Paint giants lose their sheen as rivals slash prices, buyers trade down

Economic Times

29-06-2025

India's decorative paints industry is grappling with intensified competition as new players enter the fray with aggressive pricing and discounting strategies. This growing pressure has squeezed profit margins and impacted sales realisation for leading firms, even as overall market growth remained subdued in FY25.
Industry leader Asian Paints, which controls over half of the domestic market, flagged the dual challenges of weaker urban demand and competitive pressures from both new and established brands.
'Both the new entrants as well as established players adopted aggressive pricing and discounting strategies, further intensifying competition in the industry. These dynamics affected the value realisations as well as the profitability for Asian Paints throughout the year,' said Vice-Chairman Manish Choksi at the company's annual general meeting, according to a filing submitted to stock exchanges.He also noted that weak consumption trends and subdued discretionary spending extended repainting cycles and home maintenance schedules, leading to a drop in demand for architectural paints. 'Consumers were also moving towards more affordable options, even within the premium segments of decorative paint products across categories,' Choksi added.Despite a 2.5% rise in volumes, Asian Paints reported a 5.7% decline in the value of its decorative paints business in FY25, reflecting the pricing pressure and downtrading trend.
Rural demand remained relatively stable, but it wasn't enough to offset the decline in urban markets. 'The overall weak consumption trends prevalent through FY25 had a dampening impact on the domestic decorative paints market, particularly the urban markets,' said Choksi.Other major players echoed similar concerns. Kansai Nerolac Paints, in its annual report, said that the industry showed resilience despite 'subdued demand and intensifying competitive pressures.' Rural demand stayed muted for much of the year, showing some improvement only in the third quarter.Berger Paints, too, noted that value growth in FY25 was 'muted despite volume momentum,' attributing it to the lingering effects of FY24's price reductions and weak consumer sentiment. The company did see some traction in the construction chemicals segment.
Together, Asian Paints, Berger Paints, and Kansai Nerolac account for over 75% of the Indian paints market. But in the last five to six years, the competitive landscape has dramatically changed. New players like Pidilite (Haisha Paints), Grasim (Birla Opus), and JSW Paints have expanded their presence, while acquisitions by Astral (Gem Paints) and JK Cement (Acro Paints) have further fragmented the market.
Last week, JSW Paints made a significant move by acquiring a controlling stake in Akzo Nobel India, the maker of Dulux Paints, for ₹12,915 crore. Despite current headwinds, paint makers are hopeful for a turnaround in FY26. They expect improved urban demand aided by tax breaks, easing inflation, and strong monsoon forecasts to drive growth.'The decorative segment is poised for an improved performance, underpinned by a rebound in urban demand, driven by higher disposable incomes from recent tax incentives and easing inflation. Rural growth is likewise expected to sustain, supported by forecasts of an above-average monsoon,' said Berger Paints India.Kansai Nerolac also projected a 'modest growth' in FY26, banking on premiumisation trends, a growing preference for eco-friendly products, and government programmes such as 'Housing for All' and 'Smart Cities Mission'.According to an ICICI Direct report, the Indian paints and coatings market is currently valued at $9.6 billion and is projected to grow to $15.04 billion by 2029, at a CAGR of 9.38%.
With inputs from PTI