Brazil to have biggest paint plant of the world in 2013
Valor Econômico
Brazilians like to color their houses. Among the lower classes, choosing a nuance between a wide and almost indistinguishable range of colors - even if only to draw attention to one single wall - is a synonym of status. For the higher income public, the colors used in the decoration and the latest news of the market, such as the Suede, straw or even jeans effect paint, make the environment more beautiful and take it out of the commonplace. The fact is that, stimulated by the increase of the income and growth of the real estate market, the paint industry prepares to increase nearly two digits this year, after a weak 2009 in terms of sales.
Basf Suvinil, the market leader, is getting its act together to increase in size in the country. With current capacity to produce 330 million liters, the plant of São Bernardo do Campo - which last year received investments of R$ 21 million (US$ 10.7 million) in modernization - is receiving a new investment of R$ 15 million (US$ 8.3 million). And, this year, the company will make another tranche of investments in the plant. "It will be the largest plant of paints in the world", affirms Antonio Lacerda, Vice President of Paints, Varnishes and Infrastructure of Basf for South America. The idea is that the São Bernardo plant be already operating with the new size by 2013.
The second plant of the company, located in Jaboatão of Guararapes (PE) received investments of R$ 20 million (US$ 10.2 million) at the end of last year. All that to cater practically to the domestic market - the exports represent less than 5% of the business and it was precisely the domestic market that felt the most the effects of the crisis. "The beginning of last year was complicated in the Brazilian market, but from the second half on, it resumed growing and it has not stopped anymore", says Lacerda.
Last year, the sales of the area of functional solutions (which includes chemicals for construction and paints) of Basf was of € 607.5 million. The company does not disclose the earnings of the Division of Paints in Brazil. Moreover, in view of the strong competition among themselves and the growth of regional brands, the multinationals of paints blame the headquarters and hardly disclose absolute numbers.
Coral, which belonged to the British ICI, acquired by AkzoNobel in January 2008, restricts itself to say it will invest 50% more this year, without revealing the numbers of 2009. The company intends to grow above the market, which projects growth of 3.4% in 2010, according to the Abrafati (Brazilian Coatings Manufacturers Association). Last year, the industry of real estate paints had a 2.3% fall in earnings that amounted to R$ 1.9 billion (US$ 964.5 million). In volume, there was a increase of 0.7%, with 982 million liters. It is not different with the American Sherwin-Williams that says it intends to grow above the market. Unlike its rivals, which in both ends, the company wants to consolidate in the market premium paints. "We want to evolve into products of higher added value", says Mark Pitt, President of the company in Brazil, who does not foresees industrial investments.
Because of the dispute with cheaper brands or with strong regional positioning, the three major companies also move towards the same direction. They stress out the relevance of developing innovative products and increasing the investments in marketing this year.