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MP29008

MAPS DOMESTIC & NON-DOMESTIC HEATING JANUARY 1998

Overview

Table of Contents

Executive Summary

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EXECUTIVE SUMMARY

This report has divided the heating markets into four separate sectors: domestic central heating, domestic local heating, non-domestic central heating and non-domestic local heating. There is however, some overlap between domestic and non-domestic heating products as some domestic products, such as radiators, may be used in non-domestic applications. This overlap has been minimised as far as possible by making estimates for the relevant market sectors.

The total UK space heating market was worth £987 million in 1996 at manufacturers selling prices. The domestic heating sector constitutes the major share at 83 percent with non-domestic heating making up the remainder.

Overall, the heating market declined in the early 1990s particularly during the recession, but began to pick up around 1993. Since then, recovery has been limited due to interest rate increases in late 1994. However, sales are estimated to grow by a further 6 percent in 1997 to around £1,050 million.

Mature markets are often characterised by niche sectors which are filled by added-value products to help stimulate the market value. This has been particularly apparent in the domestic heating sector where combination boilers, for example, have increased the value of the sector rather than causing significant overall market volume increases.

Domestic central heating is the major sector in the domestic heating market and is continuing to grow at the expense of local heating. The UK consumer prefers gas to other fuels and gas accounted for 75 percent of all domestic central heating installations. Other fuels include oil, which has shown good growth due to its favourable cost, solid fuel and electricity which are declining markets.

Boilers dominate the market as they are used in most central heating installations. Wall-mounted boilers account for 67 percent of the boiler market and have increased in popularity in recent years due in part to the space saving and aesthetic advantages they offer consumers. The growth in combination boilers has also had some influence as most combination boilers are wall-mounted products.

Combination boilers have been eroding the market share of traditional boilers for some years and now account for around 36 percent of all boiler sales. Condensing boilers are a relatively small market sector with Housing Associations and Local Authorities making up the bulk of purchases. System boilers are a niche market within the boiler sector although growth has been ahead of the overall market in recent years.

Market trends in the radiators sector follow the fortunes in the overall central heating market. By material, steel dominates with a share of approximately 93 percent by value. Most of these radiators are convector radiators. In recent years, new niche sectors have opened up, such as ‘designer’ radiators and Low Surface Temperature (LST) radiators. These latter products are aimed at the growing elderly population and have seen good growth.

The pump market has shown more stability than the rest of the domestic central heating market as replacement makes up a larger proportion of this sectors sales. The controls market, however, has shown especially good levels of growth within the domestic central heating market. A number of factors are responsible, such as a desire by consumers to reduce their heating costs, the growing interest in environmental issues, increasingly tighter regulations involving energy efficiency and recently an EST grant, motivating system upgrades.

The domestic local heating market has experienced decline since the late 1980s due to the difficult economic climate and increased central heating installations. Despite this market state, sales received a welcome boost, both at the beginning and end of 1996, due primarily to very poor weather conditions.

Local heating accounts for just over a quarter of the domestic heating market. Storage heaters hold the major share although this sector has been declining since the 1980s due primarily to the increased number of central heating installations.

The gas fuel-effect fire sector has seen good growth and is expected to continue to grow in the medium to long term. Growing levels of consumer expenditure and the aesthetic benefits of the fireplace as the central point in the living room have contributed to this sector’s success.

Other local heating products such as fan heaters and convector heaters tend to be distress purchases and as a result cold winters have boosted sales.

The non-domestic central and local heating markets have shown some growth in recent years due to increases in commercial and industrial construction. Market performance varies, however, within the various product groups. Commercial radiators and boilers have only seen limited growth due to greatly reduced public sector expenditure levels and reductions in office construction. However, warm air heaters, heat emitters and radiant heaters have shown better growth. Radiant heaters have benefited by the trend towards more energy efficient products.

The depressed state of the heating market in the UK has led to some manufacturers entering new sectors of the market in order to supply a complete package. However, most manufacturers tend to concentrate on one main product sector.

Key suppliers of domestic boilers include Blue Circle (through Potterton), Hepworth (through GlowWorm and Saunier Duval), Caradon Ideal and Baxi. In the non-domestic boiler sector, the major suppliers include NEI International Combustion, Babcock Robey, Hamworthy, Caradon Ideal, Potterton and Clyde Combustion.

In both the domestic and non-domestic radiator markets, key players are Stelrad, Myson and Barlo.

The market leaders for domestic electric local heating are Dimplex, Creda and Unidare whereas gas heating is dominated by Valor, Cannon, Myson, Flavel and Robinson Willey.

The domestic pumps market is dominated by Grundfos, Myson and Wilo Salmson in contrast with the controls market which is rather fragmented. The main competitors are Honeywell Control Systems, ACL Drayton, Danfoss Randall, Horstmann, Landis and Staefa.

The major manufacturers in the supply of heat emitters include Biddle Air Systems, Dunham Bush, SPC, Andrews and HCP. The warm air heater market is dominated by Powrmatic, Benson, Youngman, Reznor, Wanson and Andrews. Key suppliers of radiant heaters include Ambi-Rad, Hamworthy, Schwank, Gas Fired Products and Grayhill.

Channels of distribution vary between the two major market sectors. Distribution of domestic central heating product is dominated by the heating and plumbing merchants such as Plumb Center and Grahams, distributors such as AHED and BSS, and British Gas. Distribution of local heating products has traditionally been led by British Gas and the Regional Electricity Companies (REC’s). However, recent deregulation of the gas supply market will lead to changes in all these distribution channels.

In contrast to domestic heating products, the majority of non-domestic heating sales are made directly to the end user, with sales to major contractors or through distributors constituting other key channels.

The fortunes in the UK heating industry are strongly linked with the state of the prevailing housing market. Generally, the housing market has begun to recover from the difficult years of recession. Encouraging signs include increases in the number of consumers moving house and also increases in house prices. Together with improvements in the levels of commercial and industrial construction, this should favourably influence the heating market, especially in the medium term.

In overall terms, the UK heating market is forecast to increase by 28 percent from 1996 levels to an estimated value of £1,267 million by the year 2000.

Text © 1998 MAPS

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