South Africa market report: Paint sales remain steady but new government looks set to boost purchases

Ahead of Coatings For Africa, Paul Cochrane reports for PPCJ on the state of South Africa’s paint and coatings industry

Paint sales in South Africa remain muted after a post-pandemic boom, with low economic growth, high inflation and political uncertainty in the lead up to this May’s competitive national elections impacting consumer demand, although there is hope for a post-poll boost in purchases.  

“The market has slowed down significantly over the past year, since after the COVID pandemic rush. There is no great growth, but a maintaining of sales,” said Tara Benn, Executive Director of the South African Paint Manufacturing Association (SAPMA), which represents companies manufacturing 90% of paint produced in the country. 

Sales of home and decorative paint surged in 2020, from US$331.4M in 2019 to US$365.3M, and from US281.5M to US$312.8M, respectively, according to market researcher Euromonitor International’s figures. Sales rose again in 2021, to US$403.8M for all home paints, and to US$348.5M for decorative products. Sales then slid in 2022 and 2023, to US$399.6M and US$394.7M, for home paint; and declined from US$345M in 2022 to US$340.9M  for decorative. Lacquer and varnish sales have remained more constant, rising from US$49.9M in 2019 to a peak of US$55.3M in 2021, then dropping to US$53.8M in 2023.  

“The decline can be attributed to reduced spending on do-it-yourself (DIY) projects at home. While this may appear stagnant compared to prior years with high growth levels, it signifies a level of stability despite challenging economic circumstances, as well as the return of the paint market to prior levels after the initial surge during the COVID years [2020 and 2021],” said Greg Aubin, Research Associate at Euromonitor International. 

Post-election hopes for investment

Weak national economic growth, at just 0.6% in 2023, high unemployment, at 32.9% and 15-year high borrowing costs and elevated inflation have also hit consumers in the country, whose population is 62.4 million, according to International Monetary Fund (IMF) figures. South African economic growth is forecast by Fitch Ratings at 0.9% this year.  

The sector is hoping for more clarity in terms of fiscal policies and legislation following the May 29 national elections, even though the ruling party, the African National Congress (ANC), is expected to lose its parliamentary majority.  

“Everyone is waiting to see what will happen. The predictions are that economic inflation will drop, and interest rates will improve by the end of the year but there’s no guarantee. If consumers are able to free up some disposable income that would benefit the market. At this stage everyone is so tight, they’re spending on food and necessities, not paint or DIY,” said Benn. 

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Leading paint manufacturers are also hopeful that a new government, even an ANC-led coalition, may pass legislation on eliminating the use of lead in paint. “We have been waiting for around 14 years, with most companies already compliant. But smaller manufacturers are hanging on to the bitter end to make the change to unleaded pigments, as lead in pigments and raw materials are obviously cheaper. They have been forewarned,” said Benn. 

The looming elections have caused a spurt in government tenders in certain segments, while there is expected to be a surge in investment in new private projects post elections. 

“There’s definitely been a lot of tenders for road marking paint leading up to elections as municipalities have not kept up roads. I think we’ll see more tenders coming out now for domestic and office parks, and for your general shopping centres after the elections,” said Benn. 

The timing of the election is opportune for the paint sector, coming in the lead-up to winter in the southern hemisphere, which is the dry season in the most populated parts of South Africa, the eastern provinces of KwaZulu Natal, which includes the port city of Durban, and the city of Johannesburg in Gauteng. The summer months from November to February are the busiest period for home coatings during the holiday season, said Benn.  

Due to economic stagnation in recent years – average annual growth has been barely 1% over the past 14 years, according to the IMF – the lion’s share of the market is for low to medium priced paint, with higher end and more innovative paints too expensive for most consumers. “Entry level paints are on the rise, and people are going for more neutral colours, beiges, grays and whites, rather than brighter colours. Consumers do go for the colour of the year, or what is suggested by the larger players,” said Benn.  

Manufacturing trends and challenges

Sales of intumescent, automotive and marine coatings have held up, however, in the manufacturing hubs of Port Elizabeth in the Eastern Cape, and south of Durban. “There is a big niche market which seems to have a bit more growth than decorative,” said Benn. 

Manufacturers have struggled with high energy prices, power cuts (called load-shedding) and delays at the country’s largest ports, Cape Town and Durban, which have impeded importation of raw materials.  

“There have been a lot of strikes and delays, with the last several months at the ports an absolute disaster. No sooner has the backlog been sorted out then there’s another strike. It is a nightmare to get raw materials,” said Benn, adding that some manufacturers are importing via air freight at high cost. 

There has been no major mergers or acquisitions in the sector since South Africa’s Competition Commission blocked Netherlands-based AkzoNobel from buying Plascon South Africa, owned by Japanese-owned Kansai Plascon Africa, in 2022, said Aubin. 

Retailers are, however, entering the segment, such as Massmart’s Builders Warehouse. “They anticipate their private label within the home paint category will grow more, compared to other home and garden categories. Investment could however be geared towards paint brushes and buckets rather than the actual paint,” said Aubin. 

In terms of exports, South Africa could stand to gain from the roll-out of the African Continental Free Trade Area (AfCFTA) agreement over the next decade, although the sector is concerned about Egyptian paint exporters undermining the market through its lower prices. “A free dumping ground for paint and raw materials is the major concern,” said Benn. 

For more information, contact International News Services.

For more information about Coatings For Africa, held in Johannesburg June 19-21, click here.