Winnebago Industries Looks To New Brand Portfolio For Strength

Winnebago Industries may have been an iconic brand in the minds of the American public, but five years ago the venerable recreational-vehicle company wasn’t performing like a blue-chipper in the marketplace. In the midst of a decade-long boom for the RV industry overall, Winnebago held only a 3-percent share in the market that remained practically synonymous with its name.

“That shocked people, because they associated the brand with a leadership position,” Winnebago Industries CEO Michael Happe told Chief Executive. “Winnebago didn’t have the share that it probably deserved and wasn’t participating effectively in most of the RV market. And it wasn’t providing a strong return to shareholders.”

All that began to change when the board recruited Happe to Winnebago Industries as president and chief executive in 2016 from a top job at Toro, the lawn-equipment maker where Happe worked 19 years. The new boss reshaped Winnebago by acquiring companies in key and growing sectors of the RV market and even by going outside the industry to purchase Chris-Craft, a leading boat maker.

“We needed a stronger vision of where we wanted to be in the future,” Happe concluded. And already by 2020, Happe had secured the foundation for that future, boosting Winnebago’s revenues to $3 billion for fiscal 2021 from just $1 billion in fiscal 2015 and elevating the company’s market capitalization to more than $2 billion now from just $450 million in January 2016. Winnebago’s market share has risen to more than 12 percent.

Winnebago builds its traditional motor homes in Forest City, Iowa, where the company is headquartered. But over the course of the industry’s boom in the last decade, buyers moved away from Winnebago-style offerings – an RV built integrally onto a truck chassis – to trailers that are towed by a “fifth wheel” attachment behind a pickup truck or SUV. A main reason for the change was that the diversity of towable trailers, and the broad price range, make RV-ing desirable and affordable for a much broader swath of the U.S. population than only those who want and can pay for a motorized home.

So Happe plunged Winnebago into the towables world by acquiring Grand Design, which he called “the fastest-growing brand in the history of the RV industry.” The move “increased our credibility as an overall [RV] company and began to give us, candidly, the strategic and financial confidence to continue to invest in our core and look for other ways to grow.”

The new chief also got the company into a niche upscale of traditional Winnebagos by buying Newmar, which makes luxury motor homes that typically sell for six figures. Both brands are built in Elkhart County, in northern Indiana, the capital of the RV industry worldwide.

“We compete with two huge players in Thor Industries and Forest River” that collectively enjoy about an 80-percent share of RV sales, Happe said. “We are taking a stronger but different approach to the market by targeting discerning buyers who are interested in a premium brand and product, and service after the sale. You can be a low-cost, high-volume player or a differentiator, and our strategy has been to try to put together a portfolio of premium brands and being a differentiator in the industry.

“We think of it as creating golden threads of quality, innovation and service – the parts of our DNA that [differentiate] us.”

As a result, Winnebago Industries now competes in a majority of the North American RV market and actually sells a higher percentage of towables than of motor homes, “a complete reversal of what we looked like five years ago,” Happe said.

An even more significant aspect of Winnebago’s new appearance was its acquisition of Chris-Craft, a venerable marque that makes luxury boats in Sarasota, Florida. “After Winnebago’s near-death experience” in 2009 and 2010 in the wake of the Great Recession, Happe said, “one of the things that the board gave to new leadership was to pursue profitable diversification … to build a foundation for the company that was stronger.”

Happe recognized that the marine industry “isn’t exactly counter-cyclical” to RV sales because both rely on a good U.S. economy, strong disposable income and financial confidence by upper-income consumers. “But we believe marine possesses some of the same demand in terms of secular popularity, and it’s actually a very similar business to RVs in terms of the value chain from an operational standpoint.”

And accessing the boat market via Chris-Craft gave Winnebago “a low-risk, hopefully high-reward entrance strategically…with a brand that was second to none.”

Nowadays, Happe said, Winnebago enjoys strategic coherence around a business model “which is families and friends creating tremendous memories in the outdoors. The businesses we want to be in really all share that glue.”