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Oettinger Davidoff AG has posted strong global sales growth for its premium Davidoff brand in 2013, hailed by the group as the most successful fiscal year in the history of the brand.
Despite an overall -2% decline in group turnover to CHF 1.206 billion (US$1.35 billion) as a result of divestment in the non-core business, the Davidoff brand registered +18% growth in the USA and over +11% growth in Europe. The Travel Retail and Duty Free market saw growth of over +7% – the group profited from its numerous and increasing number of duty free shops, which represent a key off-shore market of over 100 million Chinese tourists.
“The strategic focus on our core business in cigars, which was introduced in 2012, can already be seen to have had an effect in the [2013] fiscal year, particularly in the growth of the Davidoff brand sales figures,” explained CEO Hans-Kristian Hoejsgaard. “This last year has therefore been the most successful year in the history of Davidoff, with a +14% increase in our global sales of the Davidoff brand in the second half of the year.”
Oettinger Davidoff AG also achieved a solid performance for all of the brands that it distributes, which include flagship brands Camacho and Zino Platinum, as well as leading international names such as AVO and Griffin’s. Sales turnover grew by +4.6%, despite the fact that the European market declined by -5%. Further, in the USA sales increased by +6.2% in a total market that is experiencing modest growth. As a result, the group gained in market share in both Europe and in the USA. In contrast, growth in Asia was put under considerable strain in China, with the introduction of restrictive state regulations on luxury products.
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“This last year has therefore been the most successful year in the history of Davidoff, with a +14% increase in our global sales of the Davidoff brand in the second half of the year,” says Oettinger Davidoff CEO Hans-Kristian Hoejsgaard |
A record 38.9 million own-brand cigars were produced in 2013, an increase of +24% over the previous year. This was supported by the successful launch of the Davidoff Nicaragua, a premium cigar made of Nicaraguan tobaccos.
The company said its profitability has also improved as a result of strategic and structural measures and additional cost reduction programmes.
Oettinger Davidoff AG anticipates continued turnover growth and improved profits in 2014, thanks to growing demand in Asia, the USA, in the travel retail and duty free sector, further anticipated market share gains in Europe and new products.
Changing consumption habits in Europe and record results in the USA
The company noted how increasing international legal restrictions in almost all markets have had an effect on market behaviour. For example, the seasonal demand in consumption has changed, primarily in Europe: people are smoking more in summer than they used to. A clear trend towards shorter cigars has also become evident. Finally, it is apparent that in the 28-40 age group, a premium cigar is increasingly being seen as “an indulgent treat just as much as a good glass of wine or good food”.
The Davidoff Nicaragua line has become, in this past year, the most successful product launch since the redirection of the company after it withdrew from Cuba in 1989. At times, demand is said to have outstripped budgeted production by almost double, which caused temporary supply bottlenecks.
This extraordinary success and the relaunch of the Camacho cigar, which has a long tradition in the USA, has contributed to Oettinger Davidoff experiencing the most successful year in its 25-year history in North America, the company said.
Organisational measures take hold
As part of the structural streamlining and focus on its global and Swiss core competencies, Oettinger Davidoff has in the past year consolidated its wholesale business in Switzerland into one company, established its own branches in Austria and Russia in the tobacco sector, initiated the takeover of its former trading partner in Spain and expanded sales and distribution in Central Asia and Africa.
Within the framework of the retail concept announced the year before last, shops in Tokyo and Seoul and at airports in Hong Kong, Taipei and JFK in New York, among others, were adapted to the new design and brand image.
A number of product and marketing initiatives were also eventually reflected in the final quarter of 2013 in turnovers that experienced considerable growth, and the Davidoff brand achieved gains in market share in a declining total market.
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Inside the walk-in humidor of the revamped Davidoff flagship store in Tokyo’s Ginza district, which has been adapted to the new design and brand image |
Cultural initiatives as part of the sustainable company policy
Honing its profile as a globally active, socially responsible company, Oettinger Davidoff has expanded its partnership with Art Basel. In addition to collaboration at trade fairs in Basel, Miami Beach and Hong Kong, the partnership involves a global cultural project called the Davidoff Art Initiative, which aims to promote art and artists from the Dominican Republic, the home of Davidoff cigars.
The four global programme areas of the Davidoff Art Initiative are: Davidoff Art Residency, Davidoff Art Dialogues, Davidoff Art Grants and Davidoff Art Editions.
Recently, the foundation was laid for the Davidoff Art Residency at the Dominican Altos de Chavón School of Design in La Romana. Every year from 2015 onwards, the residency will invite five international artists to spend three months at the School of Design.
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The groundbreaking ceremony for the Davidoff Art Residency studios at Altos de Chavón | |
Ambitious outlook
The first five months of 2014 have seen a strong, two-figure percentage growth, and CEO Hans-Kristian Hoejsgaard intends to continue increasing the core business turnover in the current year.
To this end, substantial investments will be made both this year and next in launching new brands, relaunching existing brands with high growth potential and developing the existing product range. Past investments have included the introduction of the Camacho cigar, having already been very successful in the USA, in Europe and the launch of the first Davidoff vintage cigar made in 2002, the most expensive cigar produced by Davidoff to date.
New Davidoff flagship stores will be opened in Frankfurt, New York and Kuala Lumpur in 2014, a separate company will be established in Spain, and in Dubai a dedicated office will be put into service in recognition of the growing significance of this region.
In addition, over 200 Davidoff shops-in-shop will have been opened around the world by the end of this year.
