Paints giant AkzoNobel hopes to strengthen its Dulux brand in India through innovations and by expanding reach and capacity. A new paint variant which brings down the temperature by 5 degrees is a case in point A couple is busy trying out various contraptions to cool their house down, while a neighbour looks on. When asked what he does to keep his house cool, he mentions that his paint does it all. It makes the couple look silly, sweating it out with myriad ways when just painting the exterior of their house would have done. AkzoNobel India, the advertiser, claims that the latest variant of its Dulux WeatherShield, called SunProtect, brings down the temperature of walls by 5 degrees by reflecting the infra-red rays of the sun. This, of course, does not mean that you could do away with your air-conditioners or coolers since there are other factors which go on to determine the temperature of the rooms. But this is a new USP that AkzoNobel wants to create for its brand. The timing, of course, is perfect. The summer is at its peak; large parts of the country have reported all-time high temperatures. The more the temperature outside, the more marked the temperature control of the walls painted with Dulux WeatherShield SunProtect. But what will happen in winter? Will it bring down the mercury by 5 degrees when the nights are cold? The company says this property won't be at work during winter, though the paint will retain other qualities such as waterproofing. Directed by filmmaker Rajiv Menon, the TVC was developed by BBDO. Ajai Jhala, the CEO of BBDO, says, "We had a tangible benefit to work on — that of the technological breakthrough. So the ad uses simple observational insight of how people go to great lengths to make their homes cooler. We wanted to tell them how this functional paint could well be a modern way of doing so, eliminating all the other methods." Apart from television, a campaign on radio has also been launched. To drive the message home, Dulux plans to carry out activation campaigns where consumers can compare the difference in temperatures of surfaces with and without the paint. The product is a result of the technology brought in by AkzoNobel. The Dutch paints giant had bought over ICI Dulux in 2008. AkzoNobel's head of marketing, Hemant Somani, says, "The product, which was a result of our research, will now be rolled out into other South-East Asian markets as well. It was developed especially for tropical countries such as India." Technology and positioning are not the only enabling results of the AkzoNobel takeover. Somani points out that efficiency in global sourcing (raw material prices are always a bone of contention in the low-margin, high-volume decorative paint market) has been brought in too. Tough market An industry observer says that Asian Paints has a competitive ratio of two (its market share, in other words, is more than twice its nearest rival), which gives it a huge advantage over others in purchase of raw material as well as distribution. "It can afford to participate in segments where the profit margins are not so good," the analyst points out. "It also uses it to leverage its position with the dealers." Asian Paints is followed by Kansai Nerolac and Berger Paints which have market shares of 17 per cent each. AkzoNobel, the world's largest paint and coating company, is fourth in the pecking order with 10 per cent. But the market is growing fast once again. The housing sector has picked up after a lull of two to three years and consequently the demand for paints is strong. Analysts say the gap between repainting (the biggest sales generator for decorative paints in India) too has dropped from the earlier five to seven years. Paint makers like AkzoNobel need to innovate to catch the market in its upswing. AkzoNobel has begun by consolidating the various brands in its portfolio under ICI Dulux. It would look to generate 80 per cent of the business from two brands, one of which is Dulux and the other is yet to be identified. AkzoNobel India will also expand capacity to double the current 70 million litres that it produces every year (the industry churns out 940 million litres). This will require investments of up to Rs 100 crore, which will enable the company to source products from India to sell in neighbouring markets. Expansion plans
Asian Paints, after all, had weathered the last slowdown in real estate because of its large presence in small-town India. While demand from large cities had been affected, there was no let up in demand from smaller towns. And this kept the company going. AkzoNobel also plans to focus on professionals who influence the buyer, such as interior decorators and painters. "Earlier, we spoke only to the home-owners. But now, we have engagement programmes for long-term partnerships with professionals as well," says Somani. While Asian Paints has led retail innovation with its ColourWorlds and studios, AkzoNobel is looking to open more than 100 Dulux Decorative centres or paint studios by the next quarter to create a similar ambience. ICI Dulux had led the premium emulsion paint segment with its Velvet Touch. It was eventually usurped by Asian Paints' Royale because of what analysts call a lack of focus. Even now, as AkzoNobel ups the ante, other players have lined up expansion plans. The market too is changing with an increasing need to cater to smaller towns which have been upgrading to paint. Distribution and product mixes for not only large cities but smaller ones too have to be figured out. AkzoNobel has to get its act together in a market that it wants to make its hub for South Asia. Safe Harbor Statement: Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints. Nothing in this article is, or should be construed as, investment advice. |
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