Americas Duty Free & Travel Retailing Caribbean/MHA 2015 by Paramount Publishing Ltd.

CARIBBEAN/MHA 2015

DUTYFREEMAGAZINE.CA APRIL 2015 · CARIBBEAN/MHA VOL 25 · NO 2

Dufry’s global dominance p.8 Caribbean Tourism Organisation p.10 BVI investment p.20

LETTER FROM THE EDITOR

APRIL 2015 · MHA/CARIBBEAN VOL 25 · NO 2

The Americas Duty Free & Travel Retailing magazine (ISSN 0962-0699) is published five times a year March, April, June, October and November by Global Marketing Company Ltd. 26 Pearl Street, Mississauga, Ontario L5M 1X2 Canada. It is distributed throughout Central America, South America, the United States, Canada, U.S. Virgin Islands, U.S. Pacific islands, and the islands in the Caribbean. The views expressed in this magazine do not necessarily reflect the views and opinions of the publisher or the editor. April 2015, Vol 25. No. 2. Printed in Canada. All rights reserved. Nothing may be reprinted in whole or in part without written permission from the publisher. © 2015 Global Marketing Company Ltd.

AMERICAS DUTY FREE & TRAVEL RETAILING 26 Pearl Street Mississauga, Ontario L5M 1X2 Canada Tel: 1 905 821 3344; Fax: 1 905 821 2777 www.dutyfreemagazine.ca

PUBLISHER Aijaz Khan aijaz@globalmarketingcom.ca EDITORIAL DEPARTMENT EDITOR-IN-CHIEF Hibah Noor hibah@dutyfreemagazine.ca EDITOR Wendy Morley wendy@dutyfreemagazine.ca ASSOCIATE EDITOR Ryan White ryan@globalmarketingcom.ca ART DIRECTOR Jessica Hearn jessica@globalmarketingcom.ca ADVERTISING SALES ADVERTISING & MARKETING EXECUTIVE Jacqueline Hammill jacqueline@dutyfreemagazine.ca CIRCULATION & SUBSCRIPTION accounts@globalmarketingcom.ca

The tide

is high L

eisure travel is one of the first perceived luxuries to get crossed off the family budget during an economic downturn; even people whose income has not been affected fear it could be and cut accordingly. Because of that, regions like the Caribbean that depend on tourism as their primary industry were especially hard hit during the economic crisis of late 2009 and 2010. Luckily, since then the worldwide economy has improved and 2014 saw the region’s best tourist numbers ever. Growth rates in the region are not just higher than they have been in the past, they are also higher than industry average—cruise passengers alone totaled close to 25 million—and everyone from government officials to those in any segment of the tourist industry is making sure to make the most of it. The coming year, 2015 and beyond, look to be especially positive. The US has long been the source of the majority of the region’s visitors, and the American economy is on a massive upswing. More tourists are trying out the lesser-known islands, and this has resulted in double and nearly triple-digit growth for some of these smaller islands. Of particular notice is St. Vincent & the Grenadines, with an incredible 91% increase in visitors last year over the year before. This country’s growth rate should continue to be high with its new Argyle International Airport opening this year. A new seaport development on British Virgin Island’s (BVI’s) Tortola Island should bring a large number of new visitors to the country, as BVI will now be able to accept the large cruise ships that bring in many thousands of passengers with every disembarkment The goal is not only to service passengers that disembark, it is to attract those passengers back as overnight guests, and some islands, notably Martinique, have had great success recently with that conversion. Cruise ship passengers will always be a welcome part of the economy, however, and the cruise industry continues to have a healthy growth rate, although growth is starting to slow a bit. While the Eastern Caribbean has been the more popular cruise destination, that has now shifted, with the Western Caribbean becoming the largest sub-region in the world for cruise travel. Caribbean tourism would not be the same without duty free shopping, and the region is becoming known as a hub. In this issue you will find information not only about the Caribbean tourism industry in general and the cruise industry specifically, you will also hear from operators and distributors in the region. The Marine Hotel Association tradeshow issue of Americas Duty Free offers you the insider information you need to help make your Caribbean and cruise-based business even better, and nothing will make us happier than to learn of your success. Enjoy the tradeshow if you attend, and enjoy the issue wherever you may read it. We wish you great prosperity in the coming year. Kindest Regards,

Wendy Morley Editor wendy@dutyfreemagazine.ca www.dutyfreemagazine.ca AMERICAS DUTY FREE & TRAVEL RETAILING

LETTER FROM THE EDITOR

Marea alta E

n tiempos de dificultades económicas, los viajes de placer son unos de los primeros “lujos” que se eliminan del presupuesto familiar. Incluso personas cuyos ingresos no han sido afectados, temen que podrían y deberían hacerlo. Debido a eso, una región como el Caribe, que depende del turismo como industria principal, fue golpeada especialmente durante la crisis económica de finales del 2009 y en el 2010. Por fortuna, la economía mundial ha mejorado desde entonces, y en el 2014 la región reportó las mejores cifras de turistas de la historia. Los índices de crecimiento allí no solo son más altos de lo que fueron en el pasado, sino que además superan el promedio de la industria—los pasajeros de cruceros solamente totalizaron cerca de 25 millones—y todos en general, desde funcionarios gubernamentales a trabajadores e cualquier segmento de la industria turística, están garantizando el máximo aprovechamiento de esa buena racha. Tanto el 2015 como los próximos años parecen especialmente positivos. Los Estados Unidos han sido tradicionalmente una fuente de suministro de la mayoría de los visitantes de la región, y su economía está en etapa de auge masivo. Cada vez más turistas están visitando las islas menos conocidas, lo cual ha dado como resultado un crecimiento de dos y casi tres dígitos en algunas de esas islas más pequeñas. Se destacan particularmente San Vicente y las Granadinas, con un incremento increíble de visitantes del 91% el año pasado en comparación con el anterior. El índice de crecimiento de este país deberá seguir en aumento con la apertura de su nuevo Aeropuerto Internacional Argyle este año. Asimismo, un nuevo proyecto portuario en Tórtola, Islas Vírgenes Británicas (BVI) deberá traer una mayor cifra de nuevos visitantes a esa nación, que podrá a partir de ahora aceptar

AMERICAS DUTY FREE & TRAVEL RETAILING APRIL 2015

grandes cruceros con miles de pasajeros en cada desembarco. El propósito no se limita a prestar servicios a los pasajeros que desembarcan, sino atraerlos también para que regresen y se hospeden varias noches. Algunas islas, sobre todo Martinica, lograron grandes éxitos recientemente con esa conversión. Sin embargo, aunque los pasajeros de cruceros serán siempre un sector bienvenido de la economía, y la industria de cruceros sigue experimentando un saludable índice de crecimiento; el mismo está comenzando a disminuir un poco. Si bien el Caribe Oriental goza de más popularidad como destino de cruceros, esa situación está cambiando, pues el Caribe Occidental va convirtiéndose en la principal subregión del mundo para viajes de cruceros. El turismo caribeño no sería lo mismo sin las compras duty free, y la región se está haciendo conocer como centro de esa actividad. En este número no solo encontrarán información sobre la industria turística caribeña en general, y la de cruceros específicamente. También tendrán noticias de operadores y distribuidores de la región. El número de Americas Duty Free dedicado a la exposición comercial de la Asociación de Hoteles Marítimos (Marine Hotel Association) les ofrece la información especializada que necesitan para que sus negocios con el Caribe y los cruceros sean mejores que nunca antes. Y nada nos hará más felices que saber de sus éxitos en ese aspecto. Si asisten a la exposición comercial, disfrútenla, y también este número, dondequiera que lo lean. Les deseamos gran prosperidad en este año y en los futuros. Un saludo cordial,

Wendy Morley, Editora wendy@dutyfreemagazine.ca

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CONTENTS

What’s inside LEAD STORIES 8 Retailer News: Dufry GLOBAL DOMINANCE

With recent news that the giant is purchasing World Duty Free, it’s apparent that the game has completely changed

10 Caribbean Overview: Caribbean Tourism Organization ON THE UP AND UP

2014 proved to be a banner year for tourism in the Caribbean, and growth is expected to continue as more and more tourists opt for sun and fun on their vacations

14 Retailer News: Caribbean ARI RUNWAY SUCCESS

Key drivers have helped shape a strong year for Caribbean ARI in Barbados,where sales growth far outpaced passenger growth

15 Association News: IAADFS ATTENDANCE GOOD AT IAADFS In spite of political and economic difficulties in LATAM, business was brisk in Orlando

20 Cruise Port: BVI CRUISING INTO PORT

The British Virgin Islands is making a statement to the cruise industry with its US$52 million investment in a new cruise port along with a five-acre shopping and entertainment area

26 20 FEATURES Caribbean Corner: Essence Corp. Company Report: ACTIUM Rum Report Company Report: Beam Suntory

18 24 26 29

Company Report: Diageo Company Report: Edrington Company Report: Bacchus

30 32 34

RETAILER NEWS: DUFRY

World Duty Free Group at Heathrow offers a large selection of top brands in Beauty and Fragrance

Global dominance When Dufry purchased Nuance last year, there was a collective gasp in the travel retail world. With recent news that the giant is also purchasing World Duty Free, it’s apparent that the game has completely changed by

WENDY MORLEY

ufry AG, the world’s biggest travel retail operator, has purchased a 50.1% share in Italy’s World Duty Free (WDF), the holding company of World Duty Free Group. This move ends months of speculation and gossip, with a list of reportedly interested buyers that included Lotte, Shilla, DFS and LS travel retail, though admittedly the name Dufry appeared most often and highest on the list. In the latter half of February, reports came that Dufry was in serious talks with WDFG, and these were apparently correct. The 50.1% controlling percentage sold represents the share owned by Edizione, the holding company 100% owned by the Benetton family. Dufry valued the fully diluted share capital of WDF at €2.6 billion and the enterprise at €3.6 million (US$3.8 million), and agreed to pay €10.25 per share in cash. This price represents a premium of about 22% on volume-weighted average share price. While this purchase gives Dufry control of WDF, the larger travel retail company wants to own its former rival outright and is planning a complete takeover. Shortly after announcing its purchase of the initial 50.1% stake for €1.3 billion (US$1.4 billion), the company announced that it plans to purchase the remaining 49.9% through a mandatory offer once the first sale is complete, again offering €10.25 per share in cash.

Global reinforcement WDFG’s locations in Spain are strategically important to Dufry to strengthen its hold on the Mediterranean region

AMERICAS DUTY FREE & TRAVEL RETAILING APRIL 2015

The sale creates a super-giant that will own close to 25% of the airport travel retail market. WDF currently operates more than 550 stores in 105 airports in 20 countries around the world,

Dufry is especially keen to pick up Heathrow airport’s WDFG location, as this airport is a gateway to emerging markets

WDFG’s stores in western South America, such as this one in Chile, will add to Dufry’s grip on the eastern side of the continent

mainly in the western hemisphere and Europe, but also including India and the Saudi Arabia. Dufry currently operates 1650 stores in 60 countries. After the purchase is finalized, Dufry will have stores in 67 countries. Combined pro forma turnover of the two companies in 2014 was US$7.8 billion, with a pro forma EBIDTA of US$1 billion. Areas of specific stated interest to Dufry include London Heathrow and airports in Spain, though all additional stores will strengthen Dufry’s position throughout the world. Julián Díaz, CEO of Dufry, stated: “… the transaction will transform Dufry into an even more distinct global business with a balanced exposure to developed and emerging markets. This acquisition is a continuation of the global geographic diversification strategy which we have communicated and executed for many years.” Dufry will integrate WDF into its organization, and expects annual cost synergies of €100 million. These savings will come about by integrating global operations and through improved purchasing power in addition to optimized pricing and promotion strategies. The company expects to realize these synergies by 2017. Another expected source of increased revenue for Dufry is the strengthened position overall, creating additional avenues for growth in future tenders and renewed contracts by leveraging core competencies. The combined capabilities, logistics network and positioning will help the company to be even more competitive in the tendering process. The initial purchase from Edizione, which had itself purchased its larger controlling share of WDF in 2008, is expected to be completed in the third quarter of 2015. Dufry intends to initially finance the acquisition of WDF and the refinancing of that company’s debt through a fully committed debt bridge facility of €3.6 billion (US$3.8 billion). This financing is being provided by BBVA, Goldman Sachs, ING, Santander, UBS and UniCredit. It is expected to be refinanced by the rights issue of at least €2.1 billion (US$2.2 billion) and long-term debt instruments for a total amount of up to €1.5 billion (US$1.6 billion).

The Nuance purchase The current game-changing purchase comes straight on the heels of another, as last year Dufry rocked the travel retail world by suddenly announcing its purchase of The Nuance Group for US$1.7 billion. Prior to that purchase, Dufry was undoubtedly

one of the top companies in travel retail, but the Nuance purchase made the Swiss company the undisputed leader. While the WDF purchase has strengthened Dufry’s position globally, the Nuance purchase was a real operational coup as Nuance was especially visible in regions where Dufry needed to increase its strength, such as Asia and the Mediterranean. The addition of WDF’s Mediterranean and other strategically important stores has reinforced Dufry strongholds in that region as well as in the Americas, and also strengthened its position in the Middle East. Diaz states that London’s Heathrow Airport, too, is an important location for their growth strategy. “Having access to one of the most diverse passenger flows in Heathrow, combining attractive emerging and developed market customer profiles, will allow us to leverage our existing expertise on all the customer groups and to further develop our global offering,” he says. Some business analysts suggest that this purchase coming so quickly after the Nuance purchase will weaken Dufry’s position in the short term since the company will be still working out the logistics of the combined Nuance-Dufry operations when it begins evaluating and deciding upon the Dufry-WDF operational logistics. That being said, the company is sacrificing short-term comfort for long-term gain, as after the first strain it is expected to surge ahead. In a company statement, Díaz said: “The acquisition of WDF is a truly unique and highly transformational transaction for Dufry and is equally a milestone for the travel retail industry overall. The transaction further enhances our global position and with a market share of 24% in airport retail, we plan to drive our business to new levels in terms of capturing global passenger flows, execution capabilities and efficiencies. “We are preparing a detailed integration plan, focused on implementing the operational initiatives previously communicated by WDF and creating additional value through the integration of WDF and Dufry’s existing platforms. We have a successful integration track record and will work closely with the local teams. Dufry has great respect for the achievements of WDF and we look forward to working with our more than 9,500 new colleagues in 20 countries and across more than 100 locations. Ultimately what we want to achieve is to develop a better company for our employees, customers, suppliers and landlords, and a more valuable asset for our shareholders.”

www.dutyfreemagazine.ca AMERICAS DUTY FREE & TRAVEL RETAILING

CARIBBEAN TOURISM REPORT

Increased seat capacity and improved global economy in addition to concerted efforts on the part of many Caribbean countries helped make 2014 the region’s best tourism year yet

On the up and up by

2014 proved to be a banner year for tourism in the Caribbean, and growth is expected to continue as more and more tourists opt for sun and fun on their vacations

(Left) Hugh Riley, Secretary General of the Caribbean Tourism Organisation, notes that there’s reason to be optimistic for 2015

Richard Sealy, Minister of Tourism for Barbados and Chairman of the CTO, notes that much of the responsibility for continuing to attract tourists rests squarely on the shoulders of the organization and its members

AMERICAS DUTY FREE & TRAVEL RETAILING APRIL 2015

RYAN WHITE

here’s no denying that a market like leisure tourism is inextricably linked to peaks and valleys in major worldwide economies. Given poor economic indicators in the US and Europe over the last few years that resulted in would-be tourists having less disposable income, the tourism industry in the Caribbean has had a tough go of it. Nonetheless, travel to the region is starting to pick up, and Winfield Griffith, Director of Research & IT at the Caribbean Tourism Organisation, says that the signs were evident near the end of 2014. “Leisure travel is displaying steady demand again as the economies in the main markets continue to show signs of resurgence, although these signs vary from weak to moderate at best,” he explains. “This heightened demand significantly benefited the Caribbean [in 2014] and is clearly evident in the fact that visitors are coming in larger numbers such that growth rates in arrivals were higher than expected last year. The growth rate of 5.3% in tourist arrivals was among the best at the regional and subregional levels worldwide.” Furthermore, an analysis of data provided by Smith Travel Research, a US company that tracks overall performance of the hotel sector, reveals that Caribbean hotels earned more revenue last year than in 2013. Room occupancy rates also improved slightly, and revenue per available room was up 5.7%. More good news is that this increase in travel wasn’t just a blip

The Caribbean welcomed nearly 24 million cruise passengers in 2014. The Western Caribbean has overtaken the Eastern region in cruise popularity

on the radar. Throughout 2014 tourism demand remained strong, with arrivals growth each quarter ranging from 2.4% to 6.8%. This raises the question: What has changed in the Caribbean’s major source markets?

Going to the source Griffith calls business from the Caribbean’s main markets in 2014 “buoyant,” noting that the US continued to be the dominant supplier of visitors to the region, accounting for just under half of all tourists, with this number growing by 5.5% over 2013. The flipside, though, is that US visitors weren’t spread out over the region equally; in fact, the market supplied increased numbers to only half of the reporting countries. Canadians also took more trips to the Caribbean last year, with the country’s market share holding strong at a healthy 12.3%. This is particularly noteworthy considering in 2013 Canadian travelers to the region were actually in decline. As has been well established from previous years’ data, Cuba and the Dominican Republic are among the most popular destinations for Canadian travelers; indeed, together these two destinations accounted for nearly 60% of Canadian travelers’ destination choices in 2014. While both US and Canadian travelers have their clear favorites when it comes to Caribbean destinations, resulting in more benefits to certain areas of the region than others, Griffith says

that there are signs that tourists to the Caribbean are broadening their horizons, especially Canadians. “Many more destinations have been gaining traction in the market, having attained double-digit growth [over 2013].” Of course, Europe is another major source market for the Caribbean, and as moderate economic growth returns slowly to the Euro zone, Europeans have begun traveling more. The rebounding economy in the region, though, can best be characterized as geographically inconsistent, making for some wildly divergent results on a country-by-country basis. Nonetheless, looking at the big picture, European arrivals to the Caribbean surpassed the 5 million mark in 2014 for the first time in almost six years, although this number still hasn’t reached the prerecession level. The Caribbean Tourism Organisation credits the spike in arrivals largely to strong performance in the UK and Germany.

Mixed signals There is potential from a number of other sources for increased tourism in the Caribbean, but signals are mixed. Increased intraregional travel; travel from new and emerging source markets and growing cruise activity are all spaces to watch, says Griffith. “The drivers of the growth in intra-regional travel continue to be the larger destinations,” he explains. “The supply of visitors by Caribbean neighbors increased by 4.8%.”

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CARIBBEAN TOURISM REPORT

Unfortunately, though, this increased intra-regional travel was not to the benefit of those destinations with heaviest reliance on the market. “Demand for intra-regional travel to the Organization of Eastern Caribbean States [OECS] remained depressed for most of 2014,” Griffith continues. “Preliminary estimates suggest that this market segment contracted by 3.1% among the OECS countries.” With regard to new and emerging markets, the BRICS countries (Brazil, Russia, India, China and South Africa) show promise where travel to the Caribbean is concerned. However, given slowing growth in these countries’ economies, this potential hasn’t yet been fully realized. Particularly notable is that Brazilians, hailing from the Caribbean’s closest BRICS-country neighbor, have begun showing interest in traveling to the region. However, despite some evidence of intensified efforts to heighten awareness of the Caribbean among Brazilians, there was no recording of significant incremental business last year. Cruise activity was distinctly positive in 2014. Cruise passengers visiting the region reached 23.9 million, representing an increase of 8% compared to 2013. On a monthly basis, December was the only month to dip into negative territory over 2013. The Caribbean Tourism Organization notes that of the 24 destinations reporting data, 21 destinations achieved increases, and 14 of these destinations showed double-digit growth. St. Vincent & the Grenadines (91.1%), Martinique (71.3%), Belize (42.9%), Trinidad & Tobago (30.1%) and Turks & Caicos (24.8%) were the top five performing destinations. By market share, The Bahamas, Cozumel, US Virgin Islands, Cayman Islands and St. Maarten are the top five destinations. “With the expansion in cruise business to Belize, Cayman Islands, Cozumel, Jamaica and Turks & Caicos Islands, the Western Caribbean is now the largest sub-region for cruise passenger arrivals, having displaced the Eastern Caribbean from this position,” Griffith explains. “The islands of the Southern Caribbean did regain some of the capacity which they had lost during the period of high-cost fuel”

Outlook for 2015 Hugh Riley, Secretary General of the Caribbean Tourism Organization, notes that there’s reason to be optimistic for 2015 given that last year was “the strongest on record” for the Caribbean tourism industry. “There’s no doubt that political and economic conditions; increased airline seat capacity; improved airport facilities; increased room stock as recognized hotel chains established themselves in our destinations; and new initiatives in the marketplace all contributed to this success,” Riley says. Of the improving economic conditions in many parts of the world, Griffith adds: “It’s generally expected that global economies will again perform better in 2015, with the International Monetary Fund still predicting sluggish 1% growth across Europe and 2.4% in the US. According to the experts the emerging countries are expected to outdo the advanced ones. The demand for travel, therefore, should grow steadily.” In addition to this, many of the Caribbean Tourism Organization’s member countries have secured additional routes with airlines to increase seat capacity during the year. “This should lead to higher demand for Caribbean vacations,” Riley says. “At the same time, hotel brands are making substantial investments [by] bringing new rooms to the market, indicating rising confidence in the industry.” The outlook for cruise passengers, though, is slightly less optimistic. While the Caribbean will remain the number one cruise destination worldwide, the 2015–2016 Cruise Industry News Annual Report suggests that some ships will be repositioned away from the region. “Consequently, we anticipate a slight decline in capacity regionally, with growth in cruise passenger arrivals remaining flat,” Riley says. Despite this, the overall outlook remains positive, with the Caribbean Tourism Organization forecasting a 4–5% rise in arrivals for 2015. Further good news is that spending should be on the increase as well. “With present business trends in accommodation, airlines and other tourism services we expect visitor spending to rise around 4% at a minimum again in 2015,” Griffith explains.

Taking ownership

The Dominican Republic and Cuba are still favorite destinations of Canadians, but people of that nation have been trying other Caribbean locations

AMERICAS DUTY FREE & TRAVEL RETAILING APRIL 2015

Chairman of the Caribbean Tourism Organization Richard Sealy is optimistic for the rest of the year, but notes that much of the responsibility for continuing to attract tourists rests squarely on the shoulders of the organization and its members: “In order to build on our record performance in 2014, in order to continue to help support economic growth in the Caribbean, in order to bolster the development of our communities and our people, we must invest in a coordinated strategy to promote the Caribbean,” he says. “At the same time, if we are to keep the visitors coming, if we are to maintain interest in our region, if we are to withstand the strong competition from both emerging destinations and our own source markets, we must make the right investments in our infrastructure, we must make travel to and through the Caribbean as hassle-free as possible, we must make tourism profitable for our people and for our partners,” he adds. “We at the Caribbean Tourism Organization are deeply gratified by the Caribbean’s performance last year,” Sealy concludes. “Thanks to our member countries for their unrelenting efforts at improving and marketing both their individual destinations and the region as a whole.”

RETAILER NEWS: ARI

Runway

success Key drivers have helped shape a strong year for Caribbean ARI in Barbados, where sales growth far outpaced passenger growth by

WENDY MORLEY

Liquor is the retailer’s second biggest category. Mount Gay is always a top seller and ARI experienced strong growth with its Mount Gay XO promotion

aribbean ARI operates three locations at Barbados’ Grantley Adams International Airport: Runway Duty Free, Runway Beauty and Runway Fashion. General Manager Patrick Molloy spoke with Americas Duty Free about business at the airport over the past year. Americas Duty Free: How have sales been in your Barbados store in 2014 compared to 2013? Patrick Molloy: 2014 was a good year for the business, despite a marginal increase of only 0.8% growth in departing passengers from Barbados. We experienced excellent growth in our liquor business, particularly our rum category. This was driven by several activations with Mount Gay and we continue to see excellent growth of their premium XO Rum. ADF: What are your top categories, and do you see any changes in this regard? PM: Perfume & Cosmetics is our largest contributing category at over 50% of the business. Within P&C, ladies’ fragrance is the main sub-category. We have had modest growth in 2014. This is followed by the Liquor category, of which rum contributes over 50%; that’s mostly Barbadian rum. We’ve had excellent growth within the Liquor category, primarily driven by our rum business.

stores but have had excellent growth with sunglass sales in 2014. Luxottica’s Ray Ban grew by more than 20% and Maui Jim sales have increased almost 50%. ADF: Have you had any expansions/ renovations recently or do you have any coming up? PM: We are about to embark on a renovation of our liquor store and will be focusing on the growing rum business in Barbados. Sampling and a premium offering will be key elements of focus in the project. ADF: Are you looking to expand into new airports or other stores in the region? PM: We are always looking at potential opportunities within the region, and our business in Barbados could easily be scaled to take advantage of the right possibility. ADF: Do you have any new partnerships? PM: We reintroduced Land leather in 2014, which had been missing from the assortment for a few years. The initial signs have been promising and we may

ADF: Lifestyle brands seem to be a rapidly growing category. Do you see this trend? PM: We have only a small offering of Fashion and Accessories within our

AMERICAS DUTY FREE & TRAVEL RETAILING APRIL 2015

Perfume & Cosmetics makes up over 50% of ARI’s business in its Barbados operation, and ladies’ fragrance is the main sub-category

look to grow the selection and space. We have also introduced some new local products from Barbados. These are really popular with our departing tourists. We continue to develop our relationship and activity with Chanel and Mount Gay. These are two of our established partners and have brought us excellent growth in recent years. Chanel is investing in a refurbishment of its space this year, and Mount Gay will see excellent benefits from our forthcoming liquor renovation. ADF: Have you had any successful activations or promotions recently? PM: We ran a “Discover Fine Drinking” promotion with Diageo in December and January, which created a significant uplift on their Johnnie Walker Black, Baileys, Tanqueray and Ciroc ranges. Ciroc in particular showed excellent growth during the campaign. Other than rum, premium vodka has been one of our largest growth categories. Beyond that we continued to experience strong growth with our Mount Gay XO promotion. This was further enhanced with staff incentives to support the continued growth.

ASSOCIATION NEWS IAADFS

Attendance good

at IAADFS

In spite of political and economic difficulties in LATAM, business was brisk in Orlando by

WENDY MORLEY

ith 2,740 visitors, the attendance of IAADFS Duty Free Show of the Americas, which took place in Orlando, Florida at the Marriott World Center, was in line with last year. Especially considering the economic and political climate in some Latin American countries including Brazil, Argentina, Venezuela and Ecuador, President Alberto “Pancho” Motta and Executive Director Michael Payne were both extremely pleased. “Given the difficulty in some sectors I consider that a good number,” says Payne, before adding a caveat that buyer numbers were down slightly. “This was partly because of company consolidations and also because of the conflict with Basel,” Payne says, referring to BaselWorld, the largest trade show of the international watch and jewelry industry, which happened to be taking place at the same time this year. www.dutyfreemagazine.ca AMERICAS DUTY FREE & TRAVEL RETAILING

ASSOCIATION NEWS IAADFS

The day before Motta cut the ribbon to open the floor on Monday morning, the IAADFS held their annual sports day. The morning began with the event’s very first fun run, which raised US$3,500 for Escuela de la Calle (EDELAC), which works in Guatemala with street children, former street children living with foster families, and children at risk of becoming homeless. The day also included the annual tennis tournament and golf tournament. Members then changed out of casual clothes and donned their finery to rub shoulders in the lovely warm evening air by the pool. Buyer numbers may have been down slightly, but the quality of the meetings was high and business was brisk, according to exhibitors. There were a number of new exhibitors and also a few who returned after a hiatus. But this show isn’t only about orders; along with business comes a little fun. On Monday and Tuesday the trade show floor finished up with a number of cocktail parties. Club Americas was a popular place on Monday night and was especially hopping on Tuesday after the Gala dinner, where guests were treated to a few different genres of live music while they enjoyed their wine and dinner. Next year’s IAADFS Duty Free Show of the Americas will take place April 3rd to 6th, again at the Orlando Marriott World Trade Center.

AMERICAS DUTY FREE & TRAVEL RETAILING APRIL 2015

CARIBBEAN CORNER: ESSENCE CORP.

Caribbean heat Essence Corp. squares up to Caribbean challenges

ositive growth continues to lift the spirits of luxury duty free distributor Essence Corp. Based in Miami, the familyowned company handles some of the most prestigious fragrance names in the industry: Burberry, EuroItalia, Interparfums Paris and USA, Clarins Group, Elizabeth Arden Group, Bulgari, Guillaume Bona, Executive Hermés, Beauté Prestige InterSales Director Caribbean, national, Shiseido, PUIG Group, Essence Corp. Victoria’s Secret, Laboratoires Filorga and Art & Fragrance. Despite the good performance, Executive Sales Director Caribbean Guillaume Bona is honest in his appraisal of the challenges faced by suppliers/distributors in the Caribbean. Firstly, he points out that the company’s global partners are demanding ever higher margins, allied with the high cost of HPPs (highprofile promotions) and beauty advisors. Meanwhile, a lack of in-store space is impacting advertising and promotions, he says. In addition, distributors are exerting less control over stock/assortment and promotions/space. Bona notes that the state of the cruise ship business and promotions in that sector are affecting all Caribbean retailers. Secondly, Bona believes that the big retail groups’ open-to-buy plans mean that small brands suffer. New launches and limitededition products are difficult to place and are not profitable, he says. Thirdly, space is a challenge, as stores are not expanding. Fourthly, he cites the grey market as an issue. Meanwhile, new rules and regulations in the Caribbean are impacting business, such as Jamaica’s tax increases, which Bona says fluctuate from one year to the other. CuraÇao has imposed new taxes, while the Bahamas has set a new VAT rate. In Aruba, 18

AMERICAS DUTY FREE & TRAVEL RETAILING APRIL 2015

HIBAH NOOR

new rules have been introduced for transit passengers, which he believes will impact perfume duty free sales. Continuing the list of regulatory concerns, Bona noted that passengers traveling from Aruba to Venezuela in transit through Curacao have had their liquids confiscated. There has also been a reduction in the number of flights to Aruba/Curacao, while Aruba’s internal debt, combined with a sudden pharmaceutical crisis, has seen local spending going down. Bona would like to see several changes in the Caribbean, notably additional high-end and modern shopping malls, which he believes are needed to attract international brands. He would like to see more airline connections in between islands, along with the reintroduction of real duty free savings to compete against US domestic pricing. Turning to changing consumer trends in the Caribbean over the next two to three years, Bona thinks the rejuvenated US economy will positively impact the Caribbean, as will the opening up of Cuba. “Internet sales are booming,” adds Bona. In addition, he says retailers are forced to run “blow-out sales” and are looking for items at a price. Regarding new emerging trends, Bona notes that shops are becoming showrooms for customers to price shop, and internet sales are a big competitor. Bona believes retailers can do four things to help his business. “Retailers should be able to direct the beauty advisers to push profitable brands; retailers should make their perfumeries a shopping experience instead of showrooms; and they should personalize [their in-store space].” Bona is satisfied with the number of tourists visiting the Caribbean. According to the Caribbean Tourism Organization, the number of 2014 cruise ship passengers slightly increased versus 2013, which is “good news”, he says. Stopover arrivals are also up on 2013. “However, the Caribbean has experienced an impoverishment of its cruise ship visitors—volume is replacing quality,” he notes.

CRUISE PORT: BVI

Phase one of the Tortola Pier project involved lengthening and widening the pier, enabling the berthing of larger cruise ships

Cruising into port The British Virgin Islands is making a statement to the cruise industry with its US$52 million investment in a new cruise port along with a five-acre shopping and entertainment area

The shopping and entertainment area will have 50 retail locations. Over 200 businesses applied for these spaces

S Before the redevelopment of the Tortola pier, BVI accepted 350,000 cruise passengers per year. New agreements ensure a minimum of 425,000, though the Ports Authority expects at least 600,000

AMERICAS DUTY FREE & TRAVEL RETAILING APRIL 2015

ome Caribbean countries are focused on airport improvement, but in this region tourists don’t just come from the sky; they also come across the waves. With over 37% of the nearly 22 million worldwide cruise passengers in 2014 (expected to increase to over 25 million per year by 2019), the Caribbean takes by far the largest slice of that industry’s pie. According to the Florida-Caribbean Cruise Association, the cruise industry is the fastest-growing category in the leisure travel market. Of the over 200 million cruise passengers since 1990, 70% have been generated in the past 10 years and 40% in the past five years. Caribbean islands that are geographically capable of attracting these cruise lines and yet are not consciously doing so are being left behind. The British Virgin Islands (BVI) is a country not willing to be left behind, as a massive pierexpansion project currently underway says loud and clear.

accommodate the largest of the cruise ships a short time ago now cannot, and, of course, the countries with ports that can no longer accommodate the largest ships will be unable to ensure a maximum number of cruise tourists and therefore benefit from this vast tourist market as much as they otherwise could. The British Virgin Islands (BVI) government together with the BVI Ports Authority understood that expansion was necessary, and agreed on this project.

Tortola Pier Park

Phase two of this project, creating the landside shopping and entertainment area, is expected to be completed before the 2015-2016 cruise season

The pier expansion At a cost of US$52 million, the BVI Cruise Pier Expansion Project is lengthening, widening and strengthening its existing cruise pier. Design of the new pier began in 2012, and construction began in 2014. The development has two phases; during Phase One the pier will be extended from 230 m (755 ft) to 398 m (1,312 ft) and widened from 9.9 m (32 ft) to 18.3 m (60 ft).The pier expansion is being constructed by IDL/ Meridian Joint Venture Ltd, and Ports and Marina Services Ltd. was responsible for the site enabling and substructure works for the landside development that specifically entailed demolition, piling and placement of concrete slabs. The buildings are being created by various local construction firms. Until this reconstruction, BVI Ports Authority averaged around 350,000 passengers annually. With this new development, however, came contracts with Norwegian Cruise Lines and Disney Cruise Lines. These companies have both signed preferential berthing agreements that combined give the port a guaranteed 425,000 passengers per year, but the Ports Authority actually expects 600,000 for the 2015-2016 season. The project may be costing the government an estimated US$52 million, but the 15-year contracts with Norwegian and Disney alone are expected to bring in US$90 million. In addition, the Ports Authority anticipates that the new construction will attract other larger ships that were unable to berth there previously, so long-term earnings could be considerably higher.

Cruise industry changes The Tortola expansion was decided upon as a direct result of ongoing changes in the cruise industry. As the industry numbers keep growing so do the ships, which are becoming ever larger and ever grander. The largest ships currently are approaching double the size of the largest ships a mere 20 years ago. Since it is the prime market for cruises, the Caribbean is the place where these giant ships will set sail and dock. Ports that could

As airports finance their expansion with retail and other nonaeronautical income, so does a cruise port. In addition, cruise ships do not dock at a port just because they can; something must be offered to their passengers. There are always exciting excursions, but a large number of passengers are happy just to shop and relax in the local environment. As stated in the Florida-Caribbean Cruise Association’s 2013 review: “Throughout its history, the industry has responded to vacation desires of its guests and embraced innovation to develop new destinations, new ship designs, new and diverse onboard amenities, facilities and services, plus wide-ranging shoreside activities.” Clearly, BVI has decided to make the shoreside experience as much a priority as the pier. For passengers who are not taking part in an excursion, the port at Tortola Island, BVI, will have a landside development featuring retail, commercial, entertainment and green spaces, to be named “Tortola Pier Park.” As a five-acre addition to the new pier, a shopping and entertainment area is being created, with 50 leasable spaces reflecting a diverse retail blend of clothing, footwear, jewelry, crafts and food & beverage. The Ports Authority has received over 200 applications for these 50 spaces. At time of publication the retailers had not yet been announced, though the announcement of the major tenants was expected soon. Currently, talks are taking place suggesting that the entire five acres might be duty free. The park will also feature the Royal Customs House, Black Swan Tavern, The Exchange, Retail Village Buildings, Entry Market, Chapel, Boat Museum, Pool Bar, Merchant Kiosks, Boardwalks East and West, Cricket Lawn, Waterfront Swimming Pool, Chapel Garden, Maintenance Area and Trolley Line, further improving the cruise passenger’s experience.

Good reputation British Virgin Islands and Tortola in particular have a strong reputation in the cruise community, according to the industry’s preeminent website for passengers, cruisecritic.com. In particular, the islands are known for their genuine hospitality. Geographically, the seas tend to be calm around the island of Tortola. The sea also tends to be high here, and thus the area is a favorite for divers and snorkelers in addition to those who enjoy sailing. While the BVI government is keen to accept cruise tourists, its ultimate goal is to convert those people into overnight guests to take advantage of all the country has to offer, and its research shows that this will be the case for approximately 50% of cruise visitors to the island Phase One, the pier, is currently in the final stages of reaching completion and is already accepting ships. Phase Two, the landside development, is expected to be finished in time for the 2015-2016 cruise season.

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CRUISE NEWS

A tale of two sister islands Antigua and Trinidad both receive far more attention than their sister islands Barbuda and Tobago, but the cruise industry has now turned its head toward these formerly less-favored siblings. With the proliferation of mega ships in recent years, many ports in the Caribbean, such as the one in Tortola BVI, have made a strategic choice to ensure their ports can accommodate them. While the smaller ships may not bring in the same numbers of tourists at any given disembarkment, they still bring in a substantial number of people. Islands with smaller ports that offer an attractive atmosphere and interesting excursions to this tourist contingent can see great benefits. Additionally, these smaller luxury ships often attract a passenger with more disposable income who is looking for a singular experience and willing to pay for it. The wooing of smaller cruise ships has created positive reward for the island of Barbuda. During the 2014-2015 season, the island received calls from Europa, Ponant, Sea Dream, Club Med, Black Watch, Windsurf and Wind Spirit. This island is especially attractive to those who want an eco-friendly adventure, and its tourism industry promotes this. Barbuda also offers the largest bird sanctuary in the western hemisphere. While green tourism is its calling card, a traveler can easily find a more traditional Caribbean vacation atmosphere there, with the island’s 17-mile stretch of pristine pink sand beach and charming 16th-century village. Barbuda offers another glimpse into history; tourists can hike their way further back in time to the Indian Cave, with its Ancient Amerindian petroglyphs. Colin C. James, CEO of the Antigua and Barbuda Tourism Authority, says, “Barbuda has emerged as a green cruising des-

Instead of battling for the mega ships, Barbuda is finding the smaller, luxury ships not only bring many people, those people also have the disposable income to enjoy specialized eco-trips

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tination, welcoming smaller luxury cruise lines with discerning cruisers, and this will have a significant impact on the economy of the sister island.” Tobago, meanwhile, has not been especially focused on the smaller ships and cruise lines, and has managed to attract Carnival, the world’s largest cruise line. Carnival ships will begin visiting Trinidad’s little sister in 2016. The additional 10,600 passengers to the island will mean a total of 81,050 for the 2015-2016 cruising season. Tobago’s Tourism and Transportation department is keen to make sure these visitors have plenty of activities to amuse them, ensuring the enjoyment of the guests and thus both their positive reviews and the potential for their return. Additionally the more activities the visitors take part in, the greater the support of the local economy. Secretary of Tourism and Transportation Tracy Davidson Celestine says: ““We have to prepare for more passengers, and we need to ensure that when the guests come here we have enough activities for them, whether that means tours, craft, food, water sports or anything else. We need our people to be entrepreneurs. Look at what is possible and plan for the next season. We can only create the opportunities; it’s for the people of Tobago to now take advantage of them.” She added that the future looks positive for Tobago’s growing cruise industry. “This year we saw a 200% growth in cruise-ship guests coming to Tobago and next cruise season we are again going to see double-digit growth. This is testimony to the hard work that we are doing.”

CRUISE NEWS

Bacardi crowns 2015 Bartender of the Year

Out of over 2,500 entries received, the winner of the Bacardi Cruise Competition Bartender of the Year has been chosen. Gerome Firmalo, of Holland America, was announced as winner at the finals in Miami on March 20, 2015. Firmalo won for his cocktail Passion Blossom 13, inspired by his travels. This inspiration was the theme of the contest for this, the 10th year of the competition. In addition to his US$5,000 cash prize, Firmalo will receive professional training and development throughout the year from Bacardi. His Passion Blossom 13, a martini made with equal quantities Bombay Sapphire gin and St-Germain elderflower liqueur combined with passion-fruit syrup, lemon sour and cranberry juice, will be featured on-board MS Oosterdam, where he works. Zachary Sulkes, Regional Manager Bacardi Travel Retail Americas, says the battle was close although each year the standards get higher, but ultimately the Passion Blossom 13 achieves everything the company looks for in a cocktail. “Cruise is an important strategic channel for Bacardi Global Travel Retail,” he says. “This competition helps drive category growth for our cruise and ferry line partners. It’s a fantastic showcase for our brands, especially given the increasing numbers of consumer groups from emerging markets who are new to cruise.” For his part, Firmalo was thrilled to win, saying he had been working toward it for a long time. “Being with the Bacardi team and competitors in South Florida has been phenomenal and it has been a privilege to compete. Winning the Bacardi Cruise Competition gives me great personal pride with the added kudos of such professional recognition. There’s no doubt it will help me develop my bartending career,” Martinique offers a unique set of activities for the cruise passenger—from going shopping to hiking alongside waterfalls

Gerome Firmalo, originally from the Philippines, has won the 10th annual Bacardi Cruise Competition to be crowned 2015 Bartender of the Year

C’est magnifique Martinique had a stellar year for cruise visitors in 2014. According to the latest statistics from the Martinique Tourism Authority, cruise passenger arrivals for the year were up 71.3% over the previous year. This French island is one of the fastest-growing cruise destinations, experiencing a 524% increase in cruise passenger arrivals since 2010. At this point the island is on course to have received 220,000 cruise visitors in the 2014-2015 season, with 176 cruise calls. As an overseas region of France, Martinique has the modern and reliable infrastructure of the European Union along with the unspoiled beaches, volcanic mountains, and rainforests of the subtropical Caribbean. This island also boasts miles of hiking trails featuring waterfalls, streams and other natural wonders. This “best of both worlds” environment has made the island especially attractive to cruise lines and passengers. “All of the major North American and European cruise lines have had stops planned in Martinique this year, including visits by Royal Caribbean’s celebrated Quantum of the Seas in her inaugural season, and the magnificent Carnival Splendor,” says Karine RoyCamille, commissioner of the Martinique Tourism Authority. “We are committed to further investment in the cruise sector and improving our overall tourist product to ensure that the strong results of the past few years will continue in 2015 and beyond.”stores in the region at some point in the near future.

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COMPANY REPORT: ACTIUM

Life is Beautiful ACTIUM’s activations and beauty advisor training in NYC have helped deliver big sales for the L’Oréal Luxe brands throughout the Caribbean by

WENDY MORLEY

iami-based ACTIUM, in partnership with its Caribbean clients and the L’Oréal Luxe group, achieved double-digit growth in the region in 2014. Lancôme experienced a healthy growth of 13% over already strong 2013 sales through key animations in both skincare and makeup throughout the year, along with the continued momentum of La Vie Est Belle, which has propelled it to one of the top fragrances for women worldwide. The addition of the eau de toilette to the La Vie Est Belle family opened a wider clientele for Lancôme fragrances. ACTIUM’s support to the team of exclusive beauty advisors included a oneof-a-kind seminar and training in New York, complete with team-building experiences and a private dinner at the Giorgio Armani flagship store. This experience instilled the attendees with a further sense

Activations, launches and the L’Oréal-ACTIUM beauty-advisor training in NYC have all helped result in Lancôme skincare and makeup growing above the market trend

Giorgio Armani Sì had impactful launches throughout the Caribbean early in 2014, including Kirk Freeport in Grand Cayman

AMERICAS DUTY FREE & TRAVEL RETAILING APRIL 2015

of loyalty to the L’Oréal Luxe brands. The individual attention and guidance each beauty advisor received led to continued growth of their respective clientele and resulted in Lancôme skincare and makeup growing above the market trend. The launch of Lancôme Grandiose in the last quarter of 2014 provided a glimpse into the success of the company’s mascara assortment in 2015. Giorgio Armani & Designer Fragrances (GADF) reached 18% growth over 2013 with dynamic launches that stayed true to each brands’ personality while also carrying ACTIUM’’s innovative DNA. Giorgio Armani Sì enticed the female segment after impactful launches throughout the Caribbean early in the year, including Curaçao and Grand Cayman. Since its launch, Sì has proven itself the new female fragrance pillar the Giorgio Armani brand intended it to be. Ralph Lauren’s Midnight Romance brought femininity back to the Ralph Lauren brand with its romantic launches that included Romance spray girls and in-store activations in Jamaica, Antigua, Trinidad, CuraÇao and the Bahamas. The exclusive new Viktor & Rolf fragrance BONBON, with its selective distribution strategy, made its first entry into the ACTIUM– Caribbean territory with a groundbreaking launch in Vanity First in St. Martin in December of 2014. ACTIUM’s expanded distribution of BONBON means exciting launches are now taking place in other locations in the region including The Perfume Shop in Bahamas, Yellow House in Curaçao, Lipstick in St. Martin and Stechers in Trinidad. The momentum that began in 2014 with all L’Oréal Luxe brands has continued into 2015, with activations for

The exclusive new Viktor & Rolf fragrance BONBON had its groundbreaking Caribbean launch with ACTIUM in Vanity First in St. Martin

both Lancôme and GADF in the region, including a makeup event featuring Lancôme artist Alfred Vargas in Vanity First, St. Martin, and in-store support for La Vie Est Belle, Giorgio Armani Sì and Cacharel Anais Anais in Yellow House, Curaçao. The key focus for ACTIUM over the coming year is to build on these successes and maximize their “one door at a time” approach, which identifies opportunities of growth not only by island and client but by each point of sale, and which has proven effective in helping the company gain market share year after year. Along with helping to fulfill Parbel’s strategy, ACTIUM will focus on Lancôme skincare pillars including Genifique, Absolue and Renergie Mult-Lift, in addition to planning the execution of the upcoming new launches of Lancôme including Trésor’s latest fragrance Trésor La Nuit and Shine Lover makeup, scheduled to launch in the second quarter. These and other launches and activations have ACTIUM excited for another remarkable year of growth with the L’Oréal Luxe portfolio.

RUM REPORT

Premium selection As more consumers discover the nuances of fine rums they may decide the spirit is also a good choice when they’re not on vacation by

WENDY MORLEY

othing says the Caribbean like a drink containing rum. Sales of the spirit had been declining in recent years but according to International Wine and Spirits Research (IWSR), this trend is expected to change in the coming years. The best news for rum producers and the duty free market is that this increase is expected to come from premium selections.

Charred barrel

Rémy Cointreau is slowly replacing its Mount Gay Eclipse with the premium Mount Gay Black Barrel, named for its maturing in charred oak ex-bourbon barrels

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The trend toward premiumization of products is not so much the case in the Caribbean, where a low retail price is often the deciding factor in a customer purchase. “The major share of the rum pie goes to the unexpansive brands up to US$20,” says François Van Aal, Regional Director, Rémy Cointreau Travel Retail Americas. “This is especially true for the Caribbean, which is a very competitive rum market, and where most of the major rum brands are produced. The Caribbean is a unique market to promote and stimulate the rum industry, but mostly with very low retail prices.” Rémy Cointreau is bucking this trend. Whereas its entry-level rum Mount Gay Eclipse grew in single digits over the coming year, sales of the premium Mount Gay Extra Old grew in the double digits. These stats support the decision made by the company to focus its efforts on a new product, Mount Gay Black Barrel, a small-batch, handcrafted rum matured in charred oak ex-bourbon barrels. It is designed for Mount Gay drinkers who appreciate the rich aromas and greater intensity that the charred barrels lend to the liquid. Of course, aging the rum increases its value. Van Aal says, “There is a good loyal customer base in Duty Free Americas for this brand, which is made in Barbados. While Mount Gay performs well, we want to accelerate the development thanks to a premiumization of the brand with the roll out of the high end Mount Gay Black Barrel. Rémy Cointreau exhibited the new Mount Gay Black Barrel in Orlando at the IAADFS Duty Free Show of the Americas, and the company plans to hold educational tastings throughout the year. “The best way to be convinced is to taste it and understand the production process. Therefore we will have tastings in many locations, as well as trainings for the sales employees wherever possible.”

Travel retail is an important channel for the company. “Duty free is the most expensive market for producers, but it is great exposure for the brand,” he says. “At this point we consider it a market investment.” The Caribbean, too, is an important market for the brand, because it’s a tourist destination with considerable traffic, People traveling in the region are often looking for a special rum. In the coming weeks the company will be releasing an exciting new collection called the “Finish Collection.” March is tight lipped about it at the moment, but believes it will be a searched-for product. Once it’s released, he will be promoting it through promotions and activations.

French tradition

Atlantico rum, which has the name and visage of Enrique Iglesias helping to get it known, is expanding throughout the Caribbean and into other parts of Latin America

Rhum Clément and Rhum J.M., from the island of Martinique, has seen strong double-digit growth in the past two years across the brands’ 70 international markets. In both Martinique and France, these brands are the leaders in the aged rum segment. The overall premiumization of the market has helped to make this happen, as customers are looking for better-quality products and brands with some history. Matthieu de Lassus, Export Director of these two brands, says most of the company’s efforts have been educational, helping the consumer to understand the different types of rum. “We

Progressing south For Atlantico rum, the Caribbean on the whole has been good and duty free within the region has been especially positive. According to Robert de Monchy, Managing Director of MONARQ, the rum’s distributor in the region, business has increased significantly in 2014. “Atlantico is performing well,” he says. “We have recently introduced the brand in several Caribbean duty free accounts in addition to locations throughout Latin America, including the Bahamas, Puerto Rico and Colombia. We listed Atlantico in several stores in St. Maarten, US Virgin Islands and Aruba last year, to name just a few. Argentina and Brazil will be opened soon as well.” MONARQ is currently in discussions to promote the brand in the airports of St. Thomas and St. Maarten (Princess Juliana International Airport), in addition to retail stores in the Bahamas. Atlantico’s flagship rum “Private Cask” is the primary focus for MONARQ; a newly designed gift box makes it especially attractive. Atlantico Reserva and Platino round out the range and are featured in select markets. De Monchy expects the brand to continue growing throughout the coming year, both in overall sales and in the number of locations where it’s available.

New collection Aged rum is a growing category, and that’s good news for Ron Abuelo. Sales of this rum grew 35% last year. Ricardo March, Vice President of Sales, says his goal is for the rum to continue on this 30% to 35% growth trajectory over the coming year. “Aged rum continues to grow. Just the US market for rum is 22 million cases each year. The category is there. Currently only 5% of this is aged rums, so there is plenty of room to grow,” he says. “Can you imagine if we had even 10% of this market? The sky’s the limit.”

Ron Abuelo has been achieving 30% to 35% growth year on year, and the new “Finish Collection” is expected to help that trend continue

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RUM REPORT

to a true internationally recognized brand. We can rely now on our strong network of international distributors and benefit from a superb image amongst rum lovers. Being a small brand, there is still plenty of room to grow and we intend to surf on this new global trend for super premium rums.”

Luxurious additions

Matthieu de Lassus, Export Director of Rhum Clément, is banking on education to help bring the rum category up to where it should be in duty free

recently designed a Rum Map which has been very well received by our all partners and customers. This map clearly distinguishes the three main styles of rum: First, the French style rhum from previous French colonies, which mimicked distillation and ageing methods traditionally used for French Armagnac and other famous eaux de vies. Second, the Spanish style ron, mostly inherited from Spanish culture for sweet wines like Jerez. Third, the English-style rums, which are mainly spiced rum, dark rums and/or strong rums. It is obvious that certain rums, although sharing the same category, are clearly the results of three different cultures, philosophies and production methods, and it is our goal to explain this to our customers and partners.” Another goal de Lassus has is to raise rum’s profile in the duty free market. “It is always striking and sad to visit duty free worldwide and to see the little consideration devoted to the rum category compared to other categories like whisky, cognac or vodka. Rum is the third-biggest category of spirit in the world, but barely represents 5% to 10% of all spirit assortment within duty free stores. Whereas whisky shelves are full of superb fine whiskies from small single malt distilleries, rum shelves are usually owned by four or five major brands selling mostly value products.” For its part, Rhum Clément is trying to change this, and de Lassus says duty free buyers are beginning to get the message. The company expects growth of 30% this year, based to a great degree on the education of customers and buyers, and also on revamped, elegant and higher-end packaging for this rum with cognac-style naming such as Clément VSOP, the new Clément XO and the company’s 10-year release. “In only ten years, Rhum Clément passed from being a very local brand from Martinique

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Jamaica is the largest market for Gruppo Campari’s rum portfolio in the Caribbean, with a duty free business that has many outlets: Montego Bay’s international airport caters primarily to tourists whereas Kingston’s caters mainly to traveling Jamaicans and business people. Cruise ship passengers can also shop duty free at piers in Ocho Rios, Montego Bay and Falmouth. Gruppo Campari’s rum sales in the duty free channel have been growing for both brands, Appleton Estate Jamaica Rum and Wray & Nephew White Overproof Rum. Ugo Fiorenzo, Senior Market Director for J. Wray & Nephew Limited, says the company carries out a great deal of marketing activity in this channel in the country. “We have lighthouse window displays in both airports; in Kingston airport the window display features Wray & Nephew White Overproof Rum and in Montego Bay it features Appleton Estate Jamaica Rum. We run special programs such as gift with purchase during the peak periods including the winter tourist season and the major Jamaican public holiday. We also have an extensive sampling program. For this we feature Sangster’s Jamaica Rum Cream range throughout the year.” Fiorenzo says while the company’s rum products are available in duty free throughout the Caribbean, over the coming year the focus will be on “expanding our visibility and offerings in the Caribbean as we feel there is a lot of potential for growth in the short to medium term in the duty free channel in Caribbean markets outside of Jamaica.” Recently the company has expanded its offerings in many Caribbean countries to include luxury variants in the Appleton Estate range.

Gruppo Campari is bringing the luxury editions of its Appleton Estate Jamaica Rum to duty free in other Caribbean islands

COMPANY REPORT: BEAM

The Maker’s Mark distillery is in the midst of a US$67million expansion that will increase capacity to more than 2 million cases

Corn and

craftsmanship

Beam Suntory takes visitors through the world of Kentucky Bourbon at two stops along the historic trail by RICK LUNDSTROM

delegation of the travel retail media was given a crash course on the fine points of small-batch Bourbon with the help of master distillers, tour guides, brand ambassadors and rackhouse supervisors on March 26 during a daylong visit to two distilleries in the Beam Suntory portfolio. The visit took the group through a portion of the Kentucky Bourbon Trail, with stops at the Maker’s Mark distillery in Loretto and then on to the sprawling 400-acre complex of Beam Suntory. The Maker’s Mark Whiskey complex is in the middle of a US$67 million expansion that will add a third copper still and mash cooker plus additional warehouse space. The brand is riding a wave of popularity in the Bourbon category. According to Beam Suntory, sales of Maker’s Mark grew by 17% in 2013. Despite this growth, the company is staying close to its original operations, replicating the craft-heavy process the new equipment and space. The expansion is a necessary part of the company’s plans to produce more than 2.2 million cases by 2020. The distillery produces Maker’s Mark White, Maker’s Mark Fully Mature, Maker’s Mark 46, launched in 2010, and Maker’s Mark Cask Strength. Forty-five minutes away at the Beam Suntory plant in Clermont, the company has launched a new collection of limited edition releases celebrating founding distiller Booker Noe. The Bookers brand of small-batch Bourbon joins other new releases including the Signature Craft Quarter Cask and the Signature Craft Harvest launched last fall. It has been a busy year at the distillery and one with several landmark events. Shortly before the completion of the company’s purchase by Suntory Holdings at the end of April 2014, Master Distiller Fred Noe had the honor of filling the 13 millionth barrel of Jim Beam Bourbon. The Beam portfolio, once limited to the white label brand, now has a portfolio of 20 Bourbon products, selling more than 7 million cases around the world.

Maker’s Mark Master Distiller and Director of Distillery Operations Greg Davis shares a laugh with Beam Suntory Brand Ambassador Gordon Dundas

Maker’s Mark 46, made with the help of pricy French oak, receives the company’s signature red wax top

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DIAGEO GTME

Serving up

a winner Diageo’s WORLD CLASS bartending competition returns this year with the same tried and true formula peppered with some exciting new additions by

RYAN WHITE

Shekhar Grover of Royal Caribbean, the winner of last year’s Diageo WORLD CLASS bartending competition

Americas Duty Free recently spoke with Matthieu Comard, Vice President of Diageo Global Travel and Middle East (Diageo GTME), about this year’s iteration of the highly successful competition. He tells us that the crux of the competition remains unchanged. “Bartenders from about 50 countries and a number of leading cruise lines submit their recipes. Last year, we saw the biggest Diageo Reserve WORLD CLASS program in collaboration with four of the world’s leading cruise lines: Princess Cruises, Norwegian Cruise Line, Royal Caribbean International and Celebrity Cruises,” Comard explains. “After a series of heats, we choose 25 semi-finalists, including one from the cruise sector, who compete during the week-long final for the title of Diageo Reserve WORLD CLASS Bartender of the Year.” Throughout the program, WORLD CLASS bartenders are trained using the collection of fine spirits from the Diageo Reserve luxury portfolio—Johnnie Walker Blue Label Blended Scotch Whisky, Johnnie Walker Platinum Label Blended Scotch Whisky, Johnnie Walker Gold Label Reserve Blended Scotch Whisky, The Singleton Single Malt Scotch Whisky, Ciroc Vodka, Ketel One Vodka, Tanqueray No. Ten Gin, Don Julio Tequila, Zacapa Rum, Bulleit Bourbon, and Talisker Single Malt Scotch Whisky.

Constant evolution “Every year there is an evolution in WORLD CLASS,” Comard tells us. “This year we are training in two different modules: Basic (Bar Academy) and Advanced (World Class). This will provide more bartenders and staff with the opportunity to participate.” While details are still emerging about this year’s competition, Comard assures us that it will be as compelling as ever, largely because of Diageo’s close work with cruise lines to make the competition’s first and foremost goal to create world-class bartenders. It’s a program that not only helps the winner, but also all contestants. Diageo GTME works very closely with all participating cruise lines to give on-board bartenders the opportunity to get training from some of the top mixologists in the cocktail industry. Additionally, Diageo has a Cruise Marketing Specialist who manages and adapts the training to fit the cruise dynamic. This role oversees the training curriculum to keep consistency and relevancy on board the ships. “It means that bartenders working with the Diageo Reserve portfolio fully understand not just the craft of cocktail making, but also how their service can enhance the experience of guests,” Comard explains.

The road ahead

aunched in 2009, Diageo Reserve WORLD CLASS has been transforming fine drinking experiences and cocktail culture around the world and in the home. At the core is an outstanding, global training programme and internationally recognized platform that elevates the craft of the bartender and builds careers in the industry.

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WORLD CLASS will continue to evolve to meet the changing needs of the industry. It has evolved into a vital element of Diageo’s cruise business, and Comard tells us that it will continue to get the attention it deserves from the company. “WORLD CLASS has become our main platform for growth within the cruise sector as it focuses on various key sales drivers: trainings, commercial activations including menus on board, beverage packages and consumer facing programs, as well as PR around the competition itself,” he enthuses. “We’re excited for what the future holds!”

CRAFT BOURBON

V I S I T U S O N FAC E B O O K TO LEAR N M O R E AB OUT WO O D F O R D R E S E RVE

C R A F T C A R E F U L LY. D R I N K R E S P O N S I B LY. Woodford Reserve Kentucky Straight Bourbon Whiskey, 45.2% Alc. by Vol., The Woodford Reserve Distillery, Versailles, KY ÂŠ2014

COMPANY REPORT: EDRINGTON

Proud Papá Brugal’s first female Master Blender creates Papá Andrés 2015 Alegría Edition, Edrington’s second release of exclusive rum made from the Brugal family’s private reserve by

WENDY MORLEY

Just 1,000 of the Brugal Papá Andrés 2015 Alegría Edition decanters have been produced, priced at US$1,500 each. All profits goto the Brugal Foundation, established in 1988 to support development and reduce poverty in the Dominican Republic

The book that accompanies the Papá Andrés 2015 Alegría Edition recounts the story of Brugal and Papá Andrés, and was inspired by designer Mariscal’s visits to Dominican Republic and interviews with Master Blender Jassil Villanueva Quintana

ontrary to what many may believe, Jassil Villanueva Quintana had never thought of becoming Master Blender at Brugal. Yes, the distillery was an important and ever-present aspect of her life, but she studied Business Administration. This led her to take two internships with Brugal, in logistics and operations. Becoming Master Blender may not have been in Villanueva’s mind, but Brugal was in her blood. A fifth-generation member of the Brugal family, she had visited the maturation facility every weekend with her father, who worked in production. As she completed her internship, she learned about a forthcoming evaluation of family members who were interested in becoming Master Blender. Villanueva decided to see if she had the required skill. As she began to build her knowledge, she became ever more passionate about the work. She spent a considerable amount of time honing her senses and understanding. This hard work paid off, resulting first in her appointment as Brand Ambassador for Brugal in 2010, and then earning the preeminent position of Master Blender in 2011 as the first female to be chosen for this position. A shy young woman, Villanueva first had some difficulty with the public aspects of her new position. “In interviews I would barely speak,” she says, showing her former body language of eyes cast down, arms pulled in. “I would just answer ‘yes’ or ‘no.’ But now I am getting better at meeting people and talking about Brugal.” Indeed, she was very popular at the WEBB-Edrington booth at IAADFS. She appeared polished and well spoken, if hints of her shyness appeared from time to time. Her eyes lit up when she talked about the honor of her position, of the pride in representing Brugal around the world and about the creation of the newest bottling of Papá Andrés 2015 Alegría Edition along with its design by renowned Spanish designer Javier Mariscal, who was also present at the booth.

AMERICAS DUTY FREE & TRAVEL RETAILING APRIL 2015

Master Blender Jassil Villanueva Quintana and designer Javier Mariscal with their exclusive luxury product in the WEBB-Edrington booth at IAADFS

“We wanted to show that a luxury brand didn’t need to appear in black and gold,” Villanueva said. “We wanted the true flavor of the Dominican Republic to come across.” The result is a fun and playful bottle nestled in a bright yellow box. The interior of the box is illustrated with a design common in the woodwork of houses in that country, which decoratively allow the breezes to blow through as a form of natural air conditioning. In the box is a drawer that contains a book created and illustrated by Mariscal, inspired by his meetings with Villanueva and his experiences in the Dominican Republic. The colorful and playful design continues on the luxury rum’s crystal decanter. Juan Gentile, Commercial Director LatAm & Duty Free Americas, commented, “Papá Andrés is the ultimate expression of Brugal quality, craft and skill—a truly rare and extraordinary rum. By introducing this exceptional super-premium rum to a wider audience, we are changing the way people perceive the category and we are reaching a new generation of luxury spirit consumers. We are particularly proud to unveil Papá Andrés 2015 Alegría Edition, which is the pinnacle of luxury rum from the very heart of the Brugal family.”

COMPANY NEWS: BACARDI

Good Spirits Bacardi’s take on corporate responsibility extends way beyond lip service

WENDY MORLEY

Dewar’s has planted close to 140,000 indigenous trees including birch, rowan oak and beech to naturally enhance its maturation facility in central Scotland and complement the surrounding landscape.

orporate Responsibility is a real buzz-phrase these days. While some companies do take their social and environmental role seriously, for others the phrase rings hollow. For Bacardi, those words carry a great deal of weight. This company’s corporate responsibility platform rests on five pillars: 1. Marketplace 2. Environment, Health and Safety 3. Responsible Sourcing 4. People 5. Philanthropy and Community Involvement

Bacardi has numerous activities for each platform, accomplishing such things as encouraging responsible alcohol consumption and supporting local community initiatives across the areas of arts, architecture, education, the environment and social services. In February 2014, while governments still debated whether to comply with international environmental protocols, Bacardi announced its own bold initiative. Called “Good Spirited: Building a Sustainable Future,” this initiative launched across more than 160 markets where Bacardi brands are sold, comprising its 6,000 employees in over 75 offices and at every one of the company’s 29 manufacturing facilities. “Protecting the natural resources we use to create our brands, at every step along the value chain, is central to our corporate responsibility,” says Mike Dolan, President and CEO of Bacardi Limited, the world’s largest privately held spirits company. “We’ve always set the bar high. Now, we’re taking our solid, sustainable foundation to the next level.” This campaign may have launched recently, but sustainability is not a new concept for Bacardi. Since 2006, when it began tracking its global environmental impact, the company has made significant reductions. It uses 25% less energy and 54% less water. The weight of its packaging has also been reduced by 7%, making up 23,000 tons. Greenhouse gas emissions from Bacardi rum production have been reduced by 48% since 2006. Wind turbines at the plant in

Facundo L. Bacardi, Chairman of Bacardi Limited, says: “Our Vision for Sustainability is to have a balanced impact on the environment in the communities in which we operate, putting back as much as we take away.”

Puerto Rico provide clean energy, and the brand’s worldwide production sites are working toward zero solid waste to landfill. The bottling site in Buxtehüde, Germany, has reached this milestone, and the facility in Brampton, Ontario, Canada, is close behind at 1.1%. The brand’s water use has been reduced by 72% since 2006, nearly 1.35 billion liters—enough to provide a glass of water to every person on earth. While their iconic rum leads the way, all of Bacardi’s brands are working toward this common goal. To that end, companywide efforts include: Responsible sourcing—Bacardi strives to obtain all raw materials and packaging from sustainably sourced, renewable or recycled materials while maintaining or enhancing the economic status of growers and suppliers. Global packaging—Bacardi is committed to crafting sustainability into its brand packaging and point-of-sale materials. By 2017, Bacardi plans to reduce the weight of its packaging by 10% and 15% by 2022. Operational Efficiencies—Bacardi continues to focus on reducing water use and greenhouse gas (GHG) emissions, with a 2017 goal to cut water use by 55% and GHG emissions by 50%. “Bacardi considers global environmental innovation part of its DNA,” says Rick Wilson, who leads Corporate Social Responsibility at Bacardi. “Our goal is to return to the environment at least as much as we take away. We’re setting a sustainability standard for others in the spirits industry to follow.”

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COMPANY REPORT: BACCHUS

Swelling

Made famous by TV shows that feature the Vanderpump family, LVP is the first bottled sangria made with premium Spanish wines, all-natural fruit flavors and no added sugar

seas by

WENDY MORLEY

In a little over a year, Bacchus has managed to pick up some heavy hitters to represent in the Caribbean

om Browne is far from being new to the travel retail industry. His substantial history spans many years with global companies in both domestic and travel retail, from the small to the giant, but his business Bacchus, a Miami-based wines and spirits distribution company, is just two years old. Be that as it may, Bacchus has made a lot of waves in that short period of time. Appropriately, those waves are being made throughout the Caribbean, the company’s territory. Bacchus recently exhibited at the IAADFS Duty Free Show of the Americas in Orlando for the second time, and had few spare moments. This year’s booth was double the size, and beautifully designed to showcase the existing brands, Beluga Noble Vodka and Hine Cognac, as well as new brands acquired in the last 12 months. The list of those new brands is extensive. The company’s impressive new offerings include: • Fraternity Spirits’ Tequila Corralejo, the fastest-growing tequila brand in the US, and Ron Prohibido, a premium, artisanal 12-year-old Solera rum • From International Beverage Holdings, Bacchus carries time-tested Balblair and Speyburn single malts and Hankey Bannister blended Scotch whisky • McCormick Distilling’s International Premium Range, which includes Tequila Rose Strawberry Cream Liqueur, Eco-Friendly 360 Vodka, 34

AMERICAS DUTY FREE & TRAVEL RETAILING APRIL 2015

Platte Valley Moonshine and the original key lime pie liqueur, Keke Beach • AGWA de Bolivia, a pure coca leaf distillate with leaves grown above 2,000 meters in the Andes and then macerated into tea and distilled in Amsterdam before the 36 herbs and botanicals are added. AGWA is all about having fun, igniting the party, keeping it going, hedonistic nights, celebrating with friends and discovery • Last but far from least, the famous Vanderpump family LVP Sangria. The world’s first bottled sangria using only premium Spanish wines and all-natural fruit flavors, with no added sugar. This signature recipe has been used for years in the family’s restaurants and bars worldwide and is featured on “The Real Housewives of Beverly Hills” and “Vanderpump Rules.” Browne, who is Bacchus’ Managing Director, says: “Having inventory in a bonded Miami warehouse means our customers can place smaller orders and receive them quickly, thereby saving time and money as well as lowering their inventory costs. This convenience along with tourism on the upswing in the Caribbean via both plane and cruise ship makes us confident and optimistic about our growth opportunities for 2015.” The Balblair Distillery, established in 1790, is located on the idyllic coast of the Scottish Highlands. Each barrel of whisky rests until reaching its optimum maturation point, capturing the essence of that year

Beluga Transatlantic Racing, made with high-plateau barley malts, artesian water from deep below the Siberian tundra and extract of wild strawberry, is served with the spirit of maritime adventure in this limited edition bottle and packaging

2015 30 Annual Convention 30e Convention annuelle th

“Canada’s Exclusive Duty Free Convention”

November 15 – 18 | 15 – 18 Novembre Westin Bayshore, Vancouver, BC, Canada

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