The total output of the world
paints and coating manufacturing industry was valued at $54 billion in 1996. The industry
supported some 12,250 active firms. This industry is forecast to expand 3.5 per cent
annually to nearly 26 million tonnes by the year 2001. The valued would be $72 billion.
Tonnage gains in the industrial coatings segment will be constrained by
a shift in trend towards higher solid coatings (such as powder coatings), which often
weigh less per kilo than solvent-borne coatings, and generally require fewer, thinner
coats. On the other hand, the architectural segment is seeing a continuing shift towards
water-based paints, which weigh more than their solvent-borne counterparts, and will
promote stronger tonnage gains. These trends are evident around the world but have had the
most impact in more mature markets.
Most of the developed world has already effected such a switch to
water-based formulations for most architectural applications. The developing world is also
experiencing this trend -- India included.
The world paints and coatings industry is becoming increasingly
dominated by a small group of highly focussed, globally positioned firms. For many of
these companies (e.g., Sherwin Williams, Kansai Paint, Nippon Paint, and Asian Paints)
coatings represent the primary line of business. In other cases (e.g., Akzo Nobel, ICI,
BASF, Hoechst, Dupont & Courtalds), the firms strong position has arisen from
involvement in various upstream petrochemical activities, including production of many of
basic raw materials used in coatings production.
The most rapid gains in paints and coatings production will be
registered in the developing regions of Latin-America and Asia-Pacific. Although the
Asia-Pacific region holds excellent long term prospects as a market for paint and
coatings, regional production has been lower, primarily due to the financial crisis that
has hit this region. However, India was not severely affected by the crisis.
The wave of currency devaluations and a sharp rise in interest rates
will seriously dampen spending in key paint sectors such as construction and durables in
the short term, particularly in Indonesia, South Korea and Thailand. India, in an earlier
budget, has announced a new housing policy, which should result in a boom for the
construction sector, which will boost demand for architectural coatings
A very interesting trend is emerging in the architectural coatings
segment. We are experiencing a shift from solvent-based coatings to water-based coatings.
Water based coatings now account for most of household paint demand in developed countries
and are gaining ground in developing countries too. During the 1990s, the drive has spread
to the industrial and specialty coatings segments. The higher performance standards for
industrial coatings have necessitated intense product reformulation efforts, leading to a
number of alternative technologies.
Meeting environmental regulations is another challenge for paint
companies in the developed world. Even companies in developing regions must be prepared in
this area, as paint products are soon adopting global standards, hence all paint companies
will have to comply with environmental regulations. Global trends towards freer trade will
have an impact on product mix, since exported goods must meet the environmental codes of
the target market. The formation of trading blocks like NAFTA will involve the
establishment of more environmental regulations for member nations.
Global production of paints and coatings can be divided into two broad
sectors -- architectural paints and industrial coatings. In 1996, architectural paints
accounted for 58 per cent of the total output, with industrial coatings accounting for the
remainder. However, the industrial coatings segment is slightly larger in value (dollar)
terms because industrial coatings tend to cost significantly more than architectural
In 1998, the worlds top ten paint and coating suppliers accounted
for nearly 42 per cent of the market. The next ten producers accounted for an additional
13 per cent of sales, which gives the top 20 firms a collective market share of over 50
The most basic division in the market is between architectural coatings
and the industrial coatings. Akzo Nobel, the worlds top player, has a strong
presence in both segments (60:40 in favour of industrial coatings). Sherwin Williams, ICI,
Total, Asian Paints, and Benjamin Moore focus primarily on architectural paints whereas
PPG, Kansai Paint, Courtaulds, Nippon Paint and RPM focus heavily on the industrial
segment. BASF, Du Pont, Lily Industries and DAI Nippon focus entirely on industrial
Globally industrial paints are the major segment, accounting for around
70 per cent of the market. Global trade is overall sparse, due to relatively simple
technology, and especially the need to maintain high inventory at the dealer level and
high transportation costs. Per capita consumption is 26 kg in the US, 4 kg in the
Philippines and 16 kg in Taiwan.