Winning Brands Corporation (WNBD)

[just_an_ant]

Wondering how Winning Colours is doing in South Africa

Seems things are potentially looking up in the relative sector there.

http://www.gfkrt.com/news_events/market_news/single_sites/007261/index.en.html

Paint sales rise as South African property market recovers

03 February 2011

Common knowledge would have one believe that the South African paint market would improve during a general property market slow down. This is based on the logic that homeowners, unable to sell their properties and buyers unable to access credit, would instead invest in upgrading and making improvements to their current homes in order to maximise their comfort and add value to their existing properties.

GfK Retail and Technology data in contrast to this logic shows otherwise. Market performance during the property downturn was poor and as the South African property market has begun to show steady, positive signs the paint market has also begun to demonstrate positive growth. One could speculate that this is due to the fact that in order to improve the general aesthetics and realise the maximum selling price, many homeowners tend to paint their homes and undertake general maintenance exercises before selling.

During the final two quarters of 2010 the domestic paint market grew by more than 11% in revenue and almost 12% in terms of litres sold, which is a strong performance relative to single digit growth in previous quarters. Changing consumer lifestyles and preferences have contributed to the strong developments. Key value items within textured finishes, bases and water based products have sold well and driven key value segments. Harsh local weather conditions have also pushed segments aimed at restoring, repairing and mitigating the negative effects on the home.

The paint market in South Africa remains a high interest territory to international players as well. Strategic positioning and access to specifically sub-Saharan regions and the rest of Africa remain a key interest point for investors. This is especially true as South African retailers continue to invest and expand into the rest of the continent.

Locally, growth in the DIY Superstore chains has impacted competitive positioning within the retail environment and underpinned private label performance against open market brands. Government housing projects have raised the level of home ownership at the entry level of the housing market in recent years. This means new opportunities and viable markets segments have begun to open up. These new segments come with various challenges, one being changing the consumer perception of DIY spending and activities which are still considered to be the activities of the affluent social classes to a large extent.

Forecast expectations remain encouraging especially if macroeconomic conditions remain relatively stable going into 2011. Movement at the entry level of the market will also continue to drive volume growth while the larger pack sizes and special application products should continue to drive value developments. For open market brands, the challenge will be to effectively and efficiently compete with low price private labels.