Despite the negative effect of freeing up the Swiss franc
exchange rate, and despite the uncertain economic outlook in Europe, Oettinger
Davidoff said it was cautiously optimistic about 2015, its 140th anniversary
year.
“The company's consistent focus on its core business of
producing and selling its own brands and those of other premium producers, as
well as developing its own innovative new products and relaunching selected
existing ones, is paying off,” said CEO Hans-Kristian Hoejsgaard. Commenting on
last year's performance, he said: "We are very pleased with the results
we've achieved and the high degree of consistency in Oettinger Davidoff's
revenue, earnings and sales volumes."
This performance is still based mainly on the core Davidoff brand, but some of the company's other internationally distributed brands have also posted “pleasingly strong” growth rates, Hoejsgaard noted.
 |
| Davidoff's store on Eisengasse in Basel |
Camacho cigar launch a "resounding success"
Alongside the continuously successful Davidoff brand, last
year's European launch of the Camacho cigar, which is already very successful
in the US, was a “resounding success”, it said. Camacho is now Oettinger
Davidoff's second most important brand. Growing demand for this cigar and other
Honduran brand cigars in the mid-premium price segment has prompted the company
to start planning a new, modern production building in Danlí, Honduras. It will
replace an out-of-date plant and ensure that production, which has increased by
60% over the last three years, can continue to keep pace with rising
demand.
During the year, Oettinger Davidoff also purchased 150
hectares of land in Honduras and Nicaragua in order to plant enough additional
crops to meet this demand. This expansion ensures control over the whole value
chain – from sowing the seeds to the finished cigar.
Closeness to customers
Increasing worldwide regulation of the sale and consumption
of tobacco, as well as the introduction of new, more stringent anti-corruption
regulations in China about the acceptance of gifts, are having a negative
impact on the luxury goods industry, and also influenced Oettinger Davidoff's
sales during the year. Sales growth was also “rather disappointing” at duty
free shops, where the lower number of Russian and Chinese travellers had a noticeable
effect, it said.
These trends created some pressure on sales, but did not
jeopardise Oettinger Davidoff's positive overall revenue performance. This was
far better than in the previous year in the US, and slightly better in Asia.
Markets in Europe shrank significantly, but Oettinger Davidoff managed to
secure good growth and so gained share in all the important markets. The
ongoing expansion of the retail sales network and the company's own stores,
especially Davidoff flagships in major cities and Davidoff stores in duty free
shops, contributed to the steady growth in sales.
The acquisition of a minority stake in Asian distribution company
Bluebell Cigars (Asia) in January 2015, with an option for subsequent
acquisition of a majority stake, is strategically important for Oettinger
Davidoff. Bluebell provides access to a dense network of stores in Asia, which
is Davidoff's most important future market. At the beginning of this year,
Oettinger Davidoff signed a framework agreement with Sparkle Roll Group
Limited, which is listed in Hong Kong, for a joint venture to market Davidoff
cigars and cigar accessories in China.
Market presence is also being ensured by the repurchase of
Oettinger Davidoff's distribution operation in Spain – a strategically
important market – and the establishment of a dedicated subsidiary for the
Iberian peninsula. Previously, Oettinger Davidoff had worked for almost 40
years with Madrid-based Proein SA.
Cautiously optimistic outlook for anniversary year
Hoejsgaard expects varying growth performance from the main
sales markets of Europe, the US and Asia. “It is hard to say how revenue will
be affected by the economic and regulatory environment in Europe and especially
Switzerland, where a new tobacco products law is currently being discussed. But
we are confident that we can outperform the market average again this
year."
This confidence is being bolstered by a series of flagship store
openings in New York, Atlanta, Houston, Tampa, Amsterdam and Bahrain. In Basel,
Oettinger Davidoff's 140th anniversary is being celebrated with the opening of
a new Davidoff shop by the city's Middle Rhine Bridge, while Zino Davidoff's
original store in Geneva is being comprehensively modernised. In addition, the
renowned Winston Churchill brand has been relaunched, thus further expanding
Davidoff's existing product portfolio.
Davidoff Art Initiative now complete
The inauguration of the International Art Residency in the
Dominican Republic at the beginning of this year completed the philanthropic
Davidoff Art Initiative launched in 2012. The Art Residency Program is the main
pillar of the Davidoff Art Initiative, which enables creative exchange between
artists in the Caribbean, the Dominican Republic and the rest of the world,
helping to develop their talents and
experience through residencies in other cultural environments. The
Davidoff Art Initiative has been a resounding success, Hoejsgaard said. In the past three years
it has already benefited 12 artists.
