INTERVIEW
Jehanzeb Khan, the CEO of AkzoNobel Pakistan, has led the company towards greater growth and success. In an exclusive interview he shared the potential of Pakistan’s paint industry with Money Matters.
Q. What is the current status of Pakistan’s paint industry?
A. Although there are no formal figures, by most rough estimates, the present size of the decorative paints, surface coatings and special chemicals market in Pakistan is assessed to be approximately Rs30 billion. This market size will be growing by 5-10 percent annually, depending on expansion in the economy and investment in industry.
In recent years, there has been impressive growth in construction in Pakistan, which has given opportunities to all players in the coatings industry. Commercial and residential building construction, which utilises decorative paints, has seen growth, but there are also a couple of challenges: the extent to which decorative paint is used for the exterior of the building is not the same as it was a few decades ago. Now there is a lot more glass, metal and aluminium, and permanent finishes which competes with our products.
Moreover, one of the side effects of the innovations that have taken place in the paint industry is that paint lasts longer. In the past, people repainted maybe every three or four years, now our research shows repainting is being done after five to six years. Partly, the reason is better paint quality which lasts longer and also to a degree because of lower disposable income.
Overall, however, with the economy and housing market growing, the demand for consumer paints has grown. One of the key changes we see in demand is increasing inclination to personalised aesthetics, including the use of personalised designs and the use of special finishes, like our Dulux Velvet Touch finishes in metallic, linen, marble and velvet. At the same time, new construction is increasing which is incremental business; about two-thirds of decorative paint goes into existing houses that are being renovated or repainted and a third goes into brand new construction.
As a consequence, national companies have had room to grow and become fairly large players, which means the paint industry is highly competitive. This is good for consumers, of course. Plus, with the per capita consumption of paints and coatings standing around half litre in Pakistan compared with 10 litres in Europe, five litres in the Far East and 6-7 litres in the Middle East, and half of the country’s population not part of this small market, you can imagine the growth potential of this industry.
Q. What is AkzoNobel Pakistan’s market share?
A. Market share calculations in the Pakistani paints industry have not really been done with a credibility level that can be shared. Of course, companies do their own internal workings, which may or may not be biased depending on who you speak to. Having said that, while we do not share our market data publicly, the numbers we see show us as the largest decorative paint company in Pakistan in terms of value.
Q. You earlier mentioned the Pakistani paints market is extremely competitive – how do you differentiate from your competitors?
A. In terms of competitors, we are on the higher side in terms of price and are at the premium end of the range. That is where AkzoNobel’s quality, innovation, image, and credibility come in. We have a number of innovative products that we did not sell in Pakistan previously. And there are several levels at which we differentiate from the competition.
First and foremost, of course, is the product quality – we deliver to the customer what we claim we are delivering, which in our market is a major positive. Our paint lasts longer and the colour-fastness is better. Then we have a huge range of products: products for the interior and exterior, enamels and emulsions, paints for special effects, paints for exteriors to keep the walls cooler. There is also the industrial paints category. This is mostly B2B selling and includes supplying to the automotive and car refinishing industry. For instance, we have technology for metal protection so the metal frame of the car is dipped in these chemicals to clean and protect.
Another level of differentiation for us is our trade partners, who are the paint shops and paint dealers who buy from us directly and sell onwards to the homeowner. We have established credibility and good business practices with them. We also feel dealing with AkzoNobel’s area managers or sales representatives is an experience which is more professional for channel partners than it might be with other companies in Pakistan.
Lastly, most of our customers who use our products have used the product earlier.
Q. How price sensitive do you find consumers to be?
A. Painting or re-painting homes and living spaces is not an activity that occurs too frequently, hence consumers will naturally take their time to make a decision on which paint to buy, and quality and price are important considerations. Our portfolio is designed to meet the different budget needs of different consumers, but we often find consumers choosing Dulux because of its superior quality, ensuring that their home will look great for longer.
Q. What paint products range is available in the Pakistani market?
A. AkzoNobel’s consumer facing decorative paints business in Pakistan provides products across different categories and price levels to serve all needs and budgets. Consumer paints have traditionally consisted of interior and exterior emulsion paints, ranging from economy segment distempers to premium 100 percent acrylic water-based emulsions. In addition to wall paint, the consumer paints category also consists of enamels and wood care products that provide complete decorative cover for the modern home.
The B2Bindustrial paints category includes selling to the automotive industry. Additionally, we have topcoats that are being used by Pakistani tractor manufacturers. Another part of this business is protective coatings, which are mostly used by new industrial projects and for repair and maintenance of existing businesses. Oil and gas companies use our epoxy paints that have long lasting life. There was recently a ship made at the Karachi Shipyard for the Pakistan Navy which was also coated by AkzoNobel Marine paint. This was done in collaboration with a Turkish company which had the overall contract for that construction.
The writer is a staff member
