In the recent past, no other cigar manufacturer has garnered as much attention as Oettinger Davidoff AG. Since Hans-Kristian Hoejsgaard (56) took the helm in 2011, Davidoff seems to have experienced a renaissance.
Innovations such as the Davidoff Nicaragua, Camacho and now the Davidoff Winston Churchill have finally ended the company’s deep sleep for good. The Swiss enterprise is shooting out a continuous load of new products and are opening one flagship store after another. Under the label “Davidoff of Geneva – since 1911” they can be found at the most attractive addresses in the world.
The latest coup: the most luxurious cigar temple of all times is currently being constructed in Lower Manhattan, New York, directly opposite Ground Zero. Behind the 12-meter facade made from onyx and lights there’ll not only be a shopping eldorado for tabaccophiles but also a stylish place to linger as of summer 2015. Soon there will be three high-end shops in the Big Apple. And these will be followed by others in Atlanta, Dallas, Houston, etc.
There’s no doubt about Hans-Kristian Hoejsgaard‘s desire to strive for bigger brand shares. The company’s own shops are an ideal foundation for that. “In our shops we generate 70 percent of sales with cigars that we produce. And of this 70 percent, in turn, 70 percent can be attributed to the Davidoff brand. This is extremely encouraging.”
Hoejsgaard got the capital for the offensive stance of a company that hasn’t been too innovation-oriented up to now from the sale of subsidiaries that had little or nothing to do with the core business.
“That gave us some latitude to concentrate on the soul of Davidoff again – the cigar and smoking accessories.” His strategy worked. The last full business year was the most successful in the history of Davidoff.
Even though Europe and the United States are almost equally balanced markets for the company, the CEO still determines happily that the company is “growing even more rapidly in the US.”
Together with Jim Young, president of Davidoff North America, alongside the flagship stores Hoejsgaard also wants to increase the number of appointed merchants – from currently around 250 to about 300 in the USA alone. Davidoff has covered the globe with a network of circa 70 flagship stores. “I can well imagine that we’ll break into the 100 mark in a few years’ time,” the manager of the largest world’s family-owned cigar company confidently says.
I can well imagine that we’ll break into the 100 mark in a few years’ time.
When it comes to the global distribution network, Davidoff has only one competitor: Habanos. But while the Cubans focused on franchising with their Casa del Habano concept from the beginning, Davidoff has only now carefully started with this.
Leading the way was Urs Portmann in Switzerland with his recently opened fine store, “Davidoff of Geneva – since 1911 – with Urs Portmann”. But the business models of the two competitors are also substantially different from a second point of view. While the Casas offer exclusively Cuban smokes, Oettinger Davidoff simply offers the entire premium segment, also from Cuba.
Hoejsgaard says: “I can imagine that we’re the biggest customers of Habanos S.A. – both in Asia and also Europe.” The tempo that Hoejsgaard is setting is breathtaking; at the very least, unusual for the cigar industry. In the past 12 months he has cut inaugural ribbons in Switzerland, Malaysia, Germany, the United States and Japan, re-established subsidiaries in about half a dozen countries, and developed joint ventures in China and the rest of Asia. Quite incidentally, the company is also building an “appropriate” head office for 180 employees in Basel. Matter of expense: approx. 35 million Swiss francs. Sounds like a lot; and so it is. But one shouldn’t forget that, with 1.2 billion Swiss francs, Oettinger Davidoff AG has almost three times the revenue of Habanos.
The world of luxury goods is tailored to the Danish Hoejsgaard. For more than 25 years he has been managing companies with valuable and luxurious brands, among them the Timex Group, Georg Jensen Ltd., the cosmetic giant Lancaster and Guerlain Asia-Pacific. In Oettinger Davidoff AG he sees himself as the driving force for the transformation of the 140-year-old traditional company from a European-focused brand enterprise to a global house of brands. His decision to accept this prestigious and daring mission wasn’t made overnight. The owners expected nothing less than the complete restructuring of the company.
Hoejsgaard remembers: “It was clear that implementing this request was going to entail massive intervention in the organizational structure and staffing as well as the cultural character of the house. You can’t take that sort of thing lightly. It wasn’t until after many discussions that I knew that all parties involved were aware of the scope of the plans and would also implicitly carry the responsibility.”
It soon became clear that the cut was deep. Hoejsgaard reduced the management team from 39 to 12 and hired top-class specialists, including the aforementioned Jim Young, who had 17 years of international experience with Diageo, the world leader in alcoholic beverages.
The financial expert Alex Lejeune then became responsible for corporate development, and, with Charles Awad, a specialist from the cosmetic branch came on board for branding and innovation.
The European side is managed by Albert Manzone, who has climbed up the ladder in the tobacco branch, just like Javier Plantada, who is now responsible for the entire production.
In the meantime, those employees who withstood the pressure of the innovations are highly motivated and enjoy considerable freedom in their fields. You can almost feel the confidence they exude while working on the development of the company.
It’s no surprise. The launching of the Davidoff Nicaragua line in 2013 triggered a turbo-effect that exceeded even the highest expectations. The demand surpassed the production phases by almost double. “Typically, two out of three of the consumers that buy a Davidoff Nicaragua are new buyers of the brand,” says Hoejsgaard explaining the upswing. “But the new series also sparked new interest in our other brands, and put Davidoff in the spotlight again in general.” Even in Hong Kong and Macao, Asia’s most important markets, the Nicaragua Series is outrunning classics like the Mille Series or Special Series.
The next thunderbolt came with the relaunch of Camacho. The number of lines was reduced from 27 to 6; most of the blends were newly created, and the brands’ design also got a makeover. “We’re very happy with the success. With Camacho we positioned ourselves well in the price category of five to eight euros, and six to nine dollars,” says Hoejsgaard. “That makes Camacho our second international pillar after the brand Davidoff.”
1875: Founding of Max Oettinger Cigares AG in Basel
1942: George Huppuch buys the company
1961: Dr. Ernst Schneider becomes general manager
1970: Oettinger buys Zino Davidoff’s store in Geneva
1991: Cigar production moved to the Dominican Republic
1994: Zino Davidoff dies on January 14
2009: Dr. Ernst Schneider dies on October 13
2011: Hans-Kristian Hoejsgaard becomes CEO of Oettinger Davidoff AG
This article was published in the Cigar Journal Spring Edition 2015. Read more