Architectural & Decorative Coatings

By Mike Agosta | August 10, 2005

Though poor economic conditions generally spell trouble for home maintenance projects, the architectural coatings market exhibited surprisingly strong growth in 2002, say some paint makers.

During poor economic times, one wouldn't think that painting the house or the living room would find its way into the budgets of most people. As a result, sluggish growth in the architectural coatings market would seem a logical conclusion. However just the opposite appears to be the case.

Though the U.S. construction industry is entering a period of significantly slower growth compared to the boom period of the 1990s, expenditures dedicated to residential repairs and improvements are expected to accelerate through 2006, according to the Freedonia Group. This is good news for the architectural coatings market, as nearly 85% of demand is linked to residential repair and maintenance applications, including both interior and exterior repainting projects.

General color trends are focusing on more subdued shades than in previous years, according to Mark Woodman, design and color manager at Duron, Inc. Popular vibrant colors of the past are melding with more earthy and calmer colors.
The importance of strong growth in the architectural market cannot be overestimated, as architectural coatings accounted for 51% of total U.S. paint volume sold in the U.S. in 2001, according to the Freedonia Group.

"In North America, business has been very good," said Jeffrey T. Spillane, senior marketing manager at Benjamin Moore. "I'd call this year 'scary good,' because there was no reason why it was as good as it was. We expected a mediocre year this year, and it's been phenomenal for us. Our sales and volume for the year far exceeded most of our competition, and we're actually having trouble keeping up with production demands."

According to Mr. Spillane, when the economy is down, people have a tendency to embark upon home improvement projects themselves, which helped to keep DIY sales strong, but a number of unexpected factors contributed to the company's success in 2002 as well. "New housing starts were up in the third quarter, which came as a surprise to everyone," he said. "In addition, people are building far larger homes than in years past, which means more surface area to paint."

North America is not the only region that has shown solid performance the past year. Even smaller markets such as New Zealand are showing strong performance. According to Karen Warman, marketing manager at Resene, the New Zealand paint market has remained stable. Strong sales in rural areas have spilled over into urban centers, and the Auckland market, which makes up more than one third of New Zealand's population, has performed particularly well, according to Mrs. Warman.

It is becoming commonplace for consumers to engage a color professional to assist them with color selections, according to Karen Warman, marketing manager at Resene.
Unfortunately for some coatings makers, other areas of the world are not performing as well, according to Pedro Reis de Almeida, marketing director at CIN. "This year there has been a contraction of both consumption and investment, which has strongly influenced the paint and coatings market," he said. "The Portuguese marketplace is going slightly down in pace with the economy, though we expect a stabilization of the market for the next year."

The somewhat sluggish conditions in Europe have put some pressure on companies to lower costs, said Mr. Reis de Almeida. Though economic conditions can increase this pressure, price competition is always present and many manufacturers are choosing to resist the temptation.

"Pressure for lower costs is always around, but only if you want to play in that arena," Mr. Spillane said. "We choose not to. No matter how low you are willing to go, someone will always beat you."

Mr. Spillane added that constantly lowering prices can often lead to cost cutting measures that end up harming the quality of the product. "Companies always struggle to get back into the quality paint business once they've taken quality out of the can," he said.

Mrs. Warman agreed, pointing out that though customers always want lower costs, they are more savvy than in the past, and know the importance of quality. "Consumers are starting to understand the concept of value when it comes to paint purchases, with many realizing that an initially higher investment in quality paint will be cheaper in the long run," she said. "They know a quality product means that they won't need to repaint as often."

BASF's Suvinil Brand Brings Color to Brazilian Children
In a country where a large number of children are forced to grow up without any social ties and survive with extremely limited financial resources, BASF is doing its part to try and paint a different future for children. BASF, through its Suvinil brand of decorative coatings, is supporting "Casa da Crian�a," an aid project to modernize facilities for underprivileged children in Brazil.

As a partner in Casa da Crian�a, the company has been donating paint to transform rundown and drab facilities into colorful and modern structures. Teachers and caretakers who work with the children say many are flourishing in their redesigned environment and are making huge strides in their personal development.

A room at a children's center redecorated with paint donated by BASF's Suvinil paint brand as part of the Casa da Crian�a project to help underprivileged children in Brazil.
"Here in Brazil we have the opportunity to change the lives and futures of many young people," said Rui-Artur Goerck, who is in charge of BASF Coatings' activities in South America. "Physical and mental problems are anything but rare, and we regard it as our social responsibility to create a friendly, positive environment for these disadvantaged young people to in which they can grow up with a good quality of life. What could be better than to see the happy faces of children who feel at home in their surroundings?" Casa da Crian�a was set up as a regional organization in Recife, Pernambuco, Brazil in 1999 and quickly turned into a national aid project. At present more than 14,000 square meters of surfaces have been renovated and redesigned.

BASF, with its Suvinil brand, is the market leader in the Brazilian architectural market. In 2002, sales of E210 million were achieved by the architectural coatings unit of BASF in South America.

What Customers Want
In addition to quality products, customers are looking for more from their decorative paint than they have in the past. As a result, coatings makers have to work harder than ever to keep up with color trends.

After years of increasing wildness with color choices, many customers are starting to tone their color desires down a bit. In fact, the phrase "protection" has taken on a whole new meaning for paint. "With terror warnings, economic woes and a sense of financial insecurity, consumers' choices in color have become a little more familiar and secure," said Mark Woodman, design and color manager, Duron, Inc. "The general color trend is more subdued, but color is still very much alive though it has lost some of its frivolity."

Red and orange have melded and mellowed with earthy browns and deep fuschia, while yellow-greens that remind consumers of fields of grasses and grains represent a continuing concern with the environment and the "greening" of environmentally sound products, he said.

The search for comfort from today's stresses has led to the creation of a palette at Duron called Comfort Zone, designed to make consumers think of simpler times. The palette is steeped in history with hues full of warmth, said Mr. Woodman. Blue, a U.S. favorite, shows up in two versions-light and dark-and a chocolate brown complements the reds, tans and deep rose that round out the palette. "Spaces utilizing these colors offer a sense of solace," Mr. Woodman said.

In addition to changing color tastes, customers are also looking for more options to use color, said Mr. Spillane.

"The design aspect of using color in paint continues to grow," he said. "Everyone thought faux-finishing would be a short-lived fad 10 years ago, and it continues to gain momentum every year. New techniques and styles keep coming out, and companies are altering paints so you can do different things with them, such as fleck paints and Venetian plaster."

With so many new methods, colors and design options, the process of painting a room or home has become far more complex. As a result, paint companies need to come up with ways to simplify the process for customers and take some of the risk out of painting. The Internet is proving a useful tool for accomplishing this task.

A number of paint companies are incorporating high-tech color and virtual painting software tools into their web sites. Benjamin Moore recently upgraded its Personal Color Viewer tool, which allows users to "paint" a room to see how different colors, methods and styles will alter the appearance. "With the new version, customers can even scan in a digital image of their own rooms and homes to change the colors prior to painting," said Mr. Spillane. "It takes some of the guess work out of it, meaning they won't have to actually paint a room to realize they've don't like the color or style."

Resene has also upgraded its EzyPaint virtual painting software on its web site, which allows users to redesign every aspect of a room. "Customers can virtually paint their own projects in more than 1,500 Resene colors, plus a selection of 400 colors from other New Zealand manufacturers of products such as carpets and laminates," said Mrs. Warman.

Resene's software also acts as a color library for professionals, offering a color chart and sample ordering capabilities, as well as hundreds of pages of product information, color ideas and services, she added.

In addition to the number of design aspects necessary to assist DIYers and professionals in their painting projects, paint makers are also working to improve products as well.

Benjamin Moore's Personal Color Viewer tool allows users to scan in a digital image of their own homes and change the colors on-line.
Like all branches of the coatings industry, the architectural market is subject to ever increasing VOC regulation. "Both the state and federal branches of the EPA continue to regulate the lowering of VOCs in paints," said Gene Merrill, director of product development and services, Duron, Inc. "This puts a constant pressure on paint manufacturers and raw material suppliers to develop water-based products that not only meet the VOC limitations, but also have equal and/or improved performance characteristics." This trend is not just limited to the U.S., but is present throughout the world.

In addition, lowering the odor content of paint is also a prime concern. "Because of the consumer demand for low-odor products, R&D labs continue to turn their attention in that direction," said Mr. Merrill.

Mr. Reis de Almeida of CIN agreed, stating, "Customers are more and more sensitive to health, safety and environmental issues. As a result, low VOC and low odor are product characteristics often asked for."

Whether a product is marketed towards DIYers or professional painters and designers, the major focus of architectural paint makers is on the customer. Careful attention to the needs and wants of customers, ranging from color choice to low-odor to ease-of-use to high-tech design help are necessities in today's market.

R&D is Key to New and Improved Coatings Formulations
Bringing quality to consumers-the goal of all coatings manufacturers-can't be accomplished without strong R&D efforts. Coatings companies are working to bring new products to their customers both through new formulation and modification of existing technologies.

"Innovation in coatings generally comes from modifications and some new technology," said Jeffrey T. Spillane, senior marketing manager at Benjamin Moore. "Currently, our R&D department is working on some new product development and improvement of our high-end Regal line. We try to live by a best-in-class philosophy."

According to Gene Merrill, director of product development and services at Duron, Inc., the company has made some enhancements to its interior paint line. "We've introduced our ultra-premium Signature Select line, which is available in velvet flat and semi-gloss finishes," he said. Both finishes are formulated with high-performance acrylic latex polymers, which contain a biocide to resist mildew growth on the dry paint film. "Best of all, they perform like conventional alkyd/oil-based products, but are non-yellowing and clean up with water," Mr. Merrill added. In addition, Duron will soon add a new gloss finish to the Signature Select line, which it hopes to unveil in the first quarter of 2003.

"Also coming in 2003 is a one-part/single-component pre-catalyzed acrylic epoxy in gloss and semi-gloss finishes," Mr. Merrill added. "With this product, applicators will no longer have the cumbersome task of mixing multiple components to get the product to chemically cure."

Resene has added a number of new products as well, according to Karen Warman, marketing manager. Among its newest launches are new Pixie Dust and Pearl Shimmer pearlescent finishes, a new range of metallic and special effects paints, an acrylic undercoat range of products as well as Resene Sun Defier, a UV stabilized clear coat to protect exterior bright finishes.

The company has also increased the tone range in Resene Zylone SpaceCote, a low-sheen water-based enamel formulated with spheromer technology for improved application and durability, according to Mrs. Warman. "This technology makes Resene Zylone SpaceCote a very versatile product suitable for use on trim and joinery, interior broadwall and wet areas."

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