Premium paints to add colour to Tier II & III cities

Premium paints to add colour to Tier II & III cities

Author | Source: The Economic Times | Thursday, Aug 31,2006 8:54 AM

Premium paints to add colour to Tier II & III cities

High-end paints are splashing the walls of the hinterland. Increasing disposable incomes and the desire to be seen as 'different' are driving consumers in tier-II and tier-III cities to experiment with such paints.

While discerning urban consumers are likely to pick up such avant-garde products, it's the changing behaviour of consumers in tier-II and tier-III towns that is forcing paint companies to sit up and take notice.

Companies are now drawing up aggressive plans to tap the growth potential of the premium paint segment in non-metros. Though the premium segment accounts for 5% of the total paints market in India, it is growing at 25-30% annually.

According to Berger Paints India group product manager Raja Banerjee, “In coming months, several paint companies may jump on to the 'format retail' bandwagon, providing dust-free shopping ambience. The challenge will be to increase footfalls while offering add-ons to the shopping experience.”

One such niche player is Oikos India, which manufactures premium special effect paints in technical co-operation with Oikos Srl, Italy. Oikos believes in treating paints the connoisseur way. So, a visitor to the Oikos Dicor Centre will not find the ubiquitous paint cans or tinting machines to clutter his vision.

Instead, he is treated to luxurious displays of painted walls resplendent with special effects. Oikos western regional manager, P Bhatt, says that within three years, the company has established its presence all over India. While Oikos has showrooms in the four metros, it's the tier-II towns which have been the hub of action. The company is doing 'good business' in tier-II cities and has 58 centres in the western region alone.

Jotun India, part of Norway's Jotun group, sells its products across 52 showrooms called “Idea Centres” or “Paint Boutiques” and is present in Maharashtra, Goa, Kerala, Tamil Nadu and Karnataka. “The customer today wants to be seen as an 'aspirer' who shops in upmarket stores,” says Jotun India's country manager, Percy Jijina.

Meanwhile, Berger Paints' premium umbrella brand, Lewis Berger is doing flourishing business in tier-II cities like Lucknow and Coimbatore and is also getting good response from tier-III towns like Guntur, Durgapur and Silvassa. The company has plans to set up exclusive paint 'HyperMarts' soon.

There are varying estimates about the actual size of the premium decorative paints market. While Oikos' Mr Bhatt and Kansai Nerolac Paints, VP (special projects), Ashok Saini, value the top-of-the-pyramid at Rs 100 crore and Rs 200 crore respectively, ICI India's GM Hina Nagarajan pegs it at Rs 1,000 crore-plus, and Berger Paints estimates it at Rs 1,500 crore or 18% of the total paints market.

However, Asian Paints has a different take on the retail phenomenon. The company's VP (sales and marketing) KBS Anand feels there's a long way to go before paints can transform into a successful retail category.

Paint is not an 'end product,' but is part of an application-driven process, which most consumers feel is best left to an interior decorator, he says. But Mr Anand agrees that ambience matters; hence, there must be a mix-and-match format to address the needs of various consumers.

So, what does the future hold? Says Mr Banerjee, “Niche players will continue to sell, based on their image credence, and cater to erudite and refined customers. But their existence may be threatened once domestic paint majors jump on to the bandwagon.”

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