The South African building paints market is expanding due to many local and international influences. South Africa is a suitable base for expansion into Southern Africa and further growth is anticipated as construction activity increases and expendable household incomes rise. As the market experiences high growth, competition is set to intensify even as heightened customer awareness about product safety triggers changes in production processes.
New analysis from Frost & Sullivan South African Building Paints Markets, finds that the market earned revenues of $630 million in 2006 and estimates this to reach $947 million in 2013.
"The 2010 football World Cup coupled with rising economic growth and a general increase in building maintenance has led to surging demand for building paints," said Frost & Sullivan research analyst Cornelis Van der Waal. "In addition, fierce local competition is keeping prices stable, making paint more affordable for end users. As a result, paint manufacturers now have an exceptional opportunity to boost market share and revenues."
Growth of six to ten percent between 2007 and 2010 is expected in a market that has traditionally grown at the rate of the overall economy. This enhanced demand will however taper off over the long-term and market entrants will have to move swiftly to capitalize on existing opportunities.
At present, many paint companies are unable to expand at the rate of current demand primarily due to legislative changes, growing customer awareness about health hazards as well as a reduction in skills in the local market. In addition, competition is intensifying with the entry of small participants.
"South African customers, though not as aware as their European counterparts, are increasingly conscious that lead in paint is dangerous," said van der Waal. "In addition, there has been increased demand for low VOC paints, particularly in the expanding DIY category."
This trend is expected to strengthen and manufacturers with older technology will have to invest in newer production methods in order to maintain and expand market share.
Increased price competitiveness, improved production processes as well as compliance with local and national health and safety standards are all issues that manufacturers have to consider when launching operations in South Africa. Existing manufacturers will have to creatively solve issues centered on health and safety as well as ensure BEE compliance in a market where the government is a major end user.
Increased construction activity shapes rapidly expanding building paints markets in South Africa
By Tim Wright
Published August 14, 2007
blog comments powered by Disqus