Stalled paints: how’s the market doing after the sanitary crisis?

As we all know, the sanitary crisis that invested our country and the whole world basically challanged every industry, including the construction one. The authorities took action with rapid measures and the purpose is to encourage the construction industry and the consumption related to it, to start an awakening in the economy.

We spoke with the people in charge at Cromas, leading Italian company in the production of paints for professional use in the construction industry and craftmanship and they confirmed that the future of the market is delicate, but that every company and association is trying to bring workers and producers back to the pre-crisis competitive levels. Since January, tensions in the raw material market are emerging, at the point that some chemical compounds and resins are quite scarse.

Let’s look at some specific data.

The business

Let’s start from a general perspective of the paint sector. Every year, the use of paint by art conservators and building experts is around 500 million liters. We are talking about a little less than 1.2 billion euros. The Italian production volume is third in Europe, right behind Germany and France, according to the most updated data by the Italian association of producers. We are obviously waiting for the 2020 estimate, which will be affected by the interruption, during spring, of non-essential productions.

A big number of companies

According to the analysts, the extreme fragmentation of producers is challenging the markets even further. In Italy only, there are around 600 paint factories, between multinational corporations and small artisanal businesses, in a variety of areas.

This complicates the analysis for a number of reasons:

  • It’s hard to create a general picture and consider every reality, often very different between one and the other. It is estimated that the 10 biggest companies bill 43% of the market, with an undeniable disproportion with the other 590 businesses. This data is even more impressive if we consider that the first 20 companies in Italy generally suffered a small decline (-1%) in the latest years: not enough to give oxygen to small realities.
  • In the sector, it’s hard to see connections between small productive realities with big companies, so it’s easy to see the industrial giants absorb the attention of applicators and analysts, just because of their dimention and the volume of their business.
  • The crisis always hits the ones who were already suffering and small companies are naturally weaker than international giants.

Assovernici is clearly the reality which is mainly integrated in the productive tissue and has contacts with the biggest number of workers and producers. For this reason, its estimate is very reliable and tries to give breath and prominence to small companies, with a more limited income, but very high quality level.

Territoriality pays back, even in the paint sector

It seems unbelievable, but the best performance in the years 2017-2018 was registered by small businesses, with a revenue of less than 5 million euros per year. Therefore, the territoriality of the markets seems to pay back even in this sector, with tight and reliable relationships between producers, suppliers and buyers, who create small internal networks which we hope will be enough to fill the gap and support the sector during the crisis.