Paint companies are facing increasing competition as new players enter the market. Apart from this, companies are also facing reduced demand for decorative paints especially in the rural markets. After struggling for a few months, the companies are moving towards an increased hiring of the sales team to secure a good share of the market. Paint industry giants such as Asian Paints, Berger Paints, Nerolac, etc have increased their employee costs since the beginning of the Q2 FY25.
Paint Industry Struggles with Competition and Reduced Demand, Increases Hiring to Stay Competitive
The paint industry is highly competitive. With the coming of new players in the industry, it has become even more difficult to build a brand in the industry. The already existing top paint companies of India such as Asian Paints, Berer Paints, and Indigo Paints are now looking to penetrate deeper into the untapped retail markets to cover the loss from the reduced demand over time. The industry has faced a reduction in the decorative paints market. The challenges were initiated in March 2024 and have increased in the preceding months.
The demand for decorative and other paint experienced a decline during the election period, followed by the impact of climate change, with excessive rainfall in the eastern and southern regions, and extreme heat in the northern and central parts of India. While the crude oil prices also increased leading to a rise in the cost of manufacturing. Due to this, the companies had moderate profitability in the previous quarter. It also leads to a fall in the share market prices of the company. As a result, the companies have decided to increase the spending on employees by 5-15%.
If we talk about Kansai Nerolac, the company has increased its spending by 15% to Rs. 124.57 Crores. While Akzo Nobel has increased the spending on sales employees by 5% to Rs. 868 Crores. The country’s second biggest paint company Berger Paints has increased the sending by 16% to 221.13 Crores. While Asian Paints has a different strategy because of its direct-to-retail model. The company is trying to reach new customers through new dealers.
Asian Paints CEO, Amit Syngle, has said that the company will be adding up to 5,000 to 8,000 new retailers annually. Apart from that, their employee expenses have also increased by 13.5% to Rs. 676.50 crores. They have also been involved in discounting activities. The new competitors in the market such as Grasim, JSW Paints and Pidilite are also providing the products at much more affordable rates. Stay tuned for more information on our website.