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Davidoff Art Initiative. From left to right: Oettinger Davidoff Group President and CEO Hans-Kristian Hoejsgaard; Sara Hermann, art historian and curator based in the Dominican Republic; András Szántó, New York-based writer, researcher and Chief Consultant to the Davidoff Art Initiative Photos by Thomas Entzeroth |
Basel-based Oettinger Davidoff Group, a worldwide leader in the premium cigar business, has unveiled sales and profit growth for 2012. The results were presented at its annual media conference, held in June 2013.
Sales of its own brands of cigars increased by over +5% compared to the previous year. All major markets grew, but with nearly +20%, the US drove growth in 2012.
Asia and Global Travel Retail & Duty Free also posted strong growth. Davidoff’s market share in the premium cigar segment amounts to approximately 8% worldwide.
But the group’s turnover slightly decreased from CHF1.29 billion to CHF1.23 billion (-4.5 % compared to the previous year) due to the divestment of activities outside the core business segments, in particular the petrol station shop unit and the restructuring of the distribution and wholesale arm.
The firm’s own cigar production was cut back due to the high level of stocks and amounted to 31.2 million units in the past year (previous year 34.4 million).
In light of these developments, the organisational and structural measures introduced have also had a positive impact on profitability and liquidity, the company reported.
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“We are very satisfied with the progress made in strengthening our core business during the past year” – Oettinger Davidoff Group President and CEO Hans-Kristian Hoejsgaard |
Strengthened global market positioning
“We are very satisfied with the progress made in strengthening our core business during the past year,” said President and CEO Hans-Kristian Hoejsgaard with regard to the 2012 results.
“However, the implementation of the strategic realignment of Oettinger Davidoff Group is not yet completed. As a result, the group will become smaller in terms of turnover, but will be clearly strengthened in terms of its earning power and positioning as a global market leader for premium cigars.”
The product strategy has also been adapted as part of the strategic realignment of the group.
The transition from a “branded house”, which primarily focused on the Davidoff brand, to a “house of brands”, which includes the flagship brands Camacho and Zino Platinum, as well as important international brands such as AVO and Griffin’s, opens new geographic markets and access to additional customers for the company, Hoejsgaard said.
The beginning of cigar production from prime Nicaraguan tobaccos constitutes an additional milestone in the history of the group, after Davidoff already very successfully launched the Puro d’Oro range, consisting of strong, purely Dominican tobaccos in 2010.
The newly created Davidoff Nicaragua will be launched in July 2013, initially in three formats in the US and then worldwide, in September. It will complement Davidoff’s existing range of products, which is dominated by Dominican tobaccos, with stronger Nicaraguan tobaccos.
“Davidoff Nicaragua is an essential step in the expansion into new areas and for the positioning of Davidoff as a brand and not as a territory,” said Hoejsgaard.
New airport stores opened
The further expansion of the worldwide presence of the products as part of the “crop-to-shop” strategy was also a priority during the past year.
After the investment-intensive modernisation of the Swiss flagship stores at Basel, Zurich-City and Zurich Airports, as well as Lucerne, new stores at Hong Kong and Taipei airports were opened. The same renovation concept will be implemented in the cities of Frankfurt, Tokyo, Geneva and Brussels.
The centrepiece of these flagship stores is a large walk-in humidor, in combination with a cigar lounge wherever possible. The number of Davidoff cigar lounges is growing, not least due to the increasing bans on smoking in public places, Hoejsgaard noted.
Davidoff has a network of locations with flagship stores, depositaries and lounges in over 150 countries.
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“Davidoff Nicaragua is an essential step in the expansion into new areas and for the positioning of Davidoff as a brand” |
Large growth potential in Asia
As part of its expansion strategy, Oettinger Davidoff Group has founded additional branches in Austria and Russia with strong local partners during the past year.
While the Austrian market is traditionally among the top ten Davidoff markets when measured by its market share, the Russian cigar market still offers high potential for development.
In addition to the 55 cigar shops in various Russian cities, the group is also planning to open new flagship stores in Moscow, St Petersburg, Yekaterinburg and Krasnodar, as well as additional shops and lounges.
“There is also extraordinary potential for Oettinger Davidoff Group in Asia and in particular in China, whose cigar market is growing by +20% annually, albeit from a still low level,” Hoejsgaard said.
Successful partnership with Art Basel
The association between Davidoff and last year’s Art Basel exhibition, which was held in Basel, Miami Beach and Hong King, proved to be a “complete success”.
As part of this collaboration, a cultural programme entitled the Davidoff Art Initiative was launched, which aims to promote art and artists from the Dominican Republic, the home of Davidoff cigars.
Its key component is a residency programme which, every year, will enable five artists from the Dominican Republic to visit a major international art city for several months. For the first time, the initiative made workshops and studios available to these Artists in Residence, in New York, Berlin and Beijing. Two additional partners are still being evaluated. At the same time, international artists may apply to stay in the Davidoff Residency in the Dominican Republic.
Additional pillars of this programme are Davidoff Grants, Dialogues and Editions. A newly founded International Art Advisory Council supports the implementation of the Davidoff Art Initiative programme.
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“Oettinger Davidoff Group is very confident that it can further build on its strong position in the mature markets and, in particular, profit at an above-average rate from the strong growth of the Asian markets” |
A confident outlook
Hoejsgaard concluded: “As a privately held company, the Oettinger Davidoff Group pursues a strategy aimed at continuity, substance and long-term success. In the implementation of this strategy, the complete vertical integration crop-to-shop of the cigar business – in particular its premium Davidoff brand – is of great significance because it enables tight control of the quality of the products and services. This constitutes a significant competitive advantage in the premium segment and in particular in the segment with cigars as natural products.
“As before, Oettinger Davidoff Group wishes to actively participate in the further consolidation of the premium cigar market. The continuous expansion of its global market presence and the innovative enlargement of the product portfolio should continue to ensure growth in the premium cigar segment in the coming years.
“Oettinger Davidoff Group is very confident that it can further build on its strong position in the mature markets and, in particular, profit at an above-average rate from the strong growth of the Asian markets.”
