The Hindu Business Line : Growing paints

It has been a happy Diwali for most businesses, thanks to increased consumer demand. The same holds true for paints and emulsion paints manufacturers who seem to have converted the festival of lights into the festival of colours. An increased spend in marketing over the previous festival season has translated into greater sales.

The festival season is traditionally the time of the year when most people choose to get their houses re-painted. Diwali marks the beginning of a new year for most North Indians, which is accompanied by a new look to homes across the country. After the slowdown of last year, growth is back for paints manufacturers. Whether it’s the new companies or the veterans, sales are up and the festive cheer is back.

The domestic paints market is estimated at Rs 17,000 crore, according to the latest industry estimates. Seventy-five per cent of this market is dominated by decorative paints used for painting homes.

With the demand seemingly returning to normal this season, market leader Asian Paints further consolidated its market share of 30 per cent this year. The company’s financial results for the quarter ended September 2009 reported almost 19 per cent growth in net sales. Asian Paints’ profits more than doubled for the quarter.

“Demand conditions for our decorative business have been good in most parts of the country. Only the international business was impacted by the global slowdown. However, despite the slowdown, South Asia and the Middle East performed well,” P. M. Murty, Managing Director and CEO, Asian Paints, is quoted as saying on the BSE Web site.

Though a fairly recent entrant to the domestic market, Nippon Paints is rapidly gaining market share in the markets it operates in. According to Ramakanth Akula, Vice-President (Decoratives), “We embarked on a phased geographical expansion. Currently we operate in South India and in a few pockets of the West. Our focus is mainly on premium-end emulsions. Our market share in South India, in the emulsion paints category, would be 10 per cent.” The company launched an aggressive marketing campaign this time to attract more buyers. Akula told BrandLine, “A 360-degree media campaign was carried out in the markets where we operate. A new TVC which starred animated characters called ‘Blobbies’ was aired during the festival season to differentiate us from the competition. The ‘Blobbies’ are an army of cheerful, animated paint drops on a mission to paint India in every imaginable hue on the Nippon Paint colour chart.”

The marketing campaigns were also accompanied by several promotional offers and freebies such as mobile phones and primers were given away as well. Overall, the company spent close to 25 per cent more than previous years on its marketing campaign. According to Akula, this increased spending has resulted in a 30 per cent increase in sales during the festival season.

Another major player in the segment, ICI’s Dulux, also went all out this season with its marketing initiatives. Dulux, whose market share is around 12 per cent, also tied up with Vodafone for a joint promotional offer.

Hemant Somani, Head (Marketing), ICI India, said: “Around the festival season, painting one’s house or surroundings takes on a new dimension. Understanding our consumer’s needs, Dulux came up with a promotion which allows consumers to cash in on this season while beautifying their homes. It announced a mega consumer promotion called ‘Colour your World’ for the festival season. Within this promotion, with purchase of every promotional can of Dulux paint, consumers got a scratch card with an assured prize in it. They could win anything from a flat, Maruti Dzire car, LCD TVs, ACs, laptops and music systems to something as handy as a mobile recharge. This has been our biggest offering till date, which offers every consumer who buys a Dulux promotional pack an assured prize.”

He added, “Normally companies increase their spends around the festival season. ICI India also entered into a joint promotion with Vodafone for a Diwali offer where Vodafone users stand a chance to get their house painted with Dulux for free.”

Dulux, one of the top three paints brand in the country, witnessed a strong growth in sales during the festival season. “The festival season conventionally brings about a positive impact on sales numbers as consumers consider it to be a good time to paint their homes. The swing in demand is across categories and is between 10 and 30 per cent,” says Somani.

Analysts say that in such a scenario the tradition of painting houses during Diwali has revived. After the gloom of last year, this year’s Diwali has brightened the scene.

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