Swiss cigar company Oettinger Davidoff has said that the COVID-19 crisis will have a significant effect on its 2020 performance due to its reliance on international markets. As the group revealed 2019 results, CEO Beat Hauenstein said: “The consequences of this extraordinary and unprecedented situation are not clearly foreseeable from today’s perspective. 2020 will be a challenging year for us.”
Oettinger Davidoff posted sales of CHF453 million (US$469.7 million) in 2019, a -9.4% year-on-year decline. Despite this, the company said that it met key financial targets, in particular by improving its cash position compared to the previous year.
In Oettinger Davidoff’s Own Brand business, sales dropped -3.6% compared to 2018. In 2019, the Davidoff brand expanded its market share in the super-premium segment and grew +1.6%; Camacho (-2.9%) and AVO Cigars (-12.6%) remained stable on an adjusted basis, the company said.
The decline in consolidated total sales was largely due to the loss of a rack merchandising business in the Swiss market. Other impacts came from social unrest in Hong Kong, which affected the duty free business and local retailers in the region. Inventory reduction by key customers in the US also had an impact.
In 2019, the premium cigar company opened walk-in humidors at airports in Istanbul, Shanghai and Beijing. It also revealed lounges in St Petersburg and Moscow, as well as a licensed boutique in Shenzhen.
Hauenstein said: “As an innovation leader in the premium cigar business, we are committed not only to providing innovative products, but also to working with our partners and customers to create innovative and unique omnichannel brand and shopping experiences.”
The Basel-based family company said that highlights of last year included the launch of new limited editions, increased brand awareness through digital engagement and the positive financial impact of the Way Forward transformation roadmap launched in 2018.
New limited editions for the core Davidoff brand included the Winston Churchill Limited Edition 2019, the Davidoff Robusto Real Especiales 7 and the Davidoff Year of the Rat released at the end of the year.
The company said it will continue to enhance its digital engagement in response to increased mobile shopping, something that has intensified in the wake of COVID-19. Oettinger Davidoff said it would bolster its online presence with the cigar community through online tastings and seminars.
The five-year Way Forward plan, the company continued, is achieving its aim of expanding Oettinger Davidoff’s strong position in the hand-rolled premium cigar business.
“Thanks to our entrepreneurial robustness, which we have achieved through the success of Way Forward, and the timely, coordinated and effective measures taken in response to the coronavirus pandemic, we look to the future with confidence,” Hauenstein concluded.
