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Can Berger Paints increase market dominance by reducing prices?

Despite its deliverables of top-notch products, Berger Paints’ stakeholders are seeking reduction of the company’s products prices.

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Stakeholders seek Berger Paints' market dominance

…Berger Paints products not for everyone – Distributors

The ongoing construction works in different parts of the country have led to significant increase in the  market demand for paint with manufacturers recording huge returns on investments.

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Considering the high demand for paint products across the country, it is not surprising that there are many existing paint manufacturing firms in the country, operating at different capacities and scales. However, as many, as they are, there still remain the “elite” paint manufacturers that dominate the market. 

READ MORE: Reactions trail Minister’s claim that Nigerians now import Pizza from London

Major competitors 

The fact that the industry is not meant for everyone, as not all existing paint manufacturing firms can afford good distribution network and access to financing, explains why only a few manufacturers are currently dominating the industry. 

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The few companies dominating the market space include Berger Paints Nigeria Plc, CAP Plc, Premier Paints Plc, and Portland Paints & Products Nigeria Plc.  

It is pertinent to note that most of the aforementioned market players have a long history of operation in the country, and at the same time, serve all segments of the paint industry. 

CAP Plc seems to be leading the pack of quoted paint companies with a market capitalisation of N17.325 billion. Berger Paints Nigeria Plc follows with N1.985 billion market capitalisation. Portland Paints & Products Nigeria Plc operates with N1.960 billion market capitalisation, while Premiere Paints operates with N1.156 billion market capitalisation. 

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Berger Paints’ market dominance 

Being one of the leading paints manufacturing firms in Nigeria, Berger Paints has successfully created a class of its own in the market space. Nairametrics learnt from research carried out on paint products in the market that Berger Paints products are not for everyone. They are for specific persons who not only have a good eye for quality paint products but are also financially capable enough to purchase them.

Berger Paints market dominance evaluation

A paints store in Ogba area of Lagos State

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Almost all the stakeholders asked about Berger Paints products heaped praises on the manufacturer. Some said the manufacturer is more concerned about selling top-notch products than its competitors. Only a few persons asserted that Berger Paints products are unnecessarily costly. 

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Experts’ opinions on Berger Paints products 

From the painters’ perspectives 

According to a professional painter who simply identified himself as Divine, people rarely make use of Berger Paints products because of the cost.  

“It is very rare to see people requesting that it is only Berger Paints products they want for their paintings. People prefer to go for cheaper products in the market,” the painter added. 

Another painter, Dele Oloyede, acknowledged that the products are good but not everyone can afford it.  

He said:“The paints are good and I will always recommend them, but it doesn’t belong to every class of the society. I mean they have been in the market for long, and they are yet to start producing substandard products. If you make use of Berger Paints products, your paintings will last over a decade compared to others which barely last 2-3 years.” 

Speaking to another painter, Babatope Raheem, the case is the same. He said, “I will say out of my 100 clients, barely 10 will insist that it is Berger Paints they want me to use for their paintings. It is mainly because of the cost; it is too expensive, not everybody can afford to use these products.” 

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Retailers’ and Distributors’ Opinions 

Like the painters’ views on the market dominance of Berger Paints, paints retailers and distributors said they only sell Berger Paints’ products on demand. A paint retailer identified as Bose Oladeji, said there is no doubt in the fact that Berger Paints is the king of other paints in the market, but she had her reservations about its prices. 

“Berger Paint is good for usage. There is hardly a place you will go to that Berger Paint is used that you won’t be impressed by the quality of paints used on the walls. It is the king out there, but it is not for everyone because all fingers aren’t equal. 

“Because of the high cost of Berger Paints, retailers don’t have them in their stores, including me, and I won’t advise anyone to do so, because the demand is slim compared to how people demand for other paint products,” Oladeji told our Analyst.

Similar to Oladeji’s statement, another paint retailer, Kalesanwo Olaolu, said that retailers ordinarily don’t store Berger Paints products because of the low demand.  

“Just take a look around my store, I’m sure you will notice that there are no Berger Paints here. It is because the demand is low, people don’t request for it much like others because it is costly. I only sell on request. 

Financial performance 

Between 2013 and 2018, the revenue of Berger Paints Nigeria Plc grew by 25%. Similarly, its Profit Before Tax increased by 33%, while its Profit After Tax improved by 25%. 

READ ALSO: Focus: This old paint company is struggling to remain king

The Prices of Berger Paints Products 

Berger Paints have different products that come with different prices. Inquiries on the company’s prices affirms the stakeholders’ points. 

While the company’s 20Lt Clinstay Emulsion sells for ₦36,297.17, its 20Lt Fire Retardant Texcote sells for ₦28,644.06.  

Berger Paints’ 20Lt Luxol Emulsion sells for ₦27,978.66 while its 20Lt Robbialac Emulsion sells for ₦6,221.74. 

The company’s 20Lt Robbitex Emulsion sells for ₦11,451.43 while its 20Lt Rufhide Emulsion sells for ₦16,399.19.  

Berger Paints’ 20Lt Supatex Emulsion sells for ₦19,660.68 while its 20Lt SuperStar Emulsion sells for ₦17,171.51.  

Its AutoLUX 1LT sells for ₦1,798.45 while its Bergernol 5Lt sells for ₦11,623.56.  

Lignolac Wood Finish 4Lt sells for ₦5,192.16 while its Luxol Gloss 4Lt sells for ₦9,473.49. 

Berger Paints’ Robbialac Gloss 4Lt sells for ₦4,774.79 while its SuperStar Gloss 4Lt sells for ₦6,993.05. 

Going by the product prices of other companies, it is true that Berger Paints products aren’t competitive, probably because the products are made for specific class.  

The Upshot 

Berger Paints Nigeria Plc has successfully created a name in the paints market space. As a result, most of the stakeholders spoken to would really love to recommend the company’s products ahead of other companies, but for the prices 

READ FURTHER: Nestle Nigeria’s revenue climbs 5% as profit hits N26.2 billion

During the research, Nairametrics learnt that if a painter is required for a painting service and the prospective client insists on using Berger Paints, that automatically gives an impression that the prospective client has a lot of money to spend. Thus, the service cost will be increased 

More so, painters whom we interviewed expressed their confidence in the ability of the company to produce quality paint products. 

Berger Paints can leverage on the class it has since created in the market space. The company may have to consider dropping its price or produce product options that can serve the middle class and the general public at large. This will have a great impact on the company’s revenue growth and profits. 

Famuyiwa Damilare is a trained journalist. He holds a Higher National Diploma (HND) in Mass Communication at the prestigious Nigerian Institute of Journalism (NIJ). Damilare is an innovative and transformational leader with broad-based expertise in journalism and media practice at large. He has explored his proven ability in the areas of reporting, curating and generating contents, creatively establishing social media engagements, and mobile editing of videos. It is safe to say he’s a multimedia journalist.

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Economy & Politics

Buhari meets with AfDB President, Akinwumi Adesina, promises support

Nigeria stands solidly behind Akinwumi Adesina in his re-election bid as the President of the African Development Bank (AfDB).

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President Muhammadu Buhari on Tuesday, June 2, 2020, met with the President of the African Development Bank (AfDB), Akinwumi Adesina, at the presidential villa.

The meeting will not be unconnected with the current travails of Adesina, who was accused by a group of whistleblowers for official misconduct and the pressure by the United States Government for an independent probe of all allegations.

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This was disclosed in a tweet posted on the president’s official Twitter handle.

The meeting which lasted for about 45 minutes was also attended by the Minister of Finance, Budget and National Planning, Zainab Ahmed; Minister of Foreign Affairs, Geoffrey Onyeama, and the Chief of Staff to the President Ibrahim Gambari.

The President in his statement said, ‘’Nigeria stands solidly behind Akinwumi Adesina in his re-election bid as the President of the African Development Bank (AfDB). We will work with all leaders and stakeholders in AfDB to ensure that he re-elected on the strength of his achievements during this term.

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‘’In 2015, when you were to be elected for the first term, I wrote to all African leaders, recommending you for the position, I didn’t say because you were a PDP Minister, and I belonged to the APC, so I would withhold my support.’’

Adesina has continued to deny the allegations and maintain his innocence.

I maintain my innocence with regard to trumped-up allegations that unjustly seek to impugn my honour and integrity, as well as the reputation of the African Development Bank,” Adesina said recently while responding to the accusations.

The Federal Government has, however, continued to rally support for Adesina as the Minister of Finance, Budget and National Planning, Zainab Ahmed in a letter urged the board of the AfDB to ignore calls for an independent investigation of Mr Adesina.

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Nigeria’s Former President Olusegun Obasanjo had earlier in his statement, and as a show of support, called on the board of AfDB to ignore calls for an independent investigation of Adesina by the US treasury secretary.

Patricia

 

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Economy & Politics

Lagos commends religious leaders in the state, churches and mosques to remain closed

The Lagos State Government has commended religious leaders in the state for their cooperation and active participation in the ongoing fight against the COVID-19 pandemic

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Prince Anofiu Elegushi

The Lagos State Government has commended religious leaders in the state for their cooperation and active participation in the ongoing fight against the COVID-19 pandemic, saying that the cooperation received from the leaders of the two major religious groups, especially in the area of zero-congregational gathering, assisted in lowering the curve of the pandemic.

The commendation was given on Tuesday, June 2, 2020, by the state’s Commissioner for Home Affairs, Prince Anofiu Elegushi, during a Ministerial Press briefing commemorating the first year in office of Mr Babajide Sanwo-Olu at Alausa, Ikeja.

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On plans to reopen the economy of the State including worship centres, Elegushi pleaded for continued collaboration with the State government and adherence to the government’s directives that would still be presented to the various churches and mosques when they are eventually allowed to gather for their services.

According to Elegushi, “When we got a hint on the current Coronavirus disease across the globe, we immediately went into action by organising a sensitisation and briefing workshop on Tuesday, March 3rd, 2020 at the Chapel of Christ the Light Hall, Alausa. This was followed by another meeting where a joint decision was reached by all religious bodies to reduce the attendance of worshippers to 50 worshipers at a time”.

In addition to this, our Religious Leaders came together again on 18th March 2020 after reviewing the situation to agree on a total lockdown of Religious Worship Centres across the State before President Muhammad Buhari came up with an announcement locking down Lagos, Ogun and Abuja“, he said.

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Elegushi said that the shutdown of all religious gatherings, activities and programmes by churches and mosques was quite timely and helped in the containment of the virus from escalating beyond control, considering the huge numbers that do gather periodically for religious purposes in the State.

He also acknowledged the discomfort which the pandemic brought on both the Muslims and Christians in Lagos, specifically during the Lenten season and the Ramadan period.

He said: “For a very long time in human history, Christians celebrated the Lenten period and Easter celebrations at home, while our Muslim brothers and sisters were also restricted to observe Sallah at home throughout the Ramadan period, including the Eid-El Fitri celebrations”.

Elegushi attributed the mutual understanding that exists between the State government and the religious groups to a long-term religious harmony and peaceful coexistence, saying that creating rapport is one of the critical functions of the Ministry.

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Meanwhile, information from a monitored report suggests that the churches and mosques in the state might not be opening anytime soon for worshippers. This was disclosed by Elegushi on the sideline of the Ministerial briefing commemorating the first year in office of Governor Babjide Sanwo-Olu.

Patricia

He said that the reopening was not possible as Lagos State is the epicentre of the coronavirus pandemic in the country and that after several meetings with religious leaders in the state, the possibility of reopening religious houses was ruled out.

Elegushi said that they claim that they cannot take responsibility for ensuring that only 20 or 50 people are in attendance.

He said that the governor will come out with further directives.

It can be recalled that the Federal Government, on Monday, June 1, 2020, announced the relaxation of the ban on religious gatherings. They, however, said that each state government can devise measures that suit them, thereby looking at the possibility of doing so in their respective states.

 

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Economy & Politics

The economics of climate change

The Western economies were built by burning “dirty” fuel i.e. coal and later crude oil to generate power for industrial complexes and cars.

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The economics of climate change

When I read “climate change” …I do not see polar ice caps melting and deserts growing. I see the economics of it.

To really do climate change, is to reduce or cap carbon emissions and boost the use of renewables such as solar and wind. These are good objectives, so why has a comprehensive climate change plan not been reached?

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Simple, it is the economics

Let us look at reducing or capping emissions, what emits carbon? Factories and cars do, so to cap or reduce emissions is to cap or reduce growth in factories and to stop families driving cars. You are capping jobs and asking families not to drive. The reality is this, the Western economies were built by burning “dirty” fuel, i.e. coal and later, crude oil to generate power for industrial complexes and cars. Then the West moved to nuclear and cleaner sources of power, but this was after the Western economies had achieved a high and inclusive economic standard of living for their citizens. Owning a car in America was a rite of passage, still is.

The world’s two largest economies outside the Western World are China and India. In all measures, the citizens in these nations are not as rich as the middle class in Pennsylvania. How do you make poor people rich? You create opportunities. How do you create opportunities? You build economies that create jobs. Where do you find jobs? In factories and offices. What do those factories burn? Diesel, petrol, and of course, coal.

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In other words, for India to move her citizens from poverty to prosperity, she must generate enough power supply to factories and businesses in India who hire Indian workers and pay them a middle-class wage. It is really that simple. So, climate change summits always fail because the West wants a cap on carbon emission and the developing nations do not, at least until they are “developed”.

It is important we understand this cold hard reality. Climate change is good. I want a great climate for my kids, but my kids must eat first. Nigeria must not in the name of “climate change” sign away our rights to build coal-fired power plants in Kogi and Enugu…. No. (Japan is restarting coal plants)

(READ MORE:Why households that engage in subsistence agriculture are poor – Yemi Kale)

So, what should Nigeria do? Do we keep polluting and flaring gas?

The economics of climate change

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Nigeria must have a strategy, and I propose a simple strategy called, “Let Them Pay” LTP. If Nigeria has coal deposits, then let the West pay Nigeria not to build a coal Power Plant using that coal. They can pay Nigeria by investing in developmental credits to fund the building of a solar power plan, or even writing off Nigeria’s debts.

Patricia

There is a precedence to this, the West pays the Armed Forces in Africa to fight terrorists, and they pay Police in North Africa to stop people smugglers crossing the Mediterranean.  Nigeria pays Niger Republic by supplying them power so that they do not build their dam on the River Niger to reduce water supply to Kainji Dam. China led Africa strategy on this with the Chinese President flying to Southern Africa from the COP 21 in Paris to discuss the developing world’s response with African leaders.

Nigeria should push that gas flaring be reduced by a massive investment by the Western nations via FDI to build LNG plants in the Niger Delta.

(READ MORE: UPDATED: Minister of Power sacks TCN MD, confirms appointment of Directors)

Nigeria should also tie the Climate Change narrative to terrorism by making the strong case that Boko Haram is feeding off the lack of jobs and opportunities caused in part by the drying of Lake Chad. This has reduced agric and trade and pushed many young boys to Boko Haram. Lake Chad has shrunk by 95% between 1963 to 1998, the UN Food and Agricultural Organization has called it an “Ecological Catastrophe”. Lake Chad provides water to almost 20million people, including frames, fishermen, and herders.

The economics of climate change

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The solution to a drying Lake Chad is already there, a pipeline to take water from the Congo to Lake Chad, it’s bloody expensive – about $14.5b but allowing Boko Haram to exploit the lack of commerce from lake chad also is expensive.

Nigeria must tie this climate thing to economics

 

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