What is the problem of down trading that Indian paint companies are facing?

If you thought that the problems for Indian paint companies was all about rising input costs and weak demand, just think again. There is a new problem that the Indian paint segment has to now contend with. That is the rising challenge from the unorganized sector, which is the non-branded paints business, which normally operates in the market fringes.

The price gap between the unorganised and organised players in paints had fallen sharply in 2021 with the result that people preferred going for known names. However, with price hikes of nearly 20% in 2022, this gap has once again widened. That is where down trading comes in which basically means that there is higher sales by the unorganised companies. Down trading is now all the more prominent with consumers preferring lower cost paints considering that the cost of labour has also gone up sharply.