Chris-Craft Is Sold to Winnebago
Chris-Craft, the iconic brand that was founded in 1874 by Chris Smith and at one time became synonymous with recreational motorboating, was sold this week to another iconic brand – Winnebago, a name synonymous with RVs. Winnebago is a publicly traded company that had sales of $1.55 billion in 2017. Chris-Craft president, Stephen Heese, said about the sale, “We look forward to further developing our storied brand while leveraging Winnebago’s capital and resources to accelerate our growth and continue delivering an exceptional product experience for our dealers and customers.” It was announced that Heese will continue as president.
The Back Story
Prior to the acquisition of Chris-Craft in 2001 by Stephen Heese and Stephen Julius, the brand had been batted around, bought and sold for over two decades, largely on the strength of its world-famous name. With each new owner came a new vision, or lack of one, for the legendary brand. When OMC (maker of Johnson and Evinrude outboard engines) started buying “transoms” for its outboard motors, Chris-Craft was one of its boat-company acquisitions. Then, in 2000 OMC’s financial house of cards came falling down, and a bankruptcy judge put Chris-Craft and the company’s other holdings on the auction block.
The Visionaries
Heese and Julius acquired Chris-Craft from the court in 2001. Not only did these two men have a vision for Chris-Craft, but they had a proof of concept. Stephen Julius was and still is the founding partner of the London-based private-equity firm of Julius, Stellican, Ltd. Four years before it had purchased the Italian builder Riva when it went out of business. Julius and his team at Riva built the brand back up and sold it three years later to the Ferretti Group in 1999.
Stephen Heese shared the same vision for Chris-Craft and has been president of the company since its inception in 2001. Julius was chairman of Chris-Craft.
Marketing to the Carriage Trade
In their early days, both the American Chris-Craft and the Italian Riva were designed for freshwater lakes where wealthy people spent their summer vacations. Indeed, they were built right on those lakes. Riva was founded on Lake Iseo in Sarnico, Italy in 1842. Lake Garda and Lake Como were not far away. Chris-Craft was started in 1874 in Algonac, Michigan on the banks of the St. Clair River which flows into Lake St. Clair. Literally hundreds of lakes are within 300 miles in Michigan, northern Ohio and Indiana. Both companies made runabouts. Both led their field in the 1920s and ’30s and became closely associated with a life-style and class of people that a broader audience aspired to in the post-World War II recovery years, both in America and in Italy.
Clever Curves.There were some important parallels between Riva and Chris-Craft. The vision of the new owners was to revive the spirit of the old lines and meld them into an eye-appealing, luxurious modern version. With curvaceous tooling that requires molds within molds, lots of true craftsmanship, and a level of fit-and-finish that mass sportboat builders could not afford, the new Chris-Craft models would be too expensive for competitors to build.
The market for boats at the required price point would not only be small, but these boats would only appeal to boaters with a sophisticated and knowledgeable eye. These two elements, and others, were essentially a poison pill for competitors – the market was too small, the cost of tooling too large, and Chris-Craft by the nature of its heritage owned lock-stock-and-barrel the classic retro-look high ground. The result is that Chris-Craft has few competitors.
After buying the company, Heese and Julius immediately set about creating all new tooling to put into fiberglass their vision of the new Chris-Craft line. Their first sales goal was about 500 boats a year – not many units compared to the mass boat builders, but actually a fairly aggressive number given the price point and potential demographic. In the meantime, they slowly rebuilt the brand’s dealer base. Industry sources say that by the third year the company was profitable.
Stephen Heese is quoted as saying that in 2005 the Sarasota-based company was selling 650 units a year, which is a remarkable number given the price point and limited market for these very up-scale motorboats. Then in 2007, sales for small boats in the U.S. began to soften, and in 2008 the Great Recession began, and virtually every builder in the boating industry struggled simply to keep their doors open.
The End Game
Chris-Craft held fast to its vision during the lean years, and tooled more and larger boats in what had become a very identifiable style. And, like all boat companies, its boats just got better and better as the company matured. Generally, the boating business began to revive in 2013 and by 2015 was humming once again, albeit at lower volumes than before. Some brands, and possibly Chris-Craft is among them, in specific premium categories, have done better than others.
Today, Chris-Craft builds 17 models of sterndrive, pod drive, and outboard-powered boats ranging from 21’ to 44’. The company says that it has 90 dealers in 123 locations.
Icon Buys Icon
When the sale was announced, Winnebago Industries president and CEO Michael Happe, said, “Chris-Craft is an iconic, premium brand that shares many similarities with our own heritage Winnebago brand, including a commitment to providing customers with the highest-quality products and services. The company’s strong brand, high-quality product line and premium position in the marine market make Chris-Craft an attractive addition to our portfolio. Chris-Craft marks Winnebago’s first entry into the marine market, which we believe has significant runway for growth, with a large and increasing population of current and new boaters who enjoy extraordinary experiences on the water.”
The price of the transaction was not disclosed. Winnebago expects to maintain the boatbuilder’s Sarasota headquarters. Chris-Craft’s vice president of sales, Gavan Hunt, has told an industry trade magazine that the company will continue to be led by the same management that has been so successful before.