Architectural Coatings Market

By Tim Wright, Editor | January 24, 2012

In high growth regions demand for architectural coatings continues to grow, but in the mature markets of North America and Western Europe difficult conditions remain.

The global coatings market is worth roughly $90 billion. The decorative segment is the largest single component representing a little more than $40 billion.

This segment represents about half of the industry’s total volume, but less of the value. The smaller percentage in value has to do with the lower price of decorative coatings compared to the higher priced segments such as automotive OEM and refinish coatings and aerospace coatings, for example.

According to a new study by the consulting firm Kusumgar, Nerlfi & Growney, in 2011 U.S. consumption of coatings is projected to be 1.4 million gallons, containing 7.8 billion pounds of solids, worth $23 billion.

Architectural coatings are the largest segment with some 3.9 billion pounds of solids worth $9.1 billion in 2011.

However, difficult market conditions remain in both residential and nonresidential segments with a slow recovery anticipated. New house production remains at extremely depressed levels and home sales have yet to recover to hoped for levels.

As with most other coatings segments, the high growth regions of the world are where most of the business is happening.

It is a fairly concentrated market representing a small field of global players. The top 10 suppliers comprise more than 50 percent of the global market. However, smaller- to medium-sized players, while not impactful on a global scale, are formidable competitors to the global majors in the regions they operate.

While activity has slowed of late, the decorative coatings market continues to consolidate.
Recently BASF Coatings said it plans to sell the decorative paints business of Relius Coatings GmbH & Co. KG along with the respective subsidiaries in France and the Netherlands.

The business encompasses decorative paints and plaster as well as coatings and glazing for construction applications. Regionally, it is focused on Germany and selected countries in Europe. In 2010, the business had total sales of approximately €80 million.

BASF’s business with decorative paints in South America and China is not affected by the divestiture. The business with industrial coatings of Relius Coatings remains a part of BASF Coatings.

In 2006, BASF acquired Relius Coatings GmbH and Co. KG as a part of the Degussa construction chemicals business. It remained a company within BASF Coatings.

“In a very competitive market, we have been successful in stabilizing the Relius deco paints primarily in the areas of brand, distribution and innovation,” said Raimar Jahn, president of the coatings division of BASF. “To be profitable over the long-term, however, our market share is too low, particularly in Germany. For this reason, we believe that the Relius deco paints will develop better in another environment.”

The decorative paint business of Relius focuses on direct sales to painters and specialist dealers. In Germany and France, Relius has about 30 distribution offices. In addition, Relius markets deco paints through importers in selected countries in Western Europe. In the Netherlands, Relius manufactures and markets products of the two brands Relius Fleurit and Relius Hoeka from its site in Deurne.

“The consultation process with the works councils has been started,” said Andreas Fehren, managing director of Relius GmbH & Co. KG. “It is our clear objective to sell the Relius deco paint business in the near-term to another company. By selling we aim to avoid forced redundancies for operational reasons if possible.”

PPG Industries recently completed the purchase of European coatings company Dyrup A/S, based in Copenhagen, Denmark, from its owner, Monberg & Thorsen, a public holding company. The final transaction value, including assumed debt, was €115 million ($160 million), subject to customary post-closing adjustments.

“We are pleased to begin the processes of integrating Dyrup into our European business and of securing the future for Dyrup’s brands and customers,” said J. Rich Alexander, PPG executive vice president who leads all of the company’s architectural coatings businesses. “The acquisition of Dyrup will help grow PPG’s presence in several key European countries where PPG today has little or no architectural coatings presence, as well as broaden our product offerings.”

Dyrup, a European producer of architectural coatings and specialty products, had 2010 sales of approximately €190 million ($270 million). It employs about 950 people and operates six manufacturing facilities in Europe. Dyrup’s brands include Bondex, Gori and Xylophene, and its products are sold primarily in Denmark, France, Germany, Portugal, Poland and Spain through professional and do-it-yourself channels.

AkzoNobel recently consolidated its paint brands under the “Let’s Colour” identity. The new marketing strategy for its decorative paints division introduces a single global brand identity for its retail consumer paint range. The Let’s Colour identity includes the brands Dulux, Flexa, Levis, Alba, Coral, Marshall, Astral, Bruguer, Dulux Valentine, Inca, Sadolin and Vivechrom.

This new marketing strategy is designed to expand AkzoNobel’s market share in consumer paint worldwide, which currently generates annual revenues close to €5 billion.

The new global brand identity is being rolled out worldwide, starting in Canada, China, India, South East Asia, Asia Pacific and the Netherlands. Other countries and regions will follow during the course of the year, with the new brand identity eventually being deployed in close to 50 markets. In addition, the AkzoNobel company endorsement will be introduced on the front of packaging, as well as on all advertisements, product websites and other relevant marketing materials.

“There are huge opportunities for us to compete directly in local and regional markets. By delivering a consistent brand image around the world, we can increase our global scale and establish more leadership positions,” said Tex Gunning, AkzoNobel executive committee member responsible for decorative paints.

“We are creating an iconic, truly global brand with the right degree of commonality in its expression,” said Sucheta Govil, the company’s global head of marketing for decorative paints. “Yet we are deploying the strategy in the marketplace with the relevant local touch. Our strategy is to streamline our offering from dozens of brands to fewer iconic, global and impactful brands.”

The new brand identity is based around a “Flourish” logo, which embodies the decorative paints’ global Let’s Colour campaign. It features a human figure and colorful Flourish that will appear on all product packaging for the Let’s Colour brands.

New Technology Innovation

Paint makers must stay on the cutting edge of new technology innovation to satisfy both consumer and regulatory demands. Kelly-Moore Paint Company, Inc., has introduced Enviro Coat Reflective 1545, one of the industry’s first commercially produced architectural coatings designed to reflect the sun’s radiant heat, according to the company. This eco-functional, exterior 100 percent acrylic eggshell paint lowers external wall temperature, allowing homeowners and building operators to minimize air conditioning usage and save money on utility bills.

Valspar Paint has rolled out Valspar+, certified asthma and allergy friendly by the Asthma and Allergy Foundation of America (AAFA). Valspar+ reduces airborne irritants during painting, improving the painting process for those with respiratory sensitivities, the company says. In addition to having zero volatile organic compounds (VOCs), which can be a trigger for people impacted by asthma and allergies, Valspar+ has no lingering odor. Once dried, the paint’s antimicrobial properties help it to resist mold and mildew.

Tikkurila Focuses on Color Design of Coatings to Give Them the Competitive Edge

The right coating material protects the product. Colors give a positive impression of the product's quality, and they help to improve visibility and brand awareness. Colors can also be used to highlight the form and structure of a product.

It is increasingly difficult to stand out in today's global market. Cost-effective production, or making products that work in even the most demanding conditions is not enough—the product must stand out among competition. Visible qualities—the surface, colors and design—play a crucial role.

"The color design and color marketing of industrial coatings are increasingly important. Colors make the products unique and distinctive," said Petri Järvinen, Tikkurila's sales director, Industry, SBU Finland and Scandinavia.

Tikkurila regularly organizes training for product designers, industrial designers, architects and its own retailers to help all the different partners to make best possible use of Tikkurila's paint products. The focus in the training sessions is, among others, on product properties and on the selection of colors.

Finishing Touches with the Help of a Color Designer

Public spaces and buildings can be given a more striking appearance with professional color design.

"These days, it is still common to have a single color across an entire solid structure. By using different color combinations, structures can be made to stand out in a completely new way. Businesses should utilize the know-how of designers who are experienced in using color. For designers, colors provide a way to give their work a unique look," Järvinen said.

On the other hand, colors can improve the comfort and appeal of public spaces, especially in environments such as restaurants and stores.
Järvinen gives an extreme example: an Irish bike retailer who turned the store premises into a work of art by using different designs and colors.

"People flocked to the store just to see it, and thanks to more customers the retailer enjoyed an increase in sales. Not before long, the investment in the surface treatment earned the store its money back many times over."

Trendy Surface Treatments with Metallic Paints

Metallic paints can be used to give a vibrant surface treatment and to highlight the structure and form of the product. Lighting enhances the shininess of the surface. When light hits the product, the small metallic particles in the coating reflect the light back, which creates an impression of a unique, high-quality surface.

Metallic paints are suitable for both the wood and metal industry products. Tikkurila has developed a basic metallic paint for concrete which gives a vibrant and striking surface effect. With metallic floor paint, designers and architects can design and create unique floor surfaces for different customers, from stores and kindergartens to theaters and business facilities.

The old Kodanská Palace in Prague, Czech Republic, was refurbished and converted into an office building. The new facade is designed by French-Israeli artist Yaacov Agam. The façade consists of eloxated aluminum sheets and 410 different colors which create an impression of a multi-dimensional rainbow. The façade was painted using Tikkurila products. The base coat was painted using Temacoat GF Primer, the top coating was made with Temadur 90, and the vertical profiles were coated with Temadur Clear.