September 2014
THE BUILDING INTERIOR SECTORS IN INDIA
OFFICIAL PROGRAM
PARTNER
THE BUILDING INTERIOR SECTORS IN INDIA This report provides a comprehensive reference for Swiss companies wanting to expand and/or develop in India‘s building interior sector. It contains insights on the developments in the market with emphasis on five selected key products and provides a brief overview on other products. Date: September 2014 Language: English Number of pages: 37 Author: Gherzi Consulting Engineers Private Limited in cooperation with the Swiss Business Hub India Other Reports: Are you interested in reports for other sectors and countries? Please find more reports here: www.s-ge.com/reports
DISCLAIMER The information in this report was gathered and researched from sources believed to be reliable and are written in good faith. S-GE and its network partners cannot be held liable for data, which might not be complete, accurate or up-to-date; nor for data which are from internet pages/sources on which SGE or its network partners do not have any influence. The information in this report does not have a legal or juridical character, unless specifically noted.
3.3.6.
Opportunity and market entry strategy for new
1.
EXECUTIVE SUMMARY __________________6
2.
MARKET OVERVIEW ____________________8
3.4.
Switches ___________________________ 24
2.1.
India – economic growth, urbanization and middle
3.4.1.
Market size and trend __________________ 24
class income trend ______________________ 8
3.4.2.
Key players in premium segment and their profiles25
2.2.
Real estate sector _____________________ 10
3.4.3.
Consumer behaviour ___________________ 25
3.
BUILDING INTERIOR MATERIALS ________12
3.4.4.
Distribution channels __________________ 26
3.1.
Sanitaryware and bathroom fittings _________ 12
3.4.5.
Key decision makers ___________________ 26
3.1.1.
Market size and trend __________________ 12
3.4.6.
Opportunity and market entry strategy for new
3.1.2.
Key players in premium segment and their profiles13
3.1.3.
Consumer behaviour ___________________ 16
3.1.4.
Distribution channels___________________ 16
3.1.5.
Key decision makers ___________________ 16
3.1.6.
Opportunity and market entry strategy for new players_____________________________ 16
3.2.
modular kitchens _____________________ 16
3.2.1.
Market size and trend ___________________17
3.2.2.
Key players in premium segment and their profiles18
3.2.3.
Consumer behaviour ___________________ 20
3.2.4.
Distribution channels___________________ 20
3.2.5.
Key decision makers ___________________ 20
3.2.6.
Opportunity and market entry strategy for new players_____________________________ 20
3.3.
LED Lightings _______________________ 20
3.3.1.
Market size and trend __________________ 20
3.3.2.
Key players in premium segment and their profiles22
3.3.3.
Consumer behaviour ___________________ 23
3.3.4.
Distribution channels___________________ 23
3.3.5.
Key decision makers ___________________ 23
players ____________________________ 23
players ____________________________ 26 3.5.
Doors and Windows ___________________ 26
3.5.1.
Market size and trend __________________ 27
3.5.2.
Key players in premium segment and their profiles27
3.5.3.
Consumer behaviour ___________________ 28
3.5.4.
Distribution channels __________________ 28
3.5.5.
Key decision makers ___________________ 28
3.5.6.
Opportunity and market entry strategy for new players ____________________________ 29
3.6.
Access control systems (ACS) _____________ 29
3.6.1.
Market size and trend __________________ 29
3.6.2.
Key players in premium segment and their profiles30
3.6.3.
Consumer behaviour ___________________ 31
3.6.4.
Distribution channels __________________ 32
3.6.5.
Key decision makers ___________________ 32
3.6.6.
Opportunity and market entry strategy for new players ____________________________ 32
3.7.
other interior building materials ___________ 32
3.7.1.
Floorings ___________________________ 32
3.7.2.
Furniture hardware ____________________ 33
3.7.3.
Window solutions – blinds and sun shading ___ 33
3.7.4.
Wood and wooden products ______________ 33
3.7.5.
Speciality paints and chemicals in building industry33
4.
CONCLUSION _________________________35
5.
APPENDIX ____________________________36
5.1.
references __________________________ 36
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Introduction Over the years, India has not only implemented and realised various steps towards attracting foreign direct investment but has also started making its mark in the world economy. Despite the slowdown in economic activity in the last few years, we can confidently say that developments in the area of trade and investment are indeed moving forward in a promising direction. This is mirrored by the fact that there are more than 200 Swiss companies in India operating through subsidiaries, joint ventures, branch offices; this is without counting the numerous companies which are present through distributors and agents. The setting up of the Swiss Business Hub (hub) in India in 2001 was a step in the right direction because the changing dynamics of world trade and globalisation demanded a far more proactive approach. Since then, the ‘export promotion’ team at the hub, together with Zurich based Switzerland Global Enterprise, has actively enabled numerous Swiss and Liechtenstein based companies in taking strategic market entry decisions by using our ‘step by step’ approach; we have assisted SMEs in finding motivated and ‘best fit’ local partners, done market studies to a level of depth that is essential for a decision making process, assisted companies in setting up suitable business entities. We regularly identify sectors of mutual interest to companies in both the countries and it is in this spirit that we present this report to you. Developments in the real estate sector in India are being fuelled by social factors such as urbanisation, demographics and consumer preferences. These developments in turn are acting as catalysts that are driving sub-sectors covering building interiors in the premium segment. We invite you to study this report and to contact us with your questions and comments. Swiss Business Hub India team
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1. Executive Summary The Indian building interior sectors India, as one of the fastest developing economies in the world, is providing a well-supported environment to the construction industry. Rapid urbanization, rise of the middle class, aspirational consumers and improvement in standards of living is creating demand for branded building interior products such as sanitaryware, bathroom fittings, access control systems, lighting and switches. This growth is going to drive the demand for modular kitchens, flooring, furniture and fixtures as well. Growing awareness about energy conservation is generating demand for energy-friendly light emitting diode (LED) lights. This report aims to provide a brief overview of the current situation and future trends of the building interior sectors and to explore potential opportunities for Swiss and Liechtenstein companies. The report is focused on understanding the premium end of the market and therefore anecdotal evidence about the experience of key foreign and Indian companies with foreign partners has been captured. Five product groups This report covers the following five major product groups of the interior building material sectors: 1) Sanitaryware and bathroom fittings 2) Modular kitchen 3) LED lighting and switches 4) Doors and windows 5) Access control systems The report also provides a glimpse of the Indian market for flooring, furniture hardware, window solutions systems, wood and wooden products, and speciality paints and chemicals. The findings in the report are based on desk research on secondary data and feedback received from around 30 key players during Gherzi’s meeting with them. The key players include the builders and developers, product manufacturers, architects and product distributors. Market size and trends Figure 1.1 below provides an overview of the Indian market for interior building material sectors estimated to be worth CHF 4.2 billion in 2012 with most segments growing at a Compound Annual Growth Rate (CAGR) of 15-20%. Approximately, 10% of this aggregate market comprises the rapidly growing premium segment which is the theme of the report. Demand drivers Chief demand drivers stimulating the interior building material sectors elaborated in the report include the following: Economic growth with GDP forecast to grow at 7.3% yearly from 2005-25 and a strong middle class projected to expand to 585 million and representing 41% of India’s population in 2025 Migration from rural to urban areas which will witness 40% of India’s population living in cities by 2030 Real estate sector which contributes 5-6% to GDP is growing at 20% yearly
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Figure 1.1: Key building interior sectors and market trends in India
Product sector Sanitaryware & bathroom fittings
Aggregate market size (CHF million) 1’053
Growth indicators
Key international brands in market
CAGR 12-15% Premium segment represents 10% share and growing at 20% yearly
American Standard, Delta, Enswico, Geberit, Hansgrohe, Isenberg, Kohler, Neoperl, Toto
Modular kitchens
439
Forecast to double in 2016 CAGR 18.5%
Bulthaup, Franke, Häcker, Häfele, Hettich, Miele, Nolte, Peka, Poggenpohl, Veneta Cucine
LED lighting
87
Endo, GE, Havells, Regent
Switches
316
CAGR 46% Market penetration which was 5% in 2012 is projected to increase to 59% by 2020 Modular switch market at CHF 140 million CAGR 14% Demand forecast to double in 2016 UPVC doors market at CHF 123 million CAGR 25% to reach 468 in 2018
CAGR 25% Penetration in private homes increasing
Bosch, CP Plus, Hikvision, Kaba, Zicom
Doors & windows
Access control systems TOTAL
2’105
218
Crabtree, Legrand, Schneider
Aluplast, Profine, Veka
4’218
Source: Gherzi analysis based on secondary research
Experience of successful international brands with presence in India This study clearly shows that a number of foreign companies, particularly from Europe have successfully entered the market for premium interior building material sectors in India. The strategy adopted by these companies has five key ingredients: 1. 2. 3. 4. 5.
Appointment of strong channel partners with a geographical presence in cities with a population of over one million. Successful international brands have set up exclusive merchandising outlets for exhibition and sales of their products. Pre and post sales service, especially in consumer durable products such as modular kitchens. Setting up local manufacturing facilities through joint venture partnership or through the 100% Foreign Direct Investment (FDI) route. Taking into account regional preferences and offering a wide variety of products with eclectic features in the premium segment. Ability to innovate and offer customized solutions to buyers will be an added advantage. Advertising and promotion through industry network and print media.
Insights for Swiss companies The report re-affirms the notion that the premium segment of the Indian market, in all categories, offers a huge potential for Swiss companies. It is however important to emphasize that the Indian consumer is extremely demanding in terms of pricevalue proposition and an understanding of this characteristic is vital for taking advantage of the market opportunities. This study provides practical insights to Swiss companies desirous of targeting the attractive Indian market for interior building materials in the premium segment and contains information about the size of the market, demand and supply trends, product attributes, consumer behaviour, competitive landscape and strategies adopted by a reference group of successful competitors to serve as role models. THE BUILDING INTERIOR SECTORS IN INDIA
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