Poland
Hungary
Ukraine
9.2 %
generated on these three markets accounted
In the reporting period in Poland and Hungary, the market recorded an increase in value, with a simultaneous decrease in quantity. This was mainly due to increases in product sales prices, consumer concerns about the economic situation, maintaining the premiumization trend observed in previous years and a decline in the real purchasing power of consumers (in Hungary) in the face of high inflation.
The year of 2023 was a challenging one for the industry in Ukraine due to the need to operate in conditions of high uncertainty and requiring high flexibility. Throughout the national economy, also in the paint industry, challenges were related to limited human resources and lower purchasing power of consumers, availability of raw materials, and logistics and transport. Despite these adversities, the industry performed significantly better than in 2022, although it did not come close to the pre-war level recorded in 2021.
In addition, the condition of the industry on the markets in question in 2023 was affected by increases of prices of raw materials, energy and exchange rate fluctuations, which impacted the extent of the raise in selling prices.
According to the data of the Polish Association of Paint and Adhesive Producers, in 2023, the decorative paint market recorded an increase of 13% y/y, to PLN 2.62 billion, with a simultaneous decrease in the volume sold y/y in litres by 2%1.
The causes of this condition are complex. In the foreground are the high inflation dynamics observed throughout 2023, the uncertainty caused by the war in Ukraine, as well as widespread concerns about the country’s economic condition.
The economic situation on the Polish market of paints and agents for wood protection and decoration is also dependent on the consumer sentiment. The situation of the Polish market of paints and wood agents in 2023 was affected by a very low level of consumer confidence. The average level of the Current Consumer Confidence Indicator (BWUK)2 in 2023 was at the low level (-26.3) which, however, and it is worth emphasizing, consistently increased in the following months. In January 2023, BWUK was at the lowest level of the year (-38.1), and in December this level was comparable (-15.2) to the results recorded in the summer of 20213. Similarly to 2022, the Leading Indicator of Consumer Confidence (WWUK) is slightly above BWUK, which means that consumers declared greater optimism as for the next 12 months (2023: -14.8). December’s WWUK reading was as high as -6,44.
According to the Company’s internal data, as in previous years, decorative paints were used primarily for renovation or restoration of apartments5, while – as the Group estimates – the decision to purchase them was less frequent when it was necessary to finish a new apartment. Consumers are looking for high-quality products with good coverage properties that can be painted efficiently.
In 2023, no changes occurred among the main players on the Polish market of paints and agents for wood protection and decoration. The entities with the largest shares on the Polish market currently include: Śnieżka Group companies, PPG Deco Polska and AkzoNobel Polska. According to the Company’s estimates, their share in the total sales of decorative products in Poland amounts to over 80% (in value terms).
1. Polish Association of Paint and Adhesive Producers, Results of the decorative paint industry for 2023.
2. The BWUK and WWUK indicators range from -100 to +100. Values above zero indicate an improvement in the economic situation, while negative values indicate a deterioration.
3. Source: Central Statistical Office, Consumer economic situation – December 2023
4. Ibidem
5. Source: Group internal research.
According to the Group’s estimated data, in 2023, the Hungarian market of paints and agents for wood protection and decoration continued the trend of growth in value (single-digit y/y increase in percentage terms in local currency) and simultaneous decline in volume (double-digit decrease y/y in percentage terms).
In 2023, the industry encountered a number of challenges that are the aftermath of those from previous years, namely: high inflation dynamics, decline in real wages, limited access to financing, general concern about the economic situation and – partly – uncertainty caused by the war in Ukraine.
According to the Group’s data, the largest consumption of paints and wood decoration products on the Hungarian market was related to renovation works and refreshing flats and houses. As in Poland, Hungarian consumers pay attention to the ease of painting and good coverage properties when choosing6.
The year 2023 did not bring significant changes among major players operating on the Hungarian market. The largest entities operating in Hungary in the segment of paints and products for wood decoration and protection are: Poli-Farbe from the Śnieżka Group, PPG Trilak and AkzoNobel Coatings. Their total market share is estimated at approx. 75% of the entire market (in value terms).
6. Group internal research.
According to the Group’s data, 2023 was a relatively positive year for paint and varnish producers, despite the on-going war in Ukraine. Manufacturers managed to increase production, producing significantly more products than in the same period of 2022, but the production of the indicated categories did not reach pre-war levels7.
Companies in the industry operated more stably than last year. Most of them have resumed production activities in regions where it is possible. Concurrently, some manufacturers are considering various opportunities to work in other segments and other sales channels, depending on the needs and market situation.
In Q1 of 2023, Ukraine was affected by problems related to massive missile attacks on critical infrastructure, which generated power outages and temporarily destabilized the operation of production plants. Uncertainty of energy supplies in winter prompted most producers in the eastern and central regions of Ukraine to stockpile raw materials for their own production. At the end of Q1 of 2023, some companies from the industry located in eastern Ukraine, which suffered as a result of the armed conflict in 2022, began to resume operations after electricity supplies had stabilized. The second quarter of 2023 brought a significant increase in production, but the pace did not remain at an equally high level in the second half of the year.
One of the main challenges for the industry is the logistics and delivery of raw materials, the majority of which are imported from Europe. This affects high production costs8.The problem is predominantly faced by enterprises located in the eastern regions of Ukraine.
In 2023, producers encountered staffing difficulties related to mobilizing men for the army. Calling up employees to active military service is an additional burden for companies that have faced the challenge of finding and training new personnel. This also had an impact on the production and sales processes in the regions.
The last quarter of 2023 brought an unexpected situation related to the blockade of border crossings. This resulted in queues lasting several days and led to downtime in many production plants due to lack of supplies of raw materials.
The biggest players in the production of decorative paints on the Ukrainian market are as follows: Śnieżka-Ukraina, Tikkurila, Meffert Hansa Farben, Henkel, ZIP, DAW, Eskaro, Feidal, Polisan, Olejníkov.
7. Source: Chem-Courier, January 2024, https://chem-courier.com.ua/ru/productfilter?select=HK_LKMUKRAINE.
8.Source: Chem-Courier, January 2024, https://chem-courier.com.ua/ru/productfilter?select=HK_LKMUKRAINE
