Oettinger Davidoff has emerged from the pandemic with a fresh new approach to travel retail that includes a streamlined portfolio, focus on gifting and a plan to capitalise on the important role that cigars can play in increasing basket spend.
During the pandemic, the company made great efforts to stay in close contact with its business partners in the channel and took time out to “rethink and realign” its approach.
“In the past, we were considering travel retail as a mirror of the domestic markets,” said Jean-Christophe Hollay, Head Partner Markets & EMEA Duty Free, Oettinger Davidoff AG, when TRBusiness sat down with him during the TFWA World Exhibition & Conference in Cannes.
“We were utilising it more as a showcase of what we can do in general. Now, we are approaching it as a different channel with different needs.”
The company believes less is more. As such, it has streamlined is global travel retail portfolio by more than 50%.
“During the pandemic, retailers realised they had a lot of stock on the shelves,” said Hollay. “We had already had the idea to scale our selection back but covid accelerated this. We are now focusing on the bestsellers.
“It’s important to take this specific approach to travel retail as the shopper has different needs.
“Gifting is a major part of it and we are presenting ourselves to people that may not necessarily know the category well. Cigars are typically not a pre-planned purchase – they’re bought on impulse.”
Focus on cigars for gifting
Hollay referenced how, traditionally, spirits and cosmetics are considered key gifting categories in the channel but that cigars are also an important part of the mix.
“Firstly, we need to communicate where the category is,” he said. “This is one of our quests: to position the category correctly to the shopper.
“Once you enter the walk-in humidor, we need to simply the navigation [of products].”
The goal is to place cigars close to other popular gifting categories such as whisky, rum, cosmetics and fine chocolates.
“We believe that we should not be placed in the tobacco category like cigarettes and other tobacco products. We are more in the category of enjoyment and indulgence and good taste. Therefore, we are probably closer to the spirits and wines categories.
“It’s an important point of differentiation and we feel an intense interest from the retailers in going in the same direction.”
The price point of cigars has the potential to make a big impact on average spend per head.
“When you buy a box of cigars it’s immediately EUR200 [around US$174] in the basket and one of the major KPIs for retailers is increasing the average basket size, so this is an important consumer to capture,” said Hollay. “If you don’t showcase the cigar category in this environment, you will miss this opportunity.”
The shift in mindset to a category management approach is summarised in the company’s Today Transform Tomorrow strategy.
While changes can be made to the merchandising in existing locations, achieving the vision as Davidoff sees it, requires a remodelling of the layout looking closely at the best place for positioning the walk-in humidor.
With this in mind, upcoming retail projects are perfectly placed to capitalise on this.
“We have already had one or two retailers asking us to be a part of this development from the beginning,” said Hollay. “For us, it is a great opportunity, but also very rich in feedback, as it shows our approach is starting to be integrated at a retail level.
“Tobacco was one of the first categories to come back after the pandemic and cigars was really over-performing, so the category is highly important,” he added. “I am really impressed by the change in perception toward the premium cigar category in travel retail.”
Davidoff is also spotlighting its Zino brand in the channel, which is an everyday cigar.
The Zino Nicaragua Gordo line extension went on-shelf from 15 September, adding to the existing Short Torpedo, Robusto, Toro and Gordo formats.
Davidoff says the gordo format ‘complements the global trend towards bigger cigars’ while offering ‘great value for money’.
The ‘freshpacks’ zip-lock packaging keeps the cigars humidified for up to three months so they can be merchandised outside of the walk-in humidors.
As such, they are ideally placed to capitalise on fast check-out and impulse purchases.
As a brand, the medium-intense Zino range of cigars offer distinctive aromas of fresh pepper, salted nuts and dark chocolate, combining Nicaraguan spiciness with the creaminess of Dominican tobaccos.
They pair especially well with rum or craft beer.
“Zino is growing extremely fast and growing extremely well in travel retail,” said Hollay. “The price is more affordable and the quality is exceptional as you have the stamp of Davidoff behind it.”