Global Overview on Decorative Paint: West to East

Strategy Briefing

About This Report

Jul 2016

Consumers in the Asia Pacific region are the main drivers of growth in global volume sales of decorative paint, with India emerging as a particularly strategic market. Elsewhere, demand remains relatively subdued, but a revival in consumer confidence and stronger housing markets are driving a recovery. This is particularly the case in North America, where the rate of new household formation has accelerated sharply as the labour market has strengthened.

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Global Overview on Decorative Paint: West to East

Asia Pacific the most important regional market

The Asia Pacific region in general, and China and India in particular, are the most important markets for decorative paint. North America and Western Europe account for a little over a quarter of global sales in volume terms, with the importance of the later region diminishing steadily.

New household formation a crucial driver of growth

Important demand factors include the rate of new household formation, residential housing values, urbanisation, average home size, whether consumers are tenants or owner occupiers, and whether they live in apartments or houses.

Internet retailing will eventually take off

Home and garden specialist retailers remain the backbone of distribution, but millennials are likely to drive strong long-term growth in online sales of decorative paint, as they value convenience.

India to become a key growth market

With urbanisation and strong economic growth the main drivers, India has already surpassed the US and is set to become a major driver of global growth in volume sales of decorative paint in the medium term. However, the outlook for growth is much dimmer for the other BRIC markets.

Private label versus premium

Private label is important in the Western European market, but is relatively unimportant in the global market. Premium products are popular with affluent consumers, and have significant potential for growth in emerging markets.

Introduction

Scope
Key findings

Global Overview

Sluggish growth in global sales
Three markets dominate global sales
Canada leads per capita consumption
High growth markets concentrated in Asia Pacific
Economic weakness weighs on demand in Europe

Demand Factors

New household formation drives growth
The housing market wealth effect
Apartment living depresses demand
In some markets, tenants m ake p oor c ustomers
Building a cocoon
Will increased d emand for titanium d ioxide p ush u p p rices?

Competitive Landscape

Bringing celebrity c achet to paint
Western European consumers comfortable with private label
The appeal of exclusivity
Heritage paints an established n iche
Leveraging M&A to penetrate e merging m arkets
What’s in a name?
Home and garden specialists remain resilient
Apps make decorative paint more accessible

Regional Focus

DIY remains relatively unpopular in Asia Pacific
Sales little b etter than flat in China
Demographic and socio-economic change gather pace in India
Buoyant housing market helps to boost demand in Australia
Inflation and decline in remittances Eastern Europe
Inflationary pressure hits Russian consumers hard
Rising house prices boost demand in Latin America
Recession bites in Brazil
Expanding middle class drives growth in Middle East and Africa
Revival in US consumer confidence b oosts North American sales
Recovery remains anaemic in Western Europe
Private label a strong presence in the German market

Outlook

US set to surpass Canada in per capita consumption
Revival in developed market consumer confidence bodes well
Strong GDP growth and urbanisation to propel India past China
Weak growth outlook for other BRIC markets
What next for TiO 2 pricing?
Will tenancy reform boost demand?
Conclusions