Paint industry is one of the fastest and steadily growing industry across the globe. The paints and coatings industry in the United States, Western Europe and Japan is mature and generally correlates with the health of the economy, especially housing and construction and transportation.
Overall demand from 2011 to 2016 will increase at average annual rates of 12% in the United States ,1.52.5% in Western Europe, Asia Pacific (810% and Latin America (6%).
One of the key factors of the paint market growth is the rapid development of the global construction industry.
consumption ranked first in a yield of 42% in 2012,in that China accounted for more than half of consumption.
3. SHERWIN-WILLIAMS (U.S.)
4. DUPONT (U.S.) 5. BASF (D.E.) 6. RPM Inc (U.S.) 7. DIAMOND Paint (U.S.) 8. VALSPAR (U.S.) 9.SACAL (U.K.) 10. NIPPON Paint (J.P.)
$ 7.94 billion
$ 5.35 billion $ 4.99 billion $ 4.08 billion $ 3.73 billion $ 3.57 billion $ 3.35 billion $ 2.98 billion
Growth of the paint industry has been consistent with the growth of Indian GDP. Paint industry has been growing at a rate of 1.5 to 2 times of Indian GDP growth.
Currently estimated at INR 210bn, Indian paint industry has grown at a CAGR of 18.5% in last two years and expected to grow at a CAGR of 17.5% in next four years to become INR 396bn industry in FY15.
ASIAN PAINTS Overall market leader due to leadership in decorative segment. KANSAI NEROLAC Market leader in automotive industrial paint segment. BERGER PAINTS Major revenue from decorative paint segment AKZO NOBEL Major revenue from decorative paint segment,also in automotive paints.
Indian paint industry is dominated by organized sector which currently captures 67% market share. Organized sector has grown at a higher rate vis--vis unorganized sector in last few years.
Unorganized sector mostly offers lower end products like low end enamels, distempers, lime wash, cement paint etc.
Rising disposable income and created awareness from marketing efforts by organized players resulted in consumers preferring for better quality and higher end products like emulsions.
It has been observed that buyers, both direct end-users and retail channel, are becoming increasing powerful with their growing bargaining power. End-users are demanding higher quality paint for the same or a lower cost. Paint manufacturers are continuously being forced to reduce prices, and those who fail to do so are losing out to the closely fought competition. Due to economic recession, end-users have lower purchasing power and this is forcing paint companies to reduce prices in order to keep up their sales volumes.
The cuts in price of product are being accompanied by increase in the raw material prices. Resins prices have been rising in the past few years for almost all kind of paints. Thus, paint companies are getting squeezed from both directions resulting in thinning of their profit margins. Governmental regulations against paints containing volatile organic compounds (VOC) will be a major factor in throwing out certain kinds of paints from the market,prompting paint companies to act accordingly. Companies have to be proactive and cannot sit back and wait for other companies to act because these will be the companies which will surely lose out in the market in the medium run, if not the short.
ASIAN PAINTS
Asian Paints, largest decorative paint company in India has a dominant market share of more than 50% in organized sector. The company has presence in 17 counties with 22 manufacturing facilities.It is one of the fastest growing Indian company with 4 year revenue CAGR of 20.4%. It is also the third largest player in industrial paints with a market share of 13%.
Always Dominant ?
Despite increasing competition from domestic and major foreign paint companies , Asian Paint has maintained its market leadership and has increased its market share from 48% to 54% .
AKZONOBEL
Akzo Nobel India (Akzo) known for its premium segment product Dulux has a market share of ~11-12%. Company's business can be broadly divided into decorative paints and refinish auto paints where later contributes approximately 15% to its revenues. Erstwhile ICI, the companies name was changed to Akzo Nobel in FY10 after it was acquired by largest paint company in the world in 2008.
Due to lack of product offerings for mid-market and lower-market segment, company has been continuously losing market share to competition.
So company is expecting to aggressively launch new products in mid market segment to fill the product gaps and renew efforts to gain marketshare.
Focus to grow
Company is backed by the parent company Akzo Nobel, Netherlands which has consistently ranked as world's largest paint company. Backed by the renewed efforts from parent company with its bigger plans for Indian market, Akzo Nobel management has guided to become Euro 1bn entity by 2015. To achieve the target company is undergoing massive capacity expansion plans. It plans to double its capacity from current 80,000 MT to 160,000 MT by FY14.