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KN22094

KEY NOTE Report Plus: GREETINGS CARDS : September 2004

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This report covers: greetings cards, humerous, cute, whimsical, traditional, contemporary, fine art, photographic, multicultural and religious, handmade/handfinished, charity shops, multiple retailers, supermarket chains, confectioners, tobacconists, newsagents, Post Office, US market,

Companies covered include: The Giftware Association, Greeting Card Association, Carlton Cards, Carte Blanche Greetings, Hallmark Cards, International Greetings, UK Greetings,The Paper House Group, Birthdays Group, Card Warehouse, Clinton Cards, Greeting Card Group,Top Drawer, The National Stationery Show, Paperworld, Albert Horn Söhne GmbH & Co, American Greetings Corporation, Busquets, Depesche Vetrieb GmbH & Co, Hallmark Cards Inc,

EXECUTIVE SUMMARY

Specialised greetings cards are now produced for every relationship and age group. There are cards for every occasion, every ethnicity, every special interest group and at every price point. There are cards for numerous different holidays and for every conceivable (and sometimes quite inconceivable) event. Just in case the spoilt-for-choice consumer cannot find a suitable card, he (or more likely she, since women are the principal purchasers of greetings cards in the UK) can choose a blank card for his (or her) own message. UK consumers are the most avid card purchasers in the world and, to the relief of the industry, show no signs of abandoning traditional greetings cards in favour of electronic messages. If anything, the personal aspect of sending a traditional card has become ever more important and the retail sales value of greetings cards increased slightly in 2003, despite the maturity of the sector. Cards say as much about the sender as about his or her feelings towards the recipient, and many people are quite prepared to spend time, and importantly money, on their choice. Many consumers find it difficult to express their sentiments in their own words, so use a greetings card to communicate them.

In this mature, and somewhat predatory, market, any significant growth is likely to be at the expense of competitors. Just 7.1% of publishers in the industry subsector had turnovers in excess of £1m in 2003. Some of the publishers in the sector are long-term under performers and, as such, are prime targets for acquisition.

The greetings card industry is heavily reliant on an efficient postal service and therefore, recent adverse publicity concerning the Royal Mail's failure to meet delivery targets has caused concern. The Royal Mail's proposed introduction of a Size Based Pricing (SBP) scheme is a very real threat to the industry, whose members are actively campaigning against the introduction of the new system. It is feared that charging consumers extra postage for sending larger than standard-sized cards, or those over a certain thickness, will stunt creativity and innovation. Such fears are quite understandable, as it is this creativity and innovation for which the UK greetings card industry is justifiably renowned. Publishers already face stiff competition from overseas manufacturers operating with lower overheads, and can do without any such threat to their domestic market.

On the positive side, increased longevity and the expansion of family networks through divorces and remarriage has created an increase in the number of card-giving occasions, and in the number of potential recipients. The industry, never one to rest on its laurels, continues to endeavour to persuade the card-buying public of the necessity of acknowledging such occasions as Grandparents' Day and Boss's Day. A BMRB survey commissioned for this report found that only 2% of respondents never sent cards, demonstrating an enviable percentage penetration that the UK's dynamic greetings card industry will continue to enthusiastically exploit

REPORT COVERAGE

TABLE OF CONTENTS

Executive Summary

1. Market Definition

report coverage

MARKET SECTORS

Everyday Cards

Christmas and New Year Cards

Spring Season Cards

MARKET TRENDS

Consolidation of Publishers

Independent Card Retailers

Captions and Gimmicks

E-Greetings

Economic Trends

Gross Domestic Product

Table 1: UK Gross Domestic Product at Current and Annual Prices (£m), 1999-2003

Inflation

Table 2: UK Rate of Inflation (%), 1999-2003

Unemployment

Table 3: Actual Number of Unemployed Persons (million), 1999-2003

Household Disposable Income

Table 4: Annual Average Household Disposable Income in the UK (£), 1998-2002

Population

Table 5: UK Resident Population Estimates by Sex (000), Mid-Years 1999-2003

MARKET POSITION

The UK

Table 6: Household Expenditure on Newspapers, Books and Stationery at Current Prices (£m), 1999-2003

Overseas

2. Market Size

THE TOTAL MARKET

Table 7: The Total UK Greetings Cards Market by Sector by Value at Current Prices (£m at rsp), 1999-2003

by MARKET SECTOR

Everyday Cards

Table 8: The UK Everyday Cards Sector by Value at Current Prices (£m at rsp and %), 1999-2003

Christmas and New Years Cards

Table 9: The UK Christmas and New Years Cards Sector by Value at Current Prices (£m at rsp and %), 1999-2003

Spring Cards

Table 10: The UK Spring Cards Sector by Value at Current Prices (£m at rsp and %), 1999-2003

Table 11: The Estimated UK Market for Spring Cards by Type by Value at Current Prices (£m at rsp), 2002 and 2003

Overseas Trade

Table 12: UK Balance of Trade in Greetings Cards and Illustrated Postcards (£m) 1999-2003

Imports

Table 13: UK Imports of Greetings Cards and Illustrated Postcards by Value (£000), 2003

Table 14: UK Imports of Greetings Cards and Illustrated Postcards by Country of Origin (£000), 2002 and 2003

Exports

Table 15: UK Exports of Greetings Cards and Illustrated Postcards by Value (£000), 2003

Table 16: UK Exports of Greetings Cards and Illustrated Postcards by Principal Destinations (£000), 2002 and 2003

3. Industry Background

RECENT HISTORY

number of companies

Table 17: Number of UK VAT-Based Enterprises Engaged in `Other' Publishing by Turnover Sizeband (£000 and %), 2003

Employment

Table 18: Number of UK VAT-Based Local Units Engaged in `Other' Publishing by Employment Sizeband (number of employees), 2003

Regional Variations in the Marketplace

DISTRIBUTION

From the Publisher

Wholesale or Direct to Retail

Own Label

Card Buying Groups

Franchises

Brokerage

Direct to the Consumer

From the Retailer

Specialist Greetings Cards Multiples

Multiple Retailers

Supermarket Chains

Confectioners, Tobacconists and Newsagents

The Post Office

Charity Shops

Others

HOW ROBUST IS THE MARKET?

LEGISLATION

The Commercial Agents (Council Directive) Regulations 1993

The Green Claims Code 1998

Registered Design Protection Directive

TRADE ASSOCIATIONS

The Giftware Association

Greeting Card Association

4. Competitor Analysis

THE MARKETPLACE

Market Leaders

Table 19: Top Ten Companies Involved in the UK Greetings Cards Market by Turnover (£m and %), 2002/2003

Table 20: Top Ten Companies Involved in the UK Greetings Cards Market by Pre-Tax Profit Margin (£m and %) 2002/2003

PUBLISHERS

Carlton Cards Ltd

Company Structure