Major foreign producers of paint and varnish have a low profile in Romania and operate only through imports, while the market posts annual increases of 15-20%. Given the consumption boom, major producers' arrival through an acquisition or greenfield project seems inevitable.
Last year, the paint market revolved around 200m euros, up around 20%, a rate that will fall to 12-15% over the next three years, but will still appeal to global giants such as Akzo Nobel (the Netherlands), SigmaKalon, part of PPG US group, BASF Coatings (Germany) or Tikkurila (Finland), reads this month's Business Construct issue.
The fast growth of constructions and demand for housing will have a significant contribution to paint and varnish consumption, according to market players. Five producers dominate the paint industry: K?ber (owned by K?ber family), Fabryo (controlled by Oresa Ventures Swedish fund), Policolor (owned by Romanian Investment Fund and RC2 Limited), d?fa Deutek (held by US fund Advent International) and Atlas Corporation (controlled by Greek investors), which account for around 70% in overall sales. Paint and varnish consumption has already reached maturity, and the market could reach 500m euros in 2011. "In the past three years the constructions boom has driven this sector's share from 6.4% (2005) to almost 10% of GDP in 2007. An upbeat scenario would be for the sector's share to top 12% in 2011, so we could hope for a paint market worth around 500 million euros," says Adrian Ion, marketing manager with d?fa Deutek.
Major players have waited for the Romanian market to reach maturity and to consolidate to a size that allows them to operate massive investments. Foreign players' main targets could be companies owned by investment funds, which would try to make an exit in the next two or three years.
However, some players consider that on the medium term domestic producers will continue to dominate the market due to massive investments in promotion.
The top five paint and varnish producers on the market in the first five months of the year witnessed sales increases of between 15 and 25%, due to the fast growth of new constructions and renovation works.
Including regional producers, around 100 brands operate domestically. The number was boosted after living standards improved and in more renovation works took place. However, despite the high number of brands, just 4-5 account for more than 50% of the market.
Moreover, given the ever stricter requirements imposed by law regarding coating products, small and medium-sized producers will have to adjust their products. However, there will always be a tier of small and medium-sized players, despite the fact that 3-4 players account for over 80% of the market, believes Adrian Ion.
Paint and varnish market
Given the consumption boom, the arrival of major producers via an acquisition or greenfield project is inevitable
Last year, the paint market revolved around 200m euros, up around 20%, a rate that will fall to 12-15% in the next 3 years, but will still appeal to global giants
Paint and varnish consumption has already reached maturity, and the market could reach 500m euros in 2011
Foreign players' main targets could be companies owned by investment funds
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