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Jens Kastner reports on how the Philippine coatings and paint sector is enjoying macroeconomic tailwinds in the post-COVID market
The Philippines’ demand for coatings and paints is leaving the pandemic behind, with London-based market researcher Euromonitor International reporting that home paint retail sales in the Asian archipelago returned to growth in 2021. That year, they recorded Philippines Peso PHP15.4bn (US$280M) – up from PHP14bn in 2020 but still lower than the PHP18bn in pre-pandemic 2019.
Euromonitor International attributed the revival in home improvement demand to the easing of COVID-19 related restrictions. This is also reflected by data of the Philippine Statistics Authority (PSA), which shows that a pickup of construction activity made growth in wholesale and retail prices of building materials reach their highest level in 14 years in 2022. Data up to December (2022) indicated that last year paint was the construction input with the second fastest annual inflation rate – 12%, behind galvanised iron sheets at 17.1%. (1)
“The re-opening theme has been a major driver of construction and construction materials demand, and we expect the economy to grow by at least 5.6% in 2023 and along with it a decent construction sector growth,” said Ruben Carlo O Asuncion, Chief Economist of the Pasig City-based UnionBank of the Philippines.
Speaking to PPCJ, he added that he believes that “strong inflation has been cooling demand for home renovation and decoration only slightly, as even though people may think twice because of the prevailing environment they will push through anyway because they have resources.”
In the first quarter of 2023 the Philippines’ inflation has soared to its highest level in 14 years due largely to rising food and fuel costs, with the consumer price index for March recording 7.6% yr-on-yr growth, towering high above the government’s 2%-4% target for the year.
Germany-based Brenntag, which distributes Philippines’ coatings manufacturers with speciality chemicals, adhesives and other ingredients from UK-based speciality chemicals company Elementis Specialties, also expects the Philippines paint and coatings market to make a strong comeback in 2023, likely to be close to pre-pandemic levels.
“However, the degree of the market recovery will depend on various factors, such as stable raw material pricing, improved logistical challenges, raw material availability, resumption of new painting projects, increased buying power from consumers, stable socio-economic indicators and sustained government focus on construction and infrastructure projects,” said Sanjay Karkhanis, Brenntag Specialties’ APAC President of Material Science.
Speaking to PPCJ, he added that the Philippine Peso weakened in 2022 – down from PHP55/USD1 in August to PHP59/USD1 in October, which in addition to the increase in raw material costs put paint manufacturers in a dilemma in keeping their production capacity at a minimum while struggling to pass on the cost increases to their customers.”
Karkhanis added that Brenntag in the Philippines has been helping customers use Elementis products to improve the formulation and properties for applications in marine anti-fouling paints, while also winning and sustaining business from new and regular customers in both the architectural and industrial coatings segments.
“We also supported customer projects in the construction chemical segment to help them achieve enhanced dry mix skim coats products performance and ease of use during applications stages,” said Karkhanis.
Domestic expansion and tackling lead
Recent moves by local home improvement and construction supply retailers also illustrate optimism, with Manila-based Wilcon Depot, for instance, in June announcing that it remains on track to reach its goal of having 100 stores in the country by 2025, up from 76. (2)
Similarly, Manila-based home improvement retailer AllHome in November 2022 announced it is on track to reach its target of opening 100 stores by 2026, up from 59 outlets. (3)
In March 2023 Thailand-based home improvement retailer Siam Global House said it is looking to launch operations in the Philippines by 2024. (4)
According to Euromonitor International, Quezon City-based Pacific Paint (Boysen) Philippines continued to lead home improvement in 2021 and augment its retail value share.
“Following its leadership in eliminating leaded paint under its brands such as Boysen, Nation, Titan and Virtuoso, the company has established strong ties with hardware stores nationwide while maintaining its active approach to above-the-line and trade marketing,” Euromonitor International wrote.
The country’s paint and coatings industry completed its transition to non-lead paint production with the end of the phase-out period for industrial paints with lead additives in December 2019. In line with the national lead paint ban, the government has since stopped issuing importation permits for lead-based raw materials for paint manufacturing. However, a joint investigation conducted by the Manila-based EcoWaste Coalition and Sweden-based International Pollutants Elimination Network (IPEN) in 2022 revealed that despite the national lead paint ban, lead-containing aerosol or spray paints mostly from China and Thailand still enter Philippine ports and are sold in retail stores and via online shopping platforms.
However, Manny Calonzo, former President and current Communications Officer of EcoWaste Coalition, speaking to PPCJ, lauded three leading paint manufacturers in the country for participating in SCS Global Services’ Lead Safe Paint certification programme that promotes indoor and outdoor paints with low or zero lead content. He praised Quezon City-based Pacific Paint, Pasig-based Davies Paints and Manila-based Sycwin Coating & Wires for this work. Sycwin said it was the first Philippines paint company to have its auto-finishing and industrial paints certified as lead-safe under this programme.
“The process is underway for the issuance of a government regulation that will reiterate the mandatory use by local government units of lead-safe paint products for construction, maintenance and renovation activities paid out of public funds,” said Calonzo.
The EcoWaste Coalition has proposed that the central government education department conduct a lead paint hazard survey in selected public elementary schools in Metro Manila, “because lead-painted walls, windows, furniture and fixtures, and gates may have deteriorated over time, releasing lead to indoor dust and outdoor soils and posing a health risk, especially for young children,” he added.
For more information, contact Keith Nuthall, International News Services:
Tel: +44 (0) 207 193 4888; Email: [email protected]