With rise in number of factories and blind folded force to capture market share, the thicknesses in different segments in Decorative laminate are being compromised in India market. With changing market dynamics and growing fight each day, the dealers and distributors find easy option to offer low thickness materials. There are murmurs whether 0.8 mm sales will be hit by cheaper version 0.7mm catalogues? This article might give you enough hint to choose your direction…
7 years back, decorative laminate market witnessed the entry of 0.92 mm thickness of decorative laminates. It was straight 20 % cheaper than any mid segment 1.0 mm priced laminates. The aim was to create a market by hitting 1.0 mm market share at cheaper price. The distributors and dealers started earning extra by placing it as a cost-effective product but it was high profit product for distributors with .9 category offerings.
The market size of .92 struggled for its market share for initial 3-4 years but slowly it made its pocket in sub 500 rupee segment. Today it has eaten almost 10 to 12 % of 1.0 mm market share but has dented a value growth in tune to 20% for the laminate industries and trade. With almost 85 to 100 folders across country, producers are still creating lower version but the profit and economics for a manufacturer does not look promising
The markets such as Mumbai, Pune, Surat, Ahmedabad, Rajkot, Bangalore etc are purchasing .9 mm thickness from where this thickness category emerged. Many people thought it will create wonders but today it has hardly has 4 % market share of the laminate trade. The Ply Reporter recent market survey indicate that market of .92 mm (which is termed as eco 1.0 mm substitute version) is stagnating and it needs a lot of input to grow from present levels unless market start finding 1.0 mm as irrelevant.
Trade and industry experts comment that no product can be a substitute of a good quality, and standard thickness product because that buyer class is mature and it reaches to quality seeking bracket after their poor experience with cheap products and referrals. So, market of 1.0 mm will remain good, if the brand is active and presenting its product meaningfully’ agree laminate trade distributors.
On the same lines, Laminate industry has begun offering lower version of 0.8 mm now, thanks to mind boggling expansions. Today liner folders have also reached to 50 plus design chips and there are around 35 to 40 companies offering liner with 50 chips shade cards. The price ranges in tune to (+/-) 40 rupees starting from 300 INR per sheet. Similarly, a texture offering 0.72 full blown folder of laminates is imitating like 0.8 mm and competing at 40 Rs lower price, thus eating some share of 0.8 mm which is obviously a better-quality product than its lower thickness sibling.
Entry of 0.72 mm laminates in year 2018, with a pack of 50- 60 designs in folders has shown a good performance as per market reports. This product category is reportedly growing very fast in tier-3 cities and rural market. The growth of 0.7 thickness indicate that its demand is mainly noted in those customers, who have been either first time laminate buyers or bulk users of 0.8 mm laminates and furniture contractors.
It is noted that 0.72mm laminates have been evolved from off white to fabric designs in liner category, but has been turning into range categories with fancy designs, textures and different colors similar to 0.8 mm laminates of 70- 80 shades. The study conducted among distributors across the country mainly tier 2-3 cities by the Ply Reporter correspondents indicates that manufacturers are offering this laminate in various colors, shades and designs and the dealers are interestingly pushing it because of good demand and margins.
Majorly smaller laminate producers are compelled to introduce 0.72 mm laminate to sustain in the market due to huge competition, short term vision and unorganized work culture. According to a study conducted by the team Ply Reporter, the thickness of 0.72mm of liner laminates have reached to the levels of 0.62mm to 0.65mm and various brands mention it by saying + - 10%.
The Ply Reporter study found that 0.7 mm thickness laminates are biggest fastest moving decorative laminates materials and approximately 100 such laminates folders in this category are seen in different markets.
CHALLENGES TO 0.8 MM
When the installed capacity goes beyond the actual market demand, entrepreneurship finds a survival instinct that push the person for new and different ideas to sustain in the market. The emergence of 0.72 mm is result of present scenario of oversupply and informal working culture. In desperate selling mode, few of the HPL manufacturers began offering texture and fancy designs in 0.72 mm laminates at economical price to gain some foot hold in the market. With time, there came followers and few found it as a necessary evil kind of product.
Later this range has started being picked by stockiest and as a product category, it has gained a significant volume in tier two, three and small cities. As per Ply Reporter’s ground survey report, the growing offering of 0.72 mm decorative laminates in folder form have began giving fight to 0.8 mm market share in pockets of rural markets and the suburb of the cities.
It is also evident that 0.72 folders are gaining access to new application where cheap 0.6 or liner laminate were being used instead of adding to new customers from paint category, 0.72 mm has began eating in to 0.8 mm sales as well.
A survey done by Ply reporter in North India, led by states from J&K till West Bengal, it was evident that if a laminate stockiest has a 0.72 mm folder that offers design and flashy textures packed with flashy range, then stockiest prefer it to promote to small furniture markets and rural markets because these are fast moving and offers better margins compared to the price of 0.8 laminate folders.
Trade and industry experts comment that no product can be a substitute of a good quality, and standard thickness product because that buyer class is mature and it reaches to quality seeking bracket after their poor experience with cheap products and referrals.
Survey has established a fact that market has seen a decent growth in 0.8 mm laminates with more numbers of new factories in northern India. With the success in 0.8 mm category, many of the new comers and volume players are choosing 0.72 mm, which is an easy way to cater immediate demand.
A dealer opines that they sell this product as equivalent to 0.8 mm range and his per sheet margin is same. Survey indicates that more dealers/stockiest are looking for such an economical grade laminates range because it is easy to sale and their margins intact
WHO PREFER 0.72 MM LAMINATES?
It’s Economics that is working for everyone in the chain including a laminate producer. As long as, a manufacturer is finding this thickness as viable and earning, he is producing it. The day raw material prices will show its twist and color, the manufacturer will backout as there is not much cushion for a manufacturer to enjoy the risk. Though, distributors and dealers certainly believe this product category as a money balancer. Normally it supports to their fixed expenses. The dealers are better benefited with 0.72mm and its sales are increasing as the dealers are taking interest in it.
The economical customers are asking for 0.8mm as usual but the dealers/retailers are pushing 0.72mm to them with a cheaper price offering compared to actual 0.8mm. Actually 0.72 mm range is not as vast in terms of colors/ designs/textures as that of 0.8mm. Few distributors say that the customers do not know about thicknesses. This is only a matter of price and affordability.
With around 15% cheaper price than 0.8 mm, these laminates offer an extra margin to retailers thus provide temporary relief from competition to all the players involved in this chain. Experts warn that growing offering of 0.72 mm laminates range will damage HPL industry and jeopardize the sustainability of many mid segment brands in future. Immediately, it will harm 0.8 mm laminates range but in the long term, it will affect the sustainability of producers and the product as well.
The growth of 0.7 thickness indicate that its demand is mainly noted in those customers, who have been either first time laminate buyers or bulk users of 0.8 mm laminates and furniture contractors.
According to an estimate it has covered almost 15% market of 0.8mm in central India region. This new trend in 0.72mm segment is good but if issues arise like bubble and peeling off then there would be a question mark against its sustainability. It will sustain with quality offering but will have to face stiff competition and low margin like happening in the segment of 1mm and 0.92mm
Although, rural market is doing well in this segment and companies are enthusiasts with its increasing demand. It will not affect the quality product in the segment of 0.8mm. Many factors like dealers’ interest and right placement of products at right counter will definitely increase its consumption because people want cost effective products.
VERDICT
The standard thickness will always be best and safest way to steer ahead and remain viable and growing in India’s competitive laminate market. The current market trend will extend ‘a must have .7mm range’ feeling and will give a short-term relief but it will benefit only a couple of industries who are sitting at 12 lacs + HPL sheet manufacturing capacity every month. Entering into this category might offer some quick balm but will certainly affect the laminate industry adversely in long term. In fact the cheaper a goods manufacturer will go, the risk of every other fluctuation is too high. It is bullet that very few will be able to chew and stay alive.
THE MARKET VIEWS ON 0.72 MM LAMINATES
Aditya Tulsyan, Noble Ply House, Bhubaneswar: In Odisha other than government projects, there is no requirement of 0.72mm laminates. The folders are with nearly 25 shades and its numbers are increasing with cost cutting and competition in the market. In my opinion this category is not suitable for top surface unless it is pasted at factory level. Without proper finishing it will create problem in terms of bubble and cracking at later stage after application. In Odisha market 0.72mm is considered for inner application. I can say 0.8mm market is not affected and its volume is much more than any other thickness consumption in the region.
Aditya Tulsyan, Noble Ply House, Bhubaneswar: In Odisha other than government projects, there is no requirement of 0.72mm laminates. The folders are with nearly 25 shades and its numbers are increasing with cost cutting and competition in the market. In my opinion this category is not suitable for top surface unless it is pasted at factory level. Without proper finishing it will create problem in terms of bubble and cracking at later stage after application. In Odisha market 0.72mm is considered for inner application. I can say 0.8mm market is not affected and its volume is much more than any other thickness consumption in the region.
Hiten Sanghvi, Dhanbad Plywood Center, Dhanbad: The change is good and is growing with dealers’ interest to promote color also for inside use. 0.72mm laminate was considered as liner which is basically dominated by fabric and off white. The customers are interested to enhance inside look also with similar colors to the top surface. In our sales 0.72mm is not being used for front surface as we are observing good sales of 0.8 mm in this region.
BK Singh, Singh Enterprises, Raipur: The retailers and dealers are taking higher margin hence .7 catalogue market is expanding with their efforts. The economically weaker section and low-priced furniture manufacturers are using it more these days. Its growth is somehow affecting the market of 0.8mm. I think, 20% of our market is covered by this segment for top surface also because lower middle class buy’s it. Its market will grow with more companies offering such products in competition.
Sanjay Makhija, Shivam Laminates, Indore: The demand in .7 is high because numerous new companies have launched cheap products to capture market. In competitive market with costlier raw material, reducing thicknesses to sustain in the market is only option for them. The leading brands are maintaining their standard and quality buyers are still there with trust but economically weaker section and customers in the rural market supported with carpenters, contractors and furniture makers are going towards lower thicknesses to save their money. Today there are nearly 25 folders mainly from Yamunanagar, Lucknow, Morbi etc who have focused on economical volumes and growing.
Bharat Nehalani, Vipin Lamiantes, Bhopal: The government thrust to affordable housing sector is also driving the demand in 0.72mm laminates. The change is good with innovation but it will definitely affect the sales of 0.8mm and 1mm. In linger grade the margin is very less so one cannot ask for better margin if it is given in different colors and designs. In case they are taking more margins still it is less with 0.8mm and 1mm so, ultimately it will be harmful for traders and manufacturers; on the other hand the retailers will be benefited with 0.72mm by saying it 0.8mm.
Vishal Tekriwal, Tekriwal Sales and Industry, Patna: The trend has started one and half years before but now after COVID period it has taken a pick up. In my opinion earlier where in rural market small companies were more active are now being feed by branded players so product penetration in the segment of 0.72mm for top surface application is easy now. We are not planning to penetrate it into the existing market of 0.8mm or higher thickness. But, definitely we are pushing it into rural markets which were untouched earlier due to price factor.
Market has seen a decent growth in 0.8 mm laminates with more numbers of new factories in northern India. With the success in 0.8 mm category, many of the new comers and volume players are choosing 0.72 mm, which is an easy way to cater immediate demand.
Rajesh Agarwal, RR Glass, Varanasi: With the change in market dynamics laminate manufacturing companies have come up with good options in lower thickness like 0.72 with more color/design option with full catalogue. Among them a few are launching textures like 0.8mm in this thickness also. The reason for its rise is the acceptance is price rise by nearly Rs 60/sheet in 0.8 mm. In Varanasi market, there are nearly 25 folders in 0.72mm and the demand is good with quality offering. It is basically eating up the sales of 0.8mm. Its demand is increasing in rural belt of UP.
Manoj Agarwal, Mani Laminates, Lucknow: There is a game in liner segment with price war like situation. With innovation they are offering colors/designs of 0.8mm into 0.72mm so the lower thickness laminate demand is increasing in country side area and small counters due to being cost-effective. There are at least 10 folders in 0.72mm segment. In our laminate sales nearly 50% is in liner sales. We expect its future is good and demand will increase further with government initiatives to support low income group people under affordable housing schemes.
Nageswar Rao, MCK Interiors, Vijaywada: We are not doing lower thickness than 0.8mm but the range of 0.72 mm folders are also there in the market. The dealers are selling it by saying 0.8mm. Such discrepancies are disturbing the sales of 0.8mm as the thickness difference is known to traders but the customers are not aware of it. There are two three companies offering 0.72mm in different shades with catalogue. They are making efforts to push it forward but the customers are being cheated as finishing quality do not comes good with lower thickness laminate.
Priyank Patel, Sai Plywood House, Vijayawada: Initially it was very small folder of 8 to 10 colours but now it has 25 to 40 colors with latest designs. Its growth is somehow affecting 0.8mm sales but with its increasing volume we are having same overall volume sales. The local small furniture manufactures who were using pent earlier are now diverting towards this cost effective solutions. Although its consumption volume is just 10 to 20% of total liner grade sales. With increasing choices of colors and designs 0.7 will grow but in fluctuating market, it is risky to predict.
Rakesh Mehta, Mahaveer Laminates, Coimbatore: 0.8mm market is converting into 0.72mm with a number of shades/ design offerings in lower thickness of laminates. In rural market in this region as of now nearly 50% markets of 0.8mm have been affected. The reason is unethical practices of manufacturers as well as retailers, as they are conveying wrong statement in terms of thickness to their customers. It is happening just because of non-realization of high input cost of manufacturing into sales. This is not good for laminate industry sustainability with decreasing margin. Hopefully in next six months when the raw materials/chemicals prices will decrease the companies will do something to improve the market for 0.8 mm. At present the situation is worse than in the segment of 1mm with 0.92mm.
Suresh Kumar M Lakhara, Parmeshwari Laminates, Hubli” As such 0.72 sales at our counter are very less and we willingly convert its demand into 0.8mm due to loss/damages and its complaint of bubble and cracking after applications. Better demand and satisfactory feeling comes when good quality higher thickness material is being sold. In Rural market retailers are a bit promoting .7mm range as there are numerous folders in 0.72mm with nearly 30 -35 designs. Small companies’ offerings are more in this segment with colors/designs. In rural market 0.72 demands may sustain but in cities it is not worthy.
Manoj Mohta, Ultra Veneer, Chennai: The need and concept of using 0.7mm is for application related to inside of the furniture, not for outside use. 0.72mm new offerings in shades and colors with different designs can move in rural and suburb markets but not in cities. It can also go well in that furniture segment which is having pressing machines and all. They will also require limited verities, because it is very price conscious segment. Secondly, machine pressing of laminates at local level is increasing with no extra cost so its demand may go up with shades/colors/designs. Still the applications remain for interiors. We have not seen folder of 0.72mm with more than 15 shades in Chennai.
Experts warn that growing offering of 0.72 mm laminates range will damage HPL industry and jeopardize the sustainability of many mid segment brands in future. Immediately, it will harm 0.8 mm laminates range but in the long term, it will affect the sustainability of producers and the product as well.
Saurabh Jain, Prem & Sons, Hisar: This is a need of the hour as the consumption of laminate has increased sharply and the market is witnessing demand from all spheres. The increasing demand of 0.72mm in different designs and colors available in the market is ultimately affecting the sales of 0.8mm. The furniture makers and low income group customers are asking for this range. The retailers are also taking good margin with it by miss-communicating about actual thickness so they are pushing it further with interest.
Krishna Chokhani, Patna Marketing, Patna: The change in liner segment with more options in designs and colors is fulfilling the demand of a certain segment of customers. In rural market people are looking it as a laminate option which is cost effective. There are nearly 10 brands have launched .72mm folder in Patna region. It is good and the market is growing in liner segment but for front use it is not good as in this offering there is definitely a compromise with quality.