Bold Brush Strokes
But architectural coatings manufacturers certainly can’t be accused of sitting on their collective paint cans, basking in the glow of past milestones such as the arrival of titanium dioxide pigments, waterborne paint and, more recently, zero-VOC and odor-free products.
As the 21st century gets under way, the pace of technological developments in the architectural-coatings industry fall squarely in the category of evolutionary, rather than revolutionary. Still, it wouldn’t be fair to declare that there’s nothing new in the highly diversified architectural-paint universe, whether it’s the tweaking of a tried-and-true paint brand, the introduction of special-effects products, the launch of new internet-commerce ventures, or the unveiling of the latest color-marketing innovation.
Environmental Demands Remain Major Driving ForceIt’s nearly impossible to take the measure of architectural-paint developments without beginning with a nod in the direction of environmental regulations. Carl Minchew, director of Technical Services and Environmental Affairs at Benjamin Moore & Co., points out that the trend toward waterborne coatings was well under way long before such regulations came into play, due to ease of cleanup and use. But VOC rules have clearly accelerated the trend.
Today, Minchew says, the challenge for the industry is to provide products that do the job and meet regulatory demands. Solventborne paints have been largely relegated to niche uses where specific performance or application characteristics are required — as in paint where adhesion or stainblocking are crucial, or in specialty products such as clear finishes. In interior applications, solventbornes also retain a place in trim paint where a smooth, uniform finish is a priority.
But generally, waterbornes have come a long way toward equaling, or surpassing, solventbornes in most application and performance measurements. “We’re putting into latexes the same flow and leveling that we are used to getting in solventborne paints,” says Minchew, who has participated first-hand in debates over VOC regulations such as the Environmental Protection Agency’s national rule on VOCs in architectural and industrial-maintenance coatings.
Minchew estimated that waterbornes now command approximately 80% of the architectural market, up from 70% eight to 10 years ago, and about 60% in the early 1980s.
But the transition toward waterbornes has not necessarily generated a bonanza for companies that have brought zero-VOC and odor-free paint to the marketplace, including Benjamin Moore. Those products, say Minchew and other paint-company representatives, have experienced modest demand from consumers. A stronger response is occurring in the professional segment, particularly for institutional applications.
Reflecting this reality, Benjamin Moore has repositioned its no-VOC (and low-odor) product, originally introduced as “Pristine,” to target the professional market, beginning at the specification level. In line with this strategy, the product has been renamed “Pristine Eco-Spec.” Other companies have followed similar approaches.
Gene Merrill, director of Product Development at Duron Inc., said sales of no-VOC, no-odor paint are building, but gradually. “It’s a similar situation to the transition of oil to latex several years ago. Acceptance is slow at first, but it is on the rise,” Merrill says.
“I see more segment differences in sales trends than I do regional differences,” Merrill says. “There are some segments out there, such as health care, government and hospitality, that are more likely to specify the product because they have a greater need for the no-odor quality. It’s mostly due to the high-occupancy rates of their facilities as compared to the other segments.”
In the United States, regulatory initiatives remain the primary driving force in the formulation of ever-lower VOC content levels, Minchew says. Here, VOCs are targeted as part of an overall strategy to reduce low-level atmospheric ozone pollution, or smog. In Europe, on the other hand, the professional user has been the key motivating factor in the formulation of products that pose less of a health threat. Health and safety issues in the United States have been effectively dealt with by means of safeguards such as Material Safety Data Sheets (MSDSs) and hazard-communication standards, Minchew says. Still, low odor and toxicity are side benefits that these paints offer — thus the marketing focus on institutional and hospitality users, medical facilities, and related end-use segments.
Not surprisingly, a major portion of R&D efforts has been directed at reducing VOCs in response to regulatory dictates. And those demands will continue to force manufacturers to find new answers, particularly if the South Coast Air Quality Management District (SCAQMD) is setting the pace. Pointing to new VOC limits that will go into effect over the next several years, Minchew says, “We can make the products, but will they meet the needs of every use? Absolutely not. As these levels get pushed down, we need to look at the whole structure of the rules being developed.”
A danger of regulations that mimic the SCAQMD’s Rule 1113 are vast differences in climate across the United States. “Southern California has a dry climate and paints tend to last a very long time. When you are looking at what should work in Los Angeles and try to duplicate it in Minneapolis or even Seattle, that’s a very different thing,” Minchew points out.
Another complication, particularly when VOC limits are driven to extremely low levels such as 100 or even 50 grams per liter, is that the standard test method for VOC content, EPA Method 24, can result in variation that exceeds the content limit itself, Minchew says.
Formulation Advances Continue to Deliver Quality, Performance GainsDespite these daunting regulatory hurdles, paint manufacturers have managed to develop waterborne paints that provide that coveted combination of one-coat coverage, ease of application and richness of color that the consumer is looking for — what the manufacturers call a “cream paint,” Minchew says. R&D programs seek to continue the progress in improving application and performance properties. “We’re still refining these coatings to get better performance,” he says.
Duron’s Merrill agrees, pointing to steady progress in formulation of exterior waterborne paints that perform much like alkyd or solventborne counterparts. Acrylics — the focus of product-development programs at Duron — “have always outperformed the alkyds in color retention and fade resistance,” he says. New waterborne technologies are also delivering increased flexibility and greater tolerance of minimal surface preparation, he adds.
Duron recently expanded its exterior paint line with the addition of “Siding in a Can,” a system of 100% acrylics designed for a variety of exterior applications. The products include high-build paints that can “bridge” hairline cracks in wood, masonry and stucco to a thin-film acrylic system for vinyl, aluminum and metal siding.
Duron says the Siding in a Can system contains a super-durable, automotive-grade pigment that resists fading, yellowing or loss of sheen. The thin-film version is available in satin and semi-gloss finishes, and the high-build product is offered in a flat finish.
Such product introductions illustrate the reality that in architectural coatings, technology advances generally come in incremental steps rather than dramatic leaps. Case in point: Canadian manufacturer Para Inc. recently unveiled “Ultra Suede,” described as a scrubbable but “gloss-free” all-acrylic interior paint. The product provides a “rich, luxurious, non-reflective finish, similar to a flat paint, yet performs like a semigloss or eggshell,” says Kevin Skelly, Marketing Service manager for Brampton, Ontario-based Para.
The Marketing Challenge: New Strategies Employed in 'Big Box' Retailer EraOutside of the R&D lab, coatings manufacturers are faced with a myriad of business and marketing challenges, ranging from industry consolidation to marketing and distribution strategies.
Ellen Singer, Benjamin Moore’s vice president of Marketing, said the architectural segment’s most daunting challenges stem from competition among the manufacturers still standing in the wake of extensive consolidation that has swept through the industry over the last few decades, and the need to implement what she termed a “successful channel strategy.” She said the channel — the route used to take products from the plant to the marketplace — “has been the source of the greatest changes in the industry over the last decade.”
“The home centers have successfully siphoned off some of the DIY/consumer business from traditional paint and decorating stores through a combination of perceived lower prices and the convenience of ‘whole project’ product availability,” Singer says. But she adds that these mass merchandisers have been less successful at attracting the contractor and professional customers, where knowledge and service are paramount and product offerings are tailored to the professional painter’s needs.
Responding to the mass-merchandiser phenomenon, Singer said Benjamin Moore’s dealers and company-owned stores “leverage their long experience of their markets, customers and products to deliver superior service to the professional customer and DIY consumer.” She said store personnel “continually update their knowledge base, build one-on-one relationships with their customers, and leverage strong brands like Benjamin Moore that are not available in ‘big box’ or mass-merchant outlets.”
But Singer says the traditional paint sellers, especially independent dealers, must take action to respond to the mass-merchandiser threat. Home Depot, in particular, has demonstrated that it is “willing and able to evolve and expand its business model to increase the penetration of virtually all aspects of the home-improvement industry,” she says. “Competing with them will require an equal or greater commitment to change on the part of the independents.”
Behr Process Sales Co., meanwhile, can relate a far different story from a drastically different perspective of the mass-merchandiser marketplace. Behr, at one time a relatively obscure regional stain manufacturer in California, rode the home-center express to national prominence as a major paint supplier to Home Depot. The result: Brian Sauer, the company’s director of Marketing, says Behr is approaching $1 billion in annual sales — several multiples higher than its revenue less than 20 years ago — and is enjoying annual sales growth of approximately 25%, a nearly unheard-of rate in a mature industry that generally records sales-volume increases of 2–4% a year.
Sauer says Behr got an early start in the home-center game, thanks to a close business relationship between former Behr co-owner Kevin Jaffe and the founders of Home Depot, the fast-growing, Atlanta-based home-center chain. Sauer says Home Depot actually proposed that Behr enter the paint-manufacturing field back in the early 1980s, when Behr was exclusively a stain maker. Home Depot wanted Behr to develop and supply a brand of paint that would convey an image, or aura, of quality. Behr responded, Sauer says, with a premium line of paints led by the company’s flagship “Ultra Pure White” high-brightness white paint. Behr also pioneered the use of computer color-matching technology to provide the customer with the desired color, Sauer says.
Behr’s ownership figured early on that Home Depot had come up with a winning retailing formula, Sauer says. “They saw that Home Depot was going to take off, and teamed up with them to help make it happen. It’s been an excellent partnership.”
Behr’s paint line shares space on Home Depot’s shelves with Glidden, the chain’s other primary supplier of regular-line architectural paint. Behr, Home Depot’s premium paint label, is experiencing such strong sales growth in large part because Home Depot currently is opening stores at a rate of about 200 a year. In addition, Home Depot has started a chain of smaller stores, called Village Hardware, that also sell Behr products.
At Home Depot, Sauer says the DIY buyer clearly represents the primary market, although the contractor and professional user are seen as potential growth segments. “We are always trying to expand our business on that side, but there are differences in how Home Depot operates as compared to the paint dealer that make it difficult,” he says. Big home centers, he agrees, can’t easily duplicate the local paint store’s intimate relationship with its professional customers, who stroll in the paint store, are greeted by their first name, pour a cup of coffee, shoot the breeze with the store owner or manager, add their purchase to the company account, and head for the job with their paint order in tow.
Group of Regional Paint Producers Forge Alliance, 'Go National'Regional manufacturers of architectural coatings are confronted with even greater challenges as industry consolidation continues to concentrate market share in the hands of fewer, bigger producers. The dilemma facing companies such as Kelly-Moore Paint Co., M.A.B. Paints, Diamond Vogel Paints and other relatively large regional paint companies is finding a way to compete for the business of users that prefer to purchase products on a national basis — chains of hotels and retailers, big homebuilders and developers, and other institutional customers with multiple facilities.
Seeking a reply to this challenge, Kelly-Moore, based in California, and M.A.B., which calls Philadelphia home, launched a business alliance in June 1999. Then, Diamond Vogel of Orange City, IA, made it a threesome shortly after, and the alliance — called Paint America — could boast manufacturing and distribution capabilities in the West, East and Midwest. A fourth partner, Dunn-Edwards Corp. of Los Angeles, recently joined the alliance, expanding the group’s supply capabilities across the nation.
The companies say the alliance offers them a chance to bid for the business of these large national customers. “It doesn’t guarantee that we’ll get the business, but it puts us on equal footing,” says Joseph P. Cristiano, president and CEO of Kelly-Moore.
The alliance works by supplying products that meet a single customer specification, no matter which company does the manufacturing. With the addition of Dunn-Edwards, Paint America’s combined resources include 16 manufacturing facilities and 525 stores, supplying architectural and industrial coatings. The companies say the alliance can offer nationwide sales and service, paint formulas tailored to regional conditions, pricing that reflects national-account buying, technical support, and other customer benefits. Cristiano likes to describe the group’s capabilities as delivering “the best of both worlds to national customers” — providing users that have “geographically diverse coatings needs” with local products, but with the convenience and cost effectiveness of centralized billing, ordering and payment.
In targeting major national sales prospects, Paint America has developed three specific marketing programs — “American Homes,” a package of customized services and coatings systems for home builders; “American Properties,” aimed at property managers who use maintenance coatings; and “American Industry,” which concentrates on sales of high-performance coatings used by industrial facilites.