Oettinger Davidoff (Davidoff) is reporting that while total sales for the 2019 financial year were down slightly by 9.4 percent, the company still managed to strengthen its position as a leading supplier in the global premium cigar market.
Even despite a slightly decline, Davidoff was able to meet its financial targets and improve its overall cash performance in comparison to 2018. The company attributes this success to its launch well-received new limited editions, increased brand awareness with a focus on digital consumer engagement and the positive financial of its “Way Forward” transformation roadmap it rolled out in 2018. In looking at the different brands, the Basel-based company recorded a decline of 3.6 percent compared to the previous year. This follows a strong 2018 year that included anniversary releases and celebrations for Davidoff and AVO brands. The Davidoff brand saw growth of 1.6 percent as its share of the super-premium segment continued to grow. Camacho saw a decline of 2.9 percent and AVO a decline of 12.6 percent, but both remained stable in the view of the company.
Davidoff attributes some of the decline in its business to a loss of its rack jobbing business in the Swiss confectionery market. Net sales decreased by 1 percent and sales performance was impacted by a challenging U.S. market where the premium cigar industry saw unprecedented rebates and inventory reduction programs by some key customers. In addition, social unrest in Hong Kong affected local retailers and duty free business throughout the region. Davidoff also concluded that improved sales performance of third party brands, especially sole agencies, was a key performance driver in 2019.
Innovation and Success
Oettinger Davidoff engaged with its customers and consumers with several new product launches that appealed to various palates in 2019. The main focus of 2019 was on Davidoff’s release of the Winston Churchill Limited Edition 2019, Davidoff Robusto Real Especiales 7, and the Davidoff Year of the Rat, which was released at the end of the year. In addition, Davidoff released two masterpiece humidors in cooperation with artists Rose Saneuil, who worked on the Masterpiece Humidor Terroirs, and French father artist Emille Moutard-Martin, who worked on the Masterpiece Humidor Royal Release. AVO and Camacho also contributed to Oettinger Davidoff’s 2019 portfolios, including the launch of the AVO Improvisation Series, Camacho Distillery Edition and the Camacho Diploma Robusto Black.
In looking ahead to 2020 and beyond, Davidoff states that working with the trade category is key to its longterm plan. Davidoff has done this through opening more Davidoff-branded lounges in places like St. Petersburg and Moscow and walk-in humidors in airports located at Istanbul, Shanghai and Beijing. The company also licensed new boutiques in Shenzhen in the autumn of 2019 and the Seminole Hard Hotel & Casino in Hollywood, Florida.
“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 omni-channel brand and shopping experiences,” comments CEO Beat Hauenstein.
Building the digital footprint of Davidoff will be a major initiative in 2020, attributed to the rapid development of digitalization and the new mobile shopping and interaction behavior of today’s consumer. This has been intensified and accelerated by the COVID-19 pandemic. Davidoff will be making other investments in e-commerce and virtual engagement with cigar smokers through online tastings and seminars.
Davidoff is still several years into its five-year plan, “Way Forward,” which was introduced back in 2018. It’s through this plan that the company plans to continue to grow its presence in the hand-rolled premium cigar industry and to be seen as a leader within the category. The program has also helped Davidoff achieve success and positive results in 2019. As with many businesses, COVID-19 presents challenges for Davidoff, especially in the global travel retail segment.
“The consequences of this extraordinary and unprecedented situation are not clearly foreseeable from today’s perspective. 2020 will be a challenging year also for us,” Hauenstein explains. “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.
“In addition, our long-term investment in the ‘Crop-to-shop’ philosophy is proving extremely efficient and enables us to supply our customers without interruption and in the usual highest quality, ensuring that our aficionados around the world continue to enjoy ‘time beautifully filled’ moments. Being a reliable business partner in times of crisis is another important quality aspect for us.”
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Photos courtesy of Oettinger Davidoff AG