Melbourne, Australia (PRWEB) November 19, 2012
Dry weather and weak construction cut revenue down in the Turf Growing industry. The industry's revenue is forecast to decline by an annualised 2.3% over the five years through 2012-13 to reach $258.2 million. The fall in water availability over the past five years led property owners to cut the area of lawn in their landscapes. According to IBISWorld Industry analyst Aries Nuguid, “this led to declining lawn installations and contributed to the drop in industry revenue”. Competition from synthetic turf also increased as the turf offered lower maintenance and watering requirements. Besides adverse weather conditions, the slowdown in the dwelling commencements also sapped away at industry revenue. With fewer residential properties under construction per year, there was less need for grown turf. The industry will continue to consolidate toward larger scale turf farms. The larger scale will enable firms to spread their fixed costs over a larger operation, which will enable some increase in profitability. Industry revenue is expected to resume more stable growth due to an uptick in consumer sentiment and dwelling commencements, increasing 1.9% in 2012-13. Water availability is also expected to increase in the current year.
The industry can expect better conditions over the next five years with revenue forecast to increase. Revenue will recover due to improved demand from the house construction markets. Wetter weather conditions will also be conducive to revenue growth, however the industry will continue to face challenges. The forecast shift toward denser living uses less lawn per residence. “There are also potential revenue drops associated with climate change risks”, says Nuguid.
The Turf Growing industry has a low level of market share concentration. The low market share concentration is due to the lack of advantages of economies of scale. Operators tend to specialise in serving markets close to their establishment. This is because of the large transport costs associated with moving low-value per weight products. The low level of differentiation between turf grower products also contributes to the low level of market share concentration. Since turf products are difficult to differentiate, many small businesses can enter the industry and be competitive.
For more information, visit IBISWorld’s Turf Growing report in Australia industry page.
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IBISWorld industry Report Key Topics
Companies in this industry grow turf for transplanting. Operators plant, maintain and harvest turf farms. Landscapers, households, governments, sport venues, revegetation contractors, and plant hire and garden service providers can then install the turf grown.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
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