Trip ReportDelhiwood 2019

Delhi, IndiaMarch 13 to 16 2019

Funding codes: F19GXIN2EX and F19GXGB4TS.

A. Travellers

American Softwoods travellers

Arijit Sinha Oregon State UniversityCarl Dobler InterforDavid Loo InterforRavi Sarojanam CLC HardwoodsTheo Middleton CanforTruss Beasley Beasley Forest ProductsGary Fallin CanforDave Sundher Coast ClearwoodDeshal Merchant West FraserTom Sundher Coast ClearwoodCharles Trevor Consultant, American Softwoods

B. Purpose of Travel and Constraint/Opportunity Addressed

The goal of this trip was to attend Delhiwood in Greater Noida, to the south east of Delhi in Uttar Pradesh with the goal of promoting American softwood products. The specific goal was to acquire more knowledge of the Indian market for softwood lumber and to establish relationships with leading Indian lumber importers.

Constraint/Opportunity Addressed: #1 - : Lack of awareness/education. Exhibitors took the opportunity to improve the level of knowledge about American softwood species, grades and sizes among Indian visitors to the stand. Samples which had been hand-carried by an exhibitor to Delhi were a useful aid in this process.

C. Itinerary

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March 11/12 - Participants leave US, Canada and UK March 12 – Set up standMarch 13-16 – Participants attend DelhiwoodMarch 14-15 – Participants arrive from DubaiMarch 16-17 – Participants leave for US, UK and Canada

D. Summary and Observations

This was the seventh time American Softwoods has exhibited at Delhiwood. Five companies and a member of Oregon State University attended the show.

India is potentially an excellent market for American softwoods. The Asian Development Bank estimates that GDP growth for 2019/20 will be 7.2%, down from its last forecast of 7.6%. A growing and highly aspirational middle class estimated to number 300 million is keen to consume foreign goods of all kinds, especially goods associated with the home.

Sales of American sawn softwoods to India were $18.67 million in 2018, down from $23.85 million in 2017. The reduction in 2018 can be attributed to the increase in log sales from $10.4 million in 2017 to $17.4 million in 2018. This increase is disappointing and comes in the face of efforts at trade shows at least, to deter log sales. Exhibitors were specifically reminded that they are not allowed to promote log sales on the booth. Visitors were reminded of the potential pitfalls in buying and importing logs but such is the appetite of Indian saw mills for logs that this trade is likely to continue and increase for some years to come.

In this regard it is interesting to compare and contrast lumber and log sales to Pakistan, where sales of lumber in 2018 were $35 million (2017 = $37.49 million) and log sales were worth $5.68 million in 2018 (2017= $8.25 million). However, the signs are that sales to Pakistan in 2019 will decline, owing to the devaluation of the Pakistani rupee and a slowing economy. This may mean that American softwood previously exported to Pakistan may be looking for a new home in India, with a detrimental effect on prices. This remains to be seen but the mood among Pakistani traders at the Dubai Wood Show was decidedly downbeat.

However, all the signs at the show were that sales of Southern Yellow Pine (SYP) lumber (as opposed to logs) in 2019 were rebounding strongly. The mood of visitors to the stand could best be characterised as frenzied. It seemed that everyone wanted SYP. It is to be hoped that this strong demand will help to drive up prices in the market. However, the reality is that two or three companies hold a dominant share of the market, making entry by new players difficult. In the opinion of one importer, growth in the SYP market in future will come from taking market share from European producers, not by expanding the existing market for SYP, which is thought to be close to saturation.

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India is predominantly a Southern Yellow Pine market (2018 = $14.39 million), with small imports of lodgepole pine ($1 million) and Doulas fir dwindling (2018 = $0.28 million) plus some sales of the ubiquitous ‘Other Pine’ (2018 = $2.53 million). Having peaked at $2.14 million in 2014, sales of treated lumber in 2018 were a mere $0.11 million.

Grades purchased by Indian buyers are predominantly No. 2 (38 X 235 mm i.e. 2 X10) and No. 3. Some SYP is used for door cores which are then faced with veneer.

The American Softwoods booth was relatively modest and functional, with a Nomadic display which was sent out from the UK. The space, which measured 6 X 6 metres, was adequate for the number of exhibitors and was situated near the food court and next to an exit which appeared to encourage visitors to approach the booth and engage exhibitors in conversation. All exhibitors were diligent in servicing the enquiries of the many visitors to the stand.

Most exhibitors were lodged in a hotel in Greater Noida (Jaypee Greens Golf and Spa Resort), which offered excellent value for money and avoided the painful journey to and from central Delhi, when the journey could take anything from an hour to two hours owing to the vagaries of the Delhi traffic.

Two brochures in Hindi (the American Softwoods Species Guide and Southern Yellow Pine Export Grades) were available at the show, as well as the full range of English language AMSO publications. These were well received by visitors to the stand and will be an asset in our continuing promotional work in India. It is disappointing to note that there is still no modern, up to date literature for western species. However, two brochures are in preparation and it is to be hoped that these will be available in the near future. Our ability to provide information on western species is now much improved, owing to the publication of a new version of the ‘Western Softwood Species’ brochure.

The number of recorded enquiries at 169 was lower than Delhiwood 2017 (196). However, exhibitors felt that leads at Delhiwood were of a higher quality than in previous years.

It was interesting to note the Canadian presence at the show, which featured a lavishly appointed house with seven or eight booths for Canadian companies. Canada has invested considerable funds in promoting Spruce Pine Fir (SPF) in India. However, anecdotal accounts speak of very limited Canadian SPF sales. It is gratifying to note the contrast with American softwood sales in India, despite a very modest promotional spend.

It is also noteworthy that Swedish Wood (the Swedish industry’s promotional program) had a considerable presence at the show. It is a stated aim of Swedish Wood to increase lumber sales in India. Judging from the promotional success

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Swedish Wood has enjoyed in China, this aim should be taken seriously and could represent competition to American sales of Southern Yellow Pine.

E. Names of Principal Contacts

Please see attached Excel file.

F. Conclusions and Recommendations

Delhiwood 2019 appears to have been a successful show from the point of view of the number and quality of enquiries taken and of the number of visitors to the stand. Time will tell whether the interest shown by potential Indian buyers translates into sales. It will be important as always to encourage exhibitors to report sales to the program assessor, which they are sometimes reluctant to do, fearing a lack of confidentiality.

Visitors to the show numbered 25,000 (preliminary estimate). The number of exhibitors was 527 from 27 countries (2017 = 474). There were eleven country pavilions.

One has the sense that at last, the level of real knowledge about American softwood species among importers and furniture manufacturers is improving somewhat. There is still of course a very long way to go and it remains questionable whether Indian importers represent the best route to market for American softwood exporters. Indeed, there is an argument for trying to by-pass the importers and selling direct to furniture manufacturers, the handicraft industry and upmarket window and door manufacturers. As long as the exclusive channels of distribution are through importers, exporters will be stuck with customers who are only interested in acquiring softwood of relatively low quality at the lowest possible price. The aim must be to sell higher quality, higher margin grades.

This strategy will require a sustained educational effort, particularly by way of seminars, preferably organised with an Indian partner/sponsor in key centres such as Delhi, Mumbai, Hyderabad, Chennai, Bangalore and Kochi. It will also need to involve exporters who will most likely to be tempted to go on selling through importers. Obviously it will not be possible to change the channels of distribution/route to market overnight but if the exporters can be involved from an early stage and can see such a strategy can lead to more profitable sales, it has a reasonable chance of success. As always with a seminar program, it is vital to have presenters who not only know their subject but have a gift for communicating information clearly and concisely to an audience whose first language is not English. In order to achieve this, it will be necessary to appoint a new representative in India. A process to achieve this was begun during the show and a possible company has been identified that could fulfill this role.

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A modest stand has been taken at Mumbaiwood in October 2019 which will help to sustain AMSO’s presence in the market and it is hoped that a stand can be built at Indiawood next year in Bangalore.

Charles TrevorLondon, April 4 2019

Part of the American Softwoods group at Delhiwood

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