Category Update: The write direction

In an increasingly digital world, the pen and pencil are still in big demand - but identifying and riding the trends is key to tapping into the potential sales opportunities, as David Holes finds out.

The writing instruments market is huge, representing $2.1 billion of sales in the US alone. And it’s on the increase, with data from The NPD Group showing over 7% growth in the past year. Within this category pencils are outperforming all other products, with coloured pencils and pencil sets showing a particularly meteoric rise – up 22% and 56% respectively.

“This growth is centred on the themes of art, colouring and personalisation,” says Leen Nsouli, Director of NPD’s Office Supplies division. “Gel pens are in high demand both for office use and artistic purposes, and the adult colouring phenomenon continues to drive coloured pencil sales in the US.”

A similar tale is emerging in continental Europe. German manufacturer Faber-Castell, for example, has reported the best year in the company’s history, with total sales of €631 million ($670 million) propelled by 10% year-on-year growth. Among its best-performing markets are Latin America and Asia, but it sees big potential in Eastern Europe, India and Africa too.

Brand and education focus

Karl-Heinz Raue, Head of Business Development at Faber-Castell, reports: “Consumers worldwide are increasingly asking for high-quality, branded products. We are seeing the benefits of a growing world population requiring more of our products for use in education. In industrialised nations there’s also an increasing amount of creative activity. In addition, offices and workspaces are becoming more colourful, causing a surge in demand for coloured pens.”

Things don’t look quite as good across the channel with the UK’s referendum decision to leave the European Union having created uncertainties in this sector. It’s mentioned as a concern by both British-based and continental European companies. GfK figures show that up to the end of September 2016, the UK writing instruments market was down by 8% – although in recent months the commercial market has bounced back somewhat.

As Pentel’s Marketing Manager Wendy Vickery points out, most players have adopted the ‘keep calm and carry on’ approach: “The biggest challenge facing UK subsidiaries of international companies – exchange rate fluctuations – is out of their control. We are experiencing price inflation and this means it’s never been more important for manufacturers to demonstrate the superiority of their products over own brand items, in terms of quality, innovation and genuine value for money.”

At UK wholesaler VOW, Traditional Category Product Manager Jill Strutt also reflects on figures that confirm this threat: “2016 saw a 7% increase in the sales of own brand writing instruments, with many named brands either flat or in decline. We further believe that the adult colouring craze which previously boosted sales has run its course in the UK, with this market showing a decline of 17%.” 

Other global macroeconomic events are having an effect too. Thorsten Streppelhoff, COO at German manufacturer edding reports that its core Latin America markets – particularly Argentina, Colombia and Ecuador – are going through very difficult and turbulent times. However, he adds that its European markets are performing well, with the Netherlands the stand-out performer, mainly fuelled by B2C channels. “We’re also seeing double-digit growth in both southern and eastern Europe,” he says, “despite difficult economic and political circumstances, and sales in Russia and Turkey have grown significantly.”

Increasing colour spectrum

One emerging writing trend that’s currently seeing a rise in popularity is the art of ‘hand lettering’. The desire to produce something personal and artistic has now embraced calligraphy, with everything from greeting card messages to restaurant menu boards reflecting this new creative movement. Bland, printed fonts are on the wane and are being replaced by handcrafted lettering that showcases the individuality of the writer. 

Germany’s Stabilo is one manufacturer that has been quick to identify this opportunity, updating its traditional line of pens and highlighters with new shades and introducing products designed specifically for writing in a whole spectrum of colours. 

“The borders between writing and painting are disappearing,” says the company’s International Sales Manager Sabrina Hamann-Gleißner. “Colour is the key driver everywhere, with a strong wish among consumers to produce something unique. Creativity is the new watchword in many hobby and craft-making areas – people are going online for tips on how to use writing instruments, with blogs and video tutorials acting as drivers during their digital journey which can be used to grow sales.

“Social media is increasingly important too,” she adds. “People are interested in seeing what others are doing with pens – they upload their own creations and share other content they like. There’s a desire for inspiration and personal expression, but consumers now expect an individual approach – classic target group marketing no longer suffices.”

In terms of specific types of writing instruments European wholesaler ADVEO believes that for the first time the market for roller pens has become larger than that for ball pens. “This means we’re actually seeing the own brands in decline as they have more ball pens in their assortment,” says Purchasing & Category Director Pieter Wolters. 

“This switch has in part been caused by the colouring trend which started with felt-tips before moving onto roller pens. We’ve seen incredible growth here, with brands like Staedtler and Stabilo driving this forward and introducing an increasing range of colours into roller and gel pens. However, we believe that 2017 will be the peak for this colouring surge. Although, despite a fall off thereafter, it won’t disappear completely.”

Ken Newman, Director of Marketing at Zebra Pen in the US, remarks on the drift away from ball pens too, with consumers now preferring the smoother writing experience that gel pens offer. He adds: “Consumers are also gobbling up coloured pencils and markers, and this is being driven by pack configuration, with retailers pushing the envelope and offering ever-larger packs where cost savings per pen is the benefit. Manufacturers are additionally providing consumers with a free pen on packs as a way of enticing purchase and trial. This seems to be gaining some traction.”

In a nod to the increasing amalgamation of the digital and analogue in this segment, ADVEO has seen an increase in demand for stylus pen products. “The volume is still small,” says Wolters, “but we believe it’s a developing category, especially now that brands such as BIC are getting on board which should mean we all have access to a stylus at an affordable price. 

“Furthermore, we see the development of sophisticated digital pens such as the Apple pencil, the Adonit pixel and Wacom products. These are aimed at professional users, but are being picked up quickly by regular consumers too. I’m curious to see whether a product that combines a paper notebook with a digital product is the next step.”

Newman remains cautious about this particular sub-category. “We innovated the stylus pen category several years ago and had some initial success launching a line of products. But in the past couple of years we’ve seen sales slowing. We’ll continue to evaluate this sector as technology develops, but for now there’s been no real wholesale shift.”

Ethical matters

Germany’s Schneider Pen meanwhile, has observed an upswing in consumer desire for ecological and sustainable products. Its range of writing instruments made from bio-based or recycled plastics, for example, has been in strong demand.  

Head of Public Relations Martina Schneider says: “Environmentally-compatible production coupled with humane working conditions now play an important part in the buying decision. In addition, legal requirements for materials and components, combined with customer requests for resource conservation, have increased exponentially. Simple statements are no longer sufficient to prove this and certificates from independent auditors are now obligatory. Having already met all of these expectations due to ‘demanding’ German environmental and social standards has put Schneider in a really good position.”

This knack for spotting an emerging need, fashion or craze, together with the ability to identify a gap in the market, is seen as key to success in the writing instruments sector. Pentel believes it has achieved both and is preparing for a spring launch of what it’s calling the most exciting product the industry has seen for many years.

Its Hybrid Dual Metallic pens write in two different shades depending on the colour of paper they’re used on. The ink gives an iridescent effect, displaying different colours as the paper is held at different angles. As Pentel’s Vickery explains: “Glitter and metallic gel pens have been on the market for years, but there’s been nothing like this before. Pentel is gearing up for this major launch, targeting teenagers, students, artists and designers in particular.”

Another growth area is the industrial sector and marker pen specialist edding is targeting this space. Although there has been a shift away from traditional marking products in the logistics business in favour of electronic scanners, there is still robust demand for core products in addition to new opportunities in more niche arenas such as medical or science laboratory applications. Much R&D effort is currently aimed at producing sophisticated ink technologies with a view to moving into other industrial sectors.

The company is also tapping into the personalisation trend. “The increasing consumer demand for customisation of their fashion items – shoes, furniture and other accessories –  is one of our strongest growth drivers,” says Streppelhoff. “Our recently launched permanent sprays and porcelain brush pens have delivered double-digit growth already and we believe there’s huge potential here, fuelled by our ability to introduce additional new colours and decorative effects.”

ADVEO still identifies great scope in the development of the erasable pen, first introduced about a decade ago. “The Pilot FriXion pen was a true innovation in this category,” says Wolters. “Other brands were quick to get on board – Newell with Papermate Replay and Uniball with Phantom – and it’s rumoured that BIC will be entering this segment soon. I forecast that we’d see this business becoming linked with the colouring trend and, sure enough, Pilot has just launched an erasable felt tip marker that will no doubt drive further sales.”

School of thought

The back-to-school (BTS) season remains a critical period for all players in this sector, but this too is undergoing some changes as explained by Vickery: “In terms of consumer buying, most retail purchases are made during the weekend prior to the start of the new school term – it appears that parents and students are still leaving their shopping until the last minute. That said, BTS has become even bigger because it also incorporates exam time, the traditional school holiday period and the return to university and college in the autumn.” 

Schneider also notes that BTS now covers a broader period of time: “It’s still by far the most important seasonal peak. However, special offers should not be confined to the period between July and September – different starting dates for schools and universities and how the requirements for these student segments differ should also be taken into account.”

While the BTS season is still seen as one of the major seasonal sales periods, it’s not the only buying peak. “The Christmas season is even more important to us,” says edding’s Streppelhoff. “That’s when our creative products are heavily in demand.” 

VOW’s Strutt concurs: “Sales of products such as gold/silver metallic pens go through the roof in the run-up to Christmas – we typically see an increase in revenues of around 650% in the October to December period compared to the three previous quarters.”

The huge and diverse writing instruments sector is evidently in very good health and still offers excellent opportunities for those able to track and exploit its many fashions and trends. As Schneider sums up: “The need for writing utensils is everywhere, so there’s really no such thing as a bad market.”