Oettinger Davidoff AG, the parent company for Davidoff Cigars and its associated brands announced it set new records for both revenue and production in 2014, however the company is giving a cautiously optimistic outlook for 2015.
In terms of revenue, the company announced it had a 1.7% increase in 2014 to 1.34 billion dollars (1.23 CHF) from 1.31 billion dollars (1.23 billion CHF) the previous year.
Following the sale of its cigarette machine business in 2013, much of the core business of the company became premium cigars. Oettinger Davidoff reported a total production of 44 million cigars in 2014 – a 13.1% increase from the prior year. The company attributes this to a 4.9% increase in staffing numbers as it created 170 new jobs in the Dominican Republic and Honduras.
The success of Camacho was pointed out as a driver for the increase in demand. Oettinger Davidoff AG called it the second most important brand behind the core Davidoff brand. Camacho remained strong in the U.S. and the company found its introduction to Europe to be a success. As reported back in February, the company is building a new factory in Danli Honduras to support the increased demand . The company says that the acquisition of 150 hectares of farmland in Honduras and Nicaragua will provide enough tobacco crop to meet demand as well.
The company also pointed out its strengthening of its retail sales network, especially the addition of new Davidoff Flagship Stores to its growth in sales.
The company has focused on Asia to bring brands closer to customers, but also pointed out there is a cost to do this in the top locations. The acquisition of a minority stake (with an option for a majority stake) in Asian distribution company Bluebell Cigars (Asia) Limited as well as a framework agreement with Sparkle Roll Goup Limited in Hong Kong to jointly market Davidoff products are both viewed upon a strategic.
The repurchase of Davidoff’s distribution operation in Spain as well as a dedicated subsidiary for Spain and Portugal allow Davidoff to have a strong market presence in the important Iberian Market.
The company pointed out its focus on Spain, long considered a strategic market
Cautiously Optimistic for 2015
For 2015, there are challenges: the uncertain economic outlook in Europe; the freeing up of the Swiss franc exchange rate; increased global regulation on tobacco; disappointing sales growth at duty free shops, and stricter anti-corruption regulations in China impacting the luxury goods industry. This has led to Oettinger Davidoff AG’s “cautiously optimistic” outlook for 2015.
With the expansion of its distribution network, the opening of more Flagship Stores, as well as the expansion of the product portfolio, the company is still confident it can outperform the market average this year.
Completion of the Davidoff Art Initiative
The company also announced the Davidoff Art Initiative is complete and has considered it a resounding success.. This was highlighted but he opening of the Inernational Art Residency in the Dominican Republic. During the past three years, the program has benefited twelve artists.