A Conversation with Hans-Kristian Hoejsgaard
President and CEO of Davidoff
David Savona, Gregory Mottola
From the Print Edition:
Saturday Night Live: How it Shapes Our Politics & Culture, September/October 2011
As the storied Davidoff brand celebrated its 100th anniversary this past June, it was also welcoming its first chief executive officer, Hans-Kristian Hoejsgaard, to take the helm without rising through the ranks of the company. Henri Davidoff started Davidoff as a shop in Geneva and titled it with his surname. His son, Zino, brought the shop to fame, and from that cornerstone the brand was expanded to include a worldwide chain of stores as well as its cigar lines.
Today, Davidoff is one of the cigar world’s best-known brands, and unlike virtually every other non-Cuban cigar brand, Davidoff’s international reach far exceeds its presence in the United States, which is itself considerable. Davidoff cigars are the backbone brands of the Oettinger Davidoff Group of Basel, Switzerland.
Before starting his tenure as president and chief executive officer of the company in April, Hoejsgaard, 53, had a strong background in luxury goods and had come from a Danish family that once sold tobacco products. On the eve of Davidoff’s centennial, the new CEO spoke with senior editor David Savona and associate editor Greg Mottola at the Cigar Aficionado offices in New York City to discuss his strategy for moving Davidoff forward.
Cigar Aficionado: So you are brand new to Davidoff.
Hoejsgaard: I am brand new to Davidoff, but it’s an interesting homecoming. I’m third-generation in a tobacco family in my native Denmark, from a distribution perspective. I’ve never smoked cigarettes in my life, but I smoked cigars from a very young age. And I was also the president, in the late ’90s, early 2000s, of Coty, which has the Davidoff fragrance line, still does. So I feel very good about coming full circle.
Q: Let’s start by talking about the family tobacco business.
A: My sister and I were the third generation in Denmark’s largest independent distributor of cigars and pipe tobacco. And we also had our own pipe production. So tobacco has always been part of my growing up. I worked my way up from a sales rep to all sorts of interesting positions in purchasing and marketing.
Q: Did that take you on any travels?
A: It did. It was not a lot, but I did visit [the growing regions in] Connecticut in the late 1970s, early ’80s. And it took me on a lot of travels in this country, for we had a nice business. But European distribution in tobacco was not really the future at that time. I had always wanted to go international with my career, and I joined Seagram. So I spent the following eight years there. We actually, with the Martell Cognac brand, had distribution of Cuban cigars. When Seagram acquired Martell Cognac in 1989, we also had distribution of Cuban cigars all over Asia.
Q: Interesting, I did not know that. How long did you do that?
A: I left in 1993.
Q: Was Martell still distributing Cuban cigars?
A: Yes we were. They don’t do it anymore, I don’t know when they lost it.
Q: And I’m sure you had to sample the product, for research.
A: Absolutely. I’ve always smoked Davidoffs and Cubans.
Q: So were you doing business with Habanos?
A: Not me personally, no. I was the head of marketing for French products, which meant Cognac, but I never met the Cubans.
Q: And from Seagram, where did you go next?
A: I went to LVMH, but in the perfume business. I was in Hong Kong, then I moved to Paris with Coty, which had the license for Davidoff fragrances. So it’s sort of coming full circle. And I met Dr. [Ernst] Schneider [the late owner of Davidoff] several times for the fragrance discussions. I was extremely touched and honored when I started [at Davidoff] on my first day in the job. They came and gave me, which is a big deal in Switzerland, Dr. Schneider’s number plate for my new car.
Q: Is that like a license plate?
Q: Very nice. So this luxury brand experience must translate well to Davidoff.
A: We really need to be very clear on the fact that we are in the luxury goods business, and Davidoff really is the brand on a global scale. I always think that Davidoff the brand is competing against Cuba the country. And I think it’s very important that we understand that, and take a brand building approach. Obviously Davidoff for me is the epitome of buying authenticity, rarity and quality, and I think those three pillars really epitomize Davidoff. I think we have an unbelievable opportunity to leverage that and build it further in existing markets as well as emerging markets. Taste you can never discuss, it’s a personal matter, but you can recognize consistency and quality of taste. I think that is really a hallmark, which makes loyal customers, coming back again and again to the brand.
Q: Let’s talk about your products. What needs to be done to keep people coming back to the Davidoff brand?
A: I think the Davidoff history, and also the brands we have acquired, like Camacho and Cusano, are basically family brands. They even have their blood in it. Whenever a company, whether it’s Christian Dior in fashion or Davidoff in cigars, when the people with the names on the brand are no longer here, it calls for a transformation. And me, I have to be very conscious of understanding the history, but not be a prisoner of it, and really take the brand to the next level. And therefore the policy is very much about getting that global consistency. We need to transform from smoking, per se, to this world of pleasure, celebration of moments and bringing new customers to the brand. I’m fascinated, particularly here in the U.S., that the growth driver is really these 30-to-35 year old guys who have never smoked a cigarette. I was in the Champagne business for many years. The French, when they celebrate something, they use that word Champagne. I would love that to be Davidoff.
Q: So you want Davidoff to be that celebratory thing, pop open the cork on Champagne, light up a Davidoff.
A: Yes. It’s luxury, but it’s affordable luxury. It’s certainly something everyone can do once in awhile.
Q: Let’s talk about consistency.
A: Oh, it is a very consistent product. No question about it. When I look at customer complaints or returns there are almost none.
And I don’t want to talk down, but in our stores we sell all manner of brands, and that’s not always the case. The consistency of quality and [Davidoff cigar blender] Henke Kelner is very strong, and that’s definitely not something that has to be fixed. What I think is interesting from the product side, we can really go into new areas. Puro d’Oro clearly is something very different from a Davidoff perspective. As far as I can see, for the first time we have really managed to come out with a cigar that has moved people, not just Davidoff smokers.
Q: Puro d’Oro is very different from the standard Davidoff.
A: It’s hardly any cannibalization. It’s for people who have not looked at Davidoff before.
Q: Let’s talk about the stores. Davidoff has company-owned stores, as well as licensed stores. What’s the split?
A: We are 65 flagship stores around the world, and it’s about half and half.
Q: So a similar number of franchised stores?
Q: Of those 130 stores or so, how many have the name Davidoff?
A: If it was 65 company-owned stores, then those 65. Then we have in the U.S. 229
appointed merchants, so the Davidoff branding is very present, if not on the façade, then in the store. Plus we have 150 branded smoking lounges around the world. We will be rolling out a twenty-first-century new look of our stores. We hope to open the first prototype in December in the Zurich airport.
Q: Is there a name for it?
A: There is only a code name at this point.
Q: With your international background, is there something that you’ve found that fundamentally defines the American customer of a Davidoff cigar as opposed to a European or Asian customer.
A: Yes. The fundamental difference between the American Davidoff smoker and the European is that the American smoker likes the big sizes. And the [American] cigar smoker likes a milder taste, big but milder.
Q: So you think the U.S. smoker likes the milder cigar?
A: Yes, and that’s a surprise to me.
Q: Going back to luxury—what has been the impact of the economy on Davidoff, which is a luxury brand?
A: We have to remember the very true saying, when times are tough we all have to tighten our belt, but there are some people who only have to tighten their alligator belt. Yes, ’08 and ’09 were certainly tough for Davidoff, but comparatively it was not so bad. And 2010 we were back to pre-’08 levels. What we did see, in our own stores, what we lost on the luxury end we were able to capture with Avo, The Griffin’s.
Q: So you saw people moving down, Davidoff went to Avo, perhaps Avo went to The Griffin’s.
Q: What about accessories? Your accessories are wonderful, but they’re also very pricey.
A: They’re pricey. They suffered. Absolutely. Humidors, high-end lighters, humidors in particular.
Q: Are there any signs of life in humidors and pricey accessories?
A: I was just in the store today and a guy walked in and walks out with a $7,000 humidor. But this is anecdotal. It is coming back, but I wouldn’t say with a lot of life. We have to reassess that whole area. A Davidoff humidor is for life. How many lives do you have?
Q: Let’s talk about the differences among some of the new family members, if you would, Camacho and Cusano. Can you speak about what each one adds?
A: It’s two very, very good family members. Camacho in particular. I see tremendous opportunities. The big role for me is to bring that success outside the United States. Cusano is, from a brand perspective, much weaker, it’s almost a private label in many ways. But I see it playing more of a role where we can do interesting things in more price-sensitive segments.
Q: Compared with the Davidoff brand, what is the international reach of Camacho and Cusano?
A: They’re really in their infancy. I see a lot more to do there.
Q: In your previous positions, did you incorporate companies that you acquired?
A: Yes. I have some experience there. I know that cultural integration is doomed to failure, you really have to understand that, the worst thing that can happen is if you try to absorb it and make it a copy of yourself.
Q: And this is still a work in progress, right?
A: Just five months prior to me joining, January 1 of this year, they all moved into the same building in Pinellas Park, Florida. Only in these last few weeks have we integrated the sales forces. We’re trying to get everyone excited that they have become part of something larger. Everybody is coming together. It takes a little time.
Q: So the old headquarters of Davidoff in Stamford, Connecticut, is closed.
A: Yes, I think we still have two people sitting there for practical reasons until the end of the year.
Q: One of the things about Davidoff cigars that I found interesting was how they are made in the Dominican Republic, shipped in plain, big boxes to Connecticut, sorted and then packed into dress boxes. Will that continue, but in Florida?
A: Yes. It comes out of this rigorous devotion to quality. We have three warehouses around the world, and this procedure is happening in all three.
Q: And that’s strictly for Davidoff white label.
Q: And do you consider Puro d’Oro white label too, even though it doesn’t have a white label?
A: It is you who call it white label, we don’t. It’s an American denomination.
Q: Ah, I didn’t realize that. So there is no Davidoff white label program?
A: It’s the Davidoff brand, and Puro d’Oro is the first one that doesn’t carry the white label.
Q: Now this was done before your time, but what do you think about this? [Points to a Davidoff Puro d’Oro cigar, which has a golden foot band, without the Davidoff name.] It was very eye opening to me, the word “Davidoff” doesn’t appear on the cigar at all.
A: As a marketing person, I’m not crazy about this. I’m more into the white label thinking, so I could easily see some brand identity case should be made in the years to come. [New cigars now] say Davidoff. Not on this one, but now printed in gold, very small, [will be the word] “Davidoff.”
Q: How has the Winston Churchill brand been received?
A: The Winston Churchill line, I think it’s fair to say, has been a struggle. I believe, and this was before me, there were some delivery and quality issues in the beginning, and as you know we only get one chance to make a first impression, so it was difficult to get back. Now we really have gotten over the infancy troubles, and we really think it has big,
Q: You touched on stronger cigars a bit. But you also said American smokers like mild
cigars, based on your sales. Are we going to see additional stronger cigars out of Davidoff?
A: Yes, we will definitely see more of that. We will definitely see more tobacco from Yamasá [the town in the Dominican Republic where the Davidoff Puro d’Oro wrapper is grown].
Q: You’ll be growing more in Yamasá? It takes awhile to get there, right?
A: It sure does. It’s a long haul, and there’s still a lot to do, but it’s very interesting.
Q: Do any other standard production cigars from Davidoff contain tobacco from Yamasá?
A: No. Whether it will always be like that, probably not, but for the moment it is.
Q: Is it strictly the wrapper, or is it also incorporated into the cigar?
A: It’s also incorporated into the cigar.
Q: What new cigars do you have coming out this year?
A: We have developed two special cigars for the 100th anniversary, and they’re very special, a pure, 100-percent Dominican cigar. Everything in the cigar is Dominican. And we are coming out with a toro limited edition for our own stores, and a robusto limited edition for our appointed merchants. Very exciting for us. On the 21st of June we have the official 100th anniversary, that’s the 100th anniversary of the Geneva store, which was the start of Davidoff.
Q: So 100 years ago in June, Zino Davidoff opened the store in Geneva?
A: Zino’s father [Henri Davidoff]. And Zino Davidoff said, ‘We do not have customers, we have guests. You have to treat customers as guests in your house.’ And that’s what he did. It’s about really being treated well. That’s what we want to recreate in this new concept. And you have to be able to find something in these stores that you cannot find anywhere else.
Q: Can you give us an idea of some of the things one might expect when they visit the new concept store?
A: We haven’t chosen the final agency yet, but it’s very much about bringing the Davidoff philosophy from crop to shop. We don’t give that experience in the store. I would like to actually bring Honduras or the Dominican Republic into the store, showing off all these things very few people actually see. A lot of multimedia, a lot of interactive technologies. It’s all about experience.
Q: What’s your opinion of smoking bans?
A: I think the smoking ban in this city has gone over the top. I think the park and beach ban is way above reason. Since the cigar business is so small compared with the cigarette business, we are very often treated the same way. It’s a very difficult speech to make, but it’s really something as an industry we have to try. For everyone you meet, cigars are something very different. It is pleasure, it is luxury. It’s not addiction, it’s not mechanical, it’s a whole experience, and that’s a message we have to get across. Can we get different regulations for cigars? We have to try.
Q: Are there any places in Europe where the smoking bans are comparable to those in the United States?
A: Yes, France is very difficult. Holland. So we’re definitely moving in that direction. There is no discussion of parks and beaches. The whole notion of smoking places, bars or lounges, has become very flexible. In Switzerland, you can buy a membership for $10 per year and go to 165 bars and restaurants and smoke. But the ex-monopoly countries are tough.
Q: Can we touch on the different businesses that represent the Davidoff group? We know the cigar business.
A: That’s definitely the core business of the group. We also have a very significant business in Switzerland, which is Swiss-only, we distribute cigarettes, we are by far the leader in Switzerland in tobacco distribution. And then we have a very large confectionary chocolate distribution with it. We have 168 retail stores in Germany, tobacconists we swallowed over time. That’s a platform for us to build our brands. Then there’s a separate company, which has nothing to do with me, which has the licensing business: fragrances, Cognac, coffee and their own accessories line.
Q: And Davidoff cigarettes was sold?
A: That was sold. And I think again, from my perspective, a really good decision—we really are now a cigar company. Our company is dedicated to cigars.
Q: Does Davidoff have a branded chewing tobacco or snuff?
A: We do not.
Q: What’s the biggest challenge that faces Davidoff right now? What do you see that worries you?
A: It’s clearly that Davidoff has to put more firepower in the United States. We have a unique opportunity, it’s still the world’s largest cigar market, and it’s still the only market where our main competitor, Cuba the country, is not here. And it’s only a matter of time before that changes, and we really need to build our position to be stronger for that day.
Q: The original Davidoff cigar was a Cuban cigar. That ended, of course. Do you think there can ever be the day where there is another Cuban Davidoff cigar?
A: Absolutely. If one would like to characterize the embargo lifting as a risk for other brands, there is also a great opportunity. We would be looking to return as well. It’s something I can assure you that the family is dreaming could happen. That is definitely an opportunity to look at. I don’t think it’s a matter of if, but when it happens. Not that we would abandon the Dominican, because we have an excellent product, but in this whole context of a port-
folio strategy it could be very interesting.
Q: Are there any Cuban Davidoffs left at Davidoff headquarters?
A: Yes. That was one of my gifts, a nice gift. We still have a few.
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