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The 15th annual Abrafati show is being held in Sao Paulo this week
October 5, 2017
By: Charles Thurston
Latin America Correspondent
The $3.4 billion Brazilian paint and coatings industry is guardedly optimistic that a return to sustained growth is finally underway, with broad expectations of a mild 1 percent expansion this year, compared with a retraction of 7.1 percent last year. The test will be whether the upward trend continues, and growth in 2018 firms to an expected 2 to 3 percent level, according to Antonio Carlos de Oliveira, the executive president of Abrafati, the Brazilians Coatings Manufacturers’ Association. The 15th annual Abrafati show is being held in Sao Paulo this week, where an estimated 12,000 attendees are doing business, trading technical information and meeting potential new partners, especially the many new exhibitors from China. The hope that the market has finally turned up is supported by the first semester 2017 GDP growth of 0.7 percent, the first instance of two consecutive semesters of growth since 2013, noted Freddy Carrillo, the president of Sherwin-Williams no Brasil and the president of the Abrafati board of directors. The overall economy is expected to warm to a 2.3 percent level in 2018, at the same time that inflation and interest rates are expected to cool. One source of the optimistic outlook is the potential gain in per capita consumption, which is now only 6.4 liters in Brazil, compared with 15.5 in North America and with 11.5 in Europe, noted Carrillo. To help the industry understand and plan for its expansion on a more granular basis, Abrafati recently contracted with GIK Universo to study the 2017 retail market in the country. The study analyzed 4,245 points of sale, including 428 home centers, 640 construction material suppliers, and 3,168 paint stores including both independent and franchised operations. Over 2,000 of the paint stores are located in the Southeast region, including the states of Rio de Janeiro and Sao Paulo. The study found that 77 percent of all paint stores are independent, including a network of up to 5 stores. Paint stores in Brazil average 1.9 color mixing machines each, with the highest – 96 percent – adoption rate in the South and a lower – 81 percent – adoption rate in the Northeast. Similarly, the study found that 87 percent of home centers have mixing equipment, while only 47 percent of construction stores have the equipment. Once sales data from these stores have been collected and analyzed, Abrafati will develop a plan to boost industry growth that targets sub-segment opportunities. One goal of the program will be to reduce the paint and coatings industry’s dependence on GDP expansion. Another goal is to augment quality while making application easier. And the program will aim to encourage the addition of new functionalities to paint lines through greater technological capabilities.
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