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June/July
1999

From Seed to Store:
Davidoff Gets Vertical

SMOKESHOP Staff Report

“You should go back and tell your boss to dig a hole in the ground and bury those cigars. If your boss cannot understand that, then he cannot understand Davidoff.”

- Zino Davidoff’s reply to Raymond Scheurer, who was sent to sell the Davidoff cigar store some substandard cigars at cost (1968).

It has been some time since Raymond Scheurer was sent on a mission to sell a few low-quality cigars to Zino Davidoff, the world’s foremost cigar retailer at the time. But that moment has stuck with the current senior vice president of Davidoff of Geneva ever since. In fact, very little has changed in the company’s philosophy in the past 31 years, as Smokeshop’s recent trip to the Dominican Republic with Davidoff shows...

Prefatory Matters
Well, the Cigar Boom is over. In fact, the Boom is so far in the past it seems like ancient history. It seems like you hear cigar industry executives and tobacco retailers talking about “the good old days” as though they took place in the 1950s. You mention 1997 and a twinkle comes into a cigar man’s eye as if you just said “Christmas.” Unfortunately, 1999 is a vastly different landscape for the cigar industry. Rapid growth, overzealous marketing, and overproduction felled countless cigar companies in the past two years, and even the major players have felt the bite of the boom, as stock prices trade at multiples as absurdly low as Amazon’s are high.

It was during this current epoch that Davidoff of Geneva decided to bring its entire sales and marketing staff on an all-expense-paid trip to the Dominican Republic to celebrate the post-Boom era and learn how Davidoff is positioned for it. Smokeshop was there to report on it, and we will tell you why Davidoff is smiling while other companies are crying for the good old days.

But first, a bit of history.

The Davidoff Story (Abridged Version)
It all started in 1911, when the Davidoff family left the oppressive Tsarist Russia for Geneva, Switzerland with 5-year-old Zino in tow. Zino grew up around his father, a skilled tobacco blender in the “Harmandgis” tradition: Russian tobacconists who specialized in cigarette mixtures. Leaving his family at 18, Zino traveled to South America and Cuba, learning the cigar trade. He eventually returned to Switzerland in 1929, and opened a small cigar section in his father’s shop. It was largely unsuccessful.

However, during W.W.II, the Davidoff store became home to all of Paris’ Habanas - a safe haven from invading German troops. The store quickly became renowned and visited by aristocracy, celebrities, and political figures. Zino’s strong relationship with Cuban manufacturers, along with a flair for marketing and ties with the world-famous Rothschild wine family, resulted in the Chateau Series of cigars, an immediate hit.

By 1970, Davidoff was the most famous cigar retailer in the world, with the most exclusive and sought-after private-label Cuban cigar lines. Dr. Ernst Schneider, the chairman and chief officer of Oettinger, joined together to form a corporation. Davidoff “Appointed Merchants” were established in Europe and Asia, and Davidoff cigars were placed in the finest hotels and restaurants.

With America closed to Zino’s famous Cuban offerings due to the embargo, Zino traveled to Honduras in 1983 to create the Zino brand for the American market. The brand slowly gained popularity among connoisseurs. In 1990, Davidoff transferred the White Label line to Santiago, Dominican Republic and placed it under the care of Hendrik Kelner and his legendary Tabadom factory. There, the Davidoff lines were completed: “Grand Cru,” the “Mille” (Thousand) series, “Anniversario,” and the “Special” series.

The Retail Philosophy is Davidoff’s Philosophy
After nearly 30 years as a corporation, it seems surprising that Davidoff’s corporate philosophy bears such a close resemblance to Zino Davidoff’s equation for small business success.

In the mid 1960’s a customer walks into the Davidoff store in Geneva and asks for a pack of matches. A clerk, busy with a customer, ignores the man until he can summon Zino for assistance. “Mr. Davidoff,” says the clerk, “can you get this man some matches? I have a very important customer who is buying 2,000 cigars.” Zino proceeds to greet the customer, and get him his matches. After he leaves, Zino says to the clerk, “Always remember to treat every customer equally. You didn’t realize this, but the man who came in for the matches bought 10,000 cigars yesterday.”

There are hundreds of hokey Zino Davidoff “The Customer is Always Right” anecdotes similar to this one. They could be easily dismissed as motivational corporate claptrap…until you realize the vast success of this company, and view it in the context of its corporate philosophy. Davidoff really believes in service. And retailers. And, most importantly, service-oriented retailers. That’s the whole Davidoff philosophy in a nutshell. Here’s how it is supposed to work: You take a retailer, give him high-quality brands which he can sell exclusively, make him your partner in the business of selling cigars, help him to become completely service-oriented, and you have a Davidoff Appointed Merchant.

Davidoff was founded by a retailer, albeit one of the single most important retailers in Europe at the time. “Back in the ‘60s the second most important client of Habanos would order 4 boxes of Montecristo…Zino would order 40,” according to Raymond Scheurer, Davidoff’s corporate communications czar and one-time student of the late Zino Davidoff. “Zino succeeded in business because of his service philosophy. In the early 1970s, the shop was open 365 days a year, and Zino would often make deliveries in the middle of the night to his best customers. In the beginning, Zino had the same merchandise as everybody else, but what distinguished his store was service to the customer.”

Scheurer likes to point that fact out to his sales staff, as he did on a recent company trip to the Dominican Republic, to which Smokeshop was invited. Over a four hour presentation to the sales and marketing team in Santiago’s Gran Almirante Hotel in the heart of Cigar Country, Scheurer stressed the four most important parts of Davidoff’s corporate philosophy: attitude, attitude, attitude, and…guess what…attitude.

“An attitude of excellence in everything you do.” It is this simple philosophy that is at the heart of Davidoff’s unique “Appointed Merchant” program. Only 450 Appointed Merchants are chosen to carry the prestigious White Label products, although the company is always seeking opportunities to include other true tobacconists that share their passion and vision. The criteria for becoming an Appointed Merchant is as simple as it is tough.

According to Scheurer, there are a few main questions Davidoff asks of an applicant: Firstly: “Are you a specialist?… Do you believe that Davidoff is a specialty product, and an investment?” And, secondly: “What is the strategy of this store? Is it to be selling cigars today, and something else tomorrow? Are you an ambassador to the tradition of cigar smoking or not?” Once it is established that the stores’ commitment to quality and service is similar to the company’s, the process of becoming an Appointed Merchant begins. Is it worth it? It must be, as over 98 percent of Davidoff Appointed Merchants have been operating since 1970.


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