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    Features

    Architectural Coatings

    What is the current state of the architectural coatings market? It depends on what country you�re in. Manufacturers around the world are dealing with different market conditions, but all have one goal in mind�sell more paint.

    Christine Esposito08.09.05

    Selling paint in Springfield? Your operating in a market that posted approximately six percent growth (in tons) in 2000-that is, if your store is in Springfield, IL. But if you're selling architectural paint in Springfield, New Zealand or Springfield, South Africa, it might be another story entirely. Paint manufacturers around the world are dealing with differing market conditions when it comes to the architectural coatings market. Some regions and markets are posting modest to little growth, while others are booming. Paint companies in one country might be looking ahead to growth in 2001, while others are wishing they could turn the clock back to 2000 or even 1999. Architectural coatings manufacturers Coatings World spoke with noted the varying conditions of their respective markets. "The paint market in Finland is relatively mature with rather small growth potential," said Riitta Eskelinen, marketing communications manager at Tikkurila Paints Oy. "The economy is stable at the moment, which has boosted the refurbishing projects that were postponed during the recession in the early 1990s. Decorating seems to have turned out as one of the mega-trends with a positive impact on paint demand. The overall outlook for 2001 is good," Ms. Eskelinen added. Down under, conditions are similar. "The paint manufacturing industry in Australia is in the mature stage of the lifecycle," said Joanne Marriott, marketing manager, ANZ, Orica. According to Market Tracking International, a London-based market research firm, the Australian decorative market posted growth of just two percent in 2000 to 125,000 tons. In nearby New Zealand, Karen Warman, marketing manager, Resene Paints, reports that the architectural coatings market is relatively stable. "The New Zealand dollar has weakened against international currency which is affecting our raw material prices and forcing most companies to raise their prices. However, the market is still looking buoyant." Ms. Warman added, Resene "experienced significant sales growth over the past year. Last year's sales were also well ahead of 1998. We expect to continue this growth into 2001." Meanwhile, in the Iberian market there are signs of a slowdown. CIN's marketing director Pedro Reis de Almeida estimated growth in 2001 would be in the area of just three percent. "The main factors influencing our consumers are the interest rate growth, together with a reduced level of confidence and, on the other hand, a decrease in the investment, both public and private, thus driving for a slowing down of consumption," he added. In Brazil, the market showed strong volume growth in the mid-to-late '90s, according to Rodolfo Ser�, director of decorative paints for BASF in South America. But he added, "Growth has since stalled and forecasts are for a slight decline in 2000. Despite a big devaluation of the Brazilian currency in 1999, market prices varied greatly. As a consequence of an economic environment that is less favorable for the consumer, demand was lower during 2000 and, above all, oriented towards the more economical product lines." One hot spot according to several industry watchers is India. While Market Tracking International places the country's growth (in tons) at 10% in 2000, one executive contends that rate was even higher. "The state of architectural coatings in this country has been very good," said Ashwin Dani, vice chairman and managing director, Asian Paints (India) Limited. "The last financial year-April 1, 1999 to March 31, 2000-saw this segment grow by around 16-17%." Asian Paints posted growth of 24% which was the company's "highest growth in the last two decades," according to Mr. Dani, who is banking on the market continuing its upswing in 2001. "We are confident that this segment will continue to drive growth for the paint industry. We expect to grow by around 19% in 2001."

    New Launches Regardless of the market conditions your company is selling in, one thing is a given-you can't rest on your laurels if you want to sell more paint. Even with a market-leading brand, new colors, improved formulations and enticing programs are vital to keep consumers interested and coming back for more. Keeping things fresh in the marketplace was a factor for Orica, which sells the Dulux brand in Australia. "Dulux Wash & Wear had given Orica market leadership in the interior broadwall paint category for many years, but the challenge was to stay ahead in developing the next generation," said Joanne Marriott, marketing manager, ANZ, for Orica's decorative paints business. The company has added several new Dulux products in recent years. The first, Wash & Wear 101, was introduced in late 1998. "The technical focus of the project centered on enhancing 'enamel-like' properties in a water-based product offering film hardness, block resistance, stain resistance and scuff resistance," said Ms. Marriott. "It was also necessary to provide a balance of these properties in flat, low sheen, semi gloss and gloss finishes," she added. Orica also touts Dulux Weathershield X10, described as a next generation exterior broadwall product that provides surfaces with 10 years of protection from extreme climates Extreme cold and tropical heat aren't the only factors Australian paint manufacturers need to contend with. Another is mold. "The disfigurement of painted and other surfaces by mold is a surprisingly large concern in Australia," said Ms. Marriott. "Market research shows that one third of households rate it as a problem, both for interior areas such as bathrooms and laundries, but also exterior surfaces. The presence of mold makes people feel that they are not good housekeepers," said Ms. Marriott. Orica has developed a new Dulux formulation to combat the problem-Mouldshield interior low sheen and semi gloss vivid-which have been extensively tested by Orica and RMIT. Orica backs the brand with a two-year mold-resistance guarantee. But not every development from Orica has been so serious. In fact, one is downright childish. After test marketing the product this past spring, Orica has rolled out Wonderwalls to the Australian and New Zealand markets. Sold under the Dulux brand, "Wonderwalls is a special paint that magnets stick to," said Ms. Marriott. The two-system product comes in 60 different colors with coordinating magnets in various shapes, numbers, letters, farmyard animals and licensed characters such as Barbie, Bart Simpson and Bananas in Pajamas. The magnets stick to furniture and walls painted with Wonderwalls. (Look for a similar product to come from a U.S.-based paint manufacturer this spring.) To support this line, Orica has created a special TV ad spot, beefed up public relations and added a special program targeting kindergarten classrooms. (To read more about other companies targeting the kid's market with unique paints, see "No Longer Ordinary" on page 44 in this issue). CIN also recognizes the need to keep adding to a leading brand's stable. "CIN will relaunch by the end of the first quarter of 2001 one of the best selling emulsion paints for interior walls," said Mr. Reis de Almeida. "Additionally we will reformulate our range of waterborne products and will direct a significant part of our marketing efforts to promote a higher level of consumption of this range." Looking to improve its interior alkyd products, PPG's Pittsburgh Paints R&D team created two products whose performance "exceeds industry standards for hiding, yellowing and application," according to Dan Passinault, marketing manager, Pittsburgh Paints. Launched under the Manor Hall super premium product line, the alkyds are targeted at professionals who remain "committed to alkyds for the exceptional application properties and finished appearance." Available in satin and semi-gloss finishes, the alkyds have exceptional flow and leveling properties. In addition, higher levels of titanium dioxide provide the coating with exceptional hide and a whiter, brighter finish and increased zinc oxide "means less yellowing and at a much slower rate than other premium alkyds," according to Mr. Passinault. PPG also launched the Pittsburgh Paints' "Make A Statement" integrated marketing campaign, according to Mr. Passinault. The line is targeted at four key customer markets-professional painters, facility managers, architects and interior designers. "We targeted specific geographic regions with a high density of Pittsburgh Paints dealers to support these customer markets," Mr. Passinault said. The campaign included direct mail, consumer print ads and radio spots. "The direct mail piece provided relevant information about PPG and Pittsburgh Paints to the specific audience and then offered a product, service or tool that would benefit this customer in their job," he added. Also part of PPG is Porter Paints, which added a new commercial line of ProMaster/Provantage/Procomm products. What is the rational behind this launch? "To help diversify our professional customer base," said Ron Raley, marketing director, Porter Paints. "We're using the new line to increase sales growth in the commercial market segment by having dedicated commercial sales specialists and service centers." Also new to the Porter family are HealthPro Ultra, a low odor, low-VOC product targeted at the institutional market, and Maxprime latex drywall primer. "All of these products have filled a niche allowing Porter to be more of a full service supplier to our professional painter customers," Mr. Raley added. In Brazil, BASF has introduced Esmalte Premium to its Toque de Seda line of paint. The company has also added Suvinil Texturatto and a water-based primer to its Suvinil line, which is currently a market-leader in the dispersion paint arena in Brazil. Also new from BASF's architectural business is a new line of equipment for its SelfColor System which lets consumers choose from a selection of 2,000 different colors. Since it entered the segment just four years ago, Asian Paints has focused its efforts on making a dent in the exterior paint market. The company's goal has been to entice Indian customers to "upgrade" from cement paint to emulsion-based exterior paint. Consumers are listening. "Our efforts towards educating the consumer through direct marketing as well as through innovative advertising have created a strong impression in the minds of the consumer," said Mr. Dani. "Apex exterior emulsion paint will become the leader in the exterior segment by the end of this financial year." New product launches from Resene have centered on problem-solving, according to Colin Gooch, technical director. According to Dr. Gooch, broadwall manufacturers recognized the benefits of the superb stain and abrasion resistance of Resene's Enamacryl and Lustacryl gloss and semi-gloss acrylic enamels, but they wanted a "very low gloss waterborne finish" with the same properties. "In high gloss finishes, the binder is the dominant feature in film properties; with low gloss finishes, the pigmentation becomes much more important," said Dr. Gooch. "Typical extenders have major shortcomings due to the number of mineral/polymer interfaces they introduce into the system which are not as compatible or as tough as polymer/polymer interfaces." According Dr. Gooch, Resene has solved this problem by using Spheromers as the major flatting pigment. "This unique material consists of precisely-sized cross-linked acrylic spheres which create protuberances in the film to achieve flatting while melding with the binder to maintain toughness. The degree of cross-linking enhances the stain resistance." The first Resene product to use technology is Zylone SpaceCote, a "silky smooth velvet finish" for broadwall areas. Dr. Gooch said SpaceCote is being taken up rapidly by the top end of the trade and is also being used on joinery, doors and windows." According to Resene, the product has been so well accepted that the company ran out of its initial launch stock four weeks early. According to Dr. Gooch, Spheromers are currently being manufactured in Norway in pilot quantities and will be available on the international market in commercial quantities in 2002. The problem-solving at Resene did not stop there. The company also tackled the issue of waterborne paint "skinning" on the lids of plastic pail containers. "This annoying problem can result in the skins detaching from the lid and contaminating otherwise perfectly good paint," said Dr. Gooch. "Resene studied the physics of the problem and identified the changes in micro-climate inside the pail which led to the problem." The solution is Resene SkinGuard, which incorporates a "unique texturing on the underside of the lid to elegantly solve the problem," Dr. Gooch added. (The technology has been licensed to ACI Plastics Ltd., according to Resene.)

    Getting in the Mood While some of the more recent launches focus on the protective aspect of coatings, there have also been a number of new offerings being marketed as truly unique decor-enhancing products. According to Mr. Passinault of Pittsburgh Paints, a "recent influence" on the architectural market is the "celebration" of color. No longer is paint simply function; now, there is a strong association between paint and decorative expression, and that is being accomplished with both color and faux finish techniques." Following up its Benetton line launch last year-which has since been extended to seven countries- Tikkurila has created a new range of DIY paint called Feelings. The line features 60 chips with different four color combinations, a full-matte interior paint, a tintable, ready-to-use effect paint and a kit with all the tools needed for effect painting. According to Ms. Eskelinen, "response from our retailers and home decorators has been very positive." Another new launch that plays on consumers' EQ-emotional quotient-comes from Craig & Rose. The Scottish company has launched the Feng Shui paint range, which offers 39 colors based on the popular Chinese principles of harmony with earth, wind, fire, water and wood. The line, which has been approved by The Feng Shui Society Scotland, includes a special color brochure and 9 Star Ki astrology chart to help consumers select colors that are best suited for themselves and their space.

    Fine Tuning Some of the most noteworthy developments in the architectural coatings market came from the boardroom rather than the lab. Several firms signed accords in late 2000 in an effort ensure their autonomy, to streamline their operations or to add muscle in new and existing markets. In early November, Benjamin Moore announced that it had signed a merger agreement with Berkshire Hathaway that was valued at more than $1 billion. Under the new accord, the Montvale, NJ-based coatings manufacturer will operate as a wholly owned subsidiary of Berkshire Hathaway. "This opportunity offers the dual benefit of providing fair value for our shareholders and continuity of the company as a distinct entity," Richard Roob, chairman of Benjamin Moore and Yvan Dupuy, president and chief executive officer of Benjamin Moore commented in a joint statement. "All those, past and present, who have played a part in building this company can feel proud that Warren Buffett and Berkshire Hathaway want to be associated with the name Benjamin Moore." Prior to its accord with Berkshire Hathaway, Benjamin Moore had been fine-tuning its operations, restructuring and seeking out viable retail outlets. As part of its restructuring efforts, the company said it would close seven manufacturing plants and reconfigure its distribution centers. In a two-year span leading up to the deal, Benjamin Moore purchased Janovic, a specialty paint dealer based in Long Island City, NY; Plaza Paint and Decorating Centers, an eight-store firm based in Palm City, FL; Lathrop Paint, a nine-unit Minnesota based dealer that it subsequently sold; and Virginia Paint Company, a paint and home decorating products retailer with 10 retail outlets in Richmond and Lynchburg, VA. Another major accord was signed in Europe just days before the Ben-Moore accord. After shedding its tinting operation (Tikkurila CPS), Tikkurila acquired the Alcro-Beckers decorative paints business from AB Wilhelm Becker. The purchase makes Kemira's decorative paints business the largest in the Nordic countries and moves the company up among the biggest players in the European market with estimated net sales of E345 million in 2000. Alcro-Beckers is the largest producer of decorative paints in Sweden, recording net sales of E196 million in 1999. The deal also covers Alcro-Beckers' 50% share in Baltic Color, the Tikkurila/Alcro-Beckers six year-old joint venture in the Baltic States. With operations in so many different regions, what is Tikkurila's strategy to meet the needs of diverse marketplaces? "We combine a global strategy with local actions," said Ms. Esklinen. "In all our foreign subsidiaries, we have a local marketing team working in close cooperation with the export department at our headquarters in Vantaa, Sweden. By listening to the representatives of our subsidiaries at an early stage of a product development project, we can take into account the special needs of various marketplaces." Asian Paints (India) Limited was also eyeing up a potential purchase before the end of the year. The company acquired the entire paint business of Pacific Paints Co. Pty. Ltd. through its Australian subsidiary. Pacific Paints Co. Pty. Ltd., based in North Brisbane, Australia, manufactures various types of water-based emulsion paints. A number of paint manufacturers, including Akzo Nobel and PPG, made acquisitions in 2000 to improve their wholesale and retail operations. Recently, Akzo Nobel announced its intention to acquire French paint wholesaler Vachon S.A., the largest independent wholesaler in France with 12 outlets. In October, PPG Architectural Finishes closed out its purchase of New Dean & Barry Ltd., a Columbus, OH-based retail chain with 21 shops. The company also acquired Monarch Paint Company in Texas. "These acquisitions complement the 22 store Wattyl Paint and 20 new Porter stores opened in 1999," said Mr. Passinault of Pittsburgh Paints. "The acquisitions were designed to strengthen our distribution in key markets and improve our ability to provide quality products and services to our professional customers within these markets." Duron, based in Beltsville, MD, was also actively building muscle in the retail market, a key region for its business. The firm acquired central Pennsylvania-based paint dealerships with three stores in Carlisle, Chambersburg and Shamokin Dam, PA. "Pennsylvania is a key market for Duron and this acquisition further enhanced Duron's ability to serve the needs of contractors and homeowners in Pennsylvania," said Gary Saiter, director of marketing and e-commerce. And doing just that-serving contractors and homeowners-is what successful companies in this competitive market need to do to keep their current customers coming back and to win over new ones.

    Consumption Forecast: The Caribbean Will Be Hot

    According to a new study released by Information Research Ltd. (IRL), London, the Caribbean will show strong gains in paint consumption over the next few years. The region, which includes Cuba, the Dominican Republic, Haiti, Jamaica, Puerto Rico and Trinidad & Tobago, will post 14% growth in paint consumption between 1999 and 2004, according to IRL. Central America will post a gain of 9.4%, according to IRL.

     

    For more information on "A Profile of the Paint Industry of the Americas 2000," contact Katie Tofts of IRL at katie.tofts@brg.co.uk, or log onto www.informationresearch.co.uk.

    �

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