(Bloomberg) -- Caran d’Ache SA, a century-old Swiss maker of writing instruments, supplied Iranian school children with pencils before the 1979 Islamic Revolution. Now, it’s betting on a partnership with a pistachio exporter to make a comeback in the country of 77 million.
Used by artists including Pablo Picasso, the maker of colored pencils and pastels reopened for business in Iran last year.
“The potential there is absolutely fantastic, there are many young people getting an education and in need of school supplies,” Chairman Carole Hubscher said in an interview in Caran d’Ache’s headquarters in Thonex, a commune in the Canton of Geneva that borders the French town of Annemasse. “Our brand was known, as many parents had Caran d’Ache pencils as kids. It’s a huge country and one of the most important in the Middle East for us.”
Caran d’Ache is among the European companies seeking to reap the benefits of the nuclear deal signed with world powers last year and which came into force in January. While the landmark agreement led to the lifting of some economic sanctions, including reconnecting Iranian banks to the SWIFT system for international financial transactions, some restrictions remain in place. This is forcing companies seeking to work with Iran to navigate a complex set of regulations.
The Swiss company’s pens, pencils and colors are sold in stores of Iran’s Daya Group together with a range of other products, such as Swiss watches. Alliances with large local groups such as Daya, which operates in businesses ranging from consumer goods to healthcare and is also an exporter of pistachio nuts, are opening up doors for companies such as Caran d’Ache.
Many of the 400 delegates meeting in Zurich for an Europe-Iran conference on Tuesday and Wednesday will also be eager to profit from the nuclear agreement. While potential deals with multinationals like Airbus Group SE and PSA Peugeot Citroen have garnered a lot of the attention, smaller companies like Caran d’Ache -- a household name for Swiss families -- also stand to win business.
Iran is currently the family-owned pencil maker’s third-largest market in the Middle East and sales growth of 25 percent is expected in 2016 and the next two years, according to Chief Executive Officer Jean-Francois de Saussure. The CEO was part of a business delegation that accompanied Swiss President Johann Schneider-Ammann on a trip to Tehran in February.
“We are there for the long run,” said Hubscher. “It’s not a rush.”
Still, the difficulties that international banks face in resuming operations is delaying potential business relations between Switzerland and Iran, de Saussure said.
“It will take time for the situation to normalize, but little by little it will happen,” he said.
Challenges at Home
Caran d’Ache faces challenges in its European markets as well. The company, which has about 300 employees and doesn’t disclose revenue data, only produces in the Geneva area where labor is more expensive than in neighboring France. The strong franc also weighs on orders.
Pencil makers such as Caran d’Ache face additional headwinds due to the advent of electronic devices such as Apple Inc.’s iPad. Still, Hubscher is confident about the future.
“Pencils will always remain the same,” Hubscher said. “There will always be children, artists, architects, who need real tools in their hands for their drawings, their sketches. It’s your touch, your creativity, your style. It’s not the same on an iPad.”
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