The economics of Pantone and its colours

In today’s episode on 5th December 2025, we tell you why Pantone’s Color of the Year is such a big deal in the design world, and the economics behind the company whose colour formulas quietly show up in products we see and use every day. FREE MASTERCLASS ALERT! ⁠Join Ditto's FREE Insurance Masterclass by signing up here before seats run out.⁠ https://events.joinditto.in/?utm_source=Finshots&utm_medium=Podcast https://events.joinditto.in/?utm_source=Finshots&utm_medium=Podcast

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  Hello folks, you're tuned in to Finshots Daily and in today's episode, we tell you why Pantone's Color of the Year is such a big deal in the design world and the economics behind the company whose color formulas quietly show up in products we see and use every day.

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  And you'd probably agree, chances are you brush your teeth with Colgate this morning, if not Sipton a Coke. But here's a thought, if one day Colgate suddenly switched to Coca-Cola's red and Coca-Cola borrowed Colgate's, would you notice? You might shrug and say, "Meh, red is red." But here's the fun bit, it isn't. Colgate likely uses Pantone 1788C. Coca-Cola meanwhile doesn't have a fixed Pantone shade. Its red is a custom-mixed brand asset created using CMYK values, that's cyan, magenta, yellow, and black. But its closest Pantone cousin is 485C. And yes, when you put the two side by side, the difference is actually huge.

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  Pantone, for the uninitiated, is an American company best known for its color standardization system called the Pantone Matching System or PMS. Think of it as a dictionary of color. Designers refer to Pantone codes to ensure the exact shade you want is the shade they print. Now, imagine Starbucks printing lacs of cups around the world. If Starbucks tells a printer in New York and another in Shanghai to use Pantone 342 Both know exactly what green to mix and how to mix. The result, two cups printed continents apart but looking identical. This kind of consistency matters a lot in design and packaging. Take Kodak for example. Before PMS came along, Kodak used multiple printers for its film boxes,

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  which led to wildly varied yellows on store shelves. Some packs were bright and cheerful while others looked dull. Customers, whether consciously or not, chose to buy the brightest yellow assuming it meant fresher film. The darker boxes were deemed old or low quality. It became a real problem for sales. To fix it, Kodak adopted the Pantone system and locked in the official standardized Kodak Yellow or Pantone 1235C. From then on, no matter where it was printed, Kodak's yellow stayed Kodak's yellow. Confusion dropped and brand identity strengthened. And while we don't have exact numbers for Kodak's gains, we do have a striking example from Kraft, the global cheese and ketchup giant.

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  When Kraft standardized Heinz red using PMS, the results in Turkey were apparent. Ninety-seven percent of customers could visually tell Heinz apart from its competitors. Heinz's ketchup usage rose twenty-four percent and non-Heinz branded ketchup refills by street vendors dropped by seventy-three percent. Now that's the power of Pantone. But here's the thing. Pantone is essentially just a company that sells PMS color guides with codes and recipes for mixing shades. That's the product. Yet somehow, it's become a global monopoly in color standardization. So, how does that add up, you ask? To understand that, we need to rewind to nineteen fifty-six. A young chemistry graduate named Lawrence Herbert joined M&J Levine,

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  a small New Jersey printer that made retail display cards for cosmetics and women's tights. His job involved hand mixing delicate colors for product swatches because it was hard to buy the exact shade you needed from ink manufacturers. Retail brands desperately needed consistent colors, especially flesh tones for hosiery and cosmetics. But printers and ink makers were working with vague names like light beige, sand or almond. Some even relied on odd references like a magazine cutout or even a pet dog's fur to match a shade. Funny as it sounds, the outcome was chaotic. Minor changes in paper, ink batches or supplies led to mismatches, reprints and unhappy clients.

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  Herbert realized this wasn't just an ink problem but also a coordination problem. So, he devised a solution. Ink recipes that used specific base colors to reproduce exact shades every single time. If printers use the same bases, they'd get consistent results. Around the same time, M&G Levine was in bad shape. Almost everything except its ink business was losing money. So, Herbert borrowed its technology assets for about fifty thousand dollars and spun them off into a new company called Pantone. The name itself is a blend of pan, meaning many or across from Greek, and tone meaning hue. And then, just a year later in nineteen sixty-three,

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  Herbert launched the first PMS, which was a fan-style booklet of printed swatches, each with a number and an exact ink formula based on a fixed set of base pigments. To make sure the system took off, he first created a sample page, explaining how it worked and sent it to ink makers. Then, he started doing something clever. He made sure that everyone in the ecosystem had a reason to adopt Pantone. He went straight to designers and advertising agencies, the people who specify colors. Once designers started writing PMS codes into briefs, printers had little choice but to adopt Pantone. And once enough printers supported it, designers who didn't use Pantone risked miscommunication and reprint costs. It was a classic network effect in action.

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  On top of that, Herbert persuaded twenty of the twenty-one small ink manufacturers to adopt his numbering system. Once most of the supply sites standardized around Pantone formulas, it became nearly impossible for a rival system to take root. Because switching would require relearning everything and no one wanted that. Then came the defining moment. In nineteen sixty-eight, Pantone sued Pantone, a competitor that tried to produce a near identical color guide. Pantone argued that colors can't be copyrighted. After all, no one owns anything. Red or blue. Pantone pushed back with a smart counter argument. Maybe it couldn't own colors, but it could own the arrangement and presentation of colors that made up its system. Just like dictionaries don't own words, they own the specific way they're organized.

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  Pantone won, and that early legal victory cemented that its codes, recipes and systems were proprietary, even if the idea of defining colors wasn't. It scared off imitators and slowly turned Pantone into a near monopoly. And over time, Pantone slowly seeped into very trivial, unusual and sometimes even thoughtful spaces. Calvin Klein reportedly kept a Pantone chip in his kitchen to show his chef the exact color he wanted his coffee to be. In Japan, hospital workers wear Pantone colored scrubs, that's clothing worn by healthcare workers, in different shades for each day of the week so that patients needing acute long-term care can tell what day of the week it is. Heck, even eye peel jerseys, C S K yellow, R C B red are color matched using Pantone, so they look exactly the same season after season.

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  But to become such a giant, you need a repeatable revenue. And just selling color guides doesn't quite cut it. Just think about it. Pantone could release a guide today and clients might buy it once and never need another. Especially if they're, say, a formal textile company that only works with a limited palette of blacks, whites, browns and beiges. Pantone saw that coming and engineered a way around it. Ink and paper naturally oxidize and yellow over time, even if it's washed on premium quality paper or fabric. So Pantone explicitly recommends replacing guides every twelve to eighteen months to maintain color accuracy. In other words, what looks like a one-time reference book quietly becomes a recurring subscription. And these guides don't come cheap.

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  A full professional plastic chipset stacked in a rotating tower display can cost upwards of nine thousand dollars. Smaller guides range from three hundred dollars to two thousand dollars each. Creative agencies, print shops, textile makers and brands often buy multiple sets for different offices, teams or processes, keeping revenue steadily flowing. This single product category is estimated to account for roughly half of Pantone's business. The rest comes from consulting, licensing and digital tools. Manufacturers from paints to plastic to fashion pay to Licensed Pantone colors. The company even developed the formulation for minion yellow. The exact shade used for the characters in the animated film Despicable Me and its franchises.

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  That brings us to the other and arguably the most fascinating strategy that nudges us to write the story. The Pantone color of the year, which the company revealed just yesterday. Every December since two thousand, the Pantone Color Institute unveils a color for the year ahead. Sparking media buzz and shaping trends across fashion, design, advertising and consumer products. Twenty twenty six's color is Cloud Dancer, a shade of serene white and its code Pantone eleven four two zero one. The annual reveal earns Pantone tons of free publicity, reinforcing its image as a global authority on color. And the chosen shade, whether twenty twenty two's Very Perry, twenty twenty three's Viva Magenta,

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  twenty twenty four's Peach Fuzz or this year's Mocha Moose, quietly influences shopping behavior and product development across industries. Pantone cites studies suggesting that color steers up to eighty five percent of purchasing decisions and can boost brand recognition by eighty seven percent. The color of the year also fuels licensing revenue as brands roll out limited edition products in the chosen shade, often in partnership with Pantone. The Moto Razor is a classic example. It releases phones in the newly announced color every year and twenty twenty six is likely to be no different. So, if you suddenly see this specific pastel shade of white everywhere in merchandise, cosmetics or clothing, remember it's no coincidence.

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  It's Pantone's subtle marketing machine at work, cementing its soft power around the world. Alright folks, I'll see you in the next one. Have a happy weekend.

• 10:31Speaker 00

  Thank you for listening to today's episode. And if you want to share your feedback or suggestions, do drop us an email to [email protected]. Until next time.