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Growth-Challenged Lawn/Garden Industry Goes Greener

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Americans' love affair with their lawns is cooling and isn't likely to recover its former heights of passion once the economy recovers.

However, the increasing availability of organic products and growing interest in home food gardens should help support slow growth in the lawn-and-garden market once the economy does begin to rebound, according to the new edition of Packaged Facts' "Lawn and Garden Products in the U.S" report.

PF projects that this year, the overall consumer lawn and garden market will decline slightly: -0.1%, to $24.12 billion.

Equipment sales, which account for about half of the total annual L&G market, are projected to decline by 1.1%. Sales of supplies and lawn care treatment services, which respectively account for about 26% and 22% of the market, are each expected to rise by just 1%. (PF's lawn care services estimates include only professional services focused primarily on treating lawns and gardens with fertilizers and pesticides, not those focused on maintenance, such as cutting.)

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It's hardly surprising that the recession and the housing and development bust have put a damper on lawn care spending. However, the L&G market's growth rate has been dropping since 2005, according to PF. Total sales rose 4.9% in 2004, 3.6% in '05, 1.6% in '06 and about 0.5% in both of the last two years.

The consumer L&G equipment segment (outdoor power equipment, tools/ implements and watering/spraying equipment) has been hardest-hit. After 4.2% growth in 2004, equipment's growth declined rapidly and went into the negative column as of 2007. However, lawn-care treatment services are expected to suffer most over the next three years, declining by 1 to 2 percentage points annually before resuming modest growth.

PF's analysts believe that the housing market will bottom out between 2011 and 2012, and project that the overall L&G market will grow at 1% to 2% per year between 2010 and 2014 to reach $26 billion.

Rising oil prices, water shortages and other "climate deterioration," and increasingly negative perceptions of hydrocarbons and synthetic chemicals, will continue to be fundamental market growth suppressants.

Positive factors for the market include homeowners' need to continue lawn care in order to prop up property values; aging Boomers' likely propensity to spend more time on gardening and lawns; and the growing trend to home gardens for both economic and health/taste reasons.

Food gardening has already had a significant impact on the market, and could be a "huge stimulus" in the years ahead if the trend goes mainstream, the analysts stress.

Last but not least, the L&G industry, faced with declining sales and increasing regulation, is showing "greening momentum." The number of players in the organic L&G segment has proliferated in recent years, and organic sales saw robust 12% to 14% annual gains between 2003 and 2008, according to PF. Even this year -- despite the economy -- organic sales are expected to grow 5%, to reach $485 million.

Scotts Miracle-Gro (SMG) brands continue to increase their heavy dominance of L&G supply categories, including lawn fertilizers, plant foods, potting soil, herbicides and insecticides, confirms PF. SMG acquired Spectrum Brands' fertilizers/growth media businesses -- including its "thriving" private-label supplies businesses with Home Depot, Lowe's and Wal-Mart -- when Spectrum exited the segments late last year. In addition, SMG is gradually becoming a major player in organics.

The outdoor power equipment segment is dominated by MTD Products, Toro, Husqvarna and Deere; the tools/implements segment by Ames-True Temper, Fiskars and Corona Clipper; and watering equipment by Tekni-Plex and Teknor Apex.

ServiceMaster "towers" over all others in professional lawn care, with "distant second-place" competitors including Scotts LawnService and LawnDoctor, PF reports.

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