LITTLE FALLS, NJ, December 29, 2005 – In a mature market like commercial pest control, new growth opportunities can be as scarce as a dragonfly in the desert. But food processing plants and newly opened restaurants may offer the best chance for pest control companies and their chemical suppliers to increase market share, according to a study soon to be released by www.klinegroup.com.
Data from PEST CONTROL IN U.S. FOOD-HANDLING ESTABLISHMENTS 2005 indicates that about 25% of food processing plants still use their own employees to coordinate pest control management, as opposed to an outside pest control company. In contrast, more than 90% of restaurants, kitchens, and warehouses––which make up the bulk of the food-handling pest control market––use contractors. While food processing plants represent a smaller market segment overall, each plant is a high-value source of potential revenue for both the pest control companies and pesticide marketers.
Kline’s study shows that, in general, restaurants and other facilities operating kitchens are almost entirely dependent on pest management companies for monitoring, diagnosis, and treatment. Warehouses and food processing plants, while relying heavily on pest management professionals, are somewhat more likely to use employees for this activity.
The implication for the industry is that growth for pest management services in the kitchen categories will have to be based on increasing the number of restaurants and schools serviced, whereas there is an opportunity for increased market penetration in warehouses and processing plants.
“If you know that you’re peaked out in restaurants, and that 90-plus percent of them already have a pest control operator, you have to grow by taking share from somebody else,” says Dennis Fugate, industry manager of the Specialty Pesticides practice for Kline’s market research division. “On the other hand, if you can get a plant to convert to pest control, a single plant is probably worth 10 or more restaurants in terms of volume, though they’re a smaller segment of the market.”
Kline’s study pegs the U.S. market for professional pest control services at $5 billion in 2004. Commercial food-handling activities are likely to represent about $1 billion in service revenue and nearly $100 million in chemical use. Commercial food handling involves more than 600,000 establishments across the continental United States. Of that total, there are more than 42,000 food processing plants, including everything from canneries and bakeries to slaughterhouses and meat packagers.
“For pest control marketers, the continued use of employee-managed pest control by a good number of food processing plants indicates a dual strategy is needed to ensure full coverage of the market––one that targets not only the pest control segment but also examines where food processing companies purchase pest control products,” says Mancer Cyr, senior associate in Kline’s Specialty Pesticides consulting practice.
The study also tracks an undercurrent of dissatisfaction in the market regarding methods for dealing with flies, specifically in food processing plants. However, some of the dissatisfaction may also be an indicator of the persistence of the problem.
“In completing our survey, we noted that there’s a definite interest in new product forms and finding safer ways to handle fly problems with reduced exposure to pesticides,” says Fugate. “Flies are tough, though,” he adds. “You open the door for 10 seconds and you might end up with a fly infestation, regardless of how clean the facility is.”
He notes that pest management companies are looking to address this issue by developing preventative methods that focus on exclusion––teaching clients to improve sanitation and keep doors closed, as opposed to using chemicals.
Food handling accounts for a major portion of the overall general pest market, but researchers usually consider it only as an embedded segment of the total market picture. Kline’s new study is the first large-scale market research effort to focus specifically on opportunities for pest control operators in food-handling establishments.
PEST CONTROL IN U.S. FOOD-HANDLING ESTABLISHMENTS 2005 examines the methods, application responsibilities, products, costs, and market trends for controlling pests in seven different classes of food-handling establishments, including restaurants, hospitals, hotels, schools, food processing plants, and warehouses.
For more information on this study, go to www.klinegroup.com/reports/y585.asp or contact Dennis Fugate at +1-410-418-8934. In Europe, contact Pilar Pardo at +32 2 776 0737.
For information on the customized consulting capabilities of Kline’s Specialty Pesticides Practice, contact Mancer Cyr at +1-856-764-3536.
Established in 1959, Kline & Company (www.klinegroup.com) is a management consulting and market research firm serving clients worldwide in the life sciences, chemicals and materials, consumer products, and energy sectors.
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