Brazil’s decorative paints and coatings market was worth $2,077.3 million in 2010, according to Frost & Sullivan. With a compound annual growth rate of 5.8 percent, this is likely to increase to $3,262.6 million by 2017, the research firm said. Almost 100 percent of local consumption is produced locally, while the exports contribute to approximately five percent of the total revenues, and are concentrated on big multinational companies.
The segment corresponds for 63.8 percent in terms of revenue of the total paints and coatings market in 2010. The industrial segment held the second-largest position, with 21.4 percent, followed by the refinish and automotive sectors, with 14.8 percent all together. In 2009, the decorative segment was the least affected by the economic crisis, with a revenue loss of 2.4 percent, whereas the total market lost five percent.
The decorative paints and coatings market is highly fragmented, with the top five participants representing about 80 percent of the market, and the 10 biggest players, 90 percent of the market. The market is primarily driven by the construction and do-it-yourself (DIY) industries. “Government’s major investments in social housing and infrastructure, and taxes reduction for the construction industry drove the market growth in 2009 and 2010, preventing it from witnessing a major revenue slump as the industry shrank 2.4 percent,” said Caio Carvalho, Frost & Sullivan research analyst.
The insufficient local raw material supply, which can meet only approximately 40 percent of the total industry’s needs, is a major market restraint. Investments in this field may raise revenues, profit and margin. In Brazil, the per capita consumption of paints is approximately liters, whereas it is 15 liters per capita in the U.S. and more than 20 liters per capita in other developed countries. This low paint consumption is a challenge to the market participants, as there is a cultural barrier and paint is not regarded as a necessary good.