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In an interview with IANS, Amit Syngle, MD and CEO, Asian Paints said that one strong trend that is taking shape is that people don't really punish good brands. "In fact, during uncertain times, people get back into the solace of brands that are trusted and care for you".
Talking about the relevance of big brands in a pandemic phase, Syngle said that the tendency would be to go towards the bigger brand which has always been taking care of you and batting with you in this environment. "So to that extent, I think bigger brands would have leverage in terms of investing in the market because you don't bat for the short term," he said.
"As far as overall business goes, yes overall business would take a little bit of a toll because April has not been a very good month and for most of the period, the entire country was in lockdown. This has been common for all brands across the country", he added. "However, what we've seen is that since lockdown 3.0, from the last week of April, we have seen a really good demand in tier 3 and tier 4 cities which have been largely unaffected by the pandemic," he said.
Asian Paints has been consolidating our presence in the health and hygiene sector because we believe this category is here to stay. "This category is also going to grow very strongly and we have a line-up of more products which we are going to launch," he added.
"We have already innovated in the health and hygiene category and I think that service brands are something that we are going to work in a very strong way," he added. Asian Paints is offering solutions that talk about a share of the space within the house rather than just the share of the surface.
Indicating larger spend on homes, Asian Paints CEO said that the crux is that homes will become places of joy and happiness where people will feel secure and safe and that would be a zone where people will start investing largely.
However, currently, a home might come under discretionary expenses and people would spend more in maintenance-led painting rather than a painting led from the point of view of beautiful decor, he added.
On consumer trends, Syngle said some large macro changes are expected. One is the entire consumer behavior from the digital point of view is going to change a lot. For the coming few months, spends on essential categories will go up and discretionary items will get deferred for some time.
"We also feel that people would down trade from premium to value-for-money brands to an extent. Health, hygiene, and well-being are the three areas where customers are going to spend a huge amount of money and therefore brands who can align in these areas would definitely benefit", he added.
Q: What is the rationale behind Asian Paints entering the sanitizer category?
A: While the motivation came from the Government to support them in these testing times, we were already present in the health and hygiene space for the past few years. We felt the sanitizers would add value to our existing business and as a responsible and caring brand, our foray into this category fit into our overall health and hygiene strategy.
In terms of producing the sanitizers within our plants, we dedicated a certain capacity of our plant at Ankleshwar in Gujarat for manufacturing sanitizers. We obtained all the necessary permissions from authorities, whether it was the FDA permission or the environment permission to have them ready by May 1. We started producing the sanitizers at an unprecedented pace to have it ready within a short period, but we all rallied in and launched the sanitizers on the 1st of May.
Q: Was this part of a larger strategy to look at this health and hygiene segment because this has become the number one priority for consumers right now? So is there a larger strategy to move into this in a much bigger way apart from sanitizers?
A: So, see we have been working in the health and hygiene sector for the last three years. We already have some products there which no other brand has. We introduced Royal Health Shield which is a brand that has a 99.9% anti-bacterial effect and it is used for homes to provide an anti-bacterial coating for the walls within the home. This product also has US certification for its anti-bacterial nature and odour absorption and it has also been certified by the Indian Medical Association.
We recently launched an anti-asthma variant as well which takes care of bacteria that cause asthma. So we have been present in this sector very strongly.
With the Viroprotek range of sanitizers, we are not only offering Hand Sanitizers but Space sanitizers as well for sanitizing different spaces. It could be used for homes, offices, hotels, and hospitals. We also have a Surface Sanitizer which is a very unique product and this can be sprayed on any surface including fabric, human skin, glass, metal, and wood and it kills 99.9% germs.
So, we have been consolidating our presence in the health and hygiene sector because we believe this category is here to stay. This category is also going to grow very strongly and we have a line-up of more products which we are going to launch.
Q: So at this point, it would be a little bit of a task to convince people on how safe painting is, how to get it done in household, etc. so what kind of measures are you taking for that?
A: You're right. Given the environment, there is paranoia and a mental block on whether one should let someone inside their house for painting. Also, painting is more like a discretionary spend now. But we have been doing a series of work in that area.
We are looking at first building the capability in our painters and contractors so they can offer a safe service to the customers while safeguarding their health as well. Therefore, we released two digital ads from the point of view of telling the customers that the sites will be handled in a completely hygienic and sanitized manner and empowering the painter as well with protective gear and safety protocols which they will follow as per Asian Paints' Safe Painting Service guidelines.
The second part which we just did is release a consumer film which talks of how safe our Safe Painting Service is. As a responsible and caring brand, we felt that it was our responsibility to break the paranoia in the customers' minds by proactively looking at providing assurance to our customers by supplementing the Asian Paints Painting service with Safety and Hygiene protocols.
The initial response to this film has been great. We are getting a lot of inquiries and leads especially from the T3, T4, and some T2 cities. People are wanting to get their homes painted. So I think we are going in the right direction in terms of opening up peoples' minds and getting them ready about painting their homes.
Q: There has been some research that people vary of socializing outside, the house could become the social hub. You could friends into the house, you could get relatives into the house. So, the home is where we are spending more time than we used to. So how do you see this part of the social economy evolving?
A: Asian Paints has had a very strong emotional connection with homes and as a legacy, we own 'beautiful homes' in a strong way.
What we have seen is that this attachment with homes will take a renewed flavour because now with work from home becoming the new norm, a lot of people are spending more time at home, working, socializing, interacting with family members in various rooms; the whole connect and camaraderie between the home and the members will go up in a very strong way.
We also feel that the message which we have been appropriating for a while with 'Har GharKuchKehta Hai', comes out even stronger now where the home is a reflection of the individual's personality and its relationship with the people who live there.
So the crux is that homes will become places of joy and happiness where people will feel secure & safe and that would be a zone where people will start investing largely.
So I'm not sure whether bigger homes would be the upcoming trend, but instead, we will see more cozy and beautiful homes. Therefore, I think homeownership is a trend that will go up in these times.
Q: So do you also expect people to invest more in decorating their homes and things like that?
A: I think that will take some time. Currently, a home might come under discretionary expenses and people would spend more in maintenance-led painting rather than a painting led from the point of view of beautiful decor.
So I would say that the current trend, at least for the next 3-4 months, the painting would be more from the point of view of maintenance. But I think as we go ahead when the environment gets a little more comfortable and uncertainty reduces, people will start spending more on their homes in terms of decorating and beautifying their homes.
Q: With this uncertainty, there have been some analysts that have talked about risks to Asian Paints revenue growth and the second concern is about downsizing the brand and for a cheaper alternative. So how do you respond to concerns over revenue?
A: One strong trend that is taking shape is that people don't really punish good brands. In fact, during uncertain times, people get back into the solace of brands that are trusted and care for you.
Therefore, a brand that has been holding the customer's hand for a long time and a brand that really cares would stand to benefit because people don't down trade such brands. But what people might do is, if I have a super-premium offering and I have a value offering, there could be a down trading between those products within the same brand. But I am sure people don't go away from a brand that they trust; trust that has been built over a while.
Also, we are already seeing the trend where people may not go for a super luxury finish, but they may go for a value-for-money finish which comes from the same brand, which from the customer's point of view, is more trusted and more reliable.
As far as overall business goes, yes overall business would take a little bit of a toll because April has not been a very good month and for most of the period, the entire country was in lockdown. This has been common for all brands across the country.
However, what we've seen is that since lockdown 3.0, from the last week of April, we have seen a really good demand in tier 3 and tier 4 cities which have been largely unaffected by the pandemic. The cases have been much lower and people are quite confident in carrying on with their daily chores in a far more brisk manner. So we have seen a pickup in business. People are no longer saying "I have to only stay indoors". I think they are learning to live with the pandemic by taking care of themselves, by being safe and taking precautions; we need to because life has to go on. From that point of view, business is opening.
Q: There's another thing that is coming up in this time of uncertain and volatile environment will help the bigger brands because there is more consolidation and the weaker players are not able to sustain themselves, and the larger companies have more resources to deal with that. So how do you see that evolving?
A: It's a matter of is the brand investing enough with the stakeholders. I think bigger brands tend to invest much more with respect to all their stakeholders be it customers, retailers, contractors, architects, or designers. We have been doing exactly that from the last 6-8 weeks. So we have not curbed our spends on marketing, we have spent a lot on digital and ATL films which are going on air. Therefore we are investing from the consumer's point of view.
I feel in such a scenario when you are taking care of all your stakeholders, you're putting all your innovation in the market. At the same time, you're also taking care of your dealers and contractors by providing slightly better credit, better comfort in terms of doing business.
The tendency would be to go towards the bigger brand which has always been taking care of you and batting with you in this environment. So to that extent, I think bigger brands would have leverage in terms of investing in the market because you don't bat for the short term. So whether it is internal customers like employees, your workers who are there in the factories or even the contract employees, you are taking care of them in the long term. So that is where big brands would score in holding the hands of its stakeholders.
Q: What is your assessment about consumer behavior that will change post this epidemic and post this lockdown? What kind of consumer behavior patterns do you see?
A: Some large macro changes are expected. One is the entire consumer behavior from the digital point of view is going to change a lot. The digital economy is going to come up in a big way that would align customers to get onto e-commerce as they would love to have things delivered to them in the comfort of their homes rather than stepping out.
The second area is that the consumer is going to make choices between what is discretionary and what is essential. For the coming few months, spends on essential categories will go up and discretionary items will get deferred for some time. We also feel that people would down trade from premium to value-for-money brands to an extent. But they might not cross-trade by getting into another brand. But as I said earlier, within the same brand they would down trade which is normal when there is uncertainty around.
Another big trend which I think will happen is that service-led brands will gain. Service-led brands will come of age and customers would give a premium for services that a company or a brand is offering. The other thing, according to me, is that segmentation in brands is going to change a lot. I feel a lot of micro-segmentation would start happening which will give marketers a bit of a tough time because we will have to look at catering to certain micro-segments who would have a very different take in terms of what they want from a brand.
Therefore, the whole exercise of market segmentation would get a little bit tougher in terms of reaching the right customer in the right manner with the right marketing mix. So I think those are some critical trends which I see happening as we go ahead.
But having said that, one category to watch out for and will come up in a big way is the health and hygiene sector. Health, hygiene, and well-being are the three areas where customers are going to spend a huge amount of money and therefore brands who can align in these areas would definitely benefit.
Q: Would you be looking at anything apart from paints in the health and hygiene category like you have done sanitizers? Or is it health-oriented within paints?
A: So we started with something very interesting called 'FamAssure' which is a Sanitizing Service. Under this service, we offer shops, offices, multiplexes, hotels, hospitals, and other spaces a complete sanitization service, right from space sanitization, surface sanitization to sanitization of people. So we got into this service which is packed along with our Safe Painting Service separately.
We think this is a deadly combination because today customers are looking at really sanitizing their places in a very effective way. The added bonus with this service is that it comes from a trusted brand with the commitment of offering a professional and safe painting experience, thus giving the customer complete peace of mind. Therefore, we have already innovated in the health and hygiene category and I think that service brands are something that we are going to work in a very strong way.
Q: What do you mean by service brands?
A: So service brands means areas like Safe Painting Service, Sanitizing Service, Home Decor Service.
Q: So this year, this would be the kind of area in terms of finding
A: There are lots of areas. When we look into the future, we are looking at, one, how do we maximize the entire potential of the paint market in India. The per capita consumption in India is anyways very low and there are two things we have been working on with the objective of changing that.
First, we are looking at increasing the frequency of people painting and decorating their homes. Whether it is wallpaper, whether it is waterproofing or new painting textures, we are looking for more opportunities to increase the frequency of going to a customers' homes and getting customers to paint more often. For instance, waterproofing is a big opportunity. In China, the market for waterproofing and the use of construction chemicals is almost ten times bigger than the Indian market. So that is one area that we are working on.
The other area which we are working on is home improvement. We already have a kitchen brand, a bath brand and we have introduced a chain of high-end home stores called 'AP Homes'. AP Homes is a one-stop-shop that offers comprehensive decor and design solutions to consumers across all categories that one would need for their homes and other interior spaces.
So the entire strategy is to offer solutions on the walls and off the walls within the homes. Therefore, we are offering solutions that talk about a share of the space within the house rather than just the share of the surface. Apart from this, we feel that innovation is critical. Offering cutting edge products which are first in the world, first in India; that is something that we have been working on in a very big way and that would be the direction going forward.
(Sanjeev Sharma can be contacted at firstname.lastname@example.org)
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