THE NEW INDUSTRY DYNAMICS

So let us first elaborate on the new industry competitive dynamics which are currently undergoing unprecedented volatility and have created great uncertainty.

The huge increase in production of the ‘new’ alternative materials because of technological innovation, and the desperate need for selling all that stock, has created a big mismatch between supply and demand. Many new factories making big format porcelain and also not so big formats, with big marketing budgets aimed at reaching the mass audience, have been making great efforts in educating specifiers like architects and interior designers, and are even aiming to create their own brand in the world. They are direct competitors to natural stone. Quartz and porcelain, during 2018, took away major market share in many applications at the expense of natural stone. While US is where quartz and new alternative materials have met with the biggest success, in many other high income countries they have also replaced natural stone in applications such as kitchen countertops, floorings, facades, etc.

The relatively higher prices of the alternative materials actually made them more attractive to work with, this way there was more margins for everyone, be they wholesalers or fabricators. In natural stone industry, even those companies with access to very attractive exclusive stones available in limited quantities, often foolishly took the opposite approach, lowering prices, leaving little gross margins for the intermediate chains, thus making natural stone less attractive to do business with.