Change is inevitable.
Chennai, June 26 Facing up to the reality of a digital age in which interest in greeting cards is diminishing, ITC has exited the category. Launched in the year 2000 under the brand Expressions when the category was estimated at Rs 300 crore and growing at 15-20 per cent, the move comes in the wake of the market size shrivelling to Rs 100 crore.
ITC has also re-branded this business as the Education & Stationery Products Business (earlier known as Greeting, Gifting & Stationery) to accurately reflect its current focus on the Rs 9,000-crore market that comprises notebooks, copier and printer paper, writing instruments and ‘scholastic products’ (erasers, geometry boxes, sharpeners and the like). In the previous fiscal, greeting cards contributed only 5 per cent of the business unit’s turnover. Cheaper telephony and cell phone SMS services have proved to be a double whammy for greeting cards, while e-greetings has also contributed to the decline.
Mr Chand Das, Chief Executive, ITC-Education & Stationery Products Business, told Business Line that the company decided sometime last year to withdraw from the category and has since stopped production. ITC’s paperboards and speciality papers facility at Bhadrachalam has invested in equipment worth Rs 500 crore that will manufacture and supply the paper. Mr Das said ITC is the largest national player in the Rs 3,000-crore notebooks market with a market share of 8 per cent, followed by Navneet Publications at 5 per cent and Ballarpur Industries Ltd (BILT) at 2 per cent. Considering that these national brands account for just 15 per cent of the market, there is a huge opportunity for turning a commodity market into a branded market, he said. Also, given that the segment is growing at 9-10 per cent every year, he expects it to double in size over 6-7 years. “The notebooks, branded Classmate and PaperKraft, will cater to the student and executive segment. The printer and copier paper will also be branded PaperKraft. This category is estimated at Rs 1,800 crore, where JK Paper, BILT and Tamil Nadu Newsprint and Papers account for 70 per cent of the market. ITC’s notebooks business has been growing at 100 per cent every year for the last three years, Mr Das said, pointing out, though, that the growth came on a small base. In general, branded notebooks are priced 10-20 per cent higher than unbranded ones.
Most of the categories that are aimed at students will go by the Classmate name, including pencils and scholastic products, some of which will be outsourced from China. Of the Rs 9,000-crore market, writing instruments are the next biggest category, estimated at Rs 2,500 crore. Between October and December of this year, ITC will launch pens and pencils (the latter a Rs 400-crore market) that straddle the low-end, mid-range and premium segments of this category, Mr Das said. This business unit has, over the years, set up a separate distribution chain to market its stationery products.
Mr Das expects the education and business products unit to cross the Rs 1,000-crore turnover mark in five years from now. The business unit ended the previous financial year with a turnover of Rs 180 crore and expects to double that by the end of the current fiscal.
Archies, a leading player in the greeting cards business which has a 50 per cent plus market share, has also seen a steady decline in its profit margins in this business over the past few years. Between 2003-04 and 2006-07, even though Archies’ greeting cards sales rose from Rs 34 crore to Rs 38 crore, its profits from this business slid from Rs 9.78 crore to Rs 8.12 crore.
Chennai, June 26 Facing up to the reality of a digital age in which interest in greeting cards is diminishing, ITC has exited the category. Launched in the year 2000 under the brand Expressions when the category was estimated at Rs 300 crore and growing at 15-20 per cent, the move comes in the wake of the market size shrivelling to Rs 100 crore.
ITC has also re-branded this business as the Education & Stationery Products Business (earlier known as Greeting, Gifting & Stationery) to accurately reflect its current focus on the Rs 9,000-crore market that comprises notebooks, copier and printer paper, writing instruments and ‘scholastic products’ (erasers, geometry boxes, sharpeners and the like). In the previous fiscal, greeting cards contributed only 5 per cent of the business unit’s turnover. Cheaper telephony and cell phone SMS services have proved to be a double whammy for greeting cards, while e-greetings has also contributed to the decline.
Mr Chand Das, Chief Executive, ITC-Education & Stationery Products Business, told Business Line that the company decided sometime last year to withdraw from the category and has since stopped production. ITC’s paperboards and speciality papers facility at Bhadrachalam has invested in equipment worth Rs 500 crore that will manufacture and supply the paper. Mr Das said ITC is the largest national player in the Rs 3,000-crore notebooks market with a market share of 8 per cent, followed by Navneet Publications at 5 per cent and Ballarpur Industries Ltd (BILT) at 2 per cent. Considering that these national brands account for just 15 per cent of the market, there is a huge opportunity for turning a commodity market into a branded market, he said. Also, given that the segment is growing at 9-10 per cent every year, he expects it to double in size over 6-7 years. “The notebooks, branded Classmate and PaperKraft, will cater to the student and executive segment. The printer and copier paper will also be branded PaperKraft. This category is estimated at Rs 1,800 crore, where JK Paper, BILT and Tamil Nadu Newsprint and Papers account for 70 per cent of the market. ITC’s notebooks business has been growing at 100 per cent every year for the last three years, Mr Das said, pointing out, though, that the growth came on a small base. In general, branded notebooks are priced 10-20 per cent higher than unbranded ones.
Most of the categories that are aimed at students will go by the Classmate name, including pencils and scholastic products, some of which will be outsourced from China. Of the Rs 9,000-crore market, writing instruments are the next biggest category, estimated at Rs 2,500 crore. Between October and December of this year, ITC will launch pens and pencils (the latter a Rs 400-crore market) that straddle the low-end, mid-range and premium segments of this category, Mr Das said. This business unit has, over the years, set up a separate distribution chain to market its stationery products.
Mr Das expects the education and business products unit to cross the Rs 1,000-crore turnover mark in five years from now. The business unit ended the previous financial year with a turnover of Rs 180 crore and expects to double that by the end of the current fiscal.
Archies, a leading player in the greeting cards business which has a 50 per cent plus market share, has also seen a steady decline in its profit margins in this business over the past few years. Between 2003-04 and 2006-07, even though Archies’ greeting cards sales rose from Rs 34 crore to Rs 38 crore, its profits from this business slid from Rs 9.78 crore to Rs 8.12 crore.
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