The ownership of the stationery major has changed with a majority stake sale, but its brands will remain
Camlin is not shedding its colour just yet. The stationery major will retain its portfolio post the majority stake sale to Japan’s Kokuyo Co.
Camel and Camlin brands are unlikely to be compromised in the rush to grab market share and the company feels the brands, if nurtured, can be an asset rather than a liability.
The range of Camel colours, inks, fountain pens and ball-point pens as well as Camlin glue sticks, scales and geometric boxes have been a household feature for generations in India.
According to a company executive, the brand is going to gain traction with the launch of new products. Kokuyo, which is in the process of acquiring majority stake in Camlin, will formally introduce its Campus notebooks and Dotliner adhesive tapes, among other stationery products, once the acquisition is complete.
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The strategy of line extensions works well, say experts. Harish Bijoor, chief executive officer, Harish Bijoor Consults, says: "The equity of the Camlin and Camel brands are just too strong. People have grown up on it. Giving it up would mean having to build a new brand in its place, which is not going to be easy."
Traditionally, post a change in ownership, the new management has often been averse to sticking with previous brands, but there have been a few exceptions. When Kraft acquired Cadbury in a $19 billion transaction last year, there was no hint that it would exorcise Cadbury. Instead, Cadbury was a brand that it wanted to add to its portfolio in an attempt to strengthen its confectionary play. At the same time, Kraft was also looking to ride on the distribution network of Cadbury in emerging markets like India.
Kraft has since then integrated its own brands – Oreo and Tang (distributed independently in India) – into the Cadbury system. Now, it is Cadbury which is distributing the two products using the reach it has established pushing chocolates over the last few decades.
Camlin's case is no different, say industry insiders in the know. "It’s a brand that can actually help in greater market access. This was borne in mind when the deal was being structured," says an executive privy to the negotiations prior to the stake sale announcement. This view was endorsed by Santosh Desai, chief executive officer, Future Brands. "It’s a leverageable asset. By retaining it there are many interesting ways in which you can grow it."
It was the very same approach that swung the vote in favour of Kokuyo — one among many potential buyers for Camlin. The transfer in ownership was smooth because the two had worked together earlier. Camlin had a distribution tie-up with Kokuyo for the latter's Campus notebooks.
Now that the deal between the two is sealed, Kokuyo can focus on pushing its presence in the Indian stationery market. At $2.2 billion or roughly Rs 10,000 crore, the Indian stationery market is big. The space has also evolved over the last few years with the entry of new players like writing majors Cello, Reynolds, Linc and Luxor at one end and ITC with its Classmate brand of notebooks and allied products at the other.
International brands, like Faber Castle and 3M, are also consolidating their presence here. Acquisitions of domestic companies by global brands are also on a rise: Societe BIC of France had acquired 40 per cent stake in Cello in 2009, the same year when Japan's Mitsubishi formed a joint venture with Linc Pens.
According to industry experts, a strategic partner will help take Camlin to the next level. "Rivals in the business have deep pockets and are capable of waging a long battle for leadership," says R Sridhar, chief executive officer of Brand Comm. Echoing similar views, Shirish Pardesi, senior analyst at brokerage Anand Rathi, says: “You either have to scale up or support your brands strongly. I don't think Camlin has been particularly strong on both counts."