[European Atlas] Paint :Distribution still irregularly structured

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A great deal remains to be done to build a united European paint sector. This market, considered lucrative by the top five European distributors, varies wildly from country to country. Another specificity of this sector is that manufacturers have kept control. So, how many paint distributors are there in Europe? “2,000 to 3,000 and maybe many more. Because the small distributors are very hard to count. In countries such as Poland, the market is not yet mature and there are a multitude of them, like in Italy” says Ezio Braggio, president EMEA at Sherwin-Williams. This disparity leads to a wide range of different distribution channels.

Manufacturers in Europe call on four distribution models: specialist independent distributors, specialists incorporated within manufacturers, large parts distribution groups and automaker networks. “90% of paint manufacturers use these four distribution models, from one country to another”, adds Adrien Schrobiltgen, vice president EMEA at Axalta. The north of Europe is the stronghold of mass retail, either independent or integrated by manufacturers, either partially (BASF and Axalta in France) or fully (in Switzerland, Germany, the Netherlands, etc.). It remains very fragmented in the south (Spain, Italy, Greece, etc.), while to the east, highly local markets are often supplied by importers. In the United Kingdom, the extreme concentration of distributors and repair businesses has led to the creation of competing paint supermarkets which distribute all brands. “Here, we lose the notion of service and the skills of the experts of a brand. This model is costly for manufacturers and repair shops”, notes Adrien Schrobiltgen. The last distribution channel is of course Internet, the nemesis of conventional distributors. Their supply sources are opaque, and most manufacturers say that they do not directly supply them, contrary to what their owners say. Some websites may source their products from EU (and non-EU) countries where prices are low, to deliver to Western coachbuilders and those poorly serviced by distributors. But “on this market, we have already come across downgraded products and even counterfeits”, states Fabien Boschetti, sales manager for BASF France, Switzerland, Benelux and North Africa. In all events, pure players only offer limited services.

That these distribution models are particularly complex owes much to the fact that paint products are perishable and chemically hazardous. They should therefore be stored for limited periods of time. “Delivering a product from point A to point B is not the only job of a paint distributor. We sell a semi-finished product which requires optimal use by the painter to obtain a perfect result”, reiterates Fabien Boschetti. The reputation of brands is at stake, meaning that significant investment is necessary to train and technically support distributors and coachbuilders. They must also follow market trends to adapt their range… and of course adjust permanently to the new colours offered by automakers, which major paint manufacturers supply direct to the assembly line.

The final parameter which has an impact is the notion of agreements between business providers and manufacturers. “Part of the market is dictated by agreements with insurers who steer motorists towards approved coachbuilders contracted to a particular paint brand. We estimate that this model applies to 60% of the European market… But in a country such as the United Kingdom, we are closer to 80 to 90%. Whilst in Italy it is closer to 40%”, asserts Theo Wemmers, DG automotive EMEA at Sherwin-Williams. This system – rejected by some suppliers such as BASF in France – is developing in northern Europe and expanding rapidly in the south, to the detriment of the free market. The story of Sherwin-Williams is a good illustration of European complexity. Having arrived in 2012, it quit this market four years later. But by acquiring Valspar in 2017, the global American group benefits today from the experience of its subsidiary, with substantial financial resources and an all-conquering spirit. Because, while immature countries are gradually gaining structure, the European market should nevertheless continue to remain heterogeneous due to customer culture.
Nicolas Girault