How the pen industry hangs on in a digital world

CHICAGO – Karyn Martin uses only one type of pen for everyday writing: a Uni-ball Vision with pink ink.

"I do a lot of writing and editing, and all of my notes are in pink," Martin, 36, said. "People know that when they see pink ink it's my comments."

At the same time, her firm believes that employees might like at least one expensive pen in their tool kits.

"When you're at the company for three years, you get a Cross pen engraved with your name as an anniversary gift," said the executive vice president of 451 Marketing in Boston. The pens cost about $100 each. "That's the type of pen you write a check with for buying your first house or signing important contracts."

Martin's pen preferences illustrate how, even in an increasingly digital world, consumers haven't written off the pen industry, data show.

Pens and other writing tools generated revenue of $16.2 billion worldwide in 2014 and are expected to reach $20.2 billion by 2019, according to a December report by Technavio.

The market research firm acknowledges that the growing adoption of electronic devices is pressuring pen demand.

Pen sales overall, however, are still growing for a variety of reasons.

"Demand for basic writing instruments is high in Asia, Latin America and the Middle East due to the increasing population and literacy levels, while in the United States and Europe the demand for luxury pens is higher as these are preferred as gift items and are nowadays perceived as fashion accessories, similar to high-priced watches," Technavio said.

Retail sales of pens in the United States in 2015, through Nov. 28, were up 5 percent in dollars and 4 percent in the number of units sold, according to NPD Group.

Leen Nsouli, office supplies analyst for NPD, which tracks consumer trends, cites "a lot of creativity and innovation" in pens, and says demand for ballpoint, gel and porous pens, including in the luxury category, is up. Cross recently paid tribute to "Star Wars," released in 1977, with a limited edition of 1,977 pens inspired by characters from the movies. The pens retail for $450 to $575 each and are doing well, Cross says.

"Some of this can be attributed to the trend in adult coloring books," Nsouli said. "Whether it's taking notes in an office meeting, keeping a journal, coloring or finding that special lifestyle or luxury pen, many consumers are still handwriting."

"I like my freebies that I get from Edward Jones," says Wendy Prabhu, co-founder of Mercom Capital Group in Austin, Texas. The investment firm handles Mercom's retirement planning, she said.

Petter Knutrud, Office Depot senior vice president of merchandising, recognizes that customers are increasingly using digital devices to stay connected and capture information. But "writing instruments such as pens are still essential," Knutrud said.

Newell Rubbermaid, whose pen lines range from higher-end Waterman and Parker to mass-merchant lines like Paper Mate and Sharpie, also said pen sales are holding up.

"People think that the convergence of technology and writing is going to disable writing," Chief Executive Mike Polk told analysts last year. "That's not evident in the data."

In September at a Barclays conference, Polk said Newell would focus mostly on its "everyday writing business," including Paper Mate and Sharpie. Last November, Newell Rubbermaid told analysts that its ideas for 2016 included Paper Mate InkJoy gel pens. But a merger announced in December between Newell Rubbermaid and Jarden, owner of class ring maker Jostens, has a luxury writing angle.

Cross Chief Marketing Officer Magnus Jonsson always tucks an A.T. Cross pen between two buttons on his shirt. That way his 14-karat-gold "writing instrument," as they're called in the business, is more likely to be a conversation starter.

In early February 2013, publicly traded Cross announced plans to sell its accessory unit, which included pens, to "build shareholder value" and to focus on its sunglasses businesses.

Later that month, Cross said it expected the fine writing market to grow because "as the world economy improves, consumers and corporate gift buyers in mature markets will return to the category," and, in emerging markets, "the growing middle class will build the market."

In July 2013, New York-based private equity firm Clarion Capital Partners bought the Cross accessory business for $60 million.

Jonsson was hired by Clarion in 2014 as Cross chief marketing officer. He said Cross pen sales were falling about 15 years ago but have been "relatively flat" in recent years.

Jonsson said growth is "strong" in emerging markets, including Brazil, Russia, India and China, where educational levels are continuing to rise.

About 15 percent of Cross' business today comes from stylus pens that can be used to write on digital devices, he said.

"Consumers are changing the surfaces on which they want to write, such as glass vs. paper," Jonsson said. "We need to adapt in terms of the products we launch."