Ceramic tiles: the emerging competition of Luxury Vinyl Tiles (LVTs)
The greater ease of installation of plastic products is favoring its introduction on the US market
Published by Marcello Antonioni. .Home items Siulisse Industries Consumption pattern United States of America International marketing
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Until a few years ago, decorated vinyl laminates were considered substitutable products that were less competitive than ceramic tiles: limited graphic characterization, tendency to wear (in the face of the scuffing) and, last but not least, inflammability due to the PVC resins that compose them constituted relevant barriers to their wider use in flooring coverings.
In recent years, the adoption of digital printing technologies (which have expanded its graphic potential), increased wear resistance and above all a significant reduction in the risk of flammability have made the decorated vinyl laminated products appealing as floor coverings1, according to the following strengths compared to ceramic tiles, especially with reference to the product's installation phase:
- greater lightness of the product2, which significantly facilitates handling;
- greater ease of cutting, which makes it easier to manage.
The aforementioned qualities tend to constitute a significant critical success factor, especially in the context of markets with a limited culture of tile laying. This element is particularly relevant not only with regard to developing countries, where construction activity is still evolving from a technical point of view, but also in markets - such as the Anglo-Saxon ones (and, in particular, in the United States) - in which the culture of tile flooring has long been underutilized in favor of fitted carpeting and wood.
The ease of handling and laying is allowing a strong market penetration of decorated vinyl laminate floors.
World trade of tiles
As the figure above shows, the world trade in plastic tiles, a proxy for the international demand for Luxury Vinyl Tiles (LVTs), has shown particularly significant growth in recent years: after having remained under 4 billion euros for the entire past decade, 2018 the value of world trade in these products exceeded € 8.7 billion (more than doubling their values over a few years).
On the other hand, last year the world trade in ceramic tiles and ceramic slabs expressed in euros was less than 16 billion euros, down from the peak of 2015 (18 billion euros).
On the US market the biggest performances of LVTs (to the detriment of ceramic tiles above all).
US Imports of tiles
The US market is by far the main driver for the growth of LVTs: as illustrated in the graph above, in the last four years (2015-2018) the United States recorded a very strong growth in imports of plastic floors, from 947 million euros in 2014 to over 2.7 billion euros in 2018, which make the USA by far the largest import market in the world for this type of product (in front of Germany, France, Canada, the United Kingdom and Holland, which, however, not even together reach the value of US imports).
In the same period, US imports of ceramic tiles remained at levels of less than € 1.8 billion, even lower than the absolute peak reached in 2006 (€ 1.9 billion).
Within the coating and flooring materials industry, the competition of LVTs appears particularly direct to the ceramic segment: unlike wood and carpet, which tend to be perceived by consumers as intrinsically "different" products, tiles in ceramic and decorated plastic laminates are much more "similar" substitutes.
China, South Korea and Germany the relevant competitors in the LVT segment.
The Italian leadership in the ceramic segment therefore appears to have a threat coming not only from direct competitors of its business (China, first of all), but also - indirectly - from producers of plastic substitutes (China, South Korea and, in Europe, Germany), especially on those markets (as in the US case) where the culture and skills of setting the tile product are less widespread.
1) The new status of innovative product of decorated plastic laminates is well indicated by the name of Luxury Vinyl Tiles (LVTs) with which the manufacturing companies have begun to commercialize the new product lines.
2) The foreign trade data available in Datamart Ulisse, accessible in the Analytics tool of ExportPlanning.com, document how - compared to an average price per square meter of ceramic products decidedly higher than that of plastic products (6.30 euros per m2 in 2018 for ceramic tiles, against a level of just over 2 euros per m2 estimated for plastic floors) - LVTs have an average price compared to weight significantly higher than ceramic tiles (1.52 euros per kg for plastic floors, against 0.38 euro / kg for ceramic tiles), confirming that this kind of products are significantly lighter (and therefore easier to handle) than ceramic tiles.