Paint and Varnish Wholesalers

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 9700 paint, varnish, and supply wholesalers in the US act as middlemen between manufacturers and a variety of end users, including retailers, other wholesalers, collision repair centers, OEMs, and building contractors. Special purpose coatings, which include automotive paints, account for over 40% of industry sales. Architectural coatings account for one third of industry sales. Other products include architectural coatings, enamels, primers, stains, solvents, and lacquers; paint supplies (brushes and rollers); OEM coatings; and wallpaper and wallpaper supplies.

Dependence on Automotive Collision Repair Business

Because automotive paint and coating sales account for a significant percentage of the market, the industry is influenced by demand from the vehicle collision repair market, which consists primarily of small independent businesses.

Dependence on Construction Industry and Economy

Demand for architectural paint and coatings is dependent on the health of the construction industry, which is cyclical and influenced by economic conditions.

Industry size & Structure

The average paint, varnish, and supply wholesaler employs 16 workers and generates $7-8 million annually.

    • The paint, varnish, and supply wholesale industry consists of about 970 firms that employ 16,000 workers and generate $7 billion annually.
    • The industry is concentrated; the top 50 companies account for about 84% of industry revenue.
    • Large automotive paint, body, and equipment (PBE) wholesalers include LKQ Corporation and FinishMaster (Uni-Select). Large manufacturers of paints and coatings include PPG, Sherwin-Williams, and RPM. Sherwin-Williams is one of the largest wallpaper distributors in the US.
                                  Industry Forecast
                                  Paint and Varnish Wholesalers Industry Growth
                                  Source: Vertical IQ and Inforum

                                  Coronavirus Update

                                  Apr 1, 2022 - Remodeling Activity Expected To Remain Strong
                                  • Even as pandemic conditions wane, homeowners are expected to continue to invest in home improvements. Home remodeling spending is expected to remain strong for most of 2022 before tapering off in the fourth quarter, according to the Leading Indicator of Remodeling Activity (LIRA) report released in January by the Joint Center for Housing Studies at Harvard. Homeowner improvements and repairs are expected to increase 11.3% to $390 billion in the first quarter of 2022 compared to Q2 2021. On a year-over-year basis, quarterly remodeling spending levels are forecast to rise 15% in Q2, 19.7% in Q3, then moderate slightly to 17.3% in Q4 when spending will reach $430 billion.
                                  • Residential construction will decrease in 2022, but private non-residential construction is set to rebound as economic reopening drives the need for remodeling and rebuilding, according to multinational banking and financial services corporation ING. Government infrastructure investment will add an extra layer of spending that can mitigate the headwinds from housing and leave overall spending down 0.5% in 2022 after 2021's 7% increase.
                                  • Paint and varnish wholesalers may struggle to maintain adequate inventory due to an ongoing shipping container shortage. Top shipping and ports industry executives and analysts are warning that the crisis may persist for another year despite plans to produce more containers. Increasing the stock of containers and improving their availability to exporters alone will not ease the crisis because the entire supply chain is suffering from shortages of workers, missing truck drivers, contraction of the fleet of container ships, and related reduction in the availability of slots on container ships and the imbalance in trade flows. Many empty containers are stranded in inland depots, ports, and adjoining empty patches of land in the US and Europe, as there aren’t enough vessels sailing back to Asia where these boxes are needed. Moving loaded containers from east to west is more lucrative than hauling empties in the reverse direction, so empty containers may stay where they are for some time. Some others are parked at transshipment hubs across Asia, waiting for ships willing to make the short-haul trips within the region. However, improved retailer inventories and the potential for a pullback in consumer spending due to rising interest rates may also help reduce supply chain snarls, according to The Loadstar.
                                  • Paint and varnish prices were being affected by supply chain issues before Russia invaded Ukraine, and resulting sanctions by the US and its allies drove oil prices to their highest level since 2013. Prices for oil-derived inputs for paints and varnishes are likely to go even higher. In February 2022, US producer prices for paint and coatings manufacturers rose 20.5% compared to a year earlier and were up 24% from the pre-pandemic month of February 2020.
                                  • Demand for antimicrobial coatings may decline now that the Centers for Disease Control and Prevention (CDC) has acknowledged that the risk of catching the coronavirus from surfaces is low. Researchers reported early in the pandemic that the virus could survive on plastic or stainless steel for days. The CDC advised that if someone touched one of these contaminated surfaces and then touched their eyes, nose, or mouth, they could become infected. Health experts say that revised CDC guidance reflects evolving data on transmission throughout the pandemic.
                                  • Vehicle miles traveled (VMT), an indicator of demand for paint and varnish needed for vehicle repair, increased 4.1% in January 2022 compared to January 2021, according to the Federal Highway Administration. Vehicle miles traveled in January 2022 were down 10.3% month over month. VMT was down 11% year over year for all of 2020. VMT for all of 2021 was up 11% over 2020 but was slightly below pre-pandemic levels for all of 2019.
                                  • Total construction spending increased 0.5% in value month over month on an adjusted basis and 11% in value year over year on an unadjusted basis in February 2022, according to the US Census Bureau. Residential construction spending increased 1.1% month over month and 16% year over year in February. Nonresidential construction spending decreased 0.1% month over month but rose 6.6% year over year in December.
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