An Interview With Dr. Reto Cina
President and Chief Executive Officer, Oettinger/Davidoff Group
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A: We have always been known for excellent quality, no doubt about it. But the launching of new products was certainly not at the level it is now. Of course, at the time, this need for new products was by far not as important as it is nowadays. But I believe that also we were taking, in a rather short period of time, a big step forward, opening, first of all, new avenues in promoting cigars with Avo in Switzerland, for instance. Also within the Davidoff brands, we are launching new products at a quite different level.
Q: And you've got some very big ones, like Davidoff Millennium.
A: That was really the big event, that we were able to produce such a well-balanced and consistent cigar pleasing all these people complaining about the fact that Davidoff, since we left Cuba, has no really strong, aromatic cigars. I believe that with this Millennium blend, we are very near to that kind of taste, having at the same time, qualitywise, an excellent cigar. So we cover both sides, on one side the quality and on the other side the taste.
Q: Is that something that people bring up, Davidoffs from Cuba?
A: No, no. We know that there are people who like to have a much stronger cigar and we knew that within the Avo line we had one, but it wasn't a Davidoff. Now we are able to really have a Davidoff cigar for each different kind of need of the customer, from the very mild one up to the really strong and full-bodied cigar. Of course, when we were launching and promoting the Millennium blend, that was certainly one of the arguments we had given to the customer, that with that cigar, we are back to the more aromatic cigars, similar to the time when the Davidoff cigars were produced in Cuba.
Q: You must have been very happy with the reception to that cigar.
A: Here we have to say that we thank [Hendrik] Kelner; we really have a great producer, not to say artist, in blending cigars, and we may say that we really are the masters of blending. The big thing is that we are able to create and develop new lines, not really in the same way as the existing ones.
Q: What other new plans do you have?
A: I cannot reveal all the secrets. We are working on different items in order to maintain this aspect that the Oettinger/Davidoff Group is -- or at least tries to be -- ahead of our competitors. For instance, we now have launched the first vintage cigar which has ever been made by Davidoff. Why did we wait such a long time? Because we think and strongly believe that if we, as Davidoff, have a vintage cigar, it must be something really extraordinary. We were waiting until we had the chance to have the harvest of the year 2000, this extraordinary year -- weatherwise, humiditywise -- that allowed us to create these extraordinary cigars. To blend this cigar was really a special effort, because if you have the chance to add tobacco from different years, from different farms, coming from different soils, you may more easily get to the blend you really would like to have. But being limited and restricted to the tobaccos coming out of one year, it has made the path even more difficult for Henke [Kelner] to really get a well-balanced cigar, as we have now in hand with this Davidoff Vintage cigar.
Q: This sounds like a new corporate strategy for Davidoff.
A: It compares to traditional businesses like cosmetics, where this obligation to create new products and new fragrances every year is huge. If I may give you some proportions, 62 percent of the annual turnover in the fragrance business is made with fragrances not older than 18 months. Out of 100 new-launched products, after 18 months, 95 have completely disappeared from the market. So you see, if you want to realize a considerable sales turnover, then you are obliged to launch new products. The rate of flop is unbelievably high. So it's a really demanding and competitive product category. Not in the same way [for cigars], but surely compared to what happened 10 or 15 years ago, the cigar business also goes more and more in pthis direction.
Q: In the 1980s, Davidoff made a dedicated effort to attack counterfeiters using the company name. Is that battle won?
A: No, no. We are permanently confronted with people producing falsifications all over the world.
Q: Is that only cigars?
A: Especially cigars. I would say 98 percent of the cases are cigar-related.
Q: There are counterfeit Davidoffs?
A: Yeah, especially in China.
Q: Do you have an estimate as to how much falsifications cost the company every year?
A: No. I don't have an estimate at all. I only know what we are paying the fees for the lawyer, and it's a lot of money. You end up with almost $600,000 year after year, protecting the brand name all over the world in all the different product categories.
Q: Let's discuss the creation of your newest cigar brand: Zino Platinum. How did the Zino Platinum Crown and Scepter Series projects come about?
A: You remember that in 1983, when we were joining Zino together with the Baroness Philippine de Rothschild, the Zino cigar line had a price point of three, four, five dollars. Everybody was saying, 'They are crazy, they will never sell one cigar at that price.' Prices went up, and there is no doubt that we were at that point the first one trying to enter the market with such an upscale price. We always try to be a little step in advance of our competitors. For instance, we are now launching a small Davidoff cigar, Esquisitos, which is the smallest hand-rolled cigar that exists in the world. And with Zino Platinum, we had the first discussions with Peter [Arnell] and Arnell Group three years ago. It takes time, and when we were discussing it at the first meetings, knowing Peter and Arnell and knowing the Swiss people, that's like oil and water. These discussions took more than one year until we founded a 50-50 joint venture. The whole Zino Platinum business is within this company owned 50 percent by Oettinger Imex and 50 by PASS, which is owned by Peter Arnell and Steve Stout.
Q: Who approached whom first?
A: They did. They said, 'We believe that the cigar business needs to be refashioned, rejuvenated and rethought.' We said, ‘Let's take the risk and let's do it in order to try to be once more a step in advance of all of our competitors in the way we were launching and promoting this new cigar line.' Undoubtedly we can say that was a success. Nobody else had ever done the launching of a new line in such a way. Not only pricewise, but in the whole strategy, with a really highly priced predecessor with the Crown line, followed with the -- let's call it the bread and butter line, Scepter, accessible to everybody.
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