Background for industry and PESTEL-forces

Full industry background

The primary stakeholders in the industry include manufacturers, suppliers, distributors, retailers. The customers in the industry are individuals/organizations that are interested in purchasing, owning, and using sailboats, such as sailing enthusiasts, boat owners, and water sports enthusiasts.

The sailboat industry was valued at $5.84 billion in 2020 and has seen growth even during the COVID-19 pandemic. During Q1, and Q2 in 2020 sales were dropping due to infrastructural and production problems, but the market regained its size quickly, due to a higher demand for recreational products (approx. 30%). In 2022 the market was valued at $6.09 billion and the expected growth is 4.8% to $6.39 billion in 2023. In the future, the sailboat industry is expected to have steady growth with new and eager sailors and new innovations in the industry. The market is expected to grow to $7.52 billion at 2027, at a CAGR of 4.2%. The sailboat market is possible to divide by length, where the largest segment (>50%) consists of sailboats between 20-50 ft.

The largest region is North America and the main driver for the market growth is the increase of popularity of marine activities. The market is driven by both commercial and leisure use of sailboats. Some of the main stakeholders are Beneteau Group, Hallberg-RassyVarvs AB, Bavaria Yachtbau, HanseYachts AG and Cantiere del Pardo S.p.A. The main products of the market are cruising sailboats, motorsailers, daysailers and racing sailboats.

A brief history of the sailboat industry starts in the 1920s and 1930s, where the first signs of an industrial organization were seen. The automobile industry started to boom, and the boating industry has been trying to follow even until today without the same reach. In the 1950s the industry started booming, quick technological advancements made fiberglass boats more common and accessible. The invention of plastic boats that require minimal attention and care spread the interest for boating widely in symbiosis with new laws of paid leave.

During the 1960s and 1970s boating grew into a family sport, but concerns about energy efficiency and prices started growing. The high prices characterized the 1980s and boating seemed like a luxury leisure sport. However, since the 1990s prices have dropped and around a third of the US population went boating during the 2010s. Between 2011 to 2018, revenue from boat sales grew 7 percent annually. The period had low inflation, low interest rates and high consumer confidence.

With this being said, the customer distribution in the market is spreading out and more regular families are boating today. This market evolution is expected to continue leading to a larger market size. Even though it’s not possible for each family to own a boat, sailboat sharing services are growing meaning that the accessibility is higher.

Sources:

Cupole. (n.d) The evolution of Sweden’s leisure boat industry. cupole.se.

Formula. (2018, September 26). The History of Recreational Boating. formulaboats.com.

Grand View Research. (n.d). Sailboat Market Size, Share & Trends Analysis Report By Hull Type (Monohull, Multi-hull), Length (Up to 20 ft., 20-50 ft., Above 50 ft.), By Region, And Segment Forecasts, 2021 - 2028. grandviewresearch.com.

Harney, M., Maurer, I., & Snowball, D. (2023, April 25). Meeting the needs of younger boat and recreational-vehicle buyers.

Environmental issues

One of the dangers for sailboat owners that can, and probably will, affect them is their effect on the environment, both globally and locally. Everything from carbon emissions to destruction of the ocean/lake floor. These effects have been better understood by scientists, and the general public, and more regulations and laws restricting these industries and sailboat owners are appearing continuously.

The most common topic when discussing the environment is carbon emission. It has been reported that in 2010 the total emission from all ships sailing in European waters amounted to 180 million tonnes. If we measure these emissions as a country, it would be Europe's 8th largest emitter. Maritime pollution was also responsible for 50 000 premature deaths in Europe. Carbon emissions is a well studied area which is constantly affecting all industries with new laws and restrictions coming into effect, but also from the industries themselves because of the demand from customers and other stakeholders for more “green” products and services.

One area however that is less understood but still can see a lot of changes and restrictions is how underwater noise pollution can affect marine life. There are two kinds of underwater noise pollution, impulsive noise and continuous noise 2. Impulsive noise is a sudden burst of sound pulses which can occur from explosions, piling etc. Continuous noise however is, as its name says, sound occurring during longer periods, sailboats, cargo ships, wind turbines etc. Impulsive sounds are usually higher and carry longer distances, often hundreds of meters til thousand of meters, but they are also less frequent, sometimes just once a day or during a shorter time period, for instance during construction. Continuous noise however is usually shorter range, tens of meters til hundreds of meters, but is also much more frequent, like sailboats sailing by a couple times a day or wind turbines where vibration and sound occur constantly.

The effects of noise pollution are poorly understood because of limited research, both for ethical reasons and financial reasons, but it has been proven that animals, everything from invertebrates to mammals, react negatively to noise pollution. Some fish spawn less and react to flight when exposed to sound, mammals have been recorded to cancel their search for food and struggle to communicate and invertebrates have struggled in their feeding process and have been born with mutations to name a few negative consequences. One solution to underwater noise pollution is automated technology that alerts vessels to slow speed or avoid areas to reduce interruptions of wildlife. This changes boater behavior and encourages low-speed, silent cruising by electric motors.

Sources:

Acid News. (2014, March). Ships Should Use Advanced Emissions Monitoring. Publication No 1, Page 8. airclim.org.

Cronborg, C. (2023, March 30). The future of boating: intuitive, connected, sustainable. Volvopenta.com.

Havs- och vattenmyndigheten. (2020, Oktober 15). Marin strategi för Nordsjön och Östersjön: Övervakningsprogram 2021-2026. Publication 2020:26.

Moksnes, P., et al. (2019, September 30). Fridtidsbåtars påverkan på grunda kustekosystem i Sverige. Havsmiljöinstitutets Report Number 2019:3.

The Business Research Company. (2023, January). Sailboat Global Market Report 2023 - By Type (Ketch, Cutter, Junk), By Length (Up To 20 Ft, 20 50 Ft, Above 50 Ft), By Application (Recreation, Racing, Sail Training) - Market Size, Trends, And Global Forecast 2023-2032. thebusinessresearchcompany.com

Carbon emissions and technological advancements

Carbon emissions, as mentioned before, is a well known problem that is forcing every industry to change and adapt. The boat industry however is a slow adapter, especially in its construction phase. The constructors build in small series, usually after a specific order, and have no responsibility for the life cycle of the finished ship. To force change politicians and customers need to put higher demands on the companies for a more thought out construction phase.

After the construction phase the ship needs to be able to move. The energy source is usually fossil fuel, both because it is most often cheaper and also ready and available in all ports around the world. Electrified boats can be used for shorter distances, but more research and development is needed for it to be plausible for medium and longer distances. Another very interesting energy replacement is burning metals. These metals will release high magnitudes of energy and the rest product is metal oxide. These rest products can then be deoxidized back to metal with renewable energy and then the cycle is completed. This research has just been established in Sweden.

Sources:

Lighthouse: Swedish Maritime Competence Center. (2021). NRIA Sjöfart 2021.

Digitalization

As seen in other markets and sectors as well since 2000, technological progress has accelerated with many sectors going digital. The disruptive effects are large, and data-driven platforms are dominating. The Big Tech companies can be seen as gatekeepers of the Internet, and since one of the largest mega trends is the platformization, they have a huge impact. Cost reductions, transitions from CPUs to GPUs and TPUs with AI accelerators are key factors of hardware trends. The quick technological revolution has impacted almost all sectors and it is a big factor to analyze in the sailboat industry.

One of the main changes of technological advancements in the sailboat is the possibility of Internet of Things connections in the boats, meaning that different systems could be integrated for the user. Globally 30 billion devices are expected to be connected to the internet. Some examples of possibilities that digitalization brings to sailboats are systems for navigation, analyzing weather and safety measures.

Furthermore, the COVID-19 pandemic has prompted further technical advancements for the sector. One main aspect is the cancellation of boat shows, but the replacement with virtual boat shows being the key ingredient. In the long run, virtual boat shows have cut purchasing processes shorter and the waiting times for trade shows have been cut. The virtual boat shows are cheaper to operate as well.

Sources:

European Parliamentary Research Service. Global Trends to 2035: Economy and Society.

Automation

With digitalisation and automation the sailing industry opens up for a larger clientele. People who can’t afford a boat, don’t have the expertise to operate one or lack the time to spend on a boat is a large customer group which new technology can finally approach. The sailboats can be rented through an app, assist the sailor with a built in gps system and AI that can navigate the waters alone and leave the sailors to enjoy the ride and also help to learn the sailor with different programs to simulate different situations and give them milestones to reach. These systems can also help veterans so their experience is more fulfilling and the sailing is safer.

Further, autonomous sailboats have been developed with good performance and open-source design making them accessible. However, more research is needed, with low engagement from academia, making joint efforts a key effort.

Sources:

Cronborg, C. (2023, March 30). The future of boating: intuitive, connected, sustainable. Volvopenta.com

Yang, S., et al. (2020, November 16). Generic and Flexible Unmanned Sailboat for Innovative Education and World Robotic Sailing Championship. frontiersin.org.

Change in customer demographics

The current generational shift in boating demographics are posing new possibilities for the industry. The younger generation have expanding interests for outdoor activities and the pandemic boasted interest for nature close leisure activities. However, the rising inflation, rising rates of interest and decreasing customer confidence are posing threats for the industry. The baby boomers are leaving the market for recreational boats, and younger generations enter. The customer needs are needless to say, changing. They care about sustainability, technical aspects and life cycles. The industry needs to understand the preferences and meet them.

Millennials are now the largest consumer group in America, expected to dominate the market and customer needs until 2036, when Gen Z is thought to surpass. Younger consumers have more confidence for the economic outlook and starts parenthood later, which makes the disposable income and time more suitable for boat owning.

There are strategies for targeting the changes and younger boat owners. Digitizing the customer experience by using digital channels in sales process, crisp digital marketing and holistic purchasing journies. Having beginner friendly products, with automation, tech friendly products and self explanatory products. There is growing interest for sustainability friendly products , e.g. decarbonization of production and lower emissions. Lastly, service integretion with leasing, rentals and memberships programs might help.

Sources:

Harney, M., Maurer, I., & Snowball, D. (2023, April 25). Meeting the needs of younger boat and recreational-vehicle buyers. mckinsey.com.

Electrical boating

As seen in the automotive industry, electrical vehicles are a prime solution for a more sustainable emission level. This is applicable in the sailboat industry as well. Electric vehicles (EV) are the least carbon-intense option. However, hybrid electric vehicles (HEV) are found to be the most energy efficient option. EVs and HEVs are viable options if the electricity is produced in preferable ways, e.g. solar or hydro.

Since recreational boating is increasing in popularity many challenges pose threats for the sustainability of the industry. Pollution management, ecosystem perseverance and waterway access to name some. Environmental and health impacts may reduce with electrical boats. Furthermore, the estimated operational and maintenance costs are 40% lower with electrical boats than gasoline powered-boats.

The main factor that needs to be assessed is the source of electricity use. By using renewable energy the greenhouse gas emissions are between 4-8x lower than by using coal or oil energy sources. The health impacts are greatly lower with electrical boats (renewable source) in areas (descending order) as acidification, ecotoxicity, eutrophication, global warming, ozone depletion, fossil fuel depletion, (non-) carcinogenics, respiratory effects, smog and CO2-emissions.

Sources:

Cihat Onat, N., et al. (2014, December 1). Conventional, hybrid, plug-in hybrid or electric vehicles? State-based comparative carbon and energy footprint analysis in the United States. sciencedirect.com.