Crayola's CEO On Building A Colorful Past Into A Creative Future

Forbes

3 hours ago

Pete Ruggiero started working at Crayola in 1997 under its previous name, Binney & Smith. In his time at the company, he's worked in operations, sourcing, supply chain and running its European business. He was COO from 2020 until last year, when he was named CEO. I talked to Ruggiero about the company's position at the intersection of creativity and nostalgia for consumers of all ages, and its plans for innovation and expansion.
This conversation has been edited for length, clarity and continuity. It was excerpted in the Forbes CEO newsletter.
What do you see as the purpose of the Crayola brand?
Ruggiero: I see a brand that is ubiquitous. Wherever a consumer is experiencing a creative moment, this brand is present. I see a brand that's much more global in nature. It's underrepresented outside the United States, yet our brand recognition is surprisingly high in all markets. One of our initiatives is to grow Crayola to be 30% outside of the U.S. and Canada by 2030. It's competitive, but we have some intentional work to do there.
This whole idea of being wherever the consumer is comes through innovation, international expansion and category expansion. We are right now held tight in what we call the 'Crayola aisle.' The consumer expects us to be in the toy aisle, the craft aisle, at checkout and other places, and we're underrepresented there.
We're at an interesting moment for international business. How does the current situation with tariffs impact your expansion plans?
Let's talk supply chain strategy. The mantra of what we've been doing since 2007 has been to develop a capability that gives us competitive advantage of close-to-market responsiveness. The idea of us being able to respond and forecast the demand in critical seasons is an advantage that we enjoy over our competitors. Specifically, if we're talking about concentration of a business model in North America, having 1.7 million square feet of under-roof automated equipment scale, we make 3 billion crayons a year in Easton, Pennsylvania. We make three quarters of a billion markers. We make 100 million jars of paint. It keeps growing. To be able to make that here in the U.S. makes the tariff situation more palatable.
We do sourcing overseas and some of that has been a close-to-market responsiveness sourcing from and producing in Asia for Asia. But we buy some things, like toys, from Asia.
Crayola CEO Pete Ruggiero.
Crayola
I'll give you a great example of how the tariffs are affecting us. We made decisions in 2000 to consolidate all of our colored pencil production into Brazil. The majority reason was because there's an extremely capable supplier who has a renewable tropical pine plantation in Brazil, so we've been able to vertically integrate pencil production in Brazil. There is no renewable forest in the United States, so I'm not going to put a plant in North Carolina and make colored pencils. There's really nothing we can do. It's just additional cost for us.
How about your efforts to move to other countries and increase supply available to consumers outside the U.S. and Canada? Is the escalating trade war impacting your expansion plans?
No. We've been blessed with a vision for a diversified supply chain and a diversified supply base. Some of our key categories, we've got multiple source points on them. During the pandemic, when one country would have a problem with the virus, we could go to another country and source.
We adopted [business process improvement methodology] Six Sigma here in 2007, and my project was on de-risking the supply chain. We specifically created redundancies in the supply chain as a result of that work that long ago. I'm fairly confident that whatever it is, we will have the capabilities and the skill to navigate and still fulfill the purpose of international expansion.
You want Crayola to be a brand that's ubiquitous whenever anybody is thinking of creating. How do you expand from what everybody thinks about—a go-to for children's art projects—while using the branding that you have, and not alienating the people who have depended on you for what you have been?
It always comes back to the consumer and this majestic brand. You just have to look at some of the work we've been doing. Our Campaign For Creativity was our effort to understand more deeply why is creativity so important to our consumers: Why is it that nine out of 10 parents believe creativity is important for their children, and why is it that 96% of parents use color to help their children understand creativity? We used some of our artwork from the Dream Makers program, and went back to some of the artists who had created that 30 years ago to understand what creativity has meant in their lives. We get a deeper understanding of the consumer.
Creativity Week is a program that we've done for the past four years. We started out as a test and we've been able to expand it this year to 44% of all school-aged children in the United States. This was actors and artists and authors, an Olympian, astronauts all participating in bringing creativity to children. We were in 122 countries doing these programs.
The nostalgia and excitement around our brand is very interesting. There's more to us than back-to-school business. We're selling year-round. When I came to this company, we started building inventory in January. We would ship everything out the door, and I'm not sure what we did with ourselves from September until December. The business model now is global and year-round in nature. As soon as the Easter period ended, now we're prepping for and shipping back-to-school. As soon as back-to-school is over, we'll be prepping for and shipping Halloween, and then the holiday season. Then we'll go back in school, then Valentine's Day.
It's a year-round business with innovation, but we're actually going a step further to experiential retail with the Crayola Experience. We have a Crayola Experience model—Orlando, Florida and Easton, Pennsylvania are the lynchpins—800,000 people come through those two Crayola Experiences a year. The dwell time is three and a half hours. We've expanded that model to overseas. We've already announced China. We've got other markets that we're announcing shortly.
When you think about a brand that moms and teachers and dads trust and kids love and adore, and we have a parent company—Hallmark, [with a] media business, the Hallmark Channel. There's this great opportunity for us to be in more and to enter the studios business.
Tell me about the 'unretirement' of eight colors this year.
I'll take you back to National Crayon Day 2017, when we retired Dandelion. There was then and has been an outpouring from consumers: Why would we have retired Dandelion? Everybody loves Dandelion. I didn't realize it. We started working all the way back then with bringing Dandelion back in an authentic way. Then we looked at what other colors should we bring back. We had retired 13 colors over our history. We chose these eight for their appeal to this generation and to older fans of our brand.
We've been surprised by the outpouring of excitement over this. We had 2 billion impressions in the first 24 hours that we had brought Dandelion back. We had the International Coloring Day launch because we're trying to think with a global mindset. I attended the Dandelion celebration on National Dandelion Day. What I was most surprised by was the age ranges of the people that came. We had a mom and daughter who came from San Francisco, flew in just for the event. Many of the people in the line were adults, and they were just so excited to see Dandelion there.
It's an interesting dynamic with us right now. 54% of the people who bought Crayola last year were adults without children in their household. We say we help parents and teachers raise creatively alive kids. That's been our mission for 15 years. We're intentionally limiting ourselves by saying that, because we're much more than that. I've been liking to say recently that we try to make the world a more colorful place, one smile at a time.
Wherever I go in the world when I'm wearing my Crayola attire, you get a smile. I saw it this morning at my speaking engagement at the Philadelphia Federal Reserve. Then we get a story, and the story's invariably about the 64 box Crayola crayons with the built-in sharpener. That's not just the United States, that's anywhere I go in the world. I'm standing at the airport boarding gate anywhere, with my Crayola-themed phone case. 'You work for Crayola?' Yes. And again, you get the smile and then you get the story.
The other interesting point in the last year has been we trademarked the scent of the Crayola crayon. It's the number 18 most recognizable scent—one and two are peanut butter and coffee. It engenders memories of childhood and creativity and fun.
How do you go about innovating, and what are some of the new innovations that you're hoping to bring to the brand?
The innovation engine and the innovation process that we have is integrated with designers and capabilities and chemi-mechatronic engineers, as we call them. We have a secret laboratory along Bushkill Creek [in Easton, Pennsylvania], right next to where the original Crayola crayon factory was. In there, our scientists and chemical engineers are creating the wow factor of the brand, those chemical engineering marvels that cause color and creative experiences for our consumers.
For the last 15 years, we've been adding to color excitement with mechanical and electronic toys. A great example of that is the Color Wonder Magic Light Brush. Color Wonder is a technology that we launched in '99. We took that and added an electronic mechanical element to it for the invisible paint of Color Wonder, so when the paint brush touches it, it lights up so you know what color you're about to paint. We'll sell more than a million units of that this year.
I'm excited because we have made some intentional investments in people to prepare ourselves to go to the next level with innovation.
You've seen the company for a long time and from many different viewpoints. How is it different from the CEO's office?
I've worked directly for four CEOs, and I've seen five CEOs come through. Each CEO that I've had the chance to work for or with had great ideas, brought great things to this company.
One of the first things I did when I became CEO was to pull out their strategic planning exercises, many of which I participated in as a member of the leadership team, and figure out those ideas that are working that we need to double-down on, and those ideas that were really good, that for whatever reason stalled out. That's the exciting part for me: To be able to step into the chair having seen all of the good work that previous CEOs have done, and take the greatest of the work that's going on, and take it to the next level. There's also learnings of things that didn't work.
What I'm most excited about bringing to the table is a focus on a very simple strategy of next-level mindset building Crayola for the next quarter century, focused on culture, growth and diversification. The culture here is around collaboration, celebration. We try to celebrate when we win. A culture of: It's healthy to celebrate your problems. It's unhealthy to kick them under the carpet. And a culture of perpetual optimism, that if you say it out loud, it has a pretty good chance of coming to be.
A major element of what we do as a culture is to build an environment where we're trying to make the communities in which we live and work better. That's a Hallmark culture that's been passed to Binney & Smith/Crayola when they bought us in 1984.
The last piece here is we're trying to get excellence in everything we do. As Vince Lombardi said, we're chasing perfection so that we can achieve excellence. That's a very lofty target, but we're going to be very good in things that we do.
You've mentioned building Crayola for the next quarter century. If all goes according to your plan, where will Crayola be then?
I have a book produced for our sales meeting in 2024 talking about the history of the company. I've used this book and this mindset of: People are going to be writing about us a hundred years from now. Those are the guys that got it, they understood it, and they're the ones that transformed Crayola.
I think it's a global business. It is a highly diversified product range. And we are definitely engaging the consumer through Crayola Studios and through a much-expanded Crayola Experience business model. It continues to bring back the current focus of our consumers of safety, quality, color. All of the elements that teachers and moms and dads and kids have loved about Crayola for the previous 122 years. That's all there, but it's more than that. It's this concept of our footprint—either by our own limiting or by how we've allowed ourselves to be limited, either because of our strategy or because of our unwillingness to push against boundaries. It's a massive brand and it's not fully fulfilling its purpose.
What advice would you give to other CEOs?
Transparency and authenticity are the most important characteristics. Your employees have to trust you. They have to believe in what you're doing. And the only way to gain that trust is through transparency and authenticity. When things aren't good, you take accountability for it. When things are great, you're celebrating it and you're giving credit for where the successes have been.