Cigar Aficionado

Total Davidoff Sales Down As Core Cigar Business Grows

Total Davidoff Sales Down As Core Cigar Business Grows

Despite both its Davidoff and Camacho brands experiencing double-digit growth, Oettinger Davidoff has reported that its total sales for 2015 declined when compared to the previous year. The company did, however, report that it managed to gain market shares worldwide while also achieving a production record for the third consecutive year as it continues to focus on its premium cigar and tobacco accessories business.

According to its report, Oettinger Davidoff, a private company based in Switzerland that employs roughly 3,540 people and produces cigarettes and premium cigar brands such as Davidoff, Camacho and Avo, saw its total sales fall from 1.2 billion Swiss Francs ($1.3 billion) in 2014 to 1.1 billion Swiss Francs, ($1.2 billion). The Oettinger group contends that the 8.2 percent reduction is due to "falling demand in Europe and China," the strength of the Swiss Franc and diminishing cigarette sales.

But while the European and Chinese markets were down, Oettinger Davidoff says that inroads were made in North America as well as other Asian countries as the company saw growth in both of these markets. In particular, Oettinger Davidoff says that sales of its core brands, namely Davidoff and Camacho, were up 10.5 percent and 34.4 percent, respectively. In the United States, Oettinger Davidoff saw its total market growth increase by 15 percent.

The report specified that Camacho cigars "produced from Honduran tobaccos," have "proved a great success." In addition, the company says that new product launches under the Davidoff brand accounted for the growth. Moreover, Escurio, Winston Churchill and Davidoff Nicaragua account for around one-third of all Davidoff cigar sales.

"In the financial year gone by, Oettinger Davidoff has made great progress, both strategically and with regard to the development of the core brands and market shares," said CEO Hans-Kristian Hoejsgaard in the report.

While total sales might be down overall, production levels for Oettinger Davidoff are at an all-time high as the company produced 45.8 million premium cigars in 2015, up 4.1 percent from 2014.

According to the report, Oettinger Davidoff expects another reduction in its total sales for 2016 as it continues to boost the vertical integration of its premium cigar business.

The company noted its acquisition of 150 hectares in Nicaragua and Honduras, which it is using for tobacco cultivation and building a state-of-the art production facility, as an example of its strategy to "meet the growing global demand for cigars" from these areas. The company also shored up its Asia presence when it acquired a majority ownership of distributor Bluebell Cigars (Asia) Ltd, which is now known as Davidoff of Geneva (Asia) Ltd.

This article first appeared in the May 3, 2016 issue of Cigar Insider.