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IndiaFuture Trend in Paints.
The Paint Industry in India
Section I
Growth in Paint Industry.
Growth in Disposable Income % 80
Rank 12 5
Discretionary Spends %
52 70
Paint Ratio to HH % 6.45.4 9.4 17 -19
9
5750
12340
675
16896
987
24060
1510
69504
5415
2000 2005 2010 2025Consumption Household
In Billion INR
2000 2005 2010 2025
2000 2005 2010 2025
Paint Industry size from 13,500 crs to 1,00,000 crs by 2025
Implies the CAGR of 14% to 15%
Per capita from 1.5 kg to 7-8 kg
Rs. 115/- Rs. 700/-
Following can further increase the growth
Increasing awareness of paint category
Taking pain out of painting process
Alternative to Alternatives
Increase in number of players
Sources of Growth
Overall Growth % 10
Paint Growth % 15 13
Paint Salience % 85 90 15 10
8
Population Salience %
27 37
7208
43120
424
2871
9688
26383
563
2544
Urban Total Urban P&HHS Rural Total Rural P&HHS
2005
2025
73 63
Urban will continue to dominate
Urban in Rural and rural in Urban
Creating rural brand is ???
Rural consumer aspiring for urban
Extending urban brand is more acceptable
Consumer Segments
No. of times growth 10
Paint Potential 700 2000
9 8 1
7000 2000
2300
22000
8500
69000
Super Premium Premium Popular Economy
In Crores INR
Super premium category is under leveraged
Higher potential of growth in popular
Super Premium and Premium
Today – 20%
Future – 30%
Up-trading will happen across all the categories
Expensive labour may create DIY at lower end
India: Consumer trends today and future
Section II
Age (in yrs)
Pop
ula
tion
(in
‘0
00
s)
Source: Euromonitor Report, How India eats, drinks and shops, October 2010
20202010
Median Age:
29 yrs
Median Age:
26 yrs
India - The youngest country.But Average age likely to shift upwards
Despite average age increasing, India will still remain youngest country
Source: Economic times, Central Intelligence Agency World Factbook
Young India means, people have started investing in a house much earlier
1999 2010
Source: Financial Express, LiveMint
--Average age of the home loan buyer--
43 years 33 years
2004
36 years
Given the size of the investment, it is unlikely that the age of the home buyer will drop beyond 30 years
No wonder, the average age of the paint buyer has gone down vis-à-vis 2005
--Age-wise split of paint bought in last 5 years--
25-34 yrs segment is the largest currently
41 yrs
Avg Age in 2005
Avg Age in 2010
38 yrs
Gap between average age of new home buyer and the paint buyer is 5 years. It is still likely to be in the mid-30’s going forward
Source: Indian Readership Survey 2005, 2010 (sample – 2.4 Lacs), Age 25+
PaintsFeeling 1 – Youngness
CONSUMER TRENDS
Entertainment / Mood Enhancement
Performance enhancement
Impatient and Intolerant
Treatment to solutions
Cross Cultural
Modern designs & textures
Robust product features
Faster application process 5 days
End to End Solutions 15%
PAINT TRENDS
Example - Lift
Customization of products
Customization of credit cards (more likely in the
institutional segment)
Demand for more evolved products
Automobile companies offering top end features like keyless entry, Bluetooth connectivity
Increasing affluence leading to lifestyle upgradation
Rising income levels, has lead to a trend towards consumer up-trading and demanding better and premium products
Automobile market shows a distinct shift towards more premium cars
Consumer upgrading his choice of cars. Today 3 among the 5 top selling cars fall above the Rs. 4 lacs price bracket
20052005 20092009
AC, PS model assumed as best selling model, Ex-showroom Prices: Autocar, in Rs. lakhsS = Avg. Sales volume per month
Price range of top selling models:Rs 2.5L – 3.75L
Price range of top selling models:Rs 2.5L – 3.75L
Price range of top selling models:Rs 3.0L – 4.4L
Price range of top selling models:Rs 3.0L – 4.4L
Alto2.91
S = 12,700 units
Santro Xing3.72
S = 8,900 units
Indica3.28
S = 8,800 units
WagonR3.77
S = 7,100 units
Maruti 8002.55
S = 7,600 units
Alto2.97
S = 20,000 units
WagonR3.81
S = 12,500 units
i104.07
S = 11,400 units
Indica4.04
S = 9,700 units
Maruti Swift4.39
S = 8,900 units
Uptrading seen at both - the top as well as bottom of the pyramid
TV category CAGR of 12.1%
TV category CAGR of 12.1%
Source: Nielsen market monitor
Premium market
Source: Euromonitor, 2004, 2009
Mass marketLCD TV
96%5yr CAGR
Vs.
Premium Cosmetics
93.5%5yr growth
Vs.
Regular CosmeticsGrowth of 76%
Regular CosmeticsGrowth of 76%
Who would have imagined Indian customers paying 5 times more for a cup of coffee?
Source: Economic Times
Rs. 50Rs. 50Rs. 10Rs. 10
20072007 20102010
400
937
Not only is the consumer ready to pay so much, but also demand for premium service is evident by the number of outlets zooming
Number of CCD outlets in IndiaNumber of CCD outlets in India
Café Coffee Day is India’s largest organized retail café chain
PaintsFeeling 2 – Aesthetics
CONSUMER TRENDS
Premium with advance features
Distemper ….. Emulsion 1…. Emulsion2
More new products
Exciting & appealing packaging
Market Insight / Supply Chain
PAINT TRENDS
Example - 70% users of smart phones does not use more than two/ three featuresStill ready to pay premium for other features
Technology
Feel Good features
Premium Look & feel
Willingness to pay premium
Emergence of the eco-conscious consumer
Concern for the environment has changed the purchasing behavior of consumers
Source: Greendex 2010
India toped the
Consumer Greendex,
compiled by National
Geographic which
studied 17,000
consumers in 17
countries
This phenomenon is evident across varied categories
Source: Deccan Herald
PaintsFeeling 3 – Guilt free
CONSUMER TRENDS
Contributing to society
CSR to ISR
Doing Well, Doing Good
Future of Luxury
Environment Friendly Products
Contribution to society through paints
Shopping for Cause
PAINT IMPLICATIONS
Example - Global Warming
‘Health-consciousness’ the latest mantra
Source: Euromonitor, Health and Wellness
The health and wellness category expected to double by 2014
Evident through sudden increase of fitness centers in the last few years
Source: Economic Times, IIFL Report
20102010
100
Number of Talwalkar Fitness centers in IndiaNumber of Talwalkar Fitness centers in India
20062006
35
19391939
1
35 outlets in 67 years
65 outlets in 4 years
Also, the sudden boom of ‘being healthy’ across categories drives the point
Even India’s largest english daily – The Times of India
launched an entire bi-monthly supplement and a website dedicated to health
called ‘Times Wellness’
Sugar-free Icecream
Low Fat Milk
Health with absence of negatives
Multi-grain SnackingProbiotic
Curd
Health with nutrition enhancers
PaintsFeeling 4 – Absence of negatives
CONSUMER TRENDS
Safety
Healthy
Non Polluting
Hygienic
Lead free
Low VOC
No Smell
Low Formaldehyde
No hassles
PAINT TRENDS
Example - Sound from Refrigerators
New Age Marketing
Section III
1621 mn 3421 mn
42% 43%2X
While digital seems to witness 3-fold growth
SOURCE: Advertising spends, Magna Report
2009 2015
Predictions reveal, TV and print will continue to contribute the most even in the future
44%44%
1700 mn 3508 mn
2X
111 mn 369 mn
3% 5%3X
% contribution to total Ad spends, Ad spends USD mn
The ‘digital wave’ currently restricted only to a few categories
Source: ComScore, Nov 2010
Paints category still has a long way to go….
3G spectrum and reduction of prices of internet enabled handsets likely to spur mobile internet growth
Internet mobile user base to multiply 25 times by 2014
25X
Source: Internet & Mobile Association of India Report, Dec 2009
Eyes v/s Ear
The Ear can process 125 words per minute
The Eye can process 5000 words per minute
Visual media will be more effective than verbal
M-Marketing may do better than E-Marketing
Modern trade is growing in India…
Big retail chains increasing their
presence by reaching out to the smaller town
The economic slowdown dented the growth of organized retail during 2008-09, however the trend has picked up and the
industry is expected to boom
Source: IBEF, Booz & Co. Analysis
Source: Technopak, Booz & Co. Analysis
Renowned brands have often opted the ‘Exclusive stores’ route and have seen consistent growth over years
Source: Forbes, Tata Strategic Management Group Report, Economic Times
150
222303
2003 2007 2010Number of ‘World of Titan’ outlets in
India
World of Titan: An exclusive retail store of India’s leading watch-maker
450
723
1608
2001 2005 2010Number of Zara outlets around the
world
Zara, which exclusively retails through its own stores, has been
doubling every 4 years!
303 Titan exclusive stores account for almost
half of the watch sales
Over 10,000 multi-brand outlets account for the
remaining 50%
PaintsTouch and Feel
Smaller within reach format more successful than large formats
Exclusive retail outlets to grow
While with increasing affluence, one expects the population of working women to increase…
The actual proportion of working women in India is decliningA decline led by rural working women, due to urbanisation and
decreasing dependence on agricultural activities.
Source: National Readership Survey 2001, 2006 (Sample:2.8 lakhs), Indian Readership Survey 2010 (sample: 2.41 Lacs), Hindu Business Line, Department of Demography
But today’s Indian woman, increasingly, sees herself as a equal partner in the marriage
I do something for his family, he does
something for mine… it balances out
Equal to her husband
I suggested to him that we need to take a loan to
invest in a new house when our kids were small!
Bigger role in financial decisions
Source: DraftFCB Ulka WomanMood, Findings of 35 workshops and Expert interviews carried across 6 metros and mini-metros across India, SEC A,B
I don’t have to ask my husband for buying every small thing in
the house. I can decide!
Empowered to take
decisions on smaller aspects
Role of woman increasing in house hold categories
But in paints it is still indicative of continuing with Man
Colors, Designs and retail experience efforts need to be
uplifted to get women into paint decision making
To Conclude…
Indian Paint Industry
Robust
Growing
Stable
Versatile (Consumer / Dealer / Influencer)
Technology
It has the power to become a case study to follow.
Thank You.
Glossary• Household: Part of Personal & Household Services as per McKinsey report• Growth in disposable income as per McKinsey report• Discretionary spends as McKinsey report• 2010 discretionary spends estimated• Paint ratio to Personal & Household Services category is calculated based on estimated industry size in
years 2000, 2005 & 2010.• Per Capita Consumption based on CAGR growth of paints and Population growth• Urban & Rural growth calculated based on McKinsey report• Population salience based on McKinsey report• Paint potential calculated based on current year’s (2010) category wise salience