5. May 2021 | Markets & Companies
Architectural coatings on the upswing
Architectural paints are the largest segment within the paints and coatings industry in terms of volume. In previous years, however, the market stagnated. In 2020, the segment defied the crisis within the paints and coatings industry, and manufacturers of architectural coatings were able to look back on a successful fiscal year. However, it remains uncertain how long this positive development will continue.
The market for architectural coatings is proving robust in the pandemic. Since the beginning of the Corona crisis, many people have retreated into their homes, and their own four walls have gained in importance. Researchers call cocooning the trend of making one’s own home beautiful and comfortable in times of crisis. The market has certainly benefited from changed or adapted leisure behaviour. The current Leisure Monitor shows which activities people in Germany particularly pursue in corona times. In the study, the market research institute GfK, commissioned by the Hamburg-based Stiftung für Zukunftsfragen (Foundation for Future Studies), representative surveyed more than 2,000 people between the ages of 18 and 74 on their leisure behaviour.
The results show many have been tinkering at home, finally painting the kitchen or laying a new floor in the hallway. One in four people surveyed said they had spruced up their own home (25 %). Even more have embarked on new do-it-yourself projects (39%). However, this trend is not unique to Germany. Bank of America surveyed more than 1,000 U.S. residents about their attitudes and shopping habits during the pandemic, and they found that 70 % of respondents embarked on home improvement projects this year, with more projects already planned for 2021. Globally, the U.S. leads the way with per capita consumption of architectural paint. At 10.4 kg, they are well above the average in Canada (7.8 kg) and the European Union (7.2 kg), according to consulting firm Kusumgar, Nerlfi & Growney (KNG).
Share of water-borne systems to increase further
Water-borne architectural coatings have grown by about 80 % by volume over the past decade, compared with a 38 % increase for solvent-borne coatings, according to KNG. Waterborne systems are well established in the EU and North America and are growing at a steady rate in those regions. However, in emerging markets in Asia-Pacific, water-borne coatings penetration is lower and growing faster. A projected annual growth rate of 6 % through 2024 is levied by KNG’s market researchers for waterborne coatings, while solvent-borne coatings are growing at an annual rate of only 3 %.
Water-borne systems accounted for 93 % of the volume of architectural coatings in the EU and 90 % in North America. In Asia-Pacific, water-borne systems accounted for 78 % of the volume and in Russia only about two-thirds. KNG experts expect this trend to continue and the share of water-borne systems to increase further.
Global market to grow by 4 % annually
KNG estimates the global market for architectural coatings at a volume of 26.1 million tonnes, worth EUR 44.06 billion. The growth forecasts are for an annual average of 4 %. Thus, the market should grow to a volume of 32 million tonnes worth EUR 53.2 billion by 2024. The consultancy assumes that a market share of just under 60 % will be distributed among 25 companies. The top 5, PPG, Sherwin-Williams, Akzo Nobel, Nippon Paint and Asian Paints, already account for more than 38 %.
With nearly 11.7 million metric tonnes and EUR 18.4 billion in sales, the Asia-Pacific region is the largest market for architectural coatings. The Chinese market alone, with 5.6 million tonnes, exceeds the volume of all of Europe (5.5 million tonnes) or North America (4.1 million tonnes). In Asia-Pacific, KNG’s experts also locate the highest growth, at 7 % on average per year. The strongest growth rate is expected for India, at 10%. By comparison, the forecasts for Europe do not look so positive. Here, growth of only 1 % is assumed.
Sustainability and transparency in terms of carbon footprint, sustainable solutions are on the rise, he said. According to Mortensen, customers, investors, and governments increasingly expect companies and corporations to be more responsible and not only do well economically, but also do good. “There is great potential for architectural coatings manufacturers to not only comply with regulations, but to further engage - perhaps even partner - to go beyond compliance and work to develop sustainable products, packaging, and solutions that could benefit customers and the industry as a whole,” Jimmi Mortensen of Danish paint manufacturer Flügger is certain.
The potential for further development of the decorative paint segment, according to Tomasz Kosiński of Polish company Śnieżka, is provided by the market professionalisation and a further increase in the importance of non-price criteria among consumers. “An increase in demand for more expensive, higher-quality products that meet the expectations of an increasingly demanding, broadly understood customer”, he says. Another area with potential for development are product innovations in line with the trend of caring for health, ecology and responsible business, believes Kosiński.
For Rachel O’Connor of Irish paint manufacturer General Paints, there is great scope for paint manufacturers to meet market trends. She relates this to online demand for products and services, the increasing emphasis on sustainable products, and companies taking on more responsibility to meet higher standards in ESG. “We also need to sell the message that paint provides huge positives to our lives and to our environment,” she stresses.
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