Interior Decorative Coatings
During tough economic times green products flood mature
interior deco markets to try and keep sales buoyant.
BY TIM WRIGHT
EDITOR
Globally, the decorative sector dominates the paint
and coatings market, accounting for approximately
half of the $80 billion industry. The U.S. market
represents nearly 25% of the global market, however it is
not growing well like other mature markets in Western
Europe. At the same time, parts of the developing world
like China are growing near double-digit rates while the
greatest growth is coming from rest of the world markets
(ROW) though from a small base. Eastern Europe is also
showing significant growth.
Coatings growth in Asia-Pacific has been overwhelmingly
industrial while ROW markets have a more prominent role
in the architectural market. Decorative coatings are the
bulk of the market in the developing world.
Europe—including Eastern Europe—accounts for
approximately 32%, or $13 billion of the global architectural coatings market, according to consultancy Orr & Boss.
Asia-Pacific represents approximately 29% of the market,
or $12 billion. NAFTA is approximately 27%, or $11 billion
of the market while ROW markets are 12%, or $5 billion.
According to Orr & Boss, the markets in Latin America,
Africa, India and China are dominated by low-end, very
cheap paint that tends to be produced by local manufacturers making global suppliers want to drive up the price
point in developing countries.
The decorative coatings market is comprised of the interior, exterior, stains, clears and lacquers sub-segments,
with the interior market dominating the sector accounting
for a little more than half of the market share.
Decorative coatings ride on housing developments and
business construction and growth has traditionally been
driven by new construction, particularly in emerging markets where housing ownership and commercial developments are showing strong growth.
However, decorative coatings have not fared well in a
number of developed markets. The bad economy has
heightened concerns among paint makers that have been
struggling with the slowdown in the housing sector for
much of 2008. Analysts Coatings World spoke with said
prospects for 2009 are not good.
Even before the current financial crisis, the steep drop in
the housing markets, expecially in the U.S. due to the subprime mortgage mess, was severely affecting business in
the paint and coatings industry.
Some analysts estimate the global architectural sector of the paints and coatings market has fallen by
approximately 30% as a result. Under such deteriorating and volatile econcomic conditions it is hard to forecast where the market will end up at year’s end. At best
the market will be flat, but, most analysts expect a
downturn in the architectural market during the next
two years, due primarily to the economic crisis affecting
all regions.
At the same time, the architectural markets in emerging
regions such as China and India will continue to grow so
expect the major firms with the infrastructure in place to
continue to expand operations in these emerging markets
while at the same time contracting, cutting back and consolidating in mature markets.
The architectural market is already heavily consolidated
between a handful of large global companies. AkzoNobel
through its acquisition of ICI, Sherwin-Williams and PPG
are the three biggest paint makers in the architectural sector and command almost half of the global market, according to Chemark Consulting. At the same time only five
paintmakers—Sherwin-Williams, AkzoNobel, PPG, Valspar
and Benjamin Moore—own approximately 75% of the
North American market, which is the largest in the world.
In addition to housing starts, sales of decorative coatings
are also being heavily influenced by other factors. Trends
towards DIY and home decorating are growing, led by
media attention and by the expansion of DIY retail networks, such as Home Depot’s extension in Mexico, and
Praktiker and Castorama into Eastern Europe.
In the developed markets of North America and
Western Europe, the highly competitive decorative coatings area is also being pressured by rising raw material
prices and the erosion of profit margins due to the low
price policies of the major DIY chains. In response, manufacturers have focused on innovative and higher value
