy conservation issues and technological advances, such as shifts in building designs to improve energy efficiencies, will drive the industry in the years ahead. These efficiency pressures will also push the industry to modify or create new appliances and equipment, says the IBISWorld report.

Government enforcement of the reduction of hydrochlorofluorocarbons (HCFCs) will also generate increased sales of systems that use newer, accepted refrigerants.

A Mature Industry
The walk-in cooler and case industry is a mature one. Its industry value added — the measure of its contribution to the economy — is forecast to grow at an average annual rate of 0.5% from 2007 to 2017, below that of the U.S. gross domestic product (GDP) during the period (an anticipated 1.9% per year). While this decline typically places an industry in a declining life cycle stage, the drastic declines in revenue and profit in 2009 and 2010 must be considered.

Outside of these drops, the industry has begun to rebound. much like to rest of the economy, and is expected to continue growing between 2012 and 2017 as downstream demand increases.

IBISWorld ( is a global business intelligence leader specializing in Industry Market Research and Procurement and Purchasing research reports. Used by permission.