- Premium paints are set to surge by up to 7.5% and economy paints up 5% effective this September
- This is due to the recent 15% imposition in exercise duty on imported paints
Consumers and builders in Kenya are bracing themselves for a significant increase in paint prices, with manufacturers citing a perfect storm of factors driving up costs.
Effective September 1, 2023, prices for premium paints are set to surge by up to 7.5 percent, while economy paint products will see a 5 percent increase.
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Factors Behind the Paint Price Hike
The primary reason behind this price hike is the recent imposition of a 15 percent rise in excise duty on imported paints, varnishes, and lacquers, all of which are essential raw materials for the paint industry.
This increase in taxes, combined with high fuel prices, a weakening Kenyan Shilling against the US dollar, and a generally sluggish economy, has left paint manufacturers with no choice but to pass on the added costs to consumers.
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Manufacturer’s Perspective and Consumer Impact
One prominent paint manufacturer, Crown Paints Kenya, confirmed these price adjustments, marking the second time in less than a month that they’ve announced intentions to raise prices due to economic pressures.
The company’s head of sales, Mohammed Mateen, explained, “Despite our best efforts to absorb these additional costs, the sustained increase in raw material prices has made it necessary for us to adjust our product pricing.”
Crown Paints is not alone in feeling the strain. Neuce Kenya, although a smaller player in the local market, was one of the first companies to increase prices in response to the economic challenges. The managing director of Neuce Kenya, Nelson Fiuza, noted that factors such as foreign exchange rates, price variances in raw materials, fuel costs, clearing goods, and National Social Security Fund (NSSF) contributions have all contributed to their upward price adjustments.
One of the critical factors influencing paint prices is the cost of raw materials, which can fluctuate based on global market conditions. Paint production requires various chemicals, pigments, solvents, and additives, and any shortage or price increase in these materials can raise production costs for manufacturers, who then pass these costs on to consumers.
Despite these price hikes, Crown Paints Group CEO Rakesh Rao does not anticipate a significant dent in consumer demand. He explained that while inflation has reduced people’s purchasing power, he is hopeful that demand will rebound in the second half of the year.
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It’s worth noting that paint prices in Kenya have been on the rise since mid-2017. In 2018, they experienced a significant surge following the introduction of an 8 percent value-added tax and a Sh18 adulteration fee per litre of kerosene, a vital raw material for paint and resin production. These additional levies added pressure to paint manufacturers already grappling with high input costs.
Builders Brace for Budget Pressures
Globally, the paint industry has faced challenges related to the rising costs of raw materials like monomers and titanium dioxide, which constitute nearly 20 percent of a paint company’s total purchase basket. These costs have increased since 2017 due to the closure of large plants in Europe and China over ecological concerns.
The impending increase in paint prices in Kenya is expected to place additional pressure on builders, who are already struggling with rising project costs. Paint typically accounts for a significant portion of a project’s total budget.
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In the face of these challenges, consumers and builders alike will need to adapt to the new pricing landscape, as manufacturers grapple with the economic realities of the paint industry.
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