Victorinox AG - Spinning Off New Products into the 1980s and 1990s

Spinning Off New Products into the 1980s and 1990s

Some earlier brand extensions were the survival kits Victorinox had assembled as a natural complement to its pocket-knives. A broader diversification began in earnest after Forschner registered the Swiss Army name as a trademark in the 1980s, clearing the way for product spinoffs such as sunglasses and wristwatches. The watches, which retailed between $75 and $500, performed beyond expectations. The granting of the trademark provoked some public questioning since the Swiss Military Department did not require royalty payments in return. It did stipulate, however, that such products be made in Switzerland and be of "exceptional quality." In 1996, Forschner, then known as Swiss Army Brands, did agree to pay royalties, however.

The deal prompted a lawsuit from Precise Imports Corp., U.S. and Canadian importer of Wenger knives, which was settled in 1992. Forschner retained the rights to use the Swiss Army trademark on its compasses, timepieces, and sunglasses, while Precise could use it in marketing other non-knife items. Watches under the Wenger brand did appear in stores opposite Victorinox brand watches (made by a separate Swiss supplier). In 1992 and 1993, Canada and the Caribbean were added to Forschner's exclusive sales territory.

The connotation of quality possessed by Swiss Army knives helped U.S. distributor Forschner build a considerable business selling the knives as promotional items imprinted with sponsor's logos. Lyndon Johnson reportedly gave away 4,000 of the knives embossed with his signature, starting an enduring White House tradition. Approximately 100 companies bundled Swiss Army knives with their wares to entice consumers in the 1990s. Massachusetts-based Cyrk, Inc. specialized in this type of marketing.

Pharmaceutical companies such as Eli Lilly bought hundreds of thousands of the knives to promote new drugs. In 1989, Forschner sold nearly $10 million worth of them this way. The knives made medical news more than once, being used by doctors in emergency in-flight tracheotomy operations to save choking airline passengers. Not surprisingly, a special blade was eventually created for this purpose, as well as a tool for pulling cotton out of medicine bottles.

The renewed vigor of Victorinox in the 1980s and 1990s inevitably began to arouse competitors. Schrade Cutlery introduced a German version of the knife. Wenger made an agreement with Buck in 1991 to market knives under the well-known American brand name.

In 1992, Forschner sued to prevent the Arrow Trading Co. from importing Chinese clones displaying a white cross and shield and the words "Swiss Army." Victorinox introduced the genuine article to the Chinese market in 1993, when worldwide sales totaled $148 million (only $83,000 of this garnered in China).

Various refinements helped broaden the knife's appeal. Victorinox attempted to make the knives more attractive to female buyers by offering them in various colors. The Executive model, a small knife featuring tools such as a nail file and orange peeler, sought to cut out a place for Swiss Army knives in the business world. The SwissCard embodied the concept in the form of a "credit card" a fraction of an inch thick, which sported a toothpick, tweezers, letter opener, pen, and scissors.

Company Perspectives:

Our efforts to offer consumers around the world functional and practical high quality products at affordable prices gives our lives deeper meaning and adds joy and satisfaction to our work.

In the mid-1990s, Victorinox had an 80 percent market share for Swiss Army knives outside Switzerland. Sales to the Swiss Army itself had dwindled to less than 1 percent of the company's output. Victorinox also made kitchen knives carrying the Forschner brand name, as well as daggers and kitchen knives for the Swiss Army. Victorinox made 400 different chefs' knives as well as at least as many variations on the Swiss Army knife. Only a fraction of these models (40), however, were marketed in the United States.

Forschner changed its name to Swiss Army Brands, Inc. (SABI) in the middle of the decade to reflect the company's principal focus. Its sales were $130.01 million in 1996. Swiss Army brand extensions earned nearly half of this; the knives themselves earned slightly more than one-third.