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B 4 india - future trends in paints - by anuj jain


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B 4 india - future trends in paints - by anuj jain

  1. 1. India Future Trend in Paints.
  2. 2. The Paint Industry in India Section I
  3. 3. Growth in Paint Industry. 2000 2005 2010 2025 <ul><li>Paint Industry size from 13,500 crs to 1,00,000 crs by 2025 </li></ul><ul><li>Implies the CAGR of 14% to 15% </li></ul><ul><li>Per capita from 1.5 kg to 7-8 kg </li></ul><ul><li> Rs. 115/-  Rs. 700/- </li></ul><ul><li>Following can further increase the growth </li></ul><ul><li>Increasing awareness of paint category </li></ul><ul><li>Taking pain out of painting process </li></ul><ul><li>Alternative to Alternatives </li></ul><ul><li>Increase in number of players </li></ul>Growth in Disposable Income % 80 Rank 12 5 Discretionary Spends % 52 70 Paint Ratio to HH % 6.4 5.4 9.4 17 -19 9 57 50 12340 675 16896 987 24060 1510 69504 5415 2000 2005 2010 2025 Consumption Household In Billion INR 2000 2005 2010 2025
  4. 4. Sources of Growth <ul><li>Urban will continue to dominate </li></ul><ul><li>Urban in Rural and rural in Urban </li></ul><ul><li>Creating rural brand is ??? </li></ul><ul><li>Rural consumer aspiring for urban </li></ul><ul><li>Extending urban brand is more acceptable </li></ul>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
  5. 5. Consumer Segments In Crores INR <ul><li>Super premium category is under leveraged </li></ul><ul><li>Higher potential of growth in popular </li></ul><ul><li>Super Premium and Premium </li></ul><ul><li>Today – 20% </li></ul><ul><li>Future – 30% </li></ul><ul><li>Up-trading will happen across all the categories </li></ul><ul><li>Expensive labour may create DIY at lower end </li></ul>No. of times growth 10 Paint Potential 700 2000 9 8 1 7000 2000 2300 22000 8500 69000 Super Premium Premium Popular Economy
  6. 6. India: Consumer trends today and future Section II
  7. 7.  India - The youngest country. But Average age likely to shift upwards Source: Euromonitor Report, How India eats, drinks and shops, October 2010 2020 2010 Median Age: 29 yrs Median Age: 26 yrs Age (in yrs) Population (in ‘000s)
  8. 8. Despite average age increasing, India will still remain youngest country Source: Economic times, Central Intelligence Agency World Factbook
  9. 9. 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-- 2004 43 years 33 years 36 years Given the size of the investment, it is unlikely that the age of the home buyer will drop beyond 30 years
  10. 10. 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 Source: Indian Readership Survey 2005, 2010 (sample – 2.4 Lacs), Age 25+ 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
  11. 11. Paints Feeling 1 – Youngness Modern designs & textures Robust product features Faster application process 5 days End to End Solutions 15% PAINT TRENDS Example - Lift CONSUMER TRENDS Entertainment / Mood Enhancement Performance enhancement Impatient and Intolerant Treatment to solutions Cross Cultural
  12. 12.  Increasing affluence leading to lifestyle upgradation 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 Rising income levels, has lead to a trend towards consumer up-trading and demanding better and premium products
  13. 13. Automobile market shows a distinct shift towards more premium cars 2005 2009 AC, PS model assumed as best selling model, Ex-showroom Prices: Autocar, in Rs. lakhs S = Avg. Sales volume per month Price range of top selling models: Rs 2.5L – 3.75L Price range of top selling models: Rs 3.0L – 4.4L Consumer upgrading his choice of cars. Today 3 among the 5 top selling cars fall above the Rs. 4 lacs price bracket Alto 2.91 S = 12,700 units Santro Xing 3.72 S = 8,900 units Indica 3.28 S = 8,800 units WagonR 3.77 S = 7,100 units Maruti 800 2.55 S = 7,600 units Alto 2.97 S = 20,000 units WagonR 3.81 S = 12,500 units i10 4.07 S = 11,400 units Indica 4.04 S = 9,700 units Maruti Swift 4.39 S = 8,900 units
  14. 14. Uptrading seen at both - the top as well as bottom of the pyramid TV category CAGR of 12.1% Source: Nielsen market monitor Source: Euromonitor, 2004, 2009 Vs. Premium Cosmetics 93.5% 5yr growth Vs. Regular Cosmetics Growth of 76% Premium market Mass market LCD TV 96% 5yr CAGR
  15. 15. Who would have imagined Indian customers paying 5 times more for a cup of coffee? Source: Economic Times Rs. 50 Rs. 10 2007 2010 400 937 Number of CCD outlets in India Café Coffee Day is India’s largest organized retail café chain Not only is the consumer ready to pay so much, but also demand for premium service is evident by the number of outlets zooming
  16. 16. Paints Feeling 2 – Aesthetics 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 features Still ready to pay premium for other features CONSUMER TRENDS Technology Feel Good features Premium Look & feel Willingness to pay premium
  17. 17.  Emergence of the eco-conscious consumer Source: Greendex 2010 Concern for the environment has changed the purchasing behavior of consumers India toped the Consumer Greendex, compiled by National Geographic which studied 17,000 consumers in 17 countries
  18. 18. This phenomenon is evident across varied categories Source: Deccan Herald
  19. 19. Paints Feeling 3 – Guilt free Environment Friendly Products Contribution to society through paints Shopping for Cause PAINT IMPLICATIONS Example - Global Warming CONSUMER TRENDS Contributing to society CSR to ISR Doing Well, Doing Good Future of Luxury
  20. 20.  ‘ Health-consciousness’ the latest mantra Source: Euromonitor, Health and Wellness The health and wellness category expected to double by 2014
  21. 21. Evident through sudden increase of fitness centers in the last few years Source: Economic Times, IIFL Report Number of Talwalkar Fitness centers in India 35 outlets in 67 years 65 outlets in 4 years 2010 100 2006 35 1939 1
  22. 22. 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 Snacking Probiotic Curd Health with nutrition enhancers
  23. 23. Paints Feeling 4 – Absence of negatives Lead free Low VOC No Smell Low Formaldehyde No hassles PAINT TRENDS Example - Sound from Refrigerators CONSUMER TRENDS Safety Healthy Non Polluting Hygienic
  24. 24. New Age Marketing Section III
  25. 25.  While digital seems to witness 3-fold growth SOURCE: Advertising spends, Magna Report 2009 2015 % contribution to total Ad spends, Ad spends USD mn 1621 mn 3421 mn 42% 43% 2X 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
  26. 26. The ‘digital wave’ currently restricted only to a few categories Source: ComScore, Nov 2010 Paints category still has a long way to go….
  27. 27. 3G spectrum and reduction of prices of internet enabled handsets likely to spur mobile internet growth 25X Source: Internet & Mobile Association of India Report, Dec 2009 <ul><li>Eyes v/s Ear </li></ul><ul><li>The Ear can process 125 words per minute </li></ul><ul><li>The Eye can process 5000 words per minute </li></ul><ul><ul><li>Visual media will be more effective than verbal </li></ul></ul><ul><ul><li>M-Marketing may do better than E-Marketing </li></ul></ul>Internet mobile user base to multiply 25 times by 2014
  28. 28.  Modern trade is growing in India… Source: IBEF, Booz & Co. Analysis Source: Technopak, Booz & Co. Analysis 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
  29. 29. 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 150 222 303 2003 2007 2010 Number 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 2010 Number 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%
  30. 30. Paints Touch and Feel <ul><li>Smaller within reach format more successful than large formats </li></ul><ul><li>Exclusive retail outlets to grow </li></ul>
  31. 31.  While with increasing affluence, one expects the population of working women to increase… Source: National Readership Survey 2001, 2006 (Sample:2.8 lakhs), Indian Readership Survey 2010 (sample: 2.41 Lacs), Hindu Business Line, Department of Demography The actual proportion of working women in India is declining A decline led by rural working women, due to urbanisation and decreasing dependence on agricultural activities.
  32. 32. But today’s Indian woman, increasingly, sees herself as a equal partner in the marriage Source: DraftFCB Ulka WomanMood, Findings of 35 workshops and Expert interviews carried across 6 metros and mini-metros across India, SEC A,B <ul><li>Role of woman increasing in house hold categories </li></ul><ul><li>But in paints it is still indicative of continuing with Man </li></ul><ul><ul><ul><li>Colors, Designs and retail experience efforts need to be uplifted to get women into paint decision making </li></ul></ul></ul>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 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
  33. 33. To Conclude… <ul><li>Indian Paint Industry </li></ul><ul><ul><li>Robust </li></ul></ul><ul><ul><li>Growing </li></ul></ul><ul><ul><li>Stable </li></ul></ul><ul><ul><li>Versatile (Consumer / Dealer / Influencer) </li></ul></ul><ul><ul><li>Technology </li></ul></ul><ul><li>It has the power to become a case study to follow. </li></ul>
  34. 34. Thank You.
  35. 35. Glossary <ul><li>Household: Part of Personal & Household Services as per McKinsey report </li></ul><ul><li>Growth in disposable income as per McKinsey report </li></ul><ul><li>Discretionary spends as McKinsey report </li></ul><ul><li>2010 discretionary spends estimated </li></ul><ul><li>Paint ratio to Personal & Household Services category is calculated based on estimated industry size in years 2000, 2005 & 2010. </li></ul><ul><li>Per Capita Consumption based on CAGR growth of paints and Population growth </li></ul><ul><li>Urban & Rural growth calculated based on McKinsey report </li></ul><ul><li>Population salience based on McKinsey report </li></ul><ul><li>Paint potential calculated based on current year’s (2010) category wise salience </li></ul>