BASEL, Switzerland, June 19, 2012 /PRNewswire/ -- The Basel-based Oettinger Davidoff Group (ODG), the world's leading producer of premium cigars, performed well in a challenging international environment. In 2011, it was able to increase sales by 0.2%; after making allowances for currency fluctuations, a slight decline of 2.3% to CHF 1.29 billion resulted. Annual production rose to 34.4 million cigars, equivalent to an increase of 6.8%. With a revised strategy focussing on the core cigar business and the important sole agencies as well as controlling the whole value chain, CEO Hans-Kristian Hoejsgaard is aiming to make the company and the Davidoff brand even more firmly established in the global luxury segment of premium cigars and gain additional market shares. The refurbishment of the international shop network, launched both in the duty free locations and in the headquarters in Basel, and the conclusion of a strategic partnership with the international art fair ART Basel are among the main cornerstones in the implementation of the strategic reorientation. At the end of 2011, the Oettinger Davidoff Group employed a global workforce of 3,697 people, a small decline of 2.8% over the previous year as a consequence of the increased productivity in the production facilities in the Dominican Republic.
"In the Davidoff brand's centenary year, we are highly satisfied with the results that we have achieved in a regionally even more strictly regulated market and despite the disadvantages of the strong Swiss franc," was how CEO Hans-Kristian Hoejsgaard described the course of the 2011 financial year. With 65 Davidoff Flagship Stores around the world, 150 cigar lounges and 540 Davidoff Appointed Merchants, the ODG enjoys a strong market presence in Europe, the USA and Asia as well as in the duty free outlets around the world. With last year's production of 34.4 million cigars, the group also holds a respectable market share in the worldwide hand-rolled premium cigar market, estimated to be less than 500 million cigars.
Focus on the core business
In the light of the steadily increasing restrictions on smokers, the trend is headed towards shorter, more quickly enjoyed cigars and is moreover more strongly seasonal. "Limited editions" of cigars and new flavour trends are increasingly attracting interest among cigar smokers who also increasingly shop via the Internet. In this increasingly competitive environment, the brand is growing in importance. Against this background, the ODG has decided on a clear focussing of its business on the core competence, premium cigars, that is to say the Davidoff brand. In this way, it is positioning itself in the high-priced, high-margin luxury segment of global brands in the cigar and accessories area. Alongside Davidoff, two other own brands will in future be accorded strategic global importance: Zino Platinum and Camacho Cigars. The strategic partnership entered into with Art Basel at the beginning of this year which also includes Art Miami and from 2013 Art Hong Kong, is of great importance for this positioning of the Davidoff brand. Both have their roots in Basel and thus have a strong strategic orientation towards Europe, the USA and in future also Asia. Both brands combine the enjoyment of beautiful and fine things, of pleasure and life in the best possible way.
Control over the entire value creation chain
Innovative marketing is vital in exploiting the worldwide keenly contested luxury brand segment in the cigar area. Substantial efforts are required to meet the diverse tastes and high quality expectations of discerning consumers. For example, the last 10 cigars introduced to the market are the result of a process that began with the creation of 359 different blends.
In order to be in a position to bring own cigar creations successfully to the market and consistently guarantee a premium quality in all formats, what is needed is control over the entire process from the seed to the tobacco plant in the various growing regions all the way to the sale of the cigars in the worldwide network of company-owned and licensed Davidoff shops. The mastery of the entire value creation chain "from crop to shop" is therefore one of the fundamental components of the ODG strategy. It also explains the importance of in-house distribution and the substantial investment made by the group in the development and implementation of the new shop concept. This was implemented in a city location for the first time last year with the opening of the Davidoff Flagship Store in the centre of Basel, following the launch of the duty free version in Zurich Airport.
Facing the future with confidence
In the course of its concentration on the core tobacco business, the Oettinger Davidoff Group has optimised the existing organisation. In addition, the non-core activities of the ODG-owned Contashop AG which operates 45 filling station shops were sold to the SPAR Group in May of this year. Taken as a whole, the measures to implement the new strategy are expected to have a positive impact in the current year. For 2012, the Oettinger Davidoff Group is anticipating renewed market growth, albeit with an ongoing challenging environment in Europe, yet with slightly above-average turnovers and sales volumes in the USA, Asia and the duty free area.
The Oettinger Davidoff Group in brief
The Oettinger Davidoff Group with sales of 1.3 billion Swiss francs and around 3,700 employees worldwide can trace its roots back to 1875. It remains a family-owned company with two different lines of business to this day: one line of business concerns the wholesale, distribution and logistics area in the Swiss market; the other is dedicated to the core business, namely the manufacture, marketing and sale of premium cigars, tobacco products and accessories in the retail sector. The premium cigar business encompasses the Davidoff, AVO, Camacho, Cusano, Griffin's, Private Stock, Zino, Zino Platinum and Winston Churchill brands. The Oettinger Davidoff Group is deeply rooted in the crop-to-shop philosophy and pursues a vertical integration approach from the tobacco fields in the Dominican Republic and Honduras to the worldwide network of 65 Davidoff Flagship Stores. Guided by its vision Innovation.Passion.Integrity, the Oettinger Davidoff Group is setting out to be the indispensible partner in all business sectors in which it operates: premium cigars, smoking accessories, retail, sole agencies in the tobacco and confectionery area, distribution and logistics.
SOURCE Oettinger Davidoff Group