In its annual balance sheet press conference, Oettinger Davidoff AG (ODAG) once again looked back on a challenging financial year. Nevertheless, the company managed to report a successful 2021 financial year.
The globally active family company was able to increase sales by 8 percent to CHF 456.8 million compared to the previous year. Cigar production in the Dominican Republic and Honduras was expanded and a total of 34.1 million premium cigars were produced (+35% compared to the previous year).
Own brands are growing strongly
CEO Beat Hauenstein reported on an extremely positive sales development for cigars in the own brand area. Here, the Basel-based company recorded growth of 28.9% compared to the previous year. This increase was positively influenced in particular by the trend towards high-quality brands in the higher price segment. After a slight decline in the previous year, the premium brand Davidoff recorded an increase of 43.9% compared to 2020. Camacho (+11.3%) and AVO (+5%) were also able to report significant growth. Furthermore, the successful relaunch of the Zino brand has led to new customers and made a valuable contribution to the successful result. The sales development of the third-party brands was also positive, especially the general agencies, which represent another important performance pillar of the company.
Oettinger Davidoff has mastered the pandemic
“The past financial year has confirmed that Oettinger Davidoff is resilient and knows how to operate successfully in a demanding market environment, even in a challenging year,” says CEO Beat Hauenstein, commenting on the course of business. “Despite the diverse challenges of the pandemic, especially in the value chain, we were able to supply our customers seamlessly throughout the year, introduce innovative products and, thanks to well-timed product launches and increased digital customer commitment, meet the wishes of our customers.”
Looking back on the two years of the pandemic, the CEO of ODAG told Cigar Journal: “The most challenging thing about the Covid crisis was when it began in spring 2020, when after the slump in demand – keyword: closed markets – the supply chains were also interrupted. And not just on one continent, but across all economically developed countries at the same time. However, we have learned from the pandemic that the consumer will always find a way to get the cigar of his choice. An example: sales in the travel retail sector fell by up to 98 percent during the pandemic. But we were able to compensate for this through other channels. The positive balance of our last financial year shows once again where the sticking point for success lies. You always have to keep the customer promise on the market, permanently, with the usual quality and even under adverse circumstances.”
Davidoff reports that while demand in the European cigar market continued to decline in the past financial year, demand for premium cigars has remained stable. The cigar market in Asia has been and continues to be severely disadvantaged by the collapse of global travel retail, while the US market performed well in 2021.
When asked about the war in the Ukraine, Beat Hauenstein said: “The unspeakable war in the Ukraine is indeed presenting us with a new challenge that was unimaginable for a long time. We closed our business with Russia at the beginning of March this year.”
The challenges get bigger
On February 13 of this year, Swiss citizens voted on the referendum “Yes to the protection of children and young people from tobacco advertising (children and young people without tobacco advertising)”. The majority agreed with the demand. Beat Hauenstein: “In autumn 2021, i.e. about half a year before the referendum, the Swiss Parliament passed the new Tobacco Products Act, which determined that the existing ban on advertising and selling tobacco products sufficiently guarantees the protection of children and young people. That’s why I think that this ideologically driven ban mentality will only be the beginning of further bans for other products such as meat, sugar, alcohol, etc. It is an unspeakably disproportionate development.” No statement can yet be made about the concrete effects of this referendum.
When asked about the forthcoming Track&Trace obligation for premium cigars, Beat Hauenstein said that this regulation alone will cause additional costs in the millions for the Oettinger Davidoff company. In his opinion, these over-regulations are likely to increase the complexity of business processes and thus the costs for manufacturers, sales and retail, and thus reduce the attractiveness of the tobacco business for all market participants.