Denso Corp., is shifting gears to automate its agricultural business, aiming to capitalize on a market that could exceed $13 billion by 2035. The move comes as climate change and labor shortages pose significant challenges to consistent food supply.
Denso’s New Growth Strategy
Denso Corp., primarily known for supplying car parts, is making strategic moves to automate more of its agricultural business. The company is eyeing a larger share of an industry it predicts could surpass ¥2 trillion ($13 billion) by 2035. The growing demand for industrialized greenhouses, capable of providing consistent fresh produce amidst climate change and labor shortages, is driving this market growth, according to Yasushi Mukai, Denso’s executive officer in charge of its food value chain business.
While Denso currently holds about 2% of the ¥700 billion market for greenhouses and related segments, Mukai sees significant potential for expansion. However, he did not specify a particular target.
Diversifying Revenue Streams
Most of Denso’s revenue comes from its role as a supplier to Toyota Motor Corp. and other Toyota group companies. However, last year, the company identified new growth markets as a “second pillar” of its business.
By the 2030 fiscal year, Denso aims for these secondary businesses to contribute around ¥300 billion in sales and make up 20% of overall revenue by 2035. The company plans to leverage its expertise in automated machinery and air ventilation in the greenhouse segment.
Acquisitions and Future Plans
In line with its automation strategy, Denso acquired Dutch greenhouse manufacturer and horticultural solutions provider Certhon Build BV last year. In May, the company started accepting orders for an automated tomato-picking machine. Over the next three years, Denso hopes to supply 300 units of this machine and extend its market into North America.
Certhon Build CEO Lotte van Rijn stated that they could build a greenhouse anywhere in the world where a feasible crop can grow. He emphasized that improving agricultural practices is crucial due to climate change, water shortages, and labor scarcity to ensure a long-term food supply.
