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Hope for Growth from the South

Sales in the window market in Western Europe increased by 2.0% in terms of value last year. Sales in the industry increased by 1.5% in terms of quantity. A similar development is expected for 2019, as shown by Interconnection Consulting in a study, which was presented last week at the First Vienna Window Congress. The great uncertainty surrounding Brexit caused a 2.1% sales decrease in the window industry in the UK & Ireland area. By contrast, the window market in southern Europe (Italy, Spain, Portugal) will continue to recover and will be Europe's driving force for growth at a sales increase of 6.8% in 2019. The largest markets, France & Benelux and the German-speaking DACH region, however, will continue to achieve moderate growth rates of 1.6% and 1.9% in 2019, respectively. In these countries, the main factor curbing growth is restrained housing construction. The Scandinavian countries are also suffering from the poor development in residential construction; the window market in northern Europe will decline by 1.5% in 2019. The worst development among Scandinavian countries is expected in Sweden. Overall, sales in Western Europe will increase from 18.4 billion euro to 19.9 billion euro by 2022 (CAGR 2.1%), with Italy, Spain and Portugal making a major contribution to growth; both in the new construction sector and in the renovation segment. Metal Windows Dominate Sales Metal windows generate the largest turnover. In 2019, sales in this segment should amount to 6.8 billion euros. The average growth of this segment per year will be around 3.2% until 2022. The reason for the consistently high growth rates is the low cost of maintenance and the optical appeal of aluminium, according to Laszlo Barla, the author of the study. PVC has the largest share of sales at 43.0%, with an annual growth of 1.7%. Growth in this segment will continue, thanks in particular to rising demand in the southern European countries. Overall, combinations show the highest growth rates. For example, wood-aluminum will grow by an average of 2.6% and PVC-aluminum by an average of 3.5% annually until 2022. Both material groups combine the advantages of the aluminum look with the comfort of wood or the easy care of PVC. Structural Change Due to the Advance of Eastern European Window Manufacturers The residential construction sector is the most important sector in the window industry at 66.3%. Interconnection expects a moderate increase in this area until 2022 (CAGR: 1.4%). The increase is mainly thanks to the renovation sector, which continues to perform well due to increased environmental requirements. The industry is undergoing a major structural change due to increased internationalization. Companies from the Eastern European countries Poland, Slovakia or Romania are gradually conquering the Western European markets. The import ratio in Germany now stands at 28.8% in the sales area. On the other hand, we can see that Poland has an export share of 56.0% and with players such as Drutex, Eko-Okna and Oknoplast among others, will stir up the top 10 in some Western European countries. But not only Polish brands are on the rise: HSF and Slovaktual from Slovakia, are targeting German-speaking countries in particular, and Casa Noastra (brand Q-Fort) from Romania are exporting to Italy and France. Some major Western European manufacturers have shares in these companies and can thus benefit from this boom, others must devise clear strategies for differentiation, in order to defend market shares.

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Eastern European Window Market Faces Stagnation

The crisis in the construction industry in Russia & Ukraine is dampening the growth prospects of the Eastern European window market. The sales increase in the CEE countries in 2019 will amount to only 0.6% (33.1 million units), which means that the market is still far behind its 2014 level (40.9 million units). Despite stagnation, the 2018 sales volumes of + 3.1% reflects significant sales growth driven by growing environmental awareness, according to a study by Interconnection Consulting. The Russia & Ukraine region is by far the largest market with a market share of 53% and a sales volume of 17.6 million units. For 2019, Interconnection expects a further 1.2% decline in sales. Interconnection Consulting doesn’t expect a recovery until 2022, at which point they predict a slight increase in sales for the region for the first time. The biggest growth in the past 10 years came from the Baltic countries, whose window market benefited from a huge construction boom, both in residential and non-residential construction. Overall, the region was able to increase sales by 7.6% last year. Nevertheless, the strong growth will decline rapidly in the coming years. An average annual growth of 1.4% is expected. The Visegrad countries (Poland, the Czech Republic, Slovakia) recorded an increase in sales of 4.2% last year. As a result of the slowdown in the construction sector, however, further growth in the window market will gradually decrease (CAGR: 2018-2022 + 1.4%). The Balkan countries will continue to maintain their growth path, achieving average growth of 2.7% annually until 2022. The region of Hungary-Romania-Bulgaria-Greece recorded a decline in the new construction sector in 2018, but this is compensated by strong growth rates in the renovation sector. Here, the projected annual growth rate for sales is 2.3% until 2022. Combinations Catch Up The highest turnover is still reported for ​​PVC windows with 2.48 billion euros. The average annual growth rate until 2022 is 3.0%. In second place, we have metal windows at 1.03 billion euros. These should be able to increase their share (CAGR + 5.2%). Due to stronger growth in non-residential construction, where this product group has a higher market share, metal windows are expected to achieve higher growth rates over the next few years than PVC windows. The segments with the highest growth, however, are clearly combinations. Wood-aluminum will grow by an average of 7.6% and PVC-aluminum by an average of 6.6% per year until 2022. Both material groups combine the advantages of the aluminum look with the comfort of wood or the easy care of PVC. High Export Rate The residential construction sector is the largest sales market for window manufacturers at a share of around two-thirds (66.1%). However, this sector is now stagnant and is compensated by stable growth in non-residential construction (CAGR + 2.0%). While triple glazing are the preferred window type in the Baltic States and in Russia & Ukraine with a share of 72.5% and 54.5% respectively, double glazing dominates in the Visegrad countries (65.6%) in the Balkans (73.9%), and in Hungary-Romania-Bulgaria-Greece (80.4%). While the Western European window markets are struggling with rising import quotas, the export rate in the Eastern European markets is booming. Thanks Drutex, Oknoplast and Eko Okna, the leading companies in Europe, Poland already has a tremendous export share of 56%.

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Quick Coffee on the Go

This past year has seen an increase in the HO.RE.CA-Coffee market by 1,5%, achieving a turnover of €1,677 billion. However, predictions for the next few years for the overall market are not quite as optimistic. The sales volume in the examined markets is set to increase by only around 0.6% annually in the next few years, as shown in a new study by Interconnection Consulting. Nonetheless, the takeaway coffee culture is also creating new market conditions. Bakeries Replace Charm of Old Vienna The strongest growth in 2018 was achieved on the Austrian market, which saw a 3.0% increase in turnover in the Ho.Re.Ca (hotel, restaurant, café, bakeries) coffee business, reaching € 82.7 million in 2018, and a 1.9% rise in sales. The Austrian market benefits from higher private spending’s in the out-from-home market and a thriving hotel industry. As a country with strong coffeehouse culture, Austria remains true to its traditions. Accordingly, coffeehouses still account for the majority of gastronomy-coffee consumption (33.9%). However, the biggest increase in away-from-home coffee consumption was reported by bakeries, who are increasingly taking over the role of traditional coffeehouses, leaving coffeehouses with the lowest growth among the four customer segments. Coffee beans are the largest product group, recording a 3.3% increase in value last year. The biggest growth came from coffee capsules, up 6.8%, followed by coffee pods at 6.2%. Ground coffee can no longer keep up and will be faced with sales losses in the coming years. The most important players in the Austrian market are JDE, J. Hornig, Julius Meinl and Lavazza. Premium Coffee on the Rise In Germany, coffee sales in the Ho.Re.Ca sector increased by 1.0%. Last year, the industry generated a turnover of € 813.2 million. The turnover is growing faster than sales, due to higher demand for premium products, pods and capsules. The product groups follow a similar pattern to that in Austria. Whole coffee beans remain the market leader. However, the main growth is in coffee capsules (+ 6.3%) and coffee pods (5.5%). In Germany too, ground coffee is faced with negative growth (-0.8%). In the customer segments, coffeehouses hold a majority with a 35% market share, however this does not change the fact that this is the segment with the weakest growth of all four customer segments. "Coffeehouses are losing ground due to the strong takeaway coffee trend and are losing share to the bakeries," explains Laszlo Barla, author of the study. The most important players in Germany are JDE, J. J. Darboven, Dallmayr, Melitta and Tchibo. Slender Italian Growth The Italian HO.RE.CA coffee market has to contend with the generally poor economic situation. Quantity grew by an extremely slender 0.1%. The market volume last year was € 781.9 million. Coffeehouses, with a share of 38.3%, represent the largest share in the customer segments in Italy, followed by Restaurants /Bars at 28.5%. Whole coffee beans are the market leader - their market share in all three countries together is around 74%. The biggest growth came from coffee capsules at 3.7% and coffee pods at 3.2%. The biggest suppliers in Italy are Caffè Vergnano, Illy, Lavazza, Segafredo and Kimbo. However, the market concentration is much lower than in the retail coffee segment, as the entry barrier for the HO.RE.CA coffee market is significantly lower.

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Growth in the Austrian Window Market is Losing Momentum

In 2016, the Austrian window market posted a moderate increase for the first time in years. Since then, the trend has solidified in the following years (17-18) due to the good economic development. For 2019, Interconnection Consulting expects the growth rate to ease off again slightly (+ 0.3% growth by volume and + 1.0% growth by value). The Austrian window market has a volume of 2.5 million window units in 2019, with manufacturer revenues amounting to 837 million euros. Decline in Renovation Around 56% of the market volume comes from refurbishment. However, new construction has gained a lot of market share in recent years. The proactive residential construction strategy in Vienna and robust building completion rates in the federal states have been strong market drivers for the window market in new construction since 2017. Interconnection expects renovation to remain negative after sales rates of -2.4% in 2019. The reasons for this are the lack of transparency with regard to available subsidies, and in some cases lack of  appeal to make use of subsidies, as these are associated with high construction requirements Solid Increase for Object Construction The contract segment for window sales is developing positively in 2019 (+ 2.5% expected). Again, new construction is the stronger market driver (+ 3.9%). The construction of industrial buildings in Austria is the strongest market force for commercial construction. Plastic and Combinations Dominate the Market The largest product group in Austria is the plastic window with a quantitative market share of 41.5% in 2019. Plastic windows benefit from growth segments such as social or multi-storey housing, among others. While plastic window imports from Eastern Europe are rapidly increasing in other European countries (such as Germany and France), import pressure in Austria is not particularly high. Austria has a very high proportion of combinations (plastic / aluminum or wood / aluminum) in international comparison, which goes to show the unique and innovative strength of the Austrian window market and its strong domestic brands.

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Leading Companies trust in Interconnection Consulting

Admonter

At the IC Impulsworkhop "Sales Optimization" we appreciate not only the practical relevance, but also the eloquent language and the perfect rhetoric. The most important benefit for our company was the sales pipeline. Adrian Capellarie (Head of Sales Admonter Holzindustrie)

Deutscher Holzfertigbau Verband

Interconnection provides us with the prefabricated house study a plausible and veritable data basis for the analysis of the actual situation in the prefabricated house market and beyond for the assessment of the future market development. We are happy to use this interpreted data for our lobbying and everyday work.

Thomas Schäfer (Managing Director, Deutscher Holzfertigbau-Verband)

ELK

The prefabricated housing study by Interconnection Consulting shows a real picture of the actual market situation and forms a valuable basis for our strategic decisions.

Gerhard Schuller (CFO ELK)

Epson

EPSON is satisfied with the Interconnection's way of communication with the market and with clients. EPSON is also appriciate the Interconnection's continuous work trying to aim the report to be at the higher level. As a result, EPSON rely on Interconnection data, for the market of POS Printers and Systems.

T.Murakami (Brand Management, Seiko Epson Corporation)

Gaulhofer

I appreciate on the forum "Impulsworkshop Vertriebsoptimierung" the practical relevance of Peter Berger linked with his practical examples. I also liked the sovereign presentation style. The most important benefit was for me, on the one hand refresh of methods and also the sales management tools that were shown. Ing. Dietmar Hammer (Head of Product Management Gaulhofer)

Kontron

The most important benefit of the Impulsworkshop "sales optimization" was in my view the procedure of the definition of strengths and the entire sales process. Mr. Berger is very competent and professional. Fabian Freund (Sales Manager, Kontron Austria)

Österreichs Personaldienstleister

The sales management tool ZAIS has become indispensable for many Austrian temporary staffing providers for fast and correct sales management decisions. A tailor-made online cockpit provides comprehensive monthly figures and data on temporary work and the labor market in Austria, while at the same time impressing with its overview and intuitive user guidance. Interconnection Consulting has consider individually to all user needs during development process and also convinces with fast response times during operation.

Dr. Gertraud Höltl (Generalsekretärin Österreichs Personal Dienstleister)

Saint Gobain

Long experience and deep understanding of the construciton industry markets make up the quality of the IC studies. Interconnection Consulting is a constant companion concerning the assessment of markets and helpful for decision-making.

Bernd Blümmers (Directeur General, Saint-Gobain Solar Systems, Central Europe, Aachen)

Salamander

Interconnection Consulting reports deliver a worthfull external perspective and are so a good contrast with regards to our internal market point of views.

Pedro Posada (CEO Salamander Industrial Products Spain)

Scandinavian Business Seating

The IC Report gives a very good overview of the Western European office furniture market, in a well-structured way. The data is helpful to better understand the market developments and drivers.

Beatrice Sotelo (Director Business Development , Scandinavian Business Seating)

Schneider Electric

Under a short time constraint, Interconnection was able to deliver an outstanding study that exceeded my expectation in terms of quality and market breadth. I highly recommend Interconnection to anyone in need of market research.

Jeff Canterberry (Director of Strategy and M&A, Schneider Electric)

Sodexo

When developing new market strategies, Interconnection is a trusted source we always come back to. Christian Frey (Marketing Manager CS DACH)

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