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2. Description of the Paint Sector

 

The paint sector being investigated in this case study is the architectural and decorative market consisting of single pack paints, stains and clear applied by professional painters and homeowners to protect and/or beautify commercial and residential projects. It excludes the automotive, industrial and textured coatings markets.

Paints are mixtures of pigments (for colour), resins (for binding power), and other additives to make them easier to apply, faster-drying, etc. These ingredients are dissolved in either water or organic solvents.

2.1. Key stakeholders

Brand owners

A snapshot of the major brand owners and their characteristics is presented in the table below.

  Dulux Resene Wattyl Taubmans Benjamin Moore Other

Brands

Dulux, Cabots,

Intergrain, Dulux Professional, British Paints, Levene, Berger

Resene

Wattyl

Taubmans

Benjamin Moore

(incl Reid Paints)

Market share (approx)

36%

36%

23%

<5%

Less than 1%

Market rank

Retail

1

3

2

4

5+

Trade

2

1

3

4

5+

Control own retail network

no

yes

no

yes

yes

Retailer

Mitre10

Guthrie Bowron

Bunnings

Placemakers

Carters

Resene ColorShops

Placemakers

Mitre10

Colour Plus

ITM, Bunnings

Carters

Benjamin Moore

Aalto Colour

Reid

Manufacture

yes

yes

yes

yes

yes

Import

yes (small quantities)

no

no

no

no

Export

yes

yes

no

yes

no

House brands (for others)

Colour Your World, Results, Decorators Choice Valspar

no

no

no

no

Paint % by base type

water

80%

90%

80%

82%

no

solvent

20%

10%

20%

18%

no

Consumers

The consumer market for paint is an even mix of 50% retail and trade sales. However, this mix is changing, albeit slowly. There is a general industry consensus that the DIY market is shrinking in New Zealand. This is happening as a result of growing disposable income, less time available for DIY and less knowledge of how to paint.

New Zealanders are moving away from Do It Yourself (DIY) to an increasing Do It For Me (DIFM). The trend can vary depending upon economic circumstances. At the margin, if people feel more affluent they get others to paint for them, if not they apply paint themselves.

Recyclers

There are companies that specialise in the recycling of paint. Some take solvent-borne paint and distil the solvents for recycling. Others remanufacture paint from waste paint for resale.

Key players are:

  • Transpacific Technical Services (TTS) - collect and treat chemical waste throughout the North Island at facilities in Auckland and Wellington. TTS recovers solvents from paint waste in Auckland and Wellington. This paint waste is made up of pre-consumer paint from major manufacturers and post-consumer paint waste coming from Hazmobile collections and Enviropaints (re-manufacturer).
  • Medichem - recovers solvents in Auckland
  • Enviropaints - remanufactures water-borne paint in the Wellington region from recovered paint sourced in the North Island. Any solvent-borne paint they collect is sent to Transpacific Technical Services for recovery.

There are also two smaller-scale, solvent recovery operations in Christchurch. The recycling sector is further described in section 4.2 below.

2.2. Size of market

The total size of the decorative paint market in New Zealand is 25 million litres per annum and around $250 million at wholesale level.

2.3. Market share breakdown

Estimated market share (based on industry opinion):

Resene - 36%

Dulux - 36%

Wattyl - 23%

Rest - 5% (mostly Benjamin Moore - Reid Paints plus others total less than 1%)

The majority of paint sold is water-borne and this market share is growing. It is estimated that over 75% of paint on the market is water-borne pigmented paint, with 12-13% solvent-borne pigmented paint, and 9-10% stains/clears (water-borne and solvent-borne).

2.4. Product imported vs New Zealand-made

There are only small quantities of paint imported by paint companies in New Zealand. Dulux imports a small amount of paint but also exports (mainly to Australia).

There is a very small amount of imported product that is being placed on the market that comes in with labelling that is not consistent with New Zealand labelling standards. This is against New Zealand regulation and industry has advised that so far there has been no regulatory enforcement.

It appears that imported product does not represent a significant portion of the New Zealand paint market. However, there was concern expressed by some parties that the possibility of "cheaper", inferior quality paint being imported did exist. If the New Zealand industry was to be regulated for product stewardship would imports be regulated and policed effectively?

All four of the major players have manufacturing facilities in New Zealand. These facilities are all located in Auckland or Wellington. Some companies export product to the Australian market (Resene, Dulux and Aalto Colour) from their New Zealand manufacturing facilities.

2.5. Trends in the market

There are some observable trends in the paint market that have some relevance to product stewardship for the sector.

  • There is a clear trend in manufacture of paint away from solvent-borne paints and towards water-borne paints. Most companies now have the majority of their products as water-borne. Wattyl Taubmans, for example, now sells 80% water-borne paint and only 20% solvent-borne. For Resene, the split is 90/10 (see table in section 2.1).
  • The industry reports that sustainable design considerations have become a topic of interest recently and will be of increasing importance. This is likely to be one of the factors in the move away from solvent-borne paint to water-borne. It is also likely to result in increasing attention being paid to the environmental performance of paint products.
  • The paint market is mature and increasing slowly in size. Trade sales are growing while retail sales are stagnating, or even moving backwards. This move towards growing trade sales is a result of improved economic conditions and an increase in construction. As economic conditions slow, there is a move back towards DIY painting.
  • Consumers are moving towards more purchases of 10-litre paint pails and away from the smaller-sized containers. This shift is primarily due to perceived reduced cost per litre on the larger size and a growing willingness to store leftover paint.
  • Due to health and safety concerns around lifting, there have been some industry moves to reduce the use of 15+ litre containers.