According to the Bangladesh Paint Manufacturers' Association (BPMA), the industry's domestic sector demand is at the threshold of surpassing about 30,000 million tonnes, valued at US$45 million today. "Robust growth in the real estate sector has spurred enormous growth in the paint industry," said an association spokesman.
Furthermore, demand for paint for interior and exterior decoration is still rising, boosting greatly the paint industry, said an executive committee member of the Real Estate and Housing Association of Bangladesh, Mr Ziaul Ahsan. The country's housing industry has registered almost a double-digit growth every year, according to the Bangladesh media, with property booms most evident in the capital Dhaka. This partly fuelled by population growth: Bangladesh had a population of 133,376,684 in 2002, with a growth rate 1.59%. But it is not only housing that has boosted demand for paint and coatings. Bangladesh's healthy economy in general has also contributed to the growth in the paint industry, maintaining GDP growth at a consistent 5-6% a year.
Bangladesh Paint Manufacturers' Association officials said that the Bangladesh market provided high potential for growth as well as good opportunities for paint manufacturers to upgrade and expand their hold on the market.
One of the outcomes of the growth in paint industry market, according to the Real Estate and Housing Association of Bangladesh, has been the entry of local and foreign investments in the country's paint industry. Their entry has made Bangladesh almost self-sufficient in paint today.
A high official of a leading paint company said low per capita consumption of paints, meant there was a vast potential to upgrade the market, widening a limited product range, especially considering the country's increasing urbanization and consistent GDP growth.
By far the most important player in the Bangladesh paint sector, which made its entry in 2002 and today commands one of the biggest shares in the Bangladesh paint industry, is the Asian Paints. India's largest paint company, with a turnover of about US$340 million, the company sells over 200,000 million tonnes of paint annually and is ranked among the top 15 decorative coatings companies in the world. It has moved into Bangladesh in style, with the country hosting Asian Paints' largest green-field venture in overseas markets, launching a joint venture with local company Confidence Cement and setting up a hi-tech plant at Gazipur with a capacity of 2,500 tones initially. That number has since doubled.
Asian Paints has, Bangladesh paint industry sources say, brought much competition and a variety of paint products in the market. It introduced the 'Apcolite' range of products which is its' premium quality range in international markets and the 'Decora' range which is its' international brand for economy products. Asian Paints has also entered into segments such as interior wall finishes, exterior segment, enamels and wood finishes. The company has also introduced the concept of multiple shade choice to the Bangladeshi consumer in most of its emulsion paints. Notably, the launch of multiple shades in its 'Apcolite' range of emulsions has provided to the Bangladesh consumer for the first time a wide choice of colours that was not previously offered by paint companies, industry sources told APCJ.
Asian Paints' invasion has shaken up a domestic market, competing with the Berger Paints Bangladesh Ltd, which was long seen as dominating the Bangladesh market, with a long-standing 40% market share. The fierce rivalry with the Indian giant has forced UK-based Berger Paints to hone its marketing strategy by introducing Colorbank, offering more than 5,000 shades.
Market reports have stressed that competition may only get stiffer in the Bangladeshi coatings sector, with other companies going for capacity expansion and price wars. Add this to a government 15% duty hike on titanium and dioxide (main raw materials for paint) the financial pressures on companies to succeed are growing. Some paint manufacturers told APCJ that this tariff is becoming a real problem for paint manufacturers is the duty on these raw materials, and others, much of which has tobe imported.
To fight their corners, Bangladesh paint marketers are starting to hitch their wagons to popular culture to build brand images and increase product awareness. More than 38 small and medium size companies are engaged in paint production in Bangladesh. With rising demand and competition, most of these companies are tweaking their marketing strategies by introducing new products and promotional offers.
Meanwhile, with oil prices touching US$70 a barrel, the Bangladesh paint industry is the focus of news in the Dhaka financial press that it will hike paint prices by the end of this year. Input prices for petroleum-based solvents like mineral turpentine oil have been growing at 5-7%, but manufacturers have resisted from hiking product prices due to the present high volume growth and intense competition in the decorative segment.
Although there has yet to be any official confirmation, industry sources told APCJ it would likely be in the region of 5%.