Decorative Paint Demand Grows in
Middle East’s Gulf States
Fueled by oil
revenues,
government
sponsored projects
help grow paint
demand.
by Sean Milmo
European Correspondent
milmocw@rodpub.com
Sales in Europe’s decorative paints market have been sluggish this year and are likely to show an even slower pace of growth
in 2012. Meanwhile in the Gulf area of the Middle East—close to Europe’s doorstep—the decorative paints sector is flourishing in the wake of
high oil prices, which soared by around 50 percent between late 2010 and the spring of this year.
Demand for decorative paints in the Gulf states
of Saudi Arabia, Kuwait, Qatar, Bahrain, United
Arab Emirates (UAE) and Oman tends to be heavily influenced by the rises in government revenue
from oil and gas exports. This is because a high proportion of sales come from projects, including housing schemes, which are financed by governments.
As a result sales of decorative paints have in some
Gulf countries been rising at double-digit rates. Although there have been short periods of sharp fluctuations in demand, the decorative paint market in
the oil and gas rich Gulf has returned fairly constant increases in demand for many years.
As a result it has offered opportunities for
buoyant revenues and profits for the decorative
paints businesses of some European coatings companies, which among the foreign players in the
Gulf have tended to be the most active in it.
In particular it has been a chance for Jotun of
Norway and Hempel of Denmark, two Scandinavian coating producers, which have a relatively
small share in the total European decorative
paints market, to establish a strong presence in the
Gulf and other parts of the Middle East.
Jotun first established a physical presence in
the Middle East in 1964 with the building of a
decorative coatings plant in Libya. Eleven years
later it entered the Gulf market with the construction of a plant in Dubai in the UAE.
Hempel, which earlier this year considerably
expanded its European decorative paints business
with the takeover of Crown Paints of the UK, has
been producing and selling decorative coatings in
the Gulf for 40 years.
Jotun now claims to be market leader in the
Gulf decorative sector with a share of around 25
percent, while Hempel is also among the leaders.
Among the other international players in the Gulf
area are AkzoNobel, PPG Industries and Asian
Paints of India.
The Middle East market with its relatively fast
growth rates and preponderance of large construction projects, usually financed by the public
sector, has given international paint companies the
opportunity to use the region for the development
of new decorative products.
“We cooperate closely with our company col-
leagues in the decorative paints market in Europe,”
said Mohamad Baitie, Middle East regional brand
manager for decorative paints at Hempel. “They
take and adapt products we have developed while
we take paints they have developed as well.”
Jotun in fact runs out of its Middle East head-
quarters in Dubai two European operations in
Turkey, usually classified in the paints sector as
being part of Southeast Europe and Spain.
“We have a marketing and development hub at
Dubai which covers 17 countries including Turkey,
Spain and all MENA countries so they get marketing support from our Dubai headquarters,” said
Erik Aaberg, Jotun’s manager responsible for the
company’s decorative paints businesses in the Middle East, Southeast Asia and the Far East.
Decorative paints demand in Saudi Arabia,
with a population around 25 million and a GDP
growth rate this year of around seven percent, will
rise by around 20 percent in 2011, making it one
of the fastest growing decorative markets not only
in the Middle East but in the wider area covering
southern and Southeast Europe. It is also by far
the biggest decorative paints market in the Gulf.
Earlier this year in response to the political upheavals in Tunisia, Libya, Egypt and neighbouring Yemen, dubbed the Arab Spring, the
government of Saudi Arabia pumped an additional $130 billion into the domestic economy to
boost public sector wages and benefits for the unemployed. For the construction industry and suppliers like paint companies the big benefit of the
package was extra money for building 500,000
low-and-medium cost housing.
In addition the country is attracting a high inflow of foreign capital, which in 2010 alone
amounted to $40 billion. Some of this external investment goes into the building of hotels and commercial buildings.
