The Birlas want a slice of the Indian paints’ pie. And they are going after the market-leader, Asian Paints.
1. Just 2 months ago, this nondescript store near my house carried an exclusive Asian Paints board for over 10 years. But today, I saw a new one.. 👇
Piqued by curiosity, I dug deep and found that a battle-ground is being set for a match between Asian Paints & a new entrant from the Aditya Birla Group – Opus Paints
1. Just 2 months ago, this nondescript store near my house carried an exclusive Asian Paints board for over 10 years. But today, I saw a new one.. 👇
Piqued by curiosity, I dug deep and found that a battle-ground is being set for a match between Asian Paints & a new entrant from the Aditya Birla Group – Opus Paints
2. Asian's stranglehold up for disruption ?
Asian Paints has 44% of the Indian paints market and it has maintained this stranglehold for over 50 years ever since their founder found an opportunity when paint imports were banned by govt of India in the pre-independence era.. but this will be put to an acid-test.
Asian Paints has 44% of the Indian paints market and it has maintained this stranglehold for over 50 years ever since their founder found an opportunity when paint imports were banned by govt of India in the pre-independence era.. but this will be put to an acid-test.
3. The war-chest is big & available immediately.
Aditya Birla Group, the parent of Opus Paints has spent 7000 Cr towards setting-up of 3 plants to manufacture paints which would cater to bring the group Rs. 10,000 Crores in revenue over 3 years.
The plants are operational, as I write this.
Aditya Birla Group, the parent of Opus Paints has spent 7000 Cr towards setting-up of 3 plants to manufacture paints which would cater to bring the group Rs. 10,000 Crores in revenue over 3 years.
The plants are operational, as I write this.
4. Nervousness has set-in at home.
Investors of Asian Paints are not happy with the pace & manner at which the Birlas have been executing their plans. All loyalties are being put to test for Asian Paints.
a. in the last 2 years, their employee loyalties were tested as the manufacturing plants were being set-up;
b. as the products have been launched in the market, dealer-loyalty will be tested;
c. as time goes, customer-loyalty will also be put to test;
But the management of Asian Paints is quick to dismiss this as a non-threat.
Investors of Asian Paints are not happy with the pace & manner at which the Birlas have been executing their plans. All loyalties are being put to test for Asian Paints.
a. in the last 2 years, their employee loyalties were tested as the manufacturing plants were being set-up;
b. as the products have been launched in the market, dealer-loyalty will be tested;
c. as time goes, customer-loyalty will also be put to test;
But the management of Asian Paints is quick to dismiss this as a non-threat.
5. Time to focus ?
While Asian paints maintains a stranglehold in the paints sector, over the last few years, as a group they have forayed into multiple interests.
Somewhere, with the limitation of human mind, there’s only so much attention one can give to a business, unless it’s run like a conglomerate with multiple CEOs.
E.g. their sinks business is struggling and the management is fighting battles to fix the segment at the cost of losing the war.
Is it time for the board to focus on paints, before they start losing market share ?
Source: AP's annual report for FY24
While Asian paints maintains a stranglehold in the paints sector, over the last few years, as a group they have forayed into multiple interests.
Somewhere, with the limitation of human mind, there’s only so much attention one can give to a business, unless it’s run like a conglomerate with multiple CEOs.
E.g. their sinks business is struggling and the management is fighting battles to fix the segment at the cost of losing the war.
Is it time for the board to focus on paints, before they start losing market share ?
Source: AP's annual report for FY24
6. What’s the wedge Birlas are using to enter the market, you ask ?
Ans: Pricing
Competitors are betting on the fact that Asian Paints is a pricier by 15-20% as compared to others. And customers would buy in to the promise of offering more for less.
Source: own analysis
Ans: Pricing
Competitors are betting on the fact that Asian Paints is a pricier by 15-20% as compared to others. And customers would buy in to the promise of offering more for less.
Source: own analysis
7. Conclusion:
Asian Paints has led the industry for over 75 years through consistent product innovation, technology and superior distribution. The brand has fortified its name in the minds of home-builders as a synonym for trust & quality.
Paints, although a commodity, is perhaps, once-in-5 years purchase. And if I’m a consumer, I would rather pay the 15% premium and get a superior quality paint than go with a relatively new brand. So, the road is not an easy one for the Birlas and despite all stops being pulled, the ultimate decision maker will be the consumer.
I spoke to a few painters and they swear by Asian for quality & trust. So, brands will come & stay & even go, but the first name that they will always recommend to customers is Asian Paints, lest the painters lose credibility. At least, as things stand today.,
So, here's a piece of unsolicited advise to the Birlas - Go slow. This is not a race that can be won in 3 years.
It takes time for the paint to peel off ;)
Asian Paints has led the industry for over 75 years through consistent product innovation, technology and superior distribution. The brand has fortified its name in the minds of home-builders as a synonym for trust & quality.
Paints, although a commodity, is perhaps, once-in-5 years purchase. And if I’m a consumer, I would rather pay the 15% premium and get a superior quality paint than go with a relatively new brand. So, the road is not an easy one for the Birlas and despite all stops being pulled, the ultimate decision maker will be the consumer.
I spoke to a few painters and they swear by Asian for quality & trust. So, brands will come & stay & even go, but the first name that they will always recommend to customers is Asian Paints, lest the painters lose credibility. At least, as things stand today.,
So, here's a piece of unsolicited advise to the Birlas - Go slow. This is not a race that can be won in 3 years.
It takes time for the paint to peel off ;)
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