Paints, coatings and lacquers market in Russia: 2023 results and forecasts for 2024
What 2023 was like for the paints and coatings market in Russia and what is in store for it in 2024.
In 2023, the Russian paint and varnish market underwent a number of significant changes. In particular, consolidation processes related to the merger and redistribution of assets of companies that left Russia were completed.
Key Indicators and Results for 2023
Creon experts estimate the output of paint and varnish materials in Russia in 2023 at 1.1 million tons, which is almost 10% more than in 2022. Decorative materials accounted for 74% of the total output, while industrial materials accounted for 26%.
The import volume of paint and varnish materials decreased to 131 thousand tons at the end of 2023, which is 15% less than in 2022. There were also changes in the structure of imports: if in 2022 the leading positions were occupied by the EAEU countries (22%, including products supplied by parallel import), in 2023 the leadership is shared by China and Turkey (24% each). In general, the share of imported products in the Russian market is estimated at 16-18%, while in 2018 this indicator exceeded 30%.
Creon experts estimate the total volume of paint and varnish consumption in Russia in 2023 at 1.2 million tons. However, despite the volume of paint and varnish consumption exceeding the domestic production, the production capacity of most Russian producers of varnishes and paints is at best half-loaded.
What are the challenges faced by Russian market players in the paint and varnish market in 2022-2023?
- Complete absence or shortage of analogs of various components (resins, hardeners, thickeners) required for the production of paintwork materials.
With the withdrawal of European suppliers (recall that the ban on the supply of paintwork components to Russia was included in the fifth EU sanctions package), Russian market participants were forced to reorient themselves to manufacturers from other countries (India, Turkey, China, Malaysia), or to work out alternative routes for parallel imports.
- Suspension of activities of major foreign players in the Russian market.
The most vivid example is Tikkurila, which had not only production facilities, but also several logistics centers. Teknos, Jotun, Hempel also left the market.
- difficulties with the supply, maintenance and repair of European, Japanese and Korean-made equipment.
All these countries introduced a ban on the supply of equipment and spare parts for it as part of the sanctions packages. Accordingly, Russian companies were faced with a dilemma: either to seek the possibility of supply through third countries, or to switch to equipment manufactured in friendly countries.
Trends and Prospects
What trends are observed in the Russian paint and varnish market? The fashion for eco-friendliness has not bypassed the paint and varnish segment: natural-based products containing a minimum amount of solvents, preservatives and volatile compounds are becoming increasingly popular.
Starting from 2020, online sales of paints and varnishes are growing in the Russian market. Undoubtedly, the coronavirus pandemic also played a role here, when due to the closure of a number of large supermarkets and stores, customers were forced to leave offline for marketplaces and online portals. At the same time, the online channel mainly sells products in ready-made colors, as some types of paints need to be tinted, which is only possible in the store itself.
The Russian market and domestic producers of paint and varnish materials will also be supported by the growing activity of builders. For example, last year an absolute record was set for housing commissioning - more than 110 million square meters of living space was put into operation. However, builders are facing an ambitious and large-scale task - to commission 120 million square meters of housing annually by 2030.
We should not forget about infrastructure and civil construction, which is also developing at a rapid pace. New residential buildings, schools, roads, bridges, engineering infrastructure require millions of tons of paint and varnish materials: paints, varnishes, primers and other products. In addition, the active construction of housing, social facilities, business centers and administrative buildings will lead to an increase in demand for furniture and, accordingly, for paints and varnishes on the part of its manufacturers.
To ensure such output volumes, synergy between manufacturers, research institutes and the state is required. An example of such an approach is the support by state funds and development institutions of domestic research in the development and modernization of paint and varnish materials, re-equipment of enterprises, as well as providing them with tax benefits and other preferences. And this is bearing fruit. For example, in 2022 Sibur started producing maleic anhydrides, which are the base raw material for various resins that improve the properties of paints and varnishes. Projects are also underway to build Russia's first automated paint and varnish plant (St. Petersburg) and to produce powder paints.
Advantages of Woodex Exhibition
Market transformation opens a window of opportunity for new players, and the Russian paint and varnish market is no exception. Moreover, given its dynamic development and consistently high construction activity, the demand for paints and coatings will continue to grow in the coming years. But those companies who understand the market trends and quickly find reliable partners will be able to take advantage of this chance.
An excellent opportunity to solve such non-trivial tasks is the International exhibition of equipment, materials and components for woodworking and furniture industry Woodex. At this event, manufacturers and suppliers of paint and varnish materials will be able to find new clients from among the largest construction companies and furniture manufacturers.
In 2023, the exhibition was visited by 8,190 unique guests, which is 42% more than in 2021. It is worth noting that 29% of them (2,195 exhibitors) were interested in the paints and coatings section, which included paints, coatings, adhesives, sealants, and wood protection products.
