On a global scale, the paint and coatings industry is expected to grow in the coming years, and the North American market is no exception.
The global paint and coatings industry was valued about $160.03 billion in 2021. With a projected compound annual growth rate (CAGR) of 5 percent, the market should grow to about $235.06 billion by 2029, according to analysis conducted by Fortune Business Insights. Similar findings by Markets and Markets indicate that worldwide, an expanding furniture market and architectural uses are both driving growth in this sector as aeronautical and automotive segments work to recover over the next decade from major production slumps in 2020 and 2021.
What are the Major Groups of Coatings and Paints?
There are several ways to categorize paint and coatings, including the end-user industry, or type of application; the resin used; geography; and technology.
The acrylic resin segment accounts for the largest market share in terms of resin categories; based on technology, waterborne coatings consume the largest market share. Paint and coatings used for architectural application—such as covering commercial and residential buildings and other structures—comprise the largest segment by end-user industry.
The main players in the global market include The Sherwin-Williams Company; Akzo Nobel N.V. (AkzoNobel); PPG Industries Inc.; RPM International Inc.; and Nippon Paint Holdings Co. In this partially consolidated market, 12 companies hold more than 60 percent of the market share.
What Factors Influence the Future of the Paints and Coatings Industry?
The North American paint and coatings market is expected to experience noteworthy growth, particularly in the commercial sector. Government investments into public infrastructure projects and increasing construction activities will contribute to this growth over the next few years.
Here are a few other trends and factors influencing the future of the coatings and paint industry:
1. Refocusing on Industrial and Architectural Product Development
The COVID-19 pandemic had a relatively adverse impact on the paint and coatings segment–as well as the home improvement industry in general–over the past couple of years, with residual effects still at play.
In 2020, DIYers were driving sales in the paint and coatings segment, but that activity started settling in 2021. Now, pricing sensitivity is especially observable among homeowners, who are postponing DIY and remodeling projects primarily due material prices and budget concerns. Market share growth is expected to favor companies that re-investment into industrial and architectural paint and coatings applications (and innovations) in the next few years.
Another outcome of COVID is the increased demand for antimicrobial coatings. In indoor spaces—such as kitchens and bathrooms—individuals and families are expressing an increased desire for mold-resistant paints and coatings designed with antimicrobial technology.
Additionally, raw materials costs have remained high, which impacts every stakeholder’s purchasing power and willingness to evaluate alternative options. Changes in raw material wallet share at the manufacturer level are anticipated as a result of lingering production constraints.
2. Regulations Regarding VOCs
Sustainability is also a driving factor in the paint and coatings sector. There is a regulatory push affecting the industry to reduce volatile organic compounds (VOCs), which can extend shelf life and improve durability but also negatively impact air quality and human wellbeing.
Regulations and consumer demand have influenced a shift toward alternative and low-VOC products and constraints on production processes using products with VOCs.
These changes have driven innovations towards new product options. For example, at the end of 2020, DSM launched a new line of plant-based resins for paints that have low VOCs. This sustainable line of products, called Decovery, is supposed to have one-third of the carbon footprint of that produced by traditional solvent-borne paint resins. In general, we expect to see more water-based coatings in the market in lieu of solvent-based options.
As regulations are tightened in North America and Western Europe, building and construction markets like the Asia-Pacific region will drive growth of existing paint and coatings product lines that are losing favor in western markets.
3. Changes in Production Processes
Other environmental challenges and goals impacting industry trends include waste minimization, process efficiency enhancement, and using renewable materials. Refining products to meet these concerns is one way paint and coatings manufacturers can increasingly appeal to trade professionals.
Due to supply chain disruptions of raw materials, brands with innovative finished goods and suppliers closer in proximity are expected to have the upper hand, even against well established companies in the painting and coatings industry. Lower cost alternatives have room to take market share as price sensitivity increases and as buyers continue to indicate a willingness to evaluate more options.
Products that compliment their spray application techniques are favored by fabricators as new spray applicator equipment options hit the market. As demand among DIYers declines in 2022 and 2023, there may be a decline in unit sales of paint and coatings products that rely on brush and roller based applications.
As industrial sized fabrication and applications make gains in North America and Western Europe, building and construction markets like the Asia-Pacific region could drive unit sales growth of existing paint and coatings product lines that rely on the use of brush and roller applicators and less automated application processes.
4. Technological Advances Among Architectural Coatings
New technologies are becoming common in the industry, especially in light of environmental concerns.
For example, pigging technology is seen as a must-have for paint and coatings manufacturers. Pigging, or liquid product recovery, solutions are appropriate for water- and solvent-based paints, pigments and coatings. They have a variety of tangible benefits, from waste minimization to increasing yields and cost savings.
Powder coating is another emerging trend; the process produces thick, smooth coatings without sagging while releasing low VOCs. One drawback to the powder-coating process is that it is difficult to apply in circumstances requiring thin-coatings.
In 2021, PPG launched its Envirocron PCS P4 powder coatings that are suitable for a range of applications, including building construction, furniture, and aluminum and steel substrates.
Innovations among hydrophobic coatings are taking the industry by storm as well and are being worked into various applications from the fenestration industry through fabrication of more durable steel and wood substrates.
5. Customer Preferences Among Paint and Coatings Options
Preference is emerging for intumescent coatings over cementitious coatings. As demand for more durable building materials increases from the rise of Build to Rent investments, this preference is expected to continue.
Water borne coatings, while prone to greater complications during production, are capturing market share due to market positioning as the "green" option.
Continued investment into anti-corrosion smart coatings for metals large and small, from fasteners to AEC components and construction closures.
Preference for lightweight building materials, which are more susceptible to damage, is driving innovation among brands with fire-resistance positioned product lines.
The Home Improvement Research Institute has further researched Pro and Homeowner shopping trends in the paint and coatings industry.
Noteworthy Industry Purchases and Positioning Developments
During the past year, the industry has witnessed a couple of key developments among its major players, especially as it relates to vertical integration and sheer survival.
AkzoNobel acquired Grupo Orbis, a paints and coatings manufacturer, in June 2021, enabling the company to strengthen its position within the Central and South American markets.
In April 2022, PPG officially acquired the powder coatings manufacturing businesses of Arsonsis, an industrial coatings company headquartered in Milan, Italy. This transaction gives PPG access to a highly automated powder manufacturing plant in Verbania with both small- and large-batch capabilities.
Meanwhile, as of February, Sherwin-Williams is significantly expanding its architectural paint and coatings manufacturing capacity in North Carolina. The company is reportedly investing at least $300 million into a large distribution facility in the city of Statesville.
Brands that previously focused primarily on coatings for the aviation industry are focusing on other market segments, namely architectural applications and industrial coatings, while the aviation industry recovers from severe setbacks in unit sales in 2020 and 2021.
Conducting Customized Market Share Research
Market reports point toward a paint and coatings industry that is returning to its pre-pandemic levels of stability and even projected to experience considerable growth over the next few years.
As you strategize for your paint and coating company’s future, it is important to conduct customized market research. The Farnsworth Group can help you get the specific data and meaningful insights you need to define opportunities for acquisition, distribution or changes to your product lines to maintain healthy brand share.