Despite a number of ongoing geopolitical concerns across the
globe in the Middle East, Russia, Africa and Hong Kong, Oettinger Davidoff CEO Hans-Kristian
Hoejsgaard seems unfazed by the perfect storm that is rattling a number of
other luxury goods producers.
Speaking at the TFWA World Exhibition in October,
Hoejsgaard, who is quietly turning the traditional Swiss cigar company Davidoff
into a modern, contemporary luxury goods house, admitted there are concerns in
many areas of the world, but it’s the Hong Kong protests that began in
September that have affected the company, albeit in a limited way. “Our
business on Hong Kong island has been affected, but in Kowloon less so. We’re
still doing extremely well, with growth in the mid-single digits instead of the
double-digit increases we saw before October.”
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| Oettinger Davidoff CEO Hans-Kristian Hoejsgaard |
Elsewhere in the world, Russia’s strict anti-tobacco laws,
which came into effect in June 2014, have spread to the travel-retail channel,
with Moscow airport shops having to display all tobacco products behind closed
doors. Davidoff’s Moscow flagship has had to be reconfigured so that the
products can’t be seen from the outside. But despite the government’s very
strong anti-tobacco stance, sell-through has been good, according to
Hoejsgaard.
Meanwhile, in France, the brand’s biggest market for mini
cigarillos, the government recently voted for higher taxes on cigars and
cigarillos, to bring these products in line with the 65% cigarette excise tax. “If this law passes, it will hit sales very significantly,” he said.
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| Davidoff's award-winning Nicaragua cigar |
Innovation is key
The Davidoff brand’s strong double-digit growth over the
past 20 months has been in part driven by the brand’s new Nicaragua cigar made
from Nicaraguan tobacco leaves, said Hoejsgaard. A first for the cigar
industry, this award-winning product has generated a “halo effect” on the
classic range – as well as many subsequent copycat suppliers who have since produced
their own versions. Hoejsgaard is proud that Davidoff has “legitimised”
Nicaragua as an origin for cigars.
“Innovation is extremely important for Davidoff and it’s
part of our mission statement. First, we want to be the innovative leader in
the category with a strong pipeline of innovation, and second, want to be the brand, thanks to brand experience
and promotions. Third, we want to be the indispensable business partner and
become a category captain.”
Hoejsgaard is innovating in a number of areas - product,
packaging and commercial - the latter including visual identity/merchandising.
“It starts with the product… we’ve rejuvenated the brand and attracted a
younger crowd. Our cigar-smoking profile used to be 50, but now it’s closer to
40.”
On the US domestic market, Hoejsgaard is testing a new
concept, namely as a “curator of accessories brands”. He wants Davidoff stores
to become a showcase for “luxury brands selected by Davidoff”. He cited as
examples artisanal Italian or French brands. As a test, he is currently
displaying the US West Coast jewellery brand Room 101 in Davidoff’s Madison
Avenue store window in New York. “We’re looking to test exclusive brands in our
stores so that our assortment goes beyond our own products.”
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| Dubai Airport's Davidoff promotion |
Celebrating the Year
of the Sheep
Notably, Davidoff is bringing a sense of innovative theatre
to Asian gift packaging. This year saw a collection created specially for the
Year of the Horse. In 2015, the company has developed an expanded range of
cigar accessories to celebrate the Year of the Sheep. Further international
product initiatives are in the pipeline, thanks to the hiring of a new
accessories manager who formerly worked at Italian luxury goods house Bulgari.
Travel-retail initiatives
Over the past year in the travel-retail channel,
Hoejsgaard’s team have focused on product merchandising units, having developed
a branded backwall display fixture which has now been installed in more than
100 locations. “We’re moving from product to brand, and then from brand to
experience,” he noted.
Hoejsgaard pointed to Dubai Airport as a stand-out location
for Davidoff’s brand initiatives, or “theatre”, as he termed it. A month-long
promotion tested a year ago saw the brand visuals being displayed “everywhere”
within this major hub, and a similar, highly visual campaign has been repeated
at the airport, starting in mid-November 2014.
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| Davidoff: Bringing brand theatre to Dubai Airport |
Recent travel-retail store openings have included New York
JFK Terminal 4, Taipei and a third shop in Hong Kong International Airport, and
Hoejsgaard promises some European breakthroughs soon.
On the cultural and philanthropic fronts, Davidoff is
continuing its sponsorship of the Art Basel art fair and its support for
international artists. In a few months time, five artists will start a
three-month residency at the
newly built Davidoff Art Residency on the campus of the Altos de Chavon Art and
Design school in the Dominican Republic, where Davidoff’s cigars are handmade.
The initiative will also see five Caribbean-based artists being given the
opportunity to work in a number of global cities.
