Sensorial experiences, cross-category partnerships and digital innovation are among the dynamics that will drive Oettinger Davidoff’s future in travel retail, writes Kapila Ireland. That’s according to Senior Vice President Europe and Global Travel Retail Martin Kaufmann.
He tells The Moodie Davitt Report: “The experiential part of shopping in travel retail, which includes self-education and sensorial experiences, and the digitalisation of the travel shopper’s journey will create more potential for the category.”
Last year delivered solid growth for the company, driven by Davidoff Cigars, which accounts for 86% of travel retail sales. “Davidoff is leading demand by far and we have experienced continued success fuelled by our latest launch – Winston Churchill The Late Hour. Launched at the end of 2017-beginning of 2018, it’s doing extremely well across channels.
“We also had success in 2017 from the black label Discovery Pillar (Nicaragua, Escurio and Yamasá) that launched a few years ago. Both ranges are driving new entrants to the brand.”
New launches this year revolve around Davidoff Cigars’s 50th anniversary celebrations, for which it has planned a series of events and specially commissioned cigars and accessories.
For a limited time only, a selection of five Davidoff cigars will carry a commemorative 50th anniversary white ring. It is inspired by the original white ring that first appeared on creations such as the Ambassadrice, the No. 1 and No. 2 in 1968.
Davidoff Signature No. 2, Davidoff Signature 2000, Davidoff Aniversario, Special R, Davidoff Aniversario No. 3 and Davidoff Aniversario Entreacto carry the commemorative Davidoff 50th anniversary main ring.
Cross-category partnerships
The company is also exploring other categories and segments as it seeks to establish new partnerships in travel retail.
The Masters Evening, held by Davidoff Cigars and partners Neuhaus and Flor de Caña at this year’s Duty Free and Travel Retail Summit of the Americas in Orlando, and at last year’s TFWA World Exhibition in Cannes, is an example of a cross-category partnership in action.
Guests sampled pairings between Davidoff’s Yamasá or Winston Churchill The Late Hour cigars with Neuhuas pralines and the super-premium Nicaraguan rum. “We are all masters in our respective categories,” says Kaufmann. “Long-established family companies with a good match in tradition and a focus on pioneering innovation.”
Such experiential elements, combined with digital innovations, are key to creating cross-category selling opportunities in the airport environment. “The airport is the ideal place that combines the physical experience with the digital. It is complementary and synergistic. This is perfect for cigars, which is not an impulse category – it is highly engaging and sensorial,” explains Kaufmann.
He adds: “We see strong and consistent interest from airports and retailers in collaborating with premium cigars because it is a category that attracts an affluent consumer.
“While premium cigars is a small category compared to others, it attracts a shopper that does a lot of cross-category shopping. There is clearly a strong future for having more and a better-displayed premium cigar category,” he says.
A prime example of how premium cigar representation can bring in shoppers who make cross-category purchases is the Oettinger Davidoff’s walk-in humidor at Frankfurt Airport. This opened in December 2016 in partnership with Gebr Heinemann, under the banner ‘Davidoff of Geneva– since 1911’.
“Heinemann has a great understanding about how this can lift the experience and create a ‘win-win-win’ situation for consumers, operators and for us. This is an area we are going to continue to drive.”
Last year, the company partnered with SDA (Société de Distribution Aéroportuaire), the joint venture between Lagardère Travel Retail and Group ADP, to open a walk-in humidor at Paris Charles de Gaulle Airport Terminal 2E. The partnership specialises in pairing limited-edition cigars with quality spirits.
“We continue to see success [in this location], which has had a fantastic start and continues to grow. The success factors are the concept of the store and the staff. They make all the difference,” he notes.
Kaufmann reveals that Oettinger Davidoff has plans for walk-in humidors. “China plays a big role. There will be two big openings there – one is at Hong Kong International Airport with the CDF-Lagardère joint venture. Istanbul New Airport is also a long-planned opening with Gebr Heinemann. We are also planning one at Geneva Airport with Lagardère.”
Elevating the experience
Kaufmann also notes how travel retail is becoming more adept at using digital to create experiences for travellers.
Leveraging digital and social media is an important part of Oettinger Davidoff’s efforts to engage with travellers, although the cigar category remains restricted in how it can communicate with consumers.
The company engages with third parties such as bloggers and social media influencers who are passionate about the category, providing them with stories and experiences to share.
“We also try to meet the interaction needs from consumers at the point of sale. Travel retail will remain an area where there is more brick and mortar activity. At home, people can order online instead of going into the city if they want a product. In the airport they will most likely go into the shop, therefore, it is important to deliver more experience in this environment,” Kaufmann explains.
In Cannes last year, Oettinger Davidoff showcased its walk-in humidor and virtual reality experience where travellers can employ all five senses to learn about the production of its cigars. In travel retail, this aspect can be shared on social media.
Developing a culture
In the Chinese domestic market, the company is exploring how to leverage WeChat, through which it launched a presence last year. The move allows Oettinger Davidoff to provide consumers with information and also target and track clients and cigar aficionados. “This is a seed we need to plant in the domestic field first. There is a lot more work we need to do to develop category knowledge and awake the interest in this market.”
Kaufmann notes that China is still developing a cigar culture. Around 50% of purchases in travel retail are for gifting. “We see dynamism in China as a growing number of people are becoming interested in premium cigars. Much like with the wine culture that has grown in the country, consumers are becoming educated in cigars. The trend is most prominent among people of around 35-45 years old, who want to enhance their lifestyle.”
The Middle East and Africa are both regions where Kaufmann is seeing a growing interest in cigars. “Africa is obviously starting from a much smaller base but there is a certain level of wealth in many parts which is seeing more people adopt a lifestyle that fits with our offer,” he says.
On a wider scale, there are a growing number of consumers under the age of 50 entering the category. “They are more open to trying out new things and so there are less preconceptions about the origins of cigars,” he says.
The older generation know, and often stick to, their preferences, he explains. “It’s great to see those new groups moving along with slightly different approaches. We feel that the innovations we have launched over the past 4-5 years are highly appreciated by these customers and create a renewed sense of impulse in the category.”
Last year was a challenging year for the cigar industry as new and costly anti-tobacco legislation was introduced in both the EU and the USA. “This remains our biggest challenge but we have navigated through it fairly well by being prepared.”
“Unfortunately, we still don’t see enough differentiation made between the premium cigar category and cigarettes. They are different worlds, but we have to deal with the same challenges,” he notes.
Interaction is key
Sales staff play an important role in educating the customer. According to Kaufmann they are the single strongest business driver when it comes to tools and measurement and key indicators of performance.
The cigar specialist introduced the Davidoff Academy last year. “It is a tremendous contributor to training staff, not only in terms of gaining knowledge about products, the brand and the category but also interacting with shoppers from around the world.”
Premium cigars is not a self-serve environment or category – direct contact with staff is key, therefore they plan an important role in the shopping experience. “I believe travel retail has become more of a shopping temple that you partly find in domestic retail environment. But experience, not price, is the key motivator here,” he says.
For Oettinger Davidoff that means leading the charge in the premium cigar category with more walk-in humidors, cross-category partnerships and memorable experiences. Kaufmann concludes: “We want to create wonderful places to shop cigars.”
