Unlike decorative paints, wall putty doesn’t have a long history in India and has become a prominent part of building materials industry only in last 15 years or so. However, it’s not its past but the future that makes this building material a centre of attraction for many players. The industry has been posting decent double digit growth consistently since last few years.
But putty business is already crowded with many players – more than 2000 players already in the field – which is too many for an industry the size of which is not yet crossed Rs 4,000 crore. Most of them are in unorganised sector catering to local demand.
Healthy annual growth
Current market size of putty is 3.2mn MT and is growing at 12-15% p.a. Putty market is dominated by two white cement manufacturers, viz., Ultratech Cement and JK Cement. Both of them have almost equal market share and control about half the market. However, its not the top two players but the third player who needs to be closely watched for the future course of the industry. Yes, Asian Paints, though not white cement manufacturer, with a market share of 22% has aggressive plans which may also help the market to expand in the coming days. Paint manufacturers as a whole are accounting for 30-35% of the market share which was achieved in a short span of 10 years.
For paint companies it’s a natural extension of their business
In fact, it’s not just Asian Paints but the whole of paints industry itself looks at the putty industry as a destination for logical extension of their paint business. Paint companies’ interest in putty business started growing since 2010 when putty had almost been able to side-line its competitor Plaster of Paris (PoP). Paint companies see putty business as a logical extension of their business as there are lot of synergies between the two like raw material sourcing, transportation and distribution network. Paint companies launch putty variants under same paint brands using same distribution network. Paint companies’ efforts to gain market share in putty market have paid rich dividends in last five years during which paint companies made deep inroads into the market and grew much faster than traditional rivals in the business.
Paint makers have some advantages too
Further, paint companies have some advantages in putty business over cement companies who also sell putty. It should be noted that putty is the first product to enter consumer’s house while renovating. Paint companies can win mind share of consumer via selling superior putty and it can lead to higher sales of premium paints. Paint companies who have wide distribution network also enjoy stronger connect with the paint dealers than cement companies. Also, they have better connect with painters than cement companies and in most of the cases influence of the painters decides the putty brand to be used. Paint manufacturers can also gain from ‘umbrella branding’, that is, having same brand name of paint, putty, primer and waterproofing.
Cement companies proving to be laggards
Despite the intense competition, cement companies are reluctant to reduce prices which is also may become a major reason for them to lose market share vis-à-vis paint manufacturers. On the other hand, paint companies are aggressive both in pricing and in introducing trade schemes which have helped them to expand their market share. Also cement companies are laggards in brand building.
Paint companies strong in North
Putty is primarily a B2C market where B2B accounts for hardly 10% of the total market. Also, cement companies are dominant in B2B market and paint manufacturers play active role in B2C market. While UltraTech has national presence, JK Cement is strong in north and central India in the putty business. Due to acquisition of Perma, Kansai is strong in the western part of India and, post-acquisition of STP, Berger is strong in east India. Asian Paints is present pan-India, but has higher market share in putty in south India.
Competition has helped the growth of the industry
Over the years, putty industry has gained as the cement and paint companies have introduced multiple variants of putty. Apart from the basic benefits, these variants offer the benefits of primer, waterproofing, exterior protection and colour. For example, paint companies such as Asian Paints and Kansai Nerolac have introduced primer cum putty combination products, which offer both the benefits. It helps save time as well as labour cost. This innovative product is largely used as undercoat for interior emulsions.
However, in this war of one-upmanship it’s the consumer who is gaining ultimately. Competition not only ensures that price of the product remains within their reach but also new and improved variants are introduced in the market with regular intervals. Also, the competition has resulted in the expansion of the overall putty market. Thus, consumer is once again proving to be the king of the market.