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Cigar news: Vision and innovation make companies take calculated risks. You cannot grow your market if you are  hesitant in making change. Neils Frederiksen of Scandinavian Tobacco  business model believes in smart moves.

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Lighting the Way: Scandinavian Tobacco Group’s CEO Niels Frederiksen, Part 1

Devoted to making great moments happen for cigar lovers, Scandinavian Tobacco Group CEO Niels Frederiksen shares his approach to driving innovation.

Niels Frederiksen Scandinavian Tobacco Group

Macanudo, CAO, Borkum Riff, Captain Black, Bugler, Bali Shag and Cafe Creme are just a few of the more than 200 brands that Scandinavian Tobacco Group (STG) produces in the premium handmade cigar, pipe tobacco, roll-your-own and mass market cigar segments worldwide. Each of these well-known and best-loved brands is a market leader in its category and has become a heritage brand through the years, gaining household recognition among legions of fans around the globe.

Niels Frederiksen, CEO of Scandinavian Tobacco Group

With approximately 7,300 employees worldwide and factories and sales offices in the Dominican Republic, Honduras, Nicaragua, Indonesia, Europe, New Zealand, Australia, Canada and the United States, STG’s products are available in more than 100 countries. In the premium handmade cigar category, STG holds the top position in the biggest premium cigar market, the U.S., where roughly 60 percent of all handmade premium cigars are consumed. Globally, the company is the No. 2 seller of premium cigars.

According to Niels Frederiksen, who has led the company as CEO since 2015, the handmade premium cigar market is the company’s fastest-growing business segment and may eventually become the top earner in STG’s vast portfolio. With companies such as General Cigar Company, Cigars International and the recently acquired Thompson & Company of Tampa, Florida, the premium cigar segment in the U.S. has been a focal point of STG’s overall strategy for continued growth. Already the leader in premium cigars in the U.S., STG is cementing its position and extending its legacy as an innovative company that helps the overall premium cigar industry achieve long-lasting success. By producing cigars that drive consumers into brick-and-mortar stores, and by leveraging its deep inventory of aged tobaccos and predicate blends, STG is making cigars that excite people and help create lasting memories.

“We believe that great moments happen when the cigar lover is able to pair their smoking occasion and their lifestyle with a cigar that ticks all the boxes for them,” says Frederiksen, 53. “We have a diverse portfolio that offers something for every cigar smoker in terms of taste profile, size, country of origin and price point. Our cigars align with the full spectrum of smoking occasions, so whether the consumer lights up while grilling, smokes with friends after a round of golf or indulges in a limited-edition smoke while on a yacht, enjoying a cigar from our portfolio is a surefire way to create a memorable smoking occasion. Considering our leadership position, the growth of our handmade cigar business will help ensure a bright future for premium cigar retailers and their customers.”

Niels Frederiksen, CEO of Scandinavian Tobacco Group

Building Brands
Maintaining STG’s position as a global leader in premium cigars requires both continual innovation and careful brand management—which, in turn, helps ensure that the industry as a whole continues to thrive. “As the leader in handmade cigars, the responsibility rests on us to energize the category,” says Frederiksen, whose extensive background in marketing began with sales and marketing roles at the East Asiatic Company before he joined STG in 1999. Early in his nearly 20-year tenure with the Denmark-based multinational company, he served as market development manager and then senior vice president for House of Prince, Denmark’s only cigarette manufacturer and an independent subsidiary of STG at the time. He was promoted to executive vice president of STG in 2007, then named senior advisor two years later, subsequently returning to the executive vice president role in 2013.

“Driving excitement through innovation is integral because in the absence of innovation, the category runs the risk of losing relevance among consumers,” explains Frederiksen. “As such, we have placed an intensified strategic focus on innovation. We have a library of predicate blends that is unmatched in the handmade cigar category, which allows us to innovate in compliance with FDA [U.S. Food and Drug Administration] regulation. Through our vast library of blends, we are able to continuously surprise retailers and consumers with unique and exciting new cigars, thereby preserving the vitality of the category.”

Macanudo, perhaps the company’s best-known brand, celebrates its 50th anniversary this year and continues to evolve through its Inspirado line. CAO introduces new smoking experiences to its consumers through cigars like Brazilia, Colombia and Amazon Basin, while Diesel is a bold new cigar with a full-bodied taste profile that has not been seen in STG’s product portfolio before.

Thanks to a plethora of foundational brands that are in almost every retailer’s humidor, STG is able to meet the needs of a wide range of consumer tastes and budgets. Cohiba creates luxurious smoking occasions for image-conscious consumers. La Gloria Cubana maintains its boutique origins through its commitment to excellence and innovation. Partagas appeals to traditional smokers. Hoyo de Monterrey highlights Honduran craftsmanship and is drawing rave reviews for its La Amistad cigars. Torano connects smokers with its family tradition of making cigars.

This story first appeared in the May/June 2018 issue of Tobacco Businessmagazine. Members of the tobacco industry are eligible for a complimentary subscription to our magazine. Click here for details.

By Stephen A. Ross, senior editor of Tobacco Business Magazine. Photos by Justin Hummerston.

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