GCC paints and coatings market set to shine

New research suggests that the diversifying economy paints a rosy picture for the Middle East’s industrial paints and coatings market.

“Companies can stay ahead of the competition by introducing technologies that provide better results”
-Frost & Sullivan

Due to high volatility in the crude oil market, it's necessary for many of the Gulf Cooperation Council countries to invest in diversifying their economy and reduce their dependence on oil, as well as invest in infrastructure development.

According to Frost & Sullivan, this would indirectly benefit the paints and coatings market. The research firm's recent analysis of the Middle East paints and coatings sector found earned revenues of $1.33 billion in 2007, with estimates to reach $2.7 billion by 2014. Analysts said these countries need to develop hubs for other industries, such as light manufacturing, financial services and global trading, to attract foreign investments.

The influx of foreign investments will not only be economically rewarding, but will also introduce large-scale infrastructural and industrial projects. The paints and coatings market will also reflect the effects of such moves by becoming more dynamic.

"An increase in disposable income, as well as changing lifestyles, has led to higher expectations from end-users," says Frost & Sullivan's principal consultant Dominic Louis Britto. "This, in turn, is driving the demand for paints and coatings - especially architectural paints, which account for about 64 percent of the total market revenue."

With the expansion of industries, there has been a significant rise in demand for consumer and industrial goods in these countries. Many countries in the GCC have also started to promote tourism, which has fostered the hospitality, infrastructure and allied industries, resulting in a rise in infrastructural projects. Analysts said this has increased the demand for paints.

As the potential of the paint and coatings market becomes increasingly apparent, more participants have been flocking to it, making the business a high-volume, low-margin one. To top this, end-users are gravitating toward low-value products due to their lack of awareness regarding the quality and usage of paints and coatings.

Manufacturers can disseminate information about the quality of paints by training the professionals to make them aware of the advantages of superior quality paints. They also need to create a powerful brand image through a conscious, brand-building exercise. Analysts said they could also promote their products' ability to meet industry standards.

"In a market where no quality standards are set or followed, a company needs to develop its own standards to set as an industry benchmark," notes Britto. "These campaigns will not only help the companies target the retail segment, but also allow them to tap the rural market, which remains unexplored."

Companies also need to leverage the first-mover advantage in these countries, as it will rapidly increase their market share. Analysts said companies can stay ahead of the competition by introducing technologies that provide better results, and thereby command better prices.

Driving demand

Frost & Sullivan has also reported that the South African industrial paint market is benefiting from the country's infrastructure spending and other capital-intensive projects in the manufacturing sector. Efforts by construction firms to complete projects in a timely manner will result in an increased usage of industrial paint and coatings in the coming years.

New research finds that the market earned revenues of over US$137.3 million in 2007 and estimates this to reach US$195.1 million in 2014. "The booming infrastructure and construction industry is fuelling demand for industrial paint and coatings," notes Frost & Sullivan Programme Manager Mani James. "More spending by the government on public infrastructure projects will result in extensive usage of industrial paint and coatings during the pre and post construction phases."

Source: www.frost.com