Mrs. Grossman's Paper Company Inc.

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Mrs. Grossman's Paper Company Inc.

3810 Cypress Drive
Petaluma, California 94954
U.S.A.
Telephone: (707) 763-1700
Fax: (707) 763-7121
Web site: http://www.mrsgrossmans.com

Private Company
Founded: 1975
Employees: 160
Sales: $19.3 million (2005)
NAIC: 323110 Commercial Lithographic Printing; 322221 Coated and Laminated Packaging Paper and Plastics Film Manufacturing

Privately owned, Mrs. Grossman's Paper Company Inc. is a Petaluma, California-based company whose core business is the design and production of decorative stickers used to adorn scrapbooks, stationery, gift cards, and envelopes, or simply collected as a hobby. The company offers more than 900 sticker designs, including licensed material such as children's literary character Curious George and the works of writer/illustrator Eric Carle. In addition, Mrs. Grossman's sells scrapbooks, albums, paper crafting supplies, and sticker activity products. At the company's 110,000-square-foot corporate headquarters, eight printing presses run 22 hours four days a week, capable of turning out 5 million stickers a day. They are then sold in close to 6,000 stores around the world. Some of the plant's production capacity is devoted to subsidiary Paragon Label, which also brings some diversity to Mrs. Grossman's business. Paragon makes pressure-sensitive labels for wine bottles as well as gourmet foods and other products. The woman behind the Mrs. Grossman's name is Andrea Grossman, the founder and long-time president of the company. Her son, Jason Grossman, serves as Paragon's president. A religious woman, Andrea Grossman has founded Mrs. Grossman's Helping Hands, a charitable program that distributes more than 6 million sticker "seconds" to more than 300 pediatric hospitals around the country. The stickers are assembled and packaged by inner-city children in San Francisco, who acquire job skills and rewards.

FOUNDER GOES INDEPENDENT: 1975

Andrea Grossman was born Andrea Clausen in Santa Monica, California, the daughter of a journalist father and a mother who was a gifted painter and singer. She inherited some of her mother's talents and as a child became devoted to art. After graduating from high school she enrolled at UCLA as an art major and learned the commercial art trade at the well-regarded Art Center School of Design. After graduation she became a graphic designer in San Francisco, working on a wide range of projects, from designing album covers for Capitol Records and producing magazine illustrations to the more mundane work of corporate logos and company brochures. She married and gave birth to Jason, and in 1975 she decided to go into business for herself forming Mrs. Grossman's Paper Company. Working at home north of San Francisco she started out designing stationery and gift cards, inspired by the illustrations found in vintage seed catalogs.

Over the next four years, Grossman built up a clientele. One of her customers made a request in 1979 that would eventually turn her one-woman, kitchen table operation into a multimillion-dollar business. A gift shop in Sausalito asked her if she could find red hearts with an adhesive backing for Valentine's Day. Unable to locate a source, Grossman took on the job herself, designing a heart and contracting a specialty printer to produce it. She had assumed the hearts would be printed in rows on large sheets, but instead she received 50 ribbon rolls of continuously printed hearts. Instantly she recognized that stickers on a roll held great commercial promise. She sold the rolls to the Sausalito customer as well as other shops. All of them had no difficulty in selling them and were soon clamoring for more hearts. It was the start of what would become "stickermania," as children around the country began to obsessively collect stickers. Because they were manufactured and packaged on rolls, they were easy for stores to display on racks near the cashier's counter to take advantage of what was called "the penny-candy effect." Children could pick out the stickers they liked and have the store clerk cut off one or more from the roll. In this way, the children left with something at a reasonable cost, and by selling the stickers in such small quantities, but large numbers overall, the stores received an extremely high markup. Hence, stores were enthusiastic about the business and willing to buy a wide assortment of stickers.

A number of competitors emerged to satisfy the intense demand for stickers in the early 1980s, with children applying them on walls, notebooks, and even themselves. As the person credited with starting the craze, Andrea Grossman received a great deal of recognition. She was profiled in People magazine as well as Inc., and her business flourished. She hired more designers and moved the operation from her dining room to a playhouse, and from there to a former post office. When she outgrew that space the company moved into larger accommodations in downtown San Rafael, California. At this stage, Mrs. Grossman's had no printing capabilities and simply acted as a sticker design house. When children began collecting the stickers, the company branched into albums, books, and other sticker-collecting items. Collecting also fueled the fire of the sticker industry, as collections of several thousand stickers became commonplace. Regular stickers no longer satisfied as well, leading to the creation of "smellies," "feelies," and "puffies."

Sales for Mrs. Grossman's doubled in 1983 and the company began marketing its products to toy stores. To spur further sales, the company began conducting in-store demonstrations in both the United States and Japan, showing children what could be done with stickers in addition to collecting. There were magazines devoted to stickers, part of an industry that was doing everything it could to ensure that stickers became a stable hobby. Despite all the effort, it was impossible to force children to remain interested, and soon they turned their attention elsewhere. Stickers remained popular but the supply far exceeded the demand, leading to a rough patch for Mrs. Grossman's. The company struggled for a couple of years, but it would soon find itself riding a new wave, a hobby engaged in by more predictable adults: scrapbooking.

COMPANY PERSPECTIVES

We exist through the grace of God and must be good stewards of the wealth. We shall share with those less fortunate than us. We will be honest in all our conduct. Our product must consistently tell people that we have a purpose, have a positive world view and focus on our love of God, His creation and His people. Our designs must express the core emotions of these people. We hold growth in quality and human values above size and profit. Our employees shall feel treasured with the knowledge that we care deeply about their personal condition. Our vendors shall sense we are different in the way that we deal with them and show concern for their needs. Our customers and representatives shall delight in doing business with us because of our quality and exemplary service. Our company culture shall encourage and motivate people, to give them opportunities to stretch their horizons and to treat them with dignity. We will always be concerned over the welfare of our people, the quality and purpose of our products and our integrity as an organization. We have a unique opportunity to make a difference in our world. We shall be obedient to God and shall conduct our business in a manner that honors Him.

SCRAPBOOKING ORIGINS: 1987

Scrapbooking grew out of the efforts of a Billings, Montana, housewife named Rhonda L. Anderson, who in 1987 began teaching other women how to create keepsake scrapbooks—preserving family photographs, writings, and the like. To make them nice she also recommended stickers. Anderson had a particular fondness for the album produced by a company called Holes Webway, but when the firm went bankrupt and was sold, and her favorite line of albums was discontinued, she placed a call to the new owners, and spoke with vice-president Cheryl Lightle of Antioch Co. of Yellow Springs, Ohio. It was a conversation that would launch an industry and inadvertently revive the fortunes of Mrs. Grossman's. Because Lightle wanted to sell more albums, she was extremely interested in the scrapbook classes Anderson was conducting. Together they developed the idea of selling albums through home demonstrations, in a setting similar to Tupperware parties, and relying on the multilevel marketing arrangements that had proven so successful with the likes of Amway and Mary Kay. The result was a company called Creative Memories, which took off in 1990 after Anderson was interviewed on the radio program, Focus on the Family. In a matter of months Creative Memories had to increase its sales force from 200 to 800 to keep up with the demand.

As Creative Memories' sole sticker supplier, Mrs. Grossman's enjoyed another strong period as scrapbooking became a popular hobby and the fastest growing craft in the United States. Like quilting bees of earlier times, scrapbooking provided women with an opportunity to socialize while preserving the legacy of their families' lives. For Mrs. Grossman's it meant a return to increasing sales and expansion. The company added printing capabilities in the early 1990s, unhappy with being accorded secondary status by printers who often postponed its jobs in order to print food labels. As Grossman explained to Converting Magazine, "We just had these funny little children's stickers and the chicken people had 2,000 tons of chicken sitting in a refrigerator ready to rot if their labels didn't arrive on time." Spearheading the move into printing was Jason Grossman, who joined his mother at the company in 1989, initially working in the purchasing department. He started out buying a single printing press and packing machine, then began adding more capabilities when Mrs. Grossman's moved into a new 55,000-square-foot plant in Petaluma in 1995. Able to print in-house, the company was able to save money while also improving quality and delivery times.

With Creative Memories' business booming, Mrs. Grossman's saw its sales escalate as well, forcing the purchase of more printing presses and the addition of more space to the Petaluma facility. Despite scrapbooking's appeal to adults, which improved the chances that it would not suffer the same fate as "stickermania," Mrs. Grossman's took steps to guard against the hobby losing its appeal. It began organizing classes at stores, schools, and other locations as part of an effort to encourage the use of stickers in the design of homemade greeting cards or to spice up gift wrap and gift tags. The company also looked to the general label market, forming Paragon to take advantage of extra equipment the production plant had at its disposal.

MCCOY PACKAGING ACQUIRED: 2002

In the mid-1990s Mrs. Grossman's invested in a pair new Flexo presses to accommodate the needs of a major customer. Knowing full well that this was a yearlong necessity, the company planned to either sell the presses, store them, or launch a label business. The latter course was chosen and Paragon was formed. Years earlier Jason Grossman, when asked what the company would do if the sticker business faltered, had said it would print wine labels; now he took seriously his own off-the-cuff suggestion. Paragon spent the first year getting organized, after which the business enjoyed steady growth. The printing of wine labels proved to be an inspired choice, the company's location making it a logical supplier for the many wine companies located in Northern California. Wine was a seasonal business, however, and Paragon needed to diversify to keep the presses rolling year-round. A major step in achieving this goal was the December 2002 acquisition of McCoy Packaging, an 80-year-old label converter, a deal that created the largest label printer in the north San Francisco Bay area.

KEY DATES

1975:: Andrea Grossman established Mrs. Grossman's Paper Company.
1979:: Grossman produces its first stickers.
1987:: The scrapbooking hobby takes root.
1995:: Mrs. Grossman's opens its Petaluma plant.
1998:: The Paragon Label formed.
2002:: Paragon acquires McCoy Packaging.

McCoy also added some capabilities that Paragon had previously outsourced, which allowed Paragon to serve new types of customers. All told the company had about 400 customers, 90 percent of whom were in the wine business, but the addition of McCoy gave Paragon a foothold with food, cosmetics, and health and beauty aids packagers, as well. After diversifying into other markets for pressure-sensitive labels, Paragon planned to add other label products. Also of great importance to the growth of Paragon, the McCoy deal included a 30-year veteran of the industry, Gary Cane, who took over as general manager, after Jason Grossman had employed three different general managers in three years.

While Paragon was gearing up, Mrs. Grossman's invested in equipment that could benefit both operations. In 1999 it acquired a custom-built laser diecutter. The only one of its kind in the world, the high-speed laser-cutter was able to cut intricate designs in a label that regular diecuts could not.

In the early 2000s Creative Memories elected to handle the production of their own stickers, but Mrs. Grossman's continued to prosper. It also began to compete against its former customer, as it sold albums under the Mrs. Grossman's label. Scrapbooking was good for everyone involved in the business, as industry-wide sales doubled in the first four years of the 2000s before dropping 25 percent. The interest in scrapbooking had perhaps peaked, but unlike stickermania 20 years earlier, it appeared to be an activity that offered some staying power. Nevertheless, a shakeout in the field appeared inevitable, with many companies forced to exit the field. Well entrenched in the business, Mrs. Grossman's was positioned to remain a major player in scrapbooking. It was also poised to enjoy steady sales for its decorative stickers for other uses. The growth of the Paragon Label division looked to provide even greater financial security for the company as a whole.

Ed Dinger