By Moses Kaketo
South African based Kansai Plascon Africa Limited (KPAL), a subsidiary of Tokyo Stock Exchange-listed firm –Kansai paints, a global paints manufacturer, the company which bought Sadolin Paints Uganda ( SPUL) early this year, has finalized plans to rebrand the country’s leading paints manufacturer. The SPUL is the leading paints manufacturer with over 60 percent market share.
The deal that was signed on 15th January 2017 Kansai paints, through her South African subsidiary took over 100 percent shares in SPUL in a deal worth $87.5 million (about Ugx.313.68 billion.) The SPUL was formed in 1963 and employs more than 300 people. The company is listed among the top 100 taxpayers in Uganda.
Newz Post Understands SPUL will be rebranded to Plascon Paints Uganda. The company recently appointed South African Marketing manager to undertake the process.
In South Africa, KPAL is positioned predominantly as a premium brand, but with the acquisition of Sadolin Paints Uganda and Sadolin Kenya and Tanzania, Farid Masood, CEO of KPAL, in a recent interview with How we made it in Africa noted that they want to focus more aggressively on the mid-tier market.
“Consumers obviously want good, high-quality paint that can withstand different weather conditions, but they also want a good price point. So, there is a large market which will not be that premium price and that’s where we see our growth coming from in the decorative space – in the mid-market segment.” He said.
Sources say rebranding seeks to achieve two things: Plascon is strong paint in South Africa. The plan is to extend brand coverage to rest of the continent.
Secondly, Sadolin Group, owned by Dutch multinational Akzo Nobel, a few years ago increased the annual Loyalty fees from 2% to 5% to SPUL – the very reason why the Indians had to sell to Kansai Paints. KPAL with a strong brand heritage, global technical capability and trusted performance, sees no reason why they have pay such high annual fees every year.
Analysts say, KPAL will need an aggressive strategy and a clear marketing plan, if the rebranding is to make impact in both short term and long-term, whilst they may lose the market share in Uganda. Plascon brand is not known in Uganda, otherwise Ugandans may switch to competitor brands like Regal paint, relegated PeaCock Paints among others. There are more than 80 players in Uganda’s paints industry.
While Sadolin is number one-player in Uganda, However, Masood sees Kenya as the country presenting the greatest untapped opportunities due to its demographics and infrastructure spending.
“For us the growth market is Kenya. In Kenya, Sadolin is the number three player in the market. We see a lot of paint opportunities there given the size of Kenya we think we can take a significant amount more of the paint spend in the country. We are also one of the largest players in Tanzania and want to grow that market as well,” he noted.
There has been a tendency in Uganda, that whenever an existing brand is acquired, it does not mean that all the customers using that particular brand will switch. And more so with brand that changes its name. A case of Airtel Uganda which has changed names from CelTel Uganda, Zain, Warid to Airtel Uganda. The company has struggled and paid heavily for brand switching. It was until recently [ after other players like UTL, Orange Uganda] had issues that Airtel finally recorded some numbers and posted a profit after more than a decade of posting losses.
This explains why Vivo Energy did not change from Shell Uganda to Vivo Energy. They feared the Shell brand is very strong in Uganda, otherwise changing from Shell to Vivo Energy would paralyze the market. Ugandans did not know Vivo Energy.
Industry analysts say for KPAL to successfully rebrand and continue to command market leadership, they must put aside a huge marketing budget and come up with clear marketing and positioning strategy. They need to tell Ugandans that the ‘new product’ is strong and superior brand.
This may take the form of giving out samples to big consumers to prove to them that what they selling to them is better than ‘Sadolin Paints Uganda’
Farid Masood observes that while consumers buying paint for decorative purposes is where the majority of revenue in the region comes from; there is also growth potential in east Africa’s industrial and protective coating space.
What next for Sadolin Paints?
Rebranding Sadolin Paints to KPAL, will mean Sadolin paints brand will be no more in Uganda and the region. The region’s paint industry is estimated to be worth $350m per annum. Sadolin Paints was number one in Uganda, Number two in Tanzania and Number in Kenya. Sadolin Paints was also exported to several neighbouring companies including South Sudan, DRC, Ethiopia, Djibouti and Somalia.
Sources say, Sadolin Group may later after KPAL has finished rebranding reconsider relaunching in Uganda and other East African countries to keep the brand alive. Sadolin Paints has long history in East Africa dating back as far as 1959.