Weak pricing, slower growth in US paints - survey

02 July 2007 21:11  [Source: ICIS news]

HOUSTON (ICIS news)--A growing number of paint retailers are reporting weak pricing and slower growth in volumes amid the US housing slump, according to a survey released on Monday by Citigroup.

Citigroup interviewed more than 40 big-box and hardware paint sellers in its fourth annual survey of the market.

The survey results are consistent with the housing slump in the US, Citigroup said.

Paint volumes increased by 2-4% in 2007, compared with 5% in the last two years, the survey said. The 2007 increase was due, in part, to house renovations, which helped compensate for a drop in new house construction.

In addition, survey participants ran heavy promotions to boost sales, Citigroup said.

The paint industry was unable to pass down increases in raw material costs, with paint prices increasing by only 2% at most, the survey said.

Only 45% of the respondents noted pricing increases, down from 64% in 2006 and 90% in 2005.

Within the paint industry, premium brands continue to perform well, the survey said. The performance of premium paint is consistent with similar trends in the retail and food sectors, in which high-end brands also sell well.

Paint companies that own their own retail outlets reported stronger pricing than companies that sold through big-box retailers, the survey said.

"We attribute the strong rebates at big-box retailers to the type of customer that shops there," the survey said. The paint customers who shop at such stores are sensitive to price, the survey said.

Customers who shop at stores owned by paint makers are willing to spend more for quality, it said.

By: Al Greenwood
+1 713 525 2653

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