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Akzo, Philips Win World Cup Haul as Dutch Team Outsiders

Brazil Spent $3.6 Billion on 12 Stadiums
Fans watch a match at Maracana Stadium in Rio de Janeiro. The World Cup starts today with Brazil taking on Croatia in Sao Paulo and the host has spent $3.6 billion to build or expand 12 stadiums around the country. Photographer: Dado Galdieri/Bloomberg

June 12 (Bloomberg) -- While the Dutch soccer team is not among the favorites to win this year’s soccer World Cup, two of the country’s biggest companies have beaten rivals for orders to equip the tournament’s stadia.

Royal Philips NV provided lighting for nine of the 12 stadia hosting World Cup games in Brazil, Latin America chief Henk de Jong said in an interview. Akzo Nobel NV supplied coatings and paint to eight stadia, with each contract worth 500,000 reals ($220,000) to 1 million reals, the company’s country manager Jaap de Jong said.

The benefits of high-profile contracts extend beyond the monetary value, boosting brand awareness in a nation that’s a battleground for western companies seeking emerging market growth. Akzo Nobel’s main competitors in Brazil are U.S.-based PPG Industries Inc. and Sherwin-Williams Co., whose materials will decorate four and three stadia, respectively. Germany’s Osram AG secured lighting deals at seven stadia.

“The contracts are a small part of our sales, what’s more important to us is the effect to our exposure,” Philips’ Henk de Jong said.

The World Cup starts today with Brazil taking on Croatia in Sao Paulo and the host has spent $3.6 billion to build or expand 12 stadiums around the country. The Dutch team will play their first game against defending champion Spain on June 13, yet 12 teams are seen more likely winners, with Brazil and Argentina being the favourites, according to bookmaker William Hill Plc.

Social Housing

Akzo Nobel’s haul of stadia contracts follows a prolonged marketing campaign in Brazil for its Coral brand that’s helped drive revenue in the nation to 925 million euros in 2013. Its push for brand awareness included training street kids to become World Cup stewards and later painters, and the Amsterdam-based company will service a further two contracts through a local distributor. Brazil is now its fourth biggest market worldwide.

BASF SE’s Suvinil brand is also a competitor in Brazil, though it is not being used for any stadia.

“Given its size and potential, there’s no doubt Brazil will become a lot more important going forward,” Akzo Nobel’s De Jong said. “You don’t always see it in the sales figures due to currency effects, but you can be sure the growth is most definitely there.”

Prestige

Last year, Philips’ lighting sales volumes in Brazil increased by 20 percent, highlighting the country’s growth potential.

“By doing these projects, we show that we can manage complex projects,” Philips’ De Jong said. “It’s not only the exposure to stadium lighting, it’s also the exposure to street lighting.”

Brazil’s lighting market is poised to grow to 3.1 billion euros ($4.3 billion) by 2020 from 1.8 billion euros in 2011, according to McKinsey & Co. Paint sales should show a compound average growth rate of 3.1 percent to reach a market size of $2.2 billion in 2016, a Timetric report showed.

Construction and infrastructure spending is also getting a boost from the Brazilian government’s social-housing program “Minha Casa, Minha Vida,” which will add millions of affordable homes in the coming years, according to Global Business Reports.

To contact the reporter on this story: Elco van Groningen in Amsterdam at vangroningen@bloomberg.net

To contact the editors responsible for this story: Simon Thiel at sthiel1@bloomberg.net Andrew Noel

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