Market Overview

The FY2023 domestic market size of lettuces produced by plant factories with 100% artificial lighting (PFALs) based on the shipment value at producers is estimated at 21,000 million yen, 95.5% on YoY, and it is projected to shrink to 20,800 million yen for FY2024, 99.0% on YoY. Because 90% of produce grown at PFALs is occupied by lettuces (frilled lettuce, romaine lettuce, green leaf lettuce, etc.,) this research has calculated the shipment value of PFAL-grown lettuces.

Supply volume of lettuces produced at PFALs has been declining both for FY2022 and FY2023, as some PFALs have withdrawn from business or have been reorganized. FY2024 expects another slight reduction in the size of lettuce operation, as a large-scale PFAL has announced halt in production. On the other hand, because recent intensification of bad weathers has shown violent fluctuation in procurement market price of vegetables grown outdoors, demand for vegetables produced at plant factories is expanding both for commercial and retail, because of their constant level supply and quality. As new large-scale PFALs are expected to commence operation and existing PFALs to improve the operation rate, the market size is likely to be on an uptrend once again after FY2025.

Noteworthy Topics

Measures at Vertical Farms against Skyrocketing Prices and against 2024 Logistics Issues

In addition to the challenge of soaring costs on electricity, manpower, and operation, vertical farms face the concerns about freight volumes and rates stemming from the 2024 logistics issues. Those vertical farms located far away from consumption areas will be affected by rising logistics costs and reduced freight frequencies.
Various measures have already been taken to address logistics issues and some efforts have been made to reduce costs, such as using trucks on the way back from the local wholesale market after unloading, combining transportation with other cargo, switching to parcel delivery service when the delivery allows room temperature, limiting customers to within the range of 150km from the farm to reduce costs, increasing loading efficiency by producing large lettuces, adding value to crops by processing into final products in-house to sell value-added products, etc.

Future Outlook

As some news in recent years have reported foreign substances such as a frog or a bug found in food, demand and orders for vegetables grown in vertical farms with a low risk of foreign substances are on the rise. The reduced labor required for washing or cleaning processes has also been highly appreciated, another potential growth factor in demand for such vegetables.
While vegetables grown in vertical farms are currently limited mostly to lettuces such as frilled, romaine, green leaf lettuce, etc., the products are expected to expand to include strawberries, basil, and other herbs. Research and development of other new items that can be used as alternative protein sources, such as soybeans, melons, and rice, is projected to continue.

With high expectations for the expansion of demand for vegetables grown in vertical farms and the improvement of the operation rate of existing vertical farms, the domestic market size of lettuce grown in vertical farms is forecast to reach 24,000 million yen in FY2028.

Research Outline