Winchester Takes a Shot at Licensing

April 29, 2003
American Lawyer Media's LAW.COM, April 23, 2003
An old-line ammunition company licenses its name as a lifestyle
 
Winchester Ammunition stopped making guns in 1981, long before Congress and plaintiffs' lawyers started shooting blanks at the industry. Winchester, afraid there wasn't much future in bullets, decided to leverage its name and image instead. Starting in 1993, the company began putting its name on knives, pepper spray and dog beds -- any product that could benefit from Winchester's logo.
 
Winchester did not embark on this crusade by itself. The company hired Leveraged Marketing Corporation of America (LMCA), a New York-based firm that helps companies "extend" their brands. Brand extension is the practice of licensing a brand into a related market, as a way for the licensor to collect revenue and gain recognition and for the licensee to gain credibility. For example, Godiva and Starbucks don't actually make their own ice creams -- Dreyer's Grand Ice Cream Inc., does under license. But bullets and coffee beans present two different challenges. "We wanted [Winchester] to become more than a gun and ammunition company, to grow into new industries not affected by antigun legislation in a way that nourished the brand," says Allan Feldman, president of LMCA.
 
Winchester has a famous name, a well-known trademark -- a galloping horse and rider -- and a loyal clientele. The Winchester moniker already suggests such concepts as hunting and outdoor activity. And the marketing team saw an opportunity to extend the brand into the security and self-defense markets. The company sold ammunition to police departments, so why not sell them related safety gear? The challenge for Winchester and LMCA was to find companies in these markets that wanted to align with an ammunition company.
 
In its 10-year life, the campaign has certainly paid dividends. Today, Professional Safety Inc., makes Winchester police batons and shoe leather dye; Gerber Legendary Blades sells Winchester knives and tools; Clear Creek Company sells Winchester dog beds and rifle slings. There is a Winchester-brand safe and even Winchester-sponsored self-defense training program for police departments.
 
Most licensees team up with Winchester for three to five years, and agree to give the company anywhere from 5 to 15 percent in royalties. Winchester can terminate licensing contracts if a licensee does not meet minimum sales and quality requirements.
 
Vicki Boeker, Winchester's licensing manager, negotiates the deals, and Susan Fishbein, an in-house lawyer at Olin Corp., reviews the contracts. If complicated issues come up, they turn to Wiggin & Dana of New Haven, Conn.
 
The brand extension program keeps extending. Look for a Winchester men's fragrance to hit stores soon. General Motors Corp. is testing a Winchester options package for the Chevy Suburban. The vehicle is fire-truck red, with a horse and rider on the rear, metal work reminiscent of firearm engraving inside, and a built-in gun case for hunting.
 
In 2002, Winchester had sales exceeding $280 million. Although Winchester's profit figures are not publicly available, company officials say that for every $2 in ammunition earnings, licensing provides about $1. The future growth of the company turns largely on its branding campaign. "Licensing is probably the most important asset the company has," Boeker says.
 
In Europe, Winchester has pushed its brand image even further. It launched a designer-jean line in France and a line of sunglasses in Spain. In other parts of Europe there are Winchester furs, watches and women's purses. "In Europe, people see Winchester not as an ammunition brand, but as a Western brand," says Joe McGraw, Winchester's business and product development director.
 
Don't look for Winchester jeans in Bloomingdale's anytime soon. The Winchester brand sells better at Wal-Mart and Kmart than at upscale department stores. Says McGraw: "[Winchester's] constituency is not one who is going to march against guns."