Paint dispute increases in premium segment
Valor Econômico 07/20/10
The heating up of the economy is changing the behavior of the manufacturers of paints. The dispute, which in recent years has been tougher in the low-income segment, now turns towards the premium market - where the margins are better and the competition with the small brands is smaller. The positive response of the consumer to the more elaborate products with differentiated technology - and, above all, more expensive - led the multinationals of the sector to concentrate the funds and launchings in products of higher added value.Global leader in coatings, AkzoNobel, American company that acquired ICI, the then owner of Coral Tintas, plans to invest more than R$ 100 million (US$ 56 million) this year in the Brazilian subsidiary. R$ 50 million (US$ 28 million) of such amount will be intended for the increase of the productive capacity - the company does not disclose how much - and little more than R$ 50 million (US$ 28 million) for marketing.
With sales of R$ 2 billion (US$ 1.1 billion) in Brazil last year, of which nearly R$ 1 billion (US$ 556 million) in decoration paints, Coral is not in the market leadership, which is in the hands of the Basf company Suvinil. It intends to have its share increased though: the company currently has nearly 25% of the market and its goal is to get to 27% or 28% until the end of the year. The company estimates an increase in the sales of nearly 10% in 2010, the same it achieved in 2009.
A direct rival, Suvinil also bets on the market of higher added value. According to the very company, the brand has 60% of market share among the premium products. Suvinil will invest R$ 100 million (US$ 56 million) in marketing this year and it launched three products - against mold and corrosive sea air, with suede effect and no splashing - all on the list of most expensive products. The company intends to invest R$ 140 million (US$ 78 million) in the increase of the productive capacity in the next five years. R$ 50 million (US$ 28 million) in the plant of São Bernardo - which intends to achieve the title of largest coatings producing unit in the world - R$ 20 million (US$ 11 million) in the varnish plant in Jaboatão dos Guararapes (PE) and R$ 70 million (US$ 39 million) in a new plant in Guaratinguetá. Until the improvement of the unit of São Bernardo gets ready, within a year and a half, the company has decided to increase one shift. It has already hired 80 employees and it will hire another 60 in the first quarter of 2011.
Leader in the United States, Sherwin-Williams also disputes the segment of more expensive coatings with the Metalatex brand and it invests to increase its share of nearly 14% in the Brazilian market. This year, it launched a coating for roofs and another with waterproofing. In 2009, the sales of the company in Brazil increased 12% in value and 4.5% in volume. This year, until May, the operations of Sherwin-Williams increased 12% in volume compared to the same period of last year. In the market of premium paints, companies find room for products with an ecological appeal, which require high technology and, therefore, are more expensive. The new bet of Coral, which gets to the market today, is a white paint with patented technology that reflects up to 74% more light. The can will cost R$ 215 (US$ 119), nearly 20% more than the premium paints.
According to data of the Abrafati (Brazilian Coatings Manufacturers Association), the market grew 30% in the first half. Since there was replenishment of stocks - in the beginning of last year the companies reduced the stocked volume - the real increase turns around 15% and 18%. It is expected an increase between 12% and 15% in the year.