Peru’s Qroma Invests in Revitalization

Peru’s Qroma is focusing its efforts at growth recovery on its end customers and its distributors, betting that the domestic economy will boom following the June election of socialist President Pedro Castillo. The company is redoubling its efforts to sponsor home painting and public murals in poorer neighborhoods, and to finance the recovery of small paint distributors in Lima and beyond.

Qroma is one division of privately-held conglomerate Grupo Breca, and has 80 years of experience in the paint and coatings market in Peru. Qroma claims to be the leader in the paint market in Peru, which, including all segments, was estimated at a peak of around $375 million pre-pandemic. The paint and coatings market is expected to grow faster than the economy overall over the foreseeable future.

Re-Painting Peru

Qroma’s neighborhood repainting project, Arcoíris de Qroma, or the Qroma Rainbow Project, has grown to encompass various cities and broad architectural heritage in Lima and beyond. With the help of local artists and artist groups, the Rainbow project will help paint over 1,000 homes and buildings encompassing more than 300,000 square meters of covered walls. The project provides paint for homes, staircases, and standout murals of various sizes that depict Peruvian culture.

“The Rainbow Project seeks to create environments that promote development, education, health promotion and a sense of community using painting as a behavioral improvement mechanism. Painting can change the perception of well-being, security, pride and belonging,” Arianna Machiavello, Qroma’s manager of corporate affairs, said in a statement.

As part of the project, last year Qroma completed a neighborhood repainting project in the La Victoria region of Lima, adding new color to outside walls and tapping local artists to paint murals. Overall, some 39,000 square meters of surface were painted, affecting an estimated 10,000 inhabitants.

“As part of our purpose, which is to inspire people to paint the best version of their world, we joined the Municipality of La Victoria to improve the El Porvenir area through our Arcoíris project. This project consists of transformation of spaces through painting, modifying behaviors through color and generating a positive impact on the community,” Rodrigo Mejía, the CEO of Qroma, told El Economista.

Supporting Distributors

Qroma is moving to financially support its network of mom-and-pop distributors in the country through loan guarantees for more than 1,000 hardware dealers under the national economic recovery lending program Reactiva Perú. About 70% of the sale of architectural paint in Peru takes place at hardware stores, which number about 4,500.

Qroma’s finance campaign, called Manos a la Obra – or the hands of labor – will include funding for COVID-19 disinfection training, business advice, and security systems, according to Peru Retail.

“Manos a la Obra is a program that seeks to promote the reopening of hardware stores in a sustained manner in our country, as this sector has been one of the most affected groups after the COVID-19 crisis,” Mejía told Peru Retail.

Last year, Qroma began refocusing its market support to overcome the challenges of the pandemic. “When we became more externally focused, we redefined our company in order to talk more about a consumer company, rather than merely an industrial company,” Mejía told the IRC Consumer & Retail Practice Group in December.

“COVID simply magnified all the trends that we were already seeing before,” Mejía told IRC, noting consumers have become more demanding and require interaction with brands. The omni-channel go-to-market strategy is not simply another marketing option, it’s the only way to approach the consumer, he said.

“When we say omni-channel, we mean every single interaction with consumers, not only the digital communication; it’s in-store communication, it is corporate communication, it’s every single interaction with the consumers’ thoughts. It requires one unified strategy, communication plan and message across all channels,” Mejía told IRC, adding that each interaction demands a different approach, or vehicle, for communication, that needs to be carefully curated.

Another way Qroma is helping distributors to recover pre-pandemic sales levels is the recent launch of Barrio, an economic brand of architectural paint. The brand has been used to grow the point-of-sale network by an estimated 20%, the company told Business Empresarial.

Qroma’s sales network extends from Peru to Chile and Ecuador, including a brand portfolio of including American Colors, Barrio, CPP, Tekno, Fast, Paracas, Jet, Uniquímica, Teknoquímica and Abralit. The company claims to be the second largest manufacturing facility for paints and adhesives in South America.

Qroma is also working to improve its environmental impact through multiple efforts at efficiency, emissions technology and waste disposal. Quora recently was cited for its efforts since 2019 by the state Ministerio del Ambiente, the ministry of the environment, which awarded the company its Huella de Carbono Perú, or Peru Carbon Footprint certification.

Only one of four manufacturers in the country to have been awarded the Carbon Footprint certification, Qroma has set a goal of becoming a net-zero environmental emissions company over
the midterm.

Economic Recovery at Hand

Gross domestic product (GDP) was reported up 41.9% in the three months ending in June, compared with the same period a year earlier, according to an August calculation by the Instituto Nacional De Estadistica e Informatica de Peru, the national statistics institute.

This spurt of growth lends support to the government prediction that the economy will have a growth rate of at least 5% in order to continue to modernize the country. Between 2002 and 2013, Peru was one of the fastest-growing countries in Latin America, with an average GDP growth rate of 6.1% annually, according to the World Bank.

New Government Investments in Petroleum, Petrochemicals

Mining has long been the economic backbone of Peru, but now, new Prime Minister Guido Bellido has indicated that the government may initiate a new role in basic industries, including natural gas and electricity.

At the same time, new government investments in other sectors are expected to continue. The 2019 National Plan for Competitiveness and Productivity (PNCP) set out 52 national infrastructure projects expected to cost about $30 billion.

The outgoing administration sought to increase economic investment in the country through public-private partnerships, which can drive investment faster than GDP growth.

Construction, in particular, is expected to grow rapidly in the residential, commercial and industrial sectors. Peruvian construction investment could increase to $36.6 billion by 2023, up from $28.7 billion in 2018, according to GlobalData.

Apart from infrastructure construction, close to $450 million worth of retail malls and other facilities are being developed by the private sector, the PNCP notes.

Housing construction also will expand thanks to new government-backed mortgage lending.

In Lima alone, about 17,000 new homes were expected to be added last year, a rise of about 8% from the year-earlier result, the PNCP indicates.

Stability in the financial sector of Peru will be aided by Castillo’s reappointment of Central Bank President Julio Velarde.