Paint-makers shift focus to smaller cities

So far, it was the urban consumer who would experiment with premium textures, colours and designs solutions. But now, paint-makers feel that consumers in tier-II and III cities are fast taking to the concept.

Companies are mapping aggressive plans to tap the demand in the non-metros as this premium segment is growing at around 30 per cent annually as against the industry average of 12-15 per cent.

SPREADING COLOUR

The premium segment in tier-II and III cities is growing at around 30 per cent annually as against the industry average of 12-15 per cent

Industry observers believe that the consumers in these cities do not mind paying premium for innovative products and services, even if they are 10-20 per cent more expensive than economy products

The premium segment commands 15-20 per cent of the Rs 11,000-cr paints market in India, as against 5 per cent two years ago

While over the past three years, the metros contributed more to the sales of the industry, experts believe that with the increasing number of real estate projects, it is the smaller towns that will be of more importance to the sector.

“The income distribution pattern has changed in the tier-II & III cities and the consumer there has more purchasing power, which in turn fuels demand. A lot of real estate development is also happening in these cities adding to the demand,” says ICI India Director M R Rajaram.

Industry observers too believe that the consumers in these cities do not mind paying premium for innovative products and services, even if they are 10-20 per cent more expensive than economy products.

With more consumers willing to experiment, the premium segment now commands 15-20 per cent of the Rs 11,000 crore paints market in India, as against 5 per cent two years ago.

Meanwhile, Kansai Nerolac is also bullish about its premium brands especially ‘Impressions’ doing good business in tier-II cities such as Lucknow, Dehradun, Hyderabad and Bangalore.

“The consumer in tier-II and III cities are opening up to experimenting with designs and styles and hence are upgrading to the premium end. We are constantly innovating new products to suit the need of these markets. Even metallic-finish paints and designer textures are finding favour,” says Anuj Jain, Vice President-Marketing & Sales (Decorative), Kansai Nerolac Paints. The company offers style guides to help the consumers understand the different designs and products available.

Jotun India, part of Norway’s Jotun group will dedicate around 7-8 per cent of its turnover on marketing its products in the smaller cities with a special focus on the premium end.

“There is a growing demand for semi-premium and premium acrylics and emulsions in these markets and we are trying to create more awareness around products,” says Lopesh Dalal,marketing manager, Jotun India.

The company also plans to expand its concept stores — Multicolour stores — which provide colour solutions and an aspirational ambience. The company is also investing in educating the local paint contractors and retailers about the various options available. ICI paints plans to set up 300 design studios in three years in the country.

Industry observers believe that in spite of the rising inflation, the demand for high-end paints will continue to grow. “While the inflation does eat into the spending power of the consumer, with some moderation expected in housing loans interest rates, there should be strong demand for decorative paints from the housing and construction business,” adds Rajaram.