Berger paints is a strong company which is involved with Paints manufacturing and distribution in India. The company originates from India and has headquarters based in Kolkata. It is known to be an excellent manufacturer and distributor, though it is not as strong in advertising as Asian Paints. Berger paints has major presence in 5 different countries like India, Russia, Poland, Nepal and Bangladesh. Besides this, it is also trying to make inroads in Africa.
Here is the SWOT analysis of Berger paints.
Strengths in the SWOT Analysis of Berger Paints :
Basket of Products: Berger Paints offers a wide variety of products which includes home to industrial paints. They also offer decorative paints option which is the latest offering and in demand in the market. It acquired the decorative paints unit from the Indian arm of US-based Sherwin Williams Paints.
Brand Recognition:Being the second largest Paint manufacturer gives them a healthy brand equity. Almost everybody recognises the brand and is familiar with its products and offerings. Their rigorous campaigns have made them a household name.
Competent Leadership:The chairman is Kuldip Singh Dhingra and vice chairman is Gurbachan Singh Dhingra who own a combined stake of 75% stake in the company and have taken it to new heights making it second largest paint maker trailing behind Asian Paints. The future leadership of the company is also set. The reigns will be passed on to Simran and Kanwardeep children of Kuldip and Gurbachan.
Loyalty: Customers are loyal to Berger Paints when it comes for re-painting their homes.
Efficient Supply Chain:They have an efficient supply chain network throughout the country. This includes seven manufacturing facilities, 85 depots, many regional outlets. They house around 2500 employees and a massive network of 15000 dealers.
Growth: They have had a steady growth in their retail values (RSP).
Barriers to market entry: They have grown so big that they have created a barrier for new competition to enter the market. Together with Asian Paints, they control most of the market.
Diversification: They have expanded into the Construction Chemicals segment and thus have expanded their scope for revenues and profits.
CSR: They have initiated green Horizon initiative that caters towards eco-friendly paints by reducing wastage and conserving natural resources.
Weaknesses in the SWOT Analysis of Berger Paints :
- High dependence on one segment: Berger Paints depends on one segment heavily for its maximum revenue and that is the decorative segment. This is not a long term strategy and high growth rate cannot be sustained for long.
- Bad brand image: Berger faced a lot of negative publicity due to lead found in its paints. This kind of publicity taints the brand image of the company.
- Limited Pricing Power: Due to a duopoly in the market they do not have the pricing power in their hands. They need to keep their prices in check with the market going paint prices.
- Weaker distribution – Berger paints is known to have a weaker distribution network as compared to Nerolac or Asian paints which is a major problem for the company. It needs to ramp up its distribution network far and wide and if needed, increase its manufacturing potential to match demand.
- No premium alternative – Asian paints has conveniently targeted a unique segment which gives high margin through their Asian paints Royale initiative. Berger paints needs such initiative to get in touch with their customers and have better sales and brand equity.
Opportunities in the SWOT Analysis of Berger Paints :
- Marketing – Berger paints needs to up its game where Marketing communications is concerned. Where Nerolac and Asian paints are advertising left and right, Berger paints is left far behind and the frequency of advertisement is lesser. With marketing, it will bolster its brand values and create a demand from consumer end.
- Market potential is untapped : Usage of paints in Indian households is very low. There is a high scope of growth in this segment. Also due to urbanization there is a growth in demand for paint.
- New Launches : They can innovate and invest in their R&D to come up with superior technology for the paint industry. They can also launch more eco-friendly paints and make it health friendly.
- Emerging markets – Berger paints is currently present in 4 countries only but because of its manufacturing base, it can expand to other emerging markets too.
- Diversification : Huge scope for business and product diversification is available for Berger Paints.
- Government Policies : Government is focusing on urbanisation, industrialisation, increase in house and developing more tier 2 and tier 3 cities. This means there will be a huge demand for paints in the recent future.
Threats in the SWOT Analysis of Berger Paints :
- Raw material Prices: There are high fluctuations in the prices of the raw materials of paint.
- Changing government laws: Changing government laws may lead to new companies in this sector. That means an increase in competition.
- Competition eroding the margins – There is stiff competition amongst the top three – Asian paints, Nerolac and Berger paints. Amongst these, Berger paints seems to be left behind resulting in penetrative pricing and lesser margins. This is a threat to Berger paints.