Judging by the stocked shelves at paint retailers, there seems to be no shortage of architectural paints and coatings. But you can never get too much of a good thing. Manufacturers are continually tweaking the performance of their paints and launching new and improved products in an effort to capture a bigger share of the architectural coatings market.
In the U.S., the architectural coatings market is a mature one. In 1997, 641.4 million gallons of architectural coatings were produced by U.S. manufacturers, representing just over $6 billion, according to a study by Business Trend Analysts, Commack, NY. The Freedonia Group is predicting only modest growth in the U.S. market between now and 2002. Architectural coatings demand will increase just 1.9% each year to 680 million gallons in 2002, according to the Cleveland, OH market research company.
According to Information Research Limited, London, sales of architectural paints and coatings in Germany totaled 563 kilotons in 1997. Italy, France and the UK reported sales of 407, 360 and 290 kilotons, respectively (see chart, page 32).
Manufacturers looking for market growth in Europe may want to enter Poland. According to "World Paint File 1998-2002," a new study conducted by Market Tracking International, the Polish paint market will grow faster than any other European country's market over the next five years. Paint production volumes there will increase eight to 10% each year, according to the London-based firm.
Economic, Political Factors
What are some of the factors affecting the world's architectural paint market? Of course, new building efforts can help increase sales, just as bad weather can hinder them. However, other "external" factors are affecting the marketplace, according to manufacturers that spoke with Coatings World.
In 1997, the architectural paint market in Turkey grew more than 11.6%, according to Yasar Paint's estimates. However, current economic woes have stopped that growth in its tracks.
"There is no market growth estimated for 1998, as the paint industry is affected by the global crisis and by the measures taken by the Turkish government to fight the high inflation rate," said Bülent Atabay, general manager of Yasas, a subsidiary of Yasar Paint Group.
According to Mr. Atabay, tough market conditions have forced manufacturers to step up their efforts. "These negative conditions in the architectural paint market have led companies to be more effective in the marketing area." He added, "Marketing efforts aim to increase the paint consumption per capita, as it is still very low in Turkey compared to western countries."
D.C. Han of Samhwa Paint Ind. Co., Ltd., Seoul, said economic factors are also affecting the Korean market. According to Mr. Han, the 1998 architectural coatings market finished at the same level as 1997. (Estimates for the total market range between $292-$320 million, according to industry sources.) Mr. Han is predicting that things will take a turn for the worse this year. "The market is expected to decline in 1999, even if the government is making successive economic support policies. Most of our domestic economic scale has been drastically reduced," he said.
Despite what seem to be tough market conditions ahead, Samhwa Paint is continuing to develop new products to serve the Korean marketplace. The company is readying the launch of Bangsu-Tan, a new waterproof urethane. Available in a gloss finish, Bangsu-Tan can be used on cement, concrete and mortar. It will be sold at the company's licensed stores and will be promoted through advertising and in-store merchandising efforts, according to Samhwa.
Daihan Paint and Ink of Korea contends it controls 14% of the Korean architectural coatings market. Like Samhwa, Daihan is not expecting the market to improve this year. "We do not estimate the market in 1999 will be considerably improved due to the depressed economy since the IMF bailout," said Eunkyoung Jung, international business representative, Daihan. "To get over these difficult situations, we have been trying our best to reduce manufacturing costs," he remarked.
According to Sandip Mitra of Jenson & Nicholson (India) Ltd., politics played a role in the Indian paint market. Mr. Mitra contended there was a "five percent improvement in 1998 as compared to 1997." He said the numbers could have been higher. "The political instability and lack of investment in infrastructure facilities, as well as a general economic slowdown, has affected growth." He expects the 1999 market to fare slightly better, posting growth between seven and eight percent.
Filling in Niches
To expand share in tough markets, many companies are adding niche products. Yasar has launched a niche product line designed for difficult masonry applications. The new Dr. Dyo range includes DyoStop, a low-odor, high-build matte paint for damp masonry surfaces; Dyotek, a low-odor, stain-blocking matte finish for ceilings and walls; and DyoFlex, a water-based coating for waterproofing and protecting exterior surfaces.
Mold and mildew protection is another niche product area, and two firms have launched products to fulfill consumers' needs. Yasar's new product is Dyoterm, a water-based interior paint that prevents condensation and mold growth. Wm. Zinsser & Co., Somerset, NJ, has added a new exterior version of Perma-White mildew-proof paint. The new, 100% acrylic exterior house paint joins an existing interior product that has been on store shelves for about eight years. "We've gone a step further and formulated a product for long-term performance that is directed at the problem," said Bob Senior, president, Wm. Zinsser.
ICI will be looking to fill in niches in 1999. The company's efforts will focus on expanding its product range at its stores. According to Bob Small, director of brand management for the store group, ICI will look to "fill in holes" at its existing business. Potential product introductions include new stains and other "specialized" products. Additionally, the company will continue the introduction of ready-mixed colors on the west coast of the U.S., a project it began in 1998.
Another niche product was launched in October. Samhwa added a new urethane, non-flammable lacquer in gloss and flat finishes. The company is supporting the new product with in-store merchandising and new advertisements, according to Mr. Han.
At Benjamin Moore, filling a niche meant addressing a new customer base. Among the company's newer products is ColorScapes. According to Dan Claybaugh, consumer product manager, ColorScapes was created to fill the gap between premium and economy products. Basically, ColorScapes' lower price point targets consumers who want to buy Benjamin Moore, but may not be able to afford Regal. "ColorScapes is directed at the price-value buyer," Mr. Claybaugh said.
Focusing on the Professional
Younger, less affluent consumers may be seeking paint with lower price points, and are therefore heading to home improvement centers that tout lower prices (see The Retail Report-Tales for the Register Tape, p. 44). However there is a growing trend in the U.S. and other markets that has caused manufacturers sit up and take notice.
The "Baby Boom" generation has become a boon to the professional contractor market. With more disposable income and less free-time, baby boomers and more affluent consumers are willing to pay for the paint-and for someone else to put in on the walls for them! U.S. paint manufacturers are looking to the professional contractor market for growth rates above the rest of the architectural paint market.
"We expect the professional market to grow a little better than paint as a whole. We expect professional to be two to three percent higher," said Mr. Small of ICI.
Among ICI's new products is Dulux Professional. The line has been "tweaked" to answer the needs of the professional painter, according to Mr. Small. For example, the coatings can be applied in temperatures as low 35°.
For painting projects when weather isn't a factor, Coronado Paint Company, Edgewater, FL, has added new Air Care zero VOC, interior acrylic coatings. Three finishes-flat, eggshell and semi-gloss-and a primer are available. Because it is an odorless product, Coronado Paint contends that it is well suited for painting contractors who need to paint in occupied areas such as office complexes, hospitals and apartment buildings.
Texture was the focus for two of ICI's other new products, which geared towards the professional market. New Decra-Flex elastomeric coating provides a long-lasting, weather-resistant finish for concrete and masonry surfaces. Offered in smooth, fine and coarse textures, Decra-Flex comes in a tintable white and deep base, according to the company. Also new is Ultra-Hide Buildtex, a tintable, high-build acrylic latex offered in medium and coarse textures. It can be used on interior and exterior surfaces.
Canadian coatings firm Sico has also added new products for the professional painters market. The new line is Sico Select, a full range of products that can be tinted to 1,400 colors, according to Sico.
"The paint market is growing, and Sico Select addresses that market and compliments our Sico Supreme line," said Pat Matton, national accounts and Ontario sales supervisor, Sico Coatings. Ms. Matton said that the professional contractor market in Canada is "a bit behind the U.S., but it is growing."
The trend toward professional contractors is beginning to grow in markets outside of North America, too.
Mr. Atabay commented, "1997 was a fruitful year for new products. In 1998, Dyo's strategy was to put more effort in promoting these new products to the trade and end-users." The company's new efforts to reach the contractor market include direct mail pieces and ads promoting the Dr. Dyo brand. In addition, Yasar created training films that were shown in various regional seminars for paint professionals.
"More and more people are resorting to professional consultancy in choosing shades," said Mr. Mitra of Jenson & Nicholson. "We have started a new division-Living Space-to provide a complete solution to their decorating needs." In addition, Jenson & Nicholson is also increasing its contact with professional contractors. "Besides advertising, we are conducting painter meetings and are meeting with architects and engineers," Mr. Mitra added.
Daihan Paint and Ink has also been targeting the professional market. The company is actively promoting its new oil- and water-based, fire blocking, fire-proofing paint to construction companies. "We have been briskly promoting the sale of the product mainly to construction companies, design offices and so on," said Mr. Jung.
Adding to the Roster
Research into consumer needs can often be the starting point for new product development. Yasar's research revealed that consumers wanted products with improved hiding power and whiteness and better roller application. The company incorporated those attributes into its new interior emulsion paint, Dyosan. Yasar has been actively promoting the product since its March, 1998 launch. Efforts have included TV, radio, print and outdoor advertising, direct mail and new point-of-purchase displays.
Some of the new introductions to the architectural coatings marketplace include the hot faux finish and designer paint categories. Ace Hardware's paint division added new Ace Royal Touch Artistic Finishes, a stand-alone, latex glazing liquid for ragging, stencilling, marbleizing, and other types of faux finishes. According to a company spokesperson, Ace is working on a new interior/
exterior product which will be ready for a spring launch. In August, Sico added a new glaze for special effects, and in December, Jenson & Nicholson added its own premium acrylic exterior wall finish, also with special effects.
On the designer paint front, Norton & Son, Bayonne, NJ, is now selling a paint under the Waverly name. Norton hopes to build off the success of the Waverly name, which is one of the top U.S. home fashion brands. The line includes off-whites that coordinate with Waverly's wallpaper borders, which coordinate with the company's bed linens and other products.
Norton has chosen a selective distribution route for Waverly–the line is only available at independent dealers, according to Lee Flemming, vice president, Norton & Son. Speaking at the Paint and Decorating Retailers Show in Chicago in November, Mr. Flemming said that 100 dealers had signed on to sell the licensed brand since its launch in mid-1998. Another 100 dealers are expected to join the ranks by the end of the year.
Waverly Finishes include waterborne interior products, faux finishes and specialty primers. The line incorporates a water-based resin system that behaves like an oil, without the negative effects, according to Mr. Flemming.
Also new to the architectural paint market are products from Coronado Paint and PPG. Coronado has launched new Maxum UltiMAX, a low-luster, cold temperature cure house paint that can help retailers extend the house-painting season. The company used a 100% acrylic resin when formulating Maxum UltiMAX, which allows application at surface and ambient temperatures down to 35°F. Its low temperature compatibility will be enticing to consumers who need more time for painting projects in the late fall and early spring. Maxum UltiMAX, which dries to a soft-eggshell sheen, offers superior color and sheen retention, weather resistance and flexibility, according to the company.
PPG, which recently completed its acquisition of the Courtaulds' brand, Porter Paints, from Akzo Nobel, added two new products to the Porter family before the end of 1998. PPG extended the Hi-Hide line with a new eggshell finish. The company also launched Acri-Pro 100, a series of 100% acrylic exterior paints in flat, satin and semi-gloss.
If R&D activities are any indication, more new products are on the way. According to Gautam Ray, director of manufacturing at Jenson & Nicholson, R&D efforts have been focused on developing an "absolutely non-sagging exterior paint." At Yasar, R&D personnel are working on an exterior paint based on a "pure acrylic," a flexible exterior coating, and new parquet varnish and floor coatings.
Repackaging, Restaging, Reformulating
But what if a company isn't ready to launch a new product? Even in a mature market, there are strategies that can help manufacturers improve their position without new product entries. Repackaging, restaging and reformulating can help breathe new life into existing products.
Although Paints and Chemical Industries (Pachin), based in Cairo, did not launch a new product in 1998, the company repackaged three of its main brands, Dyroton, Safir and Syntal. Sherif El Attar, sales and marketing director, contends that the company will unveil a new brand this month.
Yasar has also revamped its packaging. Following the creation of new package design standards, the company replaced tin cans with plastic containers for all of its water-based products.
Jenson & Nicholson is reformulating enamel paints and is looking to "rationalize manufacture by using bases, clears and colorants and consolidating facilities," according to Dr. Ray.
Benjamin Moore has "restaged" its Super Spec line to give it a "clear focus targeted to the contractor," according to Mr. Claybaugh.
Akzo Nobel realized the positive results that can come from taking a new look at a well-established brand. The company added a lighter color to its Cetol 1 & 23 siding product–the first new color in eight years. According to Mark Pastir, marketing manager, after the new color hit the shelves, the brand's sales grew 25%. "Sometimes you take your flagship product for granted," Mr. Pastir said.
That's a lesson every paint company can learn from.