Category analysis: Writing instruments

Despite a turbulent back-to-school season, the writing instruments sector is back on its feet and even charting new territory.

The news from North America during 2011’s back-to-school season was not good. Manufacturers and retailers were hit by soft sales, which inevitably affected the writing instruments category. Meanwhile, in the UK the market witnessed a 9% sales value decline according to research firm GfK.

Nonetheless, the sector is once again back on its feet. GfK states that towards the end of last year the situation in the UK started to improve, with 3% sales value growth in November and a 6% growth in average price per SKU. Overall, the worldwide market for the category is set to reach $19.43 billion by 2015, according to market research firm Global Industry Analysts (GIA).

Alongside the economy, another growing concern for the OP industry has been the revolutionary change brought about by the use of technology in the office. That said, even in the electronic age, writing instruments remain irreplaceable. Pens and pencils are still vital products for everyone from school-going children to employees in high-tech offices. 

“Writing and marking instruments continue to be relevant despite today’s influx of technology,” says Krista DiBerardino, GVP Marketing Services at Newell Rubbermaid’s Writing and Creative Expression Global Business Unit. “I’ve seen a growing number of reports recently indicating people are feeling overwhelmed by technology and crave a more personal communication experience.”

Emerging markets

The resilience of the writing instruments category in North America and Western and Central Europe will certainly boost optimism going forward. According to GIA, however, there are plenty of opportunities to be found elsewhere too. In a recent report on the category, the research firm highlighted the Asia-Pacific, Latin American, and Middle Eastern territories as spearheading market growth.

And there’s more as several acquisitions have recently taken place outside these territories. In August 2011, writing instruments powerhouse Faber-Castell teamed up with its Turkish partner Adel to launch a joint venture in the Russian market. The two firms created a 50:50 joint venture company called Faber-Castell Andalou. The Moscow-based operation was established with initial paid-up capital of around $2.75 million.

Last year also marked Faber-Castell’s 250th anniversary. As part of its celebrations, Chairman and CEO Anton Wolfgang Graf von Faber-Castell visited India, an important base for the company. As one of the first foreign stationery manufacturers to enter the Indian market 13 years ago, Faber-Castell has witnessed significant growth in the region. Year-on-year growth of 20% has led to the company gaining a 30% market share in the playing and learning category. India now contributes 15% of its overall revenues.

Another industry giant in India is Camlin. In October 2011, Japanese stationery manufacturer Kokuyo acquired a majority stake in the company. Subsequently, a new joint venture named Kokuyo Camlin was launched in the region with a strategic five-year plan to triple Camlin’s current $80 million annual sales figure.

It’s no coincidence that external businesses are increasingly targeting the Indian writing instruments sector. According to a report by Euromonitor, growth in retail sales in the country is set to continue at a CAGR of 8.8% until 2014. As is the case with most emerging markets, this can be attributed to an increase in literacy levels, a burgeoning middle class and a subsequent increase in demand for quality writing products. 

Green lining

Pens and pencils are probably the office products we lose or misplace most often. But do you ever stop to think where all those products that were lost or simply thrown away ended up? Until recently very few people actually considered the environmental factors surrounding the disposal of writing instruments.

However, 2011 saw a change in attitudes with several manufacturers implementing recycling programmes both privately and in conjunction with recycling firms.

In March last year, for example, BIC launched what was hailed as the first programme for collecting and recycling writing instruments in France. In partnership with recycling company Terracycle, the initiative was aimed at schools and businesses nationwide. For each writing instrument collected, F0.02 ($0.03) was donated to a non-profit organisation chosen by whoever was responsible for the collection. Terracycle then used the waste items to make new products such as pen holders, wastepaper baskets and watering cans. 

Fellow writing instruments manufacturer Pilot has also been conducting an extensive recycling programme in the UK. As a result, the company received an award certificate from recycling firm Greener World regarding its waste disposal facility in Buckinghamshire. In the 12 months leading to August 2011, Pilot successfully recycled almost 28 tonnes of mixed materials at the site. 

UK-based manufacturer Remarkable, meanwhile, has taken the concept one step further by integrating it into everything it produces. The company, which was established in 1996, recycles over 10 tonnes of waste products each week and turns it into stationery, including writing instruments. Remarkable now employs 30 staff and has revenues of £2 million ($3.1 million). 

View from the top

OPI spoke to Benoît Marotte, Deputy General Manager Stationery at BIC, to find out his thoughts on the major trends that have affected the writing instruments category.

OPI: How has the writing instruments market changed in the last 12 months? 

Benoît Marotte: The major change has been in consumer behaviour. What I mean by that is consumers are now more price-conscious. People are spending more time finding the right product and are much more cautious about spending their money.

Consumers are attracted by promotions and are actively seeking good deals. The general consensus, or perhaps the way of thinking, for customers is “I don’t want to get it wrong”. Therefore they are seeking reliable products that are built to last. I believe that this will be a long-term trend; it won’t go away any time soon.

OPI: How important are green/eco-friendly products to the sector?

BM: There have been political decisions to push for green products, in Europe and also specifically in France. Our role as a category leader is to supply as many products as we can that have environmental benefits. As a result, we are creating an increasing amount of eco-friendly versions of our products. Consumers rely on us to offer them choice and this also applies to green products. However, due to the current economic situation, buying these items is not a priority for customers.

OPI: How are your products performing globally, including emerging markets?

BM: Latin America is doing well for BIC and performing well overall. It has always been a strong region for BIC and we have always been in Latin America, even when it was not performing so well. 

Last year was a difficult year in the Middle East and North Africa. There has been an obvious impact due to the political instability in the region. However, it is hard to determine exactly how heavily we were hit in terms of numbers. 

India is also an interesting region and we have strong ambitions there, which we’re hoping to achieve alongside our partner Cello. We believe that it’s a growth area for the future, but today the market is still relatively small compared to China.