Even though it had 80 years of experience in the Mexican paint market, in a way Pinturas Optimus is just getting started. Mexico is experiencing a boom in construction, and paint manufacturers like Optimus are riding a wave like no other. Peter Krupa reports.
There was a time when paint was just paint – a viscous liquid that you slathered or brushed or rolled onto a surface to change it’s color. In those days, there weren’t many options once you picked a color. Things like dry time, durability, and ease of clean-up got short shrift in what was considered a basic commodity.
But times, as they tend to do, are a-changing. In mature markets like Mexico, customers are beginning to demand more and more specificity in the way the paint they buy meets their needs. They want all kinds of new options, and into that breech has stepped Pinturas Optimus S.A. de C.V.
As one of the four major brands that hold a combined 80 percent of the market share, Optimus this year celebrated its 80th anniversary producing and selling paint in Mexico. During all those years in the business, Optimus learned a thing or two, and now is looking to further consolidate its position in the market, with more franchises, more new products, and more of the high quality its customers have come to expect.
It was in 1927 that a German immigrant named Boris Verbitzky opened up a small paint shop in Mexico City. The domestic paint industry was just getting to its feet at that time, and having played his cards right, within a few years Verbitzky found demand for his product to be quite good. So he constructed a paint production plant in Mexico City, a somewhat ambitious operation of around 150,000 square feet.
That plant is still in operation today, but it has been joined by a second one, this one much larger at close to 600,000 square feet. Combined, the two plants produce an annual output of about 14.2 million gallons. It’s a simple number, yet it contains the entire complexity of Optimus’ dozens and dozens of different products.
“Our product line is so extensive that no other company in the market has one (equal),” said Jorge Verbitzky, general director of Optimus and grandson of Boris Verbitzky. “We’re the company that has the widest range of products on the market.” A glance through Optimius’ inventory is convincing on that point. In just its
vinyl acrylic paints Optimus offers seven different options that
vary in duration, glossiness, and consistency. And that’s to say nothing of its equal number of glosses, stains, aerosols, varnishes, and primers.
Such an impressive variety of finishing products reflects the new challenge of paint manufacturing and marketing these days, Verbitzky said. Customers these days are more demanding and more exacting than ever. They want paint that has very specific qualities and does very specific things to meet their needs exactly.
Research and development
Optimus, therefore, has a team of researchers constantly on the case, inventing new products, examining the market, and keeping a close eye on the competition. Survival in the paint industry requires quick response to the customer’s ever-shifting needs, as well as good vision to anticipate those needs.
“They want to do the work faster, they want it to be more economical, they want the paint to last more years,” Verbitzky said. “We have a good group of technicians, which is fundamental in our industry.”
He added, “Whatever need we detect in the market, or whatever product that the competition comes out with, we develop it immediately, with the goal that our stores have all the products that are in demand.
Just this past March, in fact, Optimus came out with a new heavy primer specially designed for walls, ceilings and other rough surfaces. Optimus has also recently launched new lines of wood finishing products and latex paint, among other new products.
More than paint
Part of this diversification of products that Optimus has undertaken over the years has included offering more than just paint. Just about anything that one would finish a surface with – from paint, to varnishes, waterproofing – in just about any form imaginable – from liquid to aerosol to paste – are available through Optimus.
“What we had to do is change ourselves from being a paint manufacturer to being a manufacturer of paint and finishes, because a company can’t survive on just paint,” Verbitzky said. “You need wood products, need products for waterproofing against rain, you need texturing for walls, you need automotive paint.”
Implicit within this diversification were incursions into new markets. Although the majority of its finishing products are sold to home owners and contractors involved in home improvement and construction, Optimus does another important part of business through its line of automotive paints. Its line of industrial paints, meanwhile, serves various needs of the manufacturing industry.
Still, as mentioned before, the largest slice of Optimus’s business comes from home improvement- and construction-related products. “There are a lot of” paint manufacturers in Mexico, Verbitzky said. “But it’s a big market. Right now, the important thing for remaining in it is (figuring out) how to approach it, what strategies to take.”
Optimus itself has selected one that seems to be catching on rapidly: opening franchises. Franchising has been around in many countries for a long time, but, explained Verbitzky, it’s just catching on in Mexico, and becoming something of a “boom” in itself, no matter what the industry.
On Optimus’s part, it began its aggressive expansion efforts two and a half years ago, when the company had just 100 stores throughout the country. Today, the company has 250 franchises, and is opening new ones every day at the rate of eight to 10 new stores a month. The goal is to open 120 franchises a year for the next few years.
“The big opportunity for growth that this company has these days and the great growth we’re having is through franchises,” Verbitzky said.
Low cost, high pay-off
In 2006 alone, the franchise branch of the company grew by 25 percent. And looking at the deal Optimus offers to would-be franchise owners, it’s not hard to see why. For an investment of $3,000, franchise owners get the store, the furniture, the advertising, and the product, as well as copious amounts of sales and product training. Optimus helps franchise owners select a location, and it helps them land new customers by offering advice on technical topics like industrial paints.
What’s more, franchise owners are not required to pay royalties like typical franchise owners. Their little 500- to 1,000-square-foot stores can be run by the family, and turn out to be quite a lucrative investment. “It’s a very good business, it has quite a rapid return,” Verbitzky said.
Helping make that return even more rapid is the current state of Mexico’s economy, and the construction industry in particular. Construction in Mexico has been taking place at a furious pace, and paint manufacturers and distributors are riding the wave. In the last five years alone, the construction industry doubled in size, and Verbitzky said the government is projecting another 200 percent growth spurt for the industry in the next 10 years.
“The paint market in Mexico has a lot of growing to do,” Verbitzky said. “Construction growth in Mexico has barely started.” Optimus has been taking advantage of that growth. Over the last five years the company grew at a steady annual rate of 10 percent, while the franchise segment alone has swelled by 150 percent.
Rare for this globalized world, Optimus finds itself untroubled by foreign competition. Like the paint they make, foreign companies have been in Mexico for decades, and no new threats are likely to crop up from Asian competition due to the nature of the product. The three biggest paint manufacturers in the country are all Mexican, and none of the foreign companies hold a larger market share than Optimus.
Optimus, then, plans to stick to its guns on the home front, concentrating on consolidating its hold in the Mexican market and leaving out any plans for international expansion. “Before we go to other markets, we still have work to do here in Mexico,” Verbitzky said. It’s not hard to understand why. Mexico needs around two million new houses a year, Verbitzky said, and each one of them will need at least one coat of paint.
Mexicans know Optimus, too. Its products consistently win high marks in the government’s consumer report rankings, and it is now working toward other international standards certifications like the ISO 9000 – not to serve the foreign market, but to give its customers more confidence in good products made even better. Through it all, as Mexico undertakes a frenzy of building, Optimus wants to make sure it’s around to provide the paint for a good long while.
“This is growth that we’ve never seen before,” Verbitzky said. “The opportunity for all our products is extraordinary. Although we’ve got 80 years in the market, the best is yet to come.”