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Business News/ Markets / Mark To Market/  Berger’s  outlook  is  brighter  on hopes of better urban repainting demand
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Berger’s  outlook  is  brighter  on hopes of better urban repainting demand

Increased focus on hygiene in the post-covid world is likely to drive more frequent repainting than seen in the past

Photo: Indranil Bhoumik/MintPremium
Photo: Indranil Bhoumik/Mint

Paints being a discretionary product was among the worst hit by the coronavirus pandemic. The June quarter earnings of key paint makers showed that demand in urban areas was impacted more than rural.

However, research house JPMorgan’s recent consumer survey provides a glimmer of hope for revival of urban paint demand. As per the survey, consumers in urban areas are more willing to spend on items such as repainting as they cut down expenditure on holidays. “On home repainting, about 75% of the respondents (with need for home repainting) are open to consider repainting their homes now or post complete lockdown relaxations and only about 11% of the respondents were unwilling to spend on repainting," said the survey report dated 17 September. The sample size for this survey consisted of 500 urban salaried class respondents.

Repainting constitutes around 70% of the decorative segment demand in India and globally. There were concerns that the repainting demand would take a backseat during the pandemic, as fears of contracting the virus would deter people from allowing painters at home.

Dismal sales
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Dismal sales

Analysts reckon the paint industry would benefit if consumers’ spending preferences change and there is a general decline in virus fears among people.

Between the two large competitors, Berger Paints India Ltd has a relatively higher contribution from urban markets than Asian Paints Ltd. If repainting activity gains traction in urban areas then Berger could see faster recovery in paint volumes, point out analysts. In the June quarter, Berger Paints decorative paints volumes declined more than 40% on a year-on-year basis. The fall in volumes for Asian Paints Ltd was lower than Berger Paints, contained by the demand in smaller towns and rural areas.

Further, there are expectations that in the post-covid world, increased focus on hygiene will drive more frequent repainting than seen in the past. Paints usually have a life of five years before they start becoming dull. As per analysts’ estimates, by 2010 the repainting cycle in India was around eight-nine years. “Repainting cycle in India should shorten from 6.9 years in 2019 to 5.6 years in 2031, driven by heightened hygiene awareness, more rented homes and new solutions like virtual painting tools and mechanized painting services," research house Nomura said in a report in April.

Meanwhile, Asian Paints has launched a range of do-it-yourself products that can be used for the peripheral needs of consumers. This should support demand from consumers who are shying away from allowing painters inside their homes due to the pandemic. Analysts expect other paint makers to launch similar products to meet repainting needs of customers.

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Published: 22 Sep 2020, 05:40 PM IST
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