“The thriving building industry and the growing automotive sector are stepping up the demand for decorative paints and automotive coatings in Southern Africa,” said Frost & Sullivan chemicals, materials and food research analyst Dilshaad Booley. “The decorative paints segment accounts for more than 50 percent of the total paints and coatings market in Southern Africa, implying that the total market growth will significantly increase.”
Due to the economic crisis, the construction industry saw losses in very few building projects being commissioned while the automotive sector declined as fewer vehicles were being sold. However, Southern Africa has many infrastructural opportunities and the government has taken initiatives to provide enhanced and greater infrastructure to the locals by commissioning these building projects themselves.
However, the paints and coatings market in Southern Africa is highly fragmented with low barriers to entry. Several small paint manufacturers are establishing themselves in the market, thus increasing the competition and range of brands in the market. This leaves the market with greater brand choices and takes away the potential sale of the initial, older brand, thereby reducing revenues of the existing market participants.
“For local manufacturers, having to import large amounts of raw material increases the manufacturing costs, making way for the import of cheaper paints and coatings, creating added competition and price sensitivity,” said Booley. “The starting capital to manufacture decorative paints is low, easing market entry and increasing competition among local manufacturers.”
The local manufacturers should establish good customer relations and offer a wide range of cost-effective products to successfully maintain and develop their market share.
“In an attempt to widen the market demand, manufacturers and distributors should educate consumers on the benefits of purchasing superior quality paints,” said Booley. “Although quality paints cost more, they save the consumer from having to recoat more often and provide an aesthetic finish.”
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