Asia September e-issue by Paramount Publishing Ltd.

New Digi tal e Ditio N

SEPTEMBER 2013 • VOL 17, NO 3

Chinese traveler frenzy p.

Cappell down under p.

Retail-supplier cooperation p.

Godiva builds p. business

Letter from the Editor

Asia Duty Free & Travel Retailing (ISSN 1360-9548) is published by Global Marketing Company Ltd. 26 Pearl Street, Mississauga Ontario L5M 1X2 Canada. It is distributed in the following countries, states, regions and territories on the Asian continent and in the Pacific Rim: Australia, Bangladesh, Bhutan, Brunei, Cambodia, China, Fiji, French Polynesia, Guam, Hawaii, Hong Kong, India, Indonesia, Japan, Macao, Malaysia, Maldives Islands, Myanmar, Nepal, New Caledonia, New Guinea, New Zealand, Philippines, Saipan, Samoa, Singapore, South Korea, Sri Lanka, Taiwan, Thailand, Tonga, Vanuatu and Vietnam. The views expressed in this magazine do not necessarily reflect the views and opinions of the publisher or editor. September 2013, Vol 17, No.3. All rights reserved. Nothing may be reprinted in whole or in part without written permission from the publisher. ©2013 Asia Duty Free & Travel Retailing.

Advantage Asia

elcome to the fourth digital edition of Asia Duty Free & Travel Retailing! Sent direct to the inboxes of over 4,400 industry subscribers and compatible with smartphones, tablets and web browsers, it has a flip format with the look and feel of a traditional magazine. Asian economies continue to set the pace for the rest of the world, with China still leading the charge, albeit at a slightly slower pace these days. Newly wealthy Chinese consumers, as they travel throughout the region and farther afield, represent a huge travel retail opportunity; one which remains hampered by restrictions that prevent foreign retailers from setting up shop at Chinese mainland airports, sea ports and border locations. Even that hasn’t kept travel retail entrepreneurs out of the action, however. It turns out that Chinese travelers are far more likely to buy luxury goods and duty free outside China, no matter how much Beijing cajoles them to buy at home. So travel retailers throughout the Asia Pacific region are making good on their opportunity after all. Also in this issue we speak with Dan Cappell, General Manager of Retail & Car Parks for the Australian company that operates Melbourne and Launceston airports. Cappell has worked in all three arms of the trinity, and was most recently Vice-President of NonAeronautical Revenue & Business at Abu Dhabi Airports Co. Not surprisingly, he’s bullish on the potential of the airports under his charge, and he shares with us some of the factors he says have made Melbourne in particular an unheralded success story. Speaking of quiet success, how about Indonesia? The most populous nation in Southeast Asia isn’t exactly front and center for many travel retail operators, and yet the nation is going through what can only be called explosive growth when it comes to aviation. Domestic aviation grew by 20% last year—from 60.2 million to 72.5 million passengers—making Indonesia the fifth largest domestic aviation market in the world. And from 2009 to 2011 Indonesia’s international air traffic grew by 50%. The travel retail possibilities are too big to ignore. Time for a closer look. I hope you enjoy the magazine, and I look forward to seeing you in Cannes. Kindest Regards, Hibah Noor Editor hibah@dutyfreemagazine.ca

ASiA duty Free & trAvel retAiling sePteMber 2013

AsiA 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 Hibah noor hibah@dutyfreemagazine.ca AssociAte editor - AsiA p. Convery padraic.asiadutyfree@gmail.com concessions, liquor & tobAcco editor ryan White ryan@dutyfreemagazine.ca AssociAte editor melissa Silva melissa@dutyfreemagazine.ca Art director Sarit Scheer sarit.scheer@gmail.com AdvertiSing SAleS Advertising & MArketing MAnAger Kim Carrera kim@dutyfreemagazine.ca circulAtion & subscriPtion MAnAger deepa J deepa@globalmarketingcom.ca

September 2013 • Vol 17, No 3

6 10 14 16 22 24 28 30 32

chinese travelers

Sino the times

China’s onshore duty free market may be off limits to foreign players, but as ever greater numbers of Chinese travel abroad, and as their tastes develop and diversify, savvy travel retailers in Asia-Pacific have an opportunity that looks set even to dwarf the Japanese wave of the 1980s

Dan cappell

Got it covered

Dan Cappell shares some of his experience with Asia Duty Free and outlines his next challenge as General Manager of Retail & Car Parks at the ambitious Australian company that runs Melbourne and Launceston airports

nuance-Watson

Keep calm and carry on

Nuance-Watson’s determination to ride out a rough patch and keep raising its game are paying off

inDonesia

Flying start

Indonesia is fast becoming Asia-Pacific’s next big travel retail market, and the first retailers off the block in the race to tap it are set to reap rewards

retailer-supplier cooperation

A common goal

William Grant & Sons partners with DFS for a shop-inshop concept aimed not only at increasing single malt sales for the retailer, but also capturing the imagination of Chinese travelers

counter intelligence retail

Seizing opportunities

Asia Duty Free discusses enticing Asian non-shoppers to buy with Director of Counter Intelligence Retail Garry Stasiulevicuis

inflight sales group

New heights

Inflight Sales Group works to improve the inflight sales experience for airline crews and the brands

cathay pacific

Knowledge-based success

Understanding the customer makes Cathay Pacific a winner in inflight

la prairie

One step ahead

La Prairie is focused on revitalizing its product offering with an eye to consumer demand

36 From Japan to the world Kosé

With a strong following in Japan and a solid portfolio, Kosé stays focused on increasing its presence in Asia

38 Delightful engagement goDiva

Godiva builds its Asian business with a strong focus on regional taste and demand

39 40 Jacobsens Bakery Ltd. Making the big move confectionery neWs

Fauchon keeps it fresh for Cannes n Ferrero unveils new concept in KLIAx

Jacobsens

As it transitions from domestic to duty free in Asia, Jacobsens Bakery Ltd. eyes the challenges and the prospects

42 Finding the key butlers

As Butlers works to open up the Asia market, it finds gifting and a focus on ingredients are vital to regional success

44 Ahead of the curve piquaDro

Piquadro tackles duty free with new store openings and high-value collaborations

46 The next step eDrington group

The Macallan, Highland Park and The Famous Grouse are already performing very well in Asian travel retail, and indicators suggest that the brands will only continue growing

48 Making strong headway Diverse flavours

Diverse Flavours exhibits for the first time at TFWA WE after sustained success in Asia with its range of New World wines from leading South African wineries

liquor neWs Grey Goose Cherry Noir receives Asia premiere n DANZKA Vodka expands in Asia n Distilleria Bottega brings a taste of Italy to Cannes n International Beverage makes encouraging inroads in Asia travel retail

52 On target with travelers agio cigars

Agio Cigars exhibits at TFWA WE in Cannes this year with a clear focus on travel retail exclusives and capturing the gifting occasion

tobacco neWs Asia contributes strongly to Oettinger Davidoff’s cigar sales n Arturo Fuente Cigars to introduce travel retail exclusive travel bags to Asia duty free

Chinese Travelers

SINO the times

uch has been made of the rise of China since it overtook Japan to become the world’s secondbiggest economy two-and-ahalf years ago, with players in all manner of industries looking to cash in on the growing spending power of Chinese consumers. Travel retail is one of those industries, but it faces an enormous obstacle when it comes to tapping this vast and fast-developing market: foreign retailers are legally prohibited from setting up at the Chinese mainland’s airports, ports and borders. But that doesn’t mean they’re missing out on all the action. Chinese travelers prefer to make their duty free and luxury purchases outside China – to such a great extent that Beijing has made it a policy to encourage them to make those purchases at home rather than abroad. But getting increasingly wealthy Chinese to reverse that habit is akin to turning a supertanker around, and as Chinese travelers

shilla executive vice president head of Duty free Division Jason cha says the retailer’s sales to chinese customers have almost doubled year on year

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fan out across Asia-Pacific, that’s not lost on travel retailers in the region. Mainland Chinese have become the biggest customer segment for many duty free and travel retail operators in Asia-Pacific in the past few years, notably in South Korea, where their spending has outpaced even that of Japanese travelers, long the staple customer group of retail giants such as Shilla Duty Free and its rival, Lotte Duty Free. “Sales growth among Chinese customers has been 90.2% compared to the previous year,” says Shilla Executive Vice President Head of Duty Free Division Jason Cha, adding that he expects the number of Chinese travelers shopping at Shilla’s stores in South Korea to continue to grow steadily over the next five years. Cha says most Chinese visitors to the country make their purchases at the retailer’s main store in downtown Seoul, at the capital’s Incheon International Airport and at its outlet on the southern island of Jeju. In Asia-Pacific region’s other hemisphere, the Chinese are also making their presence felt, says Philippe Boyer, Chief Executive of The Nuance Group Australia. “Chinese inbound tourism to Australia is still strong and not expected to slow down,” he says. “Our airport partners at Brisbane, Sydney and Melbourne are all extremely focused on ensuring their overall airport offer caters to Chinese passengers’ needs. Obviously, from a route development perspective, as they continue to successfully market themselves to these regions we expect to see more Chinese passengers and this represents an ongoing opportunity for us.” Contrary to the popular perception of Chi-

nese holidaymakers turning up by the busload in tour groups, Boyer says a good portion of Nuance Australia’s Chinese are independent travelers. “Our Chinese passengers fall into two main sub-segments – tour groups and free independent travelers [FITs],” he says. “Within the FIT group we also have several further sub-groups. “Obviously, we target our tour groups in a very specific way, mainly through direct marketing to tour leaders through relationships managed by our customer segmentation managers in-airport. This activity is supported by a direct marketing program which is delivered primarily via email. We have a very comprehensive tour group strategy in place, which means individual tour group leaders are targeted with special offers throughout the year.” Steffen Brandt, Chief Executive of Singapore-headquartered travel retailer Heinemann Asia Pacific, says the Chinese passenger profile

philippe boyer, chief executive of the nuance group australia, says limited editions, exclusives and gWps are very popular with chinese passengers

in the region is changing. “In all the big cities you see a lot of business travelers,” he says. “You still see groups, but I would say – and it’s my personal feeling – that groups are becoming fewer and individual travelers are becoming more.” Heinemann’s Operations Director for Asia Pacific, Olivier Louis, says: “In the past few years, PRC [People’s Republic of China] customers are not so much traveling in groups but alone [as visa restrictions are eased]. Also, the habits of Chinese customers are changing. We’re facing the same situation that we did with the Japanese in the mid-1980s to 90s – they were traveling in groups, and then step by step it became more individual.” Another characterization of Chinese travelers that may be in need of an update concerns their purchasing patterns – at least in certain Asia-Pacific markets. Shilla’s Cha says that as Chinese travelers show increased recognition of high-end brands, they are more liberally splashing out money on them. “They are looking to buy luxury goods,” he says. “Louis Vuitton [which Shilla operates downtown in Seoul and at Incheon] is the most popular luxury goods store. They are also very interested in buying watches from traditional luxury brands such as Omega and Rolex, and luxury jewelry brands like Cartier.” But Brandt says the apparent fixation with brands at the very top end of the market is giving way to a desire for more differentiation. “It’s a development process,” he says. “When the whole thing started, everyone wanted the high-end brands, and then after a while, they find places where everyone has a Louis Vuit-

nuance australia is targeting chinese customers with such upscale offers as this penfolds wine ampoule, priced at us$155,000, at sydney airport

chinese-speaking staff enhance the appeal of the luxury offer at nuance australia’s stores in sydney

ton bag, and then you have a huge clientele who won’t go for that brand because it’s not something to buy to differentiate yourself. “This is what you could call the peak, but then there’s a value for money consideration, and people start to understand that there are plenty of other products that offer really good value and they’re good quality. We are seeing this development. There’s the ‘show-off ’ phase, where everyone wants the best of the best, but we also believe in concepts, and at the end of the day not all Chinese will buy Chanel or Louis Vuitton – there will be quite a broad range of brands that are very attractive to mainland Chinese.” Louis says he’s seeing this dynamic in the perfumes & cosmetics category. “For P&C, whether it’s in Macau or Singapore, PRC customers are attracted to the main brands – Chanel, Lancôme, Estée Lauder and SKII are really the ones driving the business,” he says. “But that doesn’t mean they’re not looking for new brands – Kiehl’s has been a breakthrough in the past two years with PRC customers and you have Korean brands that are really coming strongly on the market and the PRC customers are really attracted to those because they really respect and trust Korean products. It is clear that step by step people will try new products and new brands, and this is the trend we’re seeing now.” Shilla has been a direct beneficiary of Chinese travelers’ growing enthusiasm for South Korean skincare and cosmetics brands, says Cha. “In the case of some products, they check carefully whether the products are really ‘made in Korea’ before they buy,” he explains. He says local brands such as Misha, The

Face Shop and Innisfree are particular favorites, thanks to their relatively low price and high quality, but adds that luxury names like Sulhwasoo, Estée Lauder and Dior are also top-sellers. In Australia, health and wellbeing products are high on the shopping lists of Chinese visitors, and Nuance has enjoyed recent success in boosting the offering to the Chinese. “Recognizing the success of health and wellbeing products within all of our Australian stores, in the first half of this year we signed a deal with Ocean King, a very successful producer of vitamins and health supplements,” says Boyer. “As well as performing extremely well in its own right, the introduction of this brand has driven overall sales in this category by over 10% across our business.”

chinese travelers have eclipsed the Japanese as the most important customer segment at shilla Duty free’s stores in south Korea

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Chinese Travelers Boyer puts that performance down to both the credibility of the brand and the fact it is heavily supported in-store with dedicated Ocean King sales staff that are fluent Chinese speakers and understand Chinese customers. Related to health – specifically to health scares, amid frequent scandals involving tainted food in China – Nuance is also capitalizing on rising demand for foreign-made baby formula among Chinese. “Milk powder is a strong seller for us to Chinese passengers,” says Boyer. “Due to concerns over the quality of products in China, Chinese visitors are buying it in Australia, where they can be assured of its authenticity. We’ve seen demand continue to grow steadily and we’ve responded by sourcing new Australian-produced and -licensed milk powder to ensure we can continue to meet that demand. “We have to be nimble to adapt our business to respond to such unexpected and sometimes quite rapid changes,” he adds. Brandt says one of Heinemann’s big successes with Chinese travelers has been its Vine & Leaf wine and cigar store at Singapore’s Changi Airport, whose net sales performance is up 25% on last year. “We’re extremely happy with the performance of shop,” he says. “Chinese customers develop fast, and if you listen to the latest talk about wine in China, you’ll see that they move extremely fast. The Chinese are extremely sharp in getting into the market, even buying wineries. They go for the high-end wines and to wine auctions. The expensive wines in our shop are mostly bought by Chinese – and when I say expensive, I’m talking about US$3,000 onwards per bottle.”

heinemann is aiming squarely at chinese travelers with its high-end wine offer

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heinemann asia pacific chief executive steffen brandt says wine has been a hit with chinese travelers at changi, and that the most costly wines at vine & leaf are mainly bought by chinese customers

Boyer says wine plays a big part in Nuance’s offer at its duty free stores around Australia, describing it as “an extremely important segment” and, like Brandt, says that exclusives, special- and limited-release bottles are a powerful driver of sales. He cites a Penfolds ampoule on display in its Sydney Airport store – one of only 12 handcrafted and individually numbered bottles, priced at A$168,000 (US$155,000), which buys its owner a visit by the winemaker anywhere in the world to open it – as an example of how to appeal to high-net-worth Chinese individuals. And exclusivity works in other categories,

too, says Boyer. “Special limited editions, Nuance exclusives and travel retail exclusives are also very popular with Chinese passengers,” he says. “High quality gift-with-purchases are also an excellent tool to help drive up the average transaction value and also help our sales staff close a sale. We always have a number of GWPs, particularly in the perfume & cosmetics and liquor categories. These are very important sales drivers for Chinese customers.” Overall, retailers characterize the Chinese traveler market as one that’s rich in opportunity for those sufficiently agile to tap it, and Brandt says its terrain is already shifting. I believe Chinese customers will develop much faster and recognize value for money much earlier,” he says. “And I think the first wave – the one who always has to buy highend, the show-off phase – is coming to an end. This is already happening, and we feel that if you offer value for money and a good quality product, the Chinese will buy it.” But he has a word of warning when it comes to the perils of overcooking a retail offer to Chinese travelers. “Without these passengers, the future would be grey, so it more than makes sense to target a certain assortment at Chinese passengers,” he says. “But it’s not a good idea, for example, to set up a ‘Chinese shop’, because the Chinese will only like it if they have the feeling that they’re in a foreign country and a different retail environment from at home – otherwise you take away the whole reason for buying there.” c

Dan Cappell Melbourne airport is preparing for a doubling of passenger traffic in just over a decade-and-a-half

Got it covered by p. convery

uty free veteran Dan Cappell has some of the most impressive travel retail credentials in the business, having worked in all three branches of the trinity, most recently as Vice-President of Non-Aeronautical Revenue & Business at Abu Dhabi Airports Co. Cappell recently shared his knowledge with Asia Duty Free in an interview about his diverse experience and new challenges. Asia Duty Free: Having worked in supply, retail and airport operation, your career covers all the bases in travel retail, and you could probably have any job in the industry that you wanted. Why Australia Pacific Airports? Dan Cappell: My decision to Leave ADAC [Abu Dhabi Airports Co] was driven by personal, family reasons, but the decision to go to Apac [Australia Pacific Airports] was an easy one to make once the opportunity became available. It’s a very mature business with a strong, excellent management team and, as a business we’ve got an incredible expansion plan over the next 10 years. There are hundreds of millions of dollars being invested in infrastructure growth at Melbourne Airport, capacity is anticipated to grow from 30 million to 60 million, and the commercial part of the business plays a key role in helping to finance

ASiA duty Free & trAvel retAiling sePteMber 2013

that infrastructure development. Having met the CEO and the board and listened to the plans, the opportunity to lead the commercial function here as the airport enters its next chapter of development was really too good to turn down. ADF: We don’t hear as much about Melbourne Airport as we do about some other airports in Asia-Pacific. Is it something of a quiet success story? DC: It’s a huge success story - it’s led growth in traffic for the past three years, it’s in an advantageous position, it’s a 24-hour operation - there isn’t a curfew - and the board and the executive leadership have got a very, very clear strategy. There is major, major investment going into infrastructure, both in the domestic facilities and the international facilities. If you read the press in Australia, it’s certainly not a quiet success - there’s nothing arrogant about it in any way, but it is a very successful business. ADF: And what are the prospects like at Launceston Airport? DC: There’s a much smaller customer base, but it punches above its weight. It’s a fantastic product serving a limited residential market, obviously, but as tourism grows, there’s the opportunity for growth there.

australia pacific airports general Manager of retail & car parks Dan cappell has nothing but high praise for the way Melbourne airport has been run so far

ADF: Tell me about shifting from Abu Dhabi to Australia. Was there any kind of culture shock? DC: Yes and no. I had 22 years with Nestlé, and I’ve moved from Nestlé in Switzerland to the Middle East, and then from that to a shareholder business in Australia. One of the great things about our business is that we all work within a totally multicultural environment - our customer base touches virtually every nationality, so aside from some of the cultural sensitivities in the Middle East - which any visitor or expat residing there needs to make sure they understand, and that they integrate and respect those cultures - then it’s

not an issue. As far as the business is concerned, the issues are exactly the same, regardless of whether you’re in Europe, the Middle East or Asia-Oceania. From my side, coming back into an environment that does have cultural differences from the Middle East isn’t a huge shock - it’s just part and parcel of everyday business. ADF: What points of difference are there between the commercial airport business in Abu Dhabi and the business in Australia? DC: Believe it or not, there aren’t really any! Both airports are going through rapid expansion, and that means you’ve got significant capacity enhancement programs in your infrastructure development, and you’ve got to maintain your level of service to customers while those projects are going on. From the commercial side of the business, it’s all about the customer experience, it’s all about extra dwell time, increasing penetration, conversion and spend, introducing an element of theatre ‘retail-tainment’ - and it’s getting to grips with how social media is changing the way people buy and think when they’re traveling. The commercial operations teams will always be having the same discussions to find solutions that meet all parties’ needs. Even from my experience years ago in Europe with brands, making sure you’ve got the right space, the right exposure - all of those issues remain the same. It doesn’t really matter where you are. ADF: How does the retail offer itself differ between Abu Dhabi and Australia? DC: The core duty free offer remains the same, with perfumes & cosmetics, liquor & tobacco, food, confectionery, sunglasses and everything else. One of the elements we focused on in the Middle East was premium, luxury goods. They took about 40% of the [retail] space, and the whole thing grew incrementally. In the Australian market - and more specifically in Melbourne - as our consumer base is evolving, we have a much higher percentage of Asians,

including Chinese. Part of my role will be assessing the overall retail mix to make sure we continue to have the breadth of offer to meet our consumers’ needs and expectations. ADF: How important is destination merchandise in your Australian airports? DC: It’s a core part of the existing business. The country has so many unique aspects to it that there’s a fantastic opportunity, through Aboriginal culture - heritage and the art and the music and things like that - and you’ve obviously got wildlife - the typical Australian koala/kangaroo scenario - you’ve got the Wallabies rugby, Australian football, and you’ve got Melbourne as Australia’s capital of sport, capital of fashion and capital of culture. So really the opportunities are huge, and the business today - with no input from Dan Cappell - does an extremely good job. Can you evolve it? Can you make it better? The answer is yes. Take wine, for example - Australia and New Zealand have probably been the two fastest growing wine regions worldwide over the last 10 years, and some of the work that’s gone on has been excellent. [The] Nuance [Group Australia] do a very good job with our wine offer, but we will be looking to talk with Nuance and

the brands to see if we can take that up another level going forward. ADF: How much potential do you see in wine as a category? DC: Huge potential - even if you just looked at it within Abu Dhabi - we started with DFS to focus on a limited range, but a very high-end, premium selection. It wasn’t just Australian and New Zealand wine - we were selling a lot of French wine, Chateau Petrus, for example. And look at Changi, at what Heinemann has done and what DFS has done with the liquor offer there. And the Chinese are not just buying wine - whether it’s malt whiskies, single malts or premium cognacs, they’re looking for real quality, limited-edition merchandise. That’s an opportunity for every airport, and from our side it’ll be something we’ll be discussing with Nuance. Obviously, what I can bring to the table is my experience from a brand perspective and a retailer perspective in looking at how we can work together with our core partners - Nuance - to maximize the [potential of the] offer. And we consider it really as a partnership. I’m not going to tell Nuance how to run their business - they know very well how to do that - but at

Melbourne airport’s little ludlow bar & Dining room proves that fine dining can be just at home in an airport as the fast-food outlets that are ubiquitous in every air hub

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cappell says Movida’s downtown eatery is booked up as far as two months ahead, and says he wants to develop the highly successful airport concept

Dan Cappell the same time, when I’m sitting down with them and working out some of the barriers to development and how to break those barriers down, that’s part of our relationship in contract management. ADF: Melbourne Airport is quite proud of its food & beverage offer. How will you be taking that forward? DC: The team have done an absolutely brilliant job here - our F&B offer in International Terminal 2 is fantastic - it has two of the top Melbourne chefs, who are now operating their first entry into airport F&B - Cafe Vue and MoVida. They are restaurants that you have to book six to eight weeks in advance downtown, and I think it was incredibly insightful on the part of the management team here to go and start those discussions and get live businesses at the airport. And the way that’s been integrated into the overall commercial offer and the link to the more generic fast food offers has been done superbly. In terms of how we take it forward, we’ll need to think about how we can evolve those two concepts and look at other Melbourne specialty F&B operations to see how we can evolve the same strategy as with Cafe Vue and MoVida within the airport environment.

ADF: Bring us up to date on the development of Melbourne Airport’s Southern Precinct project. DC: This is one of three major investment projects going on at the moment - Phase 1 is due to open on July 1, 2015. Phases 1 and 2 are going to add 11,000 square meters of additional commercial space. One of my core focuses over the next four to six months will be to go out and get the leasing strategy finalized. ADF: What are you going to do with all that space? DC: If I had the answer to that now, I would have earned my year’s salary already after just three weeks! It will focus obviously on an F&B offer, a retail offer and a services/interaction offer - come back and ask me in six months! ADF: What other expansion projects are being undertaken in Melbourne? DC: We don’t divulge actual numbers, but the board has approved hundreds of millions of dollars of investment over the next few years. There’s also the T2 international expansion project, and a major road infrastructure project. And on the aeronautical side, there’s the third runway, for which all of the necessary discussions have gone very well. ADF: Overall, how would you sum up the game plan at Apac? DC: If you look at the ‘Olympic view’, the aim is to make sure we’re ready for growth in passenger traffic to 60 million by 2030, and that means we’re looking at access in and out of Melbourne

cafe vue is one of the f&b offers at Melbourne airport that boasts some of the city’s top chefs

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Airport and the overall capacity of the facility. That’s the big, top-line picture, but also it’s about getting a much more detailed understanding of our consumer base as it changes and evolves, and ensuring that we are evolving our overall offer - whether that’s our advertising offer, our F&B offer, our retail offer - and linking it to customer services - whether that’s having dedicated mothers’ rooms, children’s play areas and so on. Staying ahead of the game on that basis, which ultimately drives dwell time, gives people a reason for wanting to come to the airport earlier to enjoy the facilities and enjoy the environment, which then in turn with the concession partners will help drive penetration, conversion and then spend. Look out for an update from Dan Cappell and Australia Pacific Airports on Asia Duty Free’s website early in the new year. c

nuance Watson

Keep calm &

Carry on Nuance-Watson’s determination to ride out a rough patch and keep raising its game are paying off by p. convery It’s been more than a year since Nuance-Watson (HK) suffered the heavy blow of losing its two core category concessions at Hong Kong International Airport – operations that were among the company’s most extensive, with 40 stores. But in the months that followed, the retailer mustered up plenty of determination to overcome the setback, and it’s now showing every sign of having ridden out a development that can only be described as a commercial earthquake. Nuance didn’t lose all its stores at the airport, and retains 17 licenses in categories including perfumes & cosmetics, technology/electronics, confectionery, watches, leather goods, readyto-wear, shoes, and destination merchandise/ souvenirs. And it’s from this base that the retailer is looking to make further inroads into an airport that Nuance-Watson (Asia) Regional Managing Director Alessandra Piovesana says it has grown and evolved with. “As always, we will continue to take a supportive approach to the airport’s new developments and strive to prolong our business at every opportunity, such as in the latest registration of interest for the luxury boutique tender,” says Piovesana. “Together with our brand partners and our dedicated employees, we remain positive, in spite of the changing nature and uncertainties of tendering at the airport.” She says that over the past year, Nuance has performed solidly, attaining record results across Asia-Pacific as a whole. p&c forms a core part of nuance’s business in asia-pacific, and it has 20 outlets at changi dedicated to the category

ASiA duty Free & trAvel retAiling sePteMber 2013

nuance-Watson has renewed its lease for the atrium in Macau and is poised for expansion in the former portuguese enclave

Piovesana says: “On one hand, we strive to maximize the productivity of our existing licenses across locations with new launches supported by targeted and innovative marketing campaigns that cater for different nationalities of travelers, as well as joint promotions with airports, credit cards and airlines that have further lifted our performance. “On the other hand, we have been actively pursuing new business development opportunities to solidify our strong hold at strategic airports while expanding our footprint in Asian travel retail to broaden our customer knowledge, strengthen our operational experience and open up new revenue streams. “All in all, we’re keeping ourselves in a balanced position to sustain our healthy growth momentum.” In Macau, Nuance has renewed its lease for The Atrium, one of the largest department stores in the mall at casino-hotel complex The Venetian Macao, and is poised to expand the store’s floor area to around 2,500 square meters, enhancing visibility and choices. In Singapore, the opening of a Victoria’s Secret standalone specialty store in June and Emporio Armani boutiques in March has brought the number of Nuance-Watson retail outlets at Changi Airport to 27 – a presence of 20 perfume and cosmetics stores and seven fashion and accessories stores. And in the southern Chinese city of Zhuhai,

neighboring Macau, it opened a new 90 square meter travel accessories shop named Attitude in June. “We are actively preparing for the new confectionery shops at [Kuala Lumpur International Airport’s] KLIA2, which will be opening in 2014,” says Piovesana. “And we are also exploring the opportunities at other airports in China and selected airports in North Asia and Southeast Asia.” “There are many tender opportunities [at] Changi, including important P&C, liquor & tobacco licences,” she says. “At HKIA, some 35 luxury brand boutiques will be put up for tender, [and there is also] the new market of Malaysia.” Piovesana says Nuance is actively seeking business development opportunities in both the airport and non-airport channels, and overall, she says, the picture is a promising one. She says: “Asia’s economic growth remains robust as the strongly influential China market still maintains a relatively high GDP growth rate. Tourism and air travel are also growing, as a new generation of the middle class starts to develop, feeding more frequent traveling habits. “Driven by the growth in both passengers and spending, we are optimistic about the opportunities for both organic growth in our existing business and new business developments.” If anyone thought the loss of HKIA would deal Nuance-Watson a blow from which it would struggle to recover, it seems they had better think again. c

Global travel retail excellence www.worlddutyfreegroup.com

regional report: Indonesia

Flying start Indonesia is fast becoming Asia-Pacific’s next big travel retail market, and the first retailers off the block in the race to tap it are set to reap rewards by p. convery

ot so long ago, Southeast Asia’s most populous nation was not even on the radar of most travel retailers. Now, as the country’s aviation market experiences soaring growth, retailers at home and abroad are starting to sit up and take notice. Indonesia’s domestic aviation sector grew by 20% in 2012, from 60.2 million to 72.5 million passengers, according to regulator the Directorate General of Air Communications, making it the world’s fifth-biggest domestic aviation market after the US, China, Japan and Brazil. It is also one of the fastest growing, expanding at an average rate of 17% from 2009 through 2011, and nearly doubling in size in just four years. Indonesia’s international air passenger traffic has grown about 50% over the same period. Steffen Brandt, Chief Executive of retailer Heinemann Asia Pacific, which works in Indonesia in partnership with local operator Plaza Bali, says: “When we started our business in Asia, we had Indonesia at the top of our list, next to countries like Malaysia, for the simple reason that countries like Malaysia and Indonesia were on nobody’s list in Europe. “But when you look at the [number of] people living there, especially in Indonesia, and when you look at the indications in the airline industry ... I’m sure you’ve heard about the latest move by AirAsia [which is shifting its regional base to Indonesia]. [AirAsia Chief Executive]

Mr. [Tony] Fernandes seems to like Jakarta. There is definitely a lot of development. “The retail - and the best example is our partner - has become more professional, and I think local retailers are finding their way,” says Brandt. “At least for me, they’re on the right track. The biggest issue they have is to sort out the infrastructure, but I think the airports have a lot of [infrastructure improvements] in mind, and that’s one of the next things they’ll address.” Plaza Bali, with Heinemann, runs two stores at Jakarta’s SoekarnoHatta International Airport, and earlier this year bid for concessions at Bali’s Ngurah Rai International Airport, where Dufry made a breakthrough in securing concessions. But local retailer Inti Dufree Promosindo has been on Bali for a lot longer, operating in partnership with travel retail giant DFS in running 950 square meters of store space, and the off-airport DFS Bali Galleria, in Bali’s famous Kuta tourist area, where the two partners are currently working on plans for a full renovation of the store. Inti Dufree Promosindo/DFS has operated at the airport for two decades, and in Kuta for 16 years, and its President Director, Budi Setiawan Wong, says recent years have definitely seen the market there change. “There has always been an active duty free market in Indonesia,

“When we started our business in Asia, we had Indonesia at the top of our list, next to countries like Malaysia, for the simple reason that countries like Malaysia and Indonesia were on nobody’s list in Europe.” Steffen Brandt, Chief Executive Heinemann Asia Pacific

ASiA duty Free & trAvel retAiling sePteMber 2013

although mostly among local duty free operators,” he says. “In terms of recent changes that have attracted the interest of more international travel retailers, there are a few key factors which have been important. products in our destination presentation.” Brandt also makes much of bringing a local flavor to the country’s Firstly, a stable environment has resulted in significant investment in new hotels and resorts, many of them in Bali and many aimed at the travel retail, partly on account of duplication he has seen among travel retail offers in the country. luxury visitor segment. “In Jakarta [airport] there are a lot of shops and they sell more or “In parallel, there has been strong growth in [the number of] international visitors from within Asia-Pacific and longer-haul, nota- less a similar assortment, which is a bit strange in our understanding,” bly Europe. Much of this growth has been in the high-end segment. he says. “For example, Lotte have tried to set up the same thing as in Coupled together, this has led to strong growth in demand within the Korea - they’re trying to compete with DFS. “[But] Heinemann and Plaza Bali’s objective is to propose a specific travel retail market. “Lastly, the Indonesian economy has been one of the strongest product assortment as well as a local shopping experience to make sure growth markets in Asia in recent years, and has led to a rapidly develop- passengers and customers remember their journey through Soekarnoing internal tourism market as well as increasing outbound demand.” Hatta airport. “Our Plaza Bali shop next to Lotte [at Soekarno-Hatta airport] is a Inti Dufree Promosindo/DFS offers all the core categories of travel retail products, with duty free liquor & tobacco, beauty products, multi-category shop. It sells merchandise from leather bags to coffee to watches, fashion accessories & jewelry and confectionery. Wong says cigarettes, liquor, accessories, P&C - everything. Product-wise but also the brand line-up is representative of the major international and in terms of the design, the ambience is local. It’s a really nice shop and luxury brands you would expect to find in most airports, and includes also [our partner] has this idea of using the coffee culture of Indonesia. Gucci, Burberry and Coach in its fashion accessories range, “all of the Next to it is a Starbucks, and it’s part of their philosophy too - to make top brands” in its beauty and liquor assortments, and a wide range of things a little bit more interesting. And it creates an opportunity - you have to queue, so at the same time you can view the duty free offer. high-end and fashion watches and sunglasses. He says it also sells duty paid food and souvenirs, with a strong The Starbucks is like the Starbucks we all know - it’s next to the shop but it’s an open design, and it sells local coffee, like civet cat coffee.” emphasis on Balinese and Indonesian products. Both Plaza Bali/Heinemann and Inti Dufree Promosindo/DFS are “Inti Dufree Promosindo is actively focused on supporting local businesses, often operated as a local village commune, through the committed to exploring further growth opportunities in Indonesia, choice of our local assortments in our stores,” says Wong. “Today, we are partnered with over 60 local heinemann asia pacific and plaza bali, operating under that latter firm’s brand, offer international luxury brands alongside indonesian products in a local ambience businesses to showcase Balinese and Indonesian brandt says the duty free proposition in indonesia has improved in recent years

www.dutyfreemagazine.ca ASiA duty Free & trAvel retAiling

regional report: Indonesia

indonesia’s rapidly growing economy has led to an aviation boom that has, in turn, allowed retailers such as inti Dufree promosindo/ Dfs to field a bigger offer of international brands

inti Dufree promosindo president Director budi setiawan Wong says the retailer has seen robust growth in the high-end segment

and will doubtless be looking at Juanda International Airport, which serves the nation’s second-biggest city, Surabaya. In July, airport operator Angkasa Pura I announced the first batch of commercial tenders for its second terminal, which is due to open in November. They and other retailers will also have an eye on commercial tenders at Medan’s new Kuala Namu International Airport, which opened on July 25, with capacity for nine million passengers annually in its first phase. The new airport will be Indonesia’s second-biggest and secondbusiest hub after Jakarta’s Soekarno-Hatta. Plans are also afoot for airport expansion in Semarang, in central Java, and Banjarmasin in South Kalimantan. Wong says he’s aware of the opportunities ahead, and of the significant investment being made in new airport infrastructure, and that Inti Dufree Promosindo/DFS will evaluate each on their merits. Brandt says: “In terms of opportunities, we’ll definitely look into other areas together with our partner, in Surabaya or Medan and places like this if there is a chance and it makes sense - Jogjakarta is another one. We’re looking into a partnership where we can develop something together. “A second- or third-tier airport might be a much better project for our type of business,” he says. “We still have the approach that what we do, we want to do almost perfectly, and second- or third-tier cities in combination with more concept-driven ideas is where we believe the future lies.” He is interested in possible downtown opportunities, as well, although not in head-to-head rivalry with operations such as Lotte’s

ASiA duty Free & trAvel retAiling sePteMber 2013

Dfs has been in business with inti Dufree promisindo at bali’s gateway airport for two decades

new shopping mall and downtown duty free store in Jakarta. “On Bali and in Jakarta, but especially on Bali, the last thing that’s needed is a duplication of the offer,” he says. “When it comes to shopping, I think the tourists are still looking for alternatives, and downtown duty free could be an alternative, but I don’t believe in deploying exactly the same concepts. And Brandt sees opportunities coming from differentiation in other ways, too. “The biggest difference is the whole setup of the retail environment,” he says. “In Jakarta you have business travelers, and then in Bali it’s almost completely tourists. When you look at the shops and the kind of merchandise they carry, there is a huge difference [between Jakarta and Bali], and the recent tender in Bali showed quite a change in the mindset - they really want to speed up, and to me this is definitely a good signal. “Think about Indonesia as a whole and what they have to offer,” Brandt explains. “Indonesia has a lot to offer not only European travelers but also Asian travelers. [But] the only thing people talk about in Indonesia is Bali - and that alone tells you how much opportunity there will be in the future.” As the country’s air travel market goes into overdrive and its airport infrastructure gets a long-awaited overhaul, it’s hard to disagree. c

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Shop-in-shop program

A common

goal

on sale at the new shop-in-shop at Dfs’ hKia operations are limited edition and travel retail exclusive offerings from glenfiddich and the balvenie

William Grant & Sons partners with DFS for a shop-in-shop concept aimed not only at increasing single malt sales for the retailer, but also capturing the imagination of Chinese travelers

illiam Grant & Sons (WGS) recently coordinated with retailer DFS at Hong Kong International Airport (HKIA) on a unique shop-in-shop concept that highlights the supplier’s sought-after single malt brands Glenfiddich and The Balvenie. Scott Hamilton, Asia Regional Director at WGS, took time out of his busy schedule to discuss the finer points of creating an unforgettable shop-in-shop experience with Asia Duty Free. “Being the single malt category leader in the travel retail channel, it is essential that our shop-in-shop is aligned to retailer and consumer needs and that it contains more than just regular stock units and wall bays,” Hamilton explained.

by RyAn WhITE

ing an actual “dipping dog”—a traditional tool used to take whisky from a cask—from The Balvenie distillery to conduct tutored tastings. Lastly, as mentioned, ensuring that the variants on offer are limited edition or travel retail-exclusive was of key importance for both WGS and DFS. “Most travelers are looking for a gift and purchases are pre-planned, often with specific brands in mind,” explains Hamilton. “Knowing that there will be exclusives gives an extra appeal for a planned trip into the store to look for purchases.” Indeed, related to the above, the shop-on-shop makes it easier for travelers to decide on the right product, with ease of shop being determined early on as a prime consideration. Merchandising by brand with an emphasis on leading brands ensures less confusion for consumers and greater sales.

“With Glenfiddich as the bestselling single malt Scotch in the world and the growth spurt of the category in recent years, there is a need to seek out retailers aligned with us in growing the category.”

Working together

Despite being a spirits initiative, the HKIA shopin-shop is a veritable how-to guide for retailersupplier cooperation across categories. From start to finish, the process took about 8 months, and Scott Hamilton, Asia Regional Director, DFS was involved every step of the way, with each round of design drafts submitted for the retailers William Grant & Sons review before a roundtable discussion. In addition to providing operational requireHe told us that by design, the latest shop-in-shop at HKIA incor- ments, Hamilton notes that the retailer’s needs were very much aligned porates three elements that WGS and DFS determined as key to with those of WGS from the beginning: “DFS is a treasured partner and generating sales and fostering a one-of-a-kind shopping experience: believe in brand-building to grow the single malt category,” he says. promoter training, experiential brand immersion, and exclusives and “With Glenfiddich as the bestselling single malt Scotch in the world limited editions. and the growth spurt of the category in recent years, there is a need to seek out retailers aligned with us in growing the category.” While HKIA is very international in terms of passenger mix, WGS is Different by design interested in reaching out to travelers from Mainland China and Hong “Promoter training is of paramount importance in being able to relate to the single malt connoisseurs and in educating consumers who wish Kong as single malt Scotch is still a relatively new category to them. “We to trade up,” Hamilton tells us. “At the same time, there needs to be believe that the travel retail channel serves as a nice compliment to the brand-building efforts in the vast domestic market of the Greater China unique brand experiences to draw consumers into the store.” On sale at the shop-in-shop are high-end offerings such as Glen- region,” concludes Hamilton,” and we’re very pleased to be undertaking fiddich 125th Anniversary Limited Edition; Glenfiddich Vintage 1973 this initiative with a trusted partner like DFS.” c Single Cask; Glenfiddich 40 YO; Glenfiddich 50 YO; Balvenie Tun 1401; Balvenie 40 YO; and Balvenie 50 YO. As such, it should go without saying that the salespeople need to know their single malts. To this end, late August saw WGS take DFS staff to the Glenfiddich and The Balvenie distilleries for an intensive immersion program. “Seeing is believing,” says Hamilton, “and we need to make sure our salespeople can articulate the quality of our whiskies with conviction.” On the point of giving single malt fans an unforgettable experience, WGS has brought some unique aspects of the brands’ production into the shop-in-shop, includ-

ASiA duty Free & trAvel retAiling sePteMber 2013

the latest shop-in-shop at hKia incorporates three elements that Wgs and Dfs determined as key to generating sales and fostering a one-of-a-kind shopping experience: promoter training, experiential brand immersion, and exclusives and limited editions

SHOP AT AI G NE R M UNI C H. C OM

Counter Intelligence retail

Seizing

opportunitieS

Asia Duty Free discusses enticing Asian non-shoppers to buy with Director of Counter Intelligence Retail Garry Stasiulevicuis

espite worldwide economic woes, the travel retail industry was worth a whopping US$49 billion in sales in 2012, with that number expected to rise to US$64 billion by 2015. Of course, responsible for our collective success to date are the dedicated shopper/travelers—a good many of them Asian, as we well know—who frequent our stores and buy our products. However, an entirely different group, the non-shoppers, may be responsible for helping us reach the lofty goal of US$64 billion in sales over the next couple of years if we can effectively entice them with our offer. Indeed, non-shoppers are arguably the most important demographic for travel retail’s continued growth, and Asia Duty Free recently spoke with Director of Counter Intelligence Retail (CIR) Garry Stasiulevicuis about a recent study that CIR performed related to Asian non-shoppers specifically. The study identified and discussed three major barriers to shopping in travel retail—“lost relevance,” “other activities” and “value perception”—before going on to suggest ways that retailers and suppliers can overcome these barriers as a means of improving sales.

The breakdown Stasiulevicuis’ data suggest that a whopping 51% of Asian travelers (Chinese, Japanese, Korean, Taiwanese and Indian) do not purchase in global duty free. Moreover, the information CIR has collected indicates that many of these travelers are traditionally the type of people that travel retail targets: A quarter of them are frequent flyers and 36% are businesspeople. Why, then, are they not spending? A closer look at the data as it relates to each nationality provides a clearer picture. While Chinese non-shoppers tend to be business travelers and frequent flyers, they are also younger travelers who tend to avoid shopping in duty free. Japanese non-shoppers are also frequent flyers and business travelers, but are older, meaning that they also tend to avoid shopping in travel retail. Korean non-shoppers tend to be infrequent leisure travelers, and Taiwanese non-shoppers are also leisure travelers who pass through airports infrequently, with the majority being female.

AMERICAS

EUROPE

MIDDLE EAST

ASIA

57%

51%

45%

51%

Why they don’t buy As mentioned, lost relevance, other activities and value perception were the top three responses given by the non-shopping Asian travelers surveyed by CIR. Stasiulevicuis explained each of the answers to us: 24

ASiA duty Free & trAvel retAiling sePteMber 2013

“With the value benefit to purchasing in duty free becoming more and more of a challenge, point-of-difference offerings are critical to attract shoppers that believe there is no advantage to them shopping and buying in the airport.” Garry Stasiulevicuis, Director, Counter Intelligence Retail

“Those who cited lost relevance as a reason for not shopping indicated that travel retail had lost its appeal; that it does not offer anything different in terms of range; and that while the store design may be high-end, there is a lack of attention given to basic execution,” he said. “Some respondents also told us that they don’t shop because airports now offer a significant number of opportunities to help passengers spend time, work and even leave the airport altogether, which falls under the AsiAn non-shoppers At A glAnce CHINA

JAPAN

SOUTH KOREA

WorldWide non-shoppers by region

by RyAn WhITE

TAIWAN

INDIA

• Business travellers & Frequent flyers • Younger travellers especially avoid shopping in DF

• Business travellers & Frequent flyers • Older travellers are more likely to avoid DF

• Leisure travellers • Infrequent flyers

• Females more likely to avoid • Leisure travellers & Infrequent flyers

• Business travellers (46%)

Counter Intelligence retail that for a segment of travelers, duty free gets put on the back burner. CIR notes that retailers and supINDIAN TAIWANESE pliers need to ensure that they’re constantly reminding travelers of the reasons they should be visiting duty free on their trips. Other Activities Examples include compelling Lost Relevance Lost Relevance signage and promotion on concourse and experiential retailing, incorporating events like tastings for those travelers who enjoy the participating in activities as opposed to simply shopping. CIR also notes that communicating these types of events on boarding passes and in in-flight magazines will help keep duty free top-of-mind. “L’Oreal Luxe has invested extensively into understanding and targeting the Asian traveler with established brands such as Lancôme that have been in China for over 20 years, and more recent launches such as Kiehl’s,” Stasiulevicuis explains. “They understand the importance of creating ‘experiences’ for Asian travelers, with a recent example being Lancôme in Beijing Airport where they offered consultations, hand massages and other treatments within a premium display area outside the duty free store.” As can likely be guessed at this point, CIR believes that communication is the key to unlocking the potential in non-shoppers. Stasiulevicuis notes that a lot of strong solutions already exist, but many of them are only visible to shoppers when they’re already inside the store. “The most effective place to communicate to travelers is while they’re inside the airport, as shopping is relatively low on the list of priorities for travelers until they’ve cleared security,” he says.

bArriers to duty free shopping for non-shopping AsiAns CHINESE

JAPANESE

KOREAN

Lost Relevance

Lost Relevance Value Perception

Other Activities

ASIAN NON-SHOPPER Lost Relevance 35% Other Activities 31% Value Perception 26%

other activities category,” he continued. “Finally, some respondents told us that travel retail’s once obvious value perception has eroded as products are available elsewhere, with promotion impacting the value message.” Lost relevance was cited by Chinese, Japanese, Taiwanese and Indian respondents; Koreans and Indians noted that other activities kept them from shopping duty free; and value perception was the defining issue for the Japanese non-shoppers surveyed. Out of the total number of respondents, 35% cited lost relevance; 31% other activities; and 26% value perception.

Addressing lost relevance The good news for retailers and suppliers is that CIR sees numerous opportunities to address the above barriers to travel retail shopping. In addition to on-concourse and in-store communications, touchpoints where travelers should be prompted include during booking; on the way to the airport; onboard the aircraft; and at the destination. “In order for retailers and suppliers to attract travelers to purchase in duty free stores investment is needed into delivering a product range and customer service experience that they cannot receive anywhere else,” Stasiulevicuis says with regard to lost relevance. “Travelers need to better understand the benefit of them purchasing on that trip as the perception is that the range available is exactly the same as back home or even in some cases a reduced range. “With the value benefit to purchasing in duty free becoming more and more of a challenge, point-of-difference offerings are critical to attract these shoppers that believe there is no advantage to them shopping and buying in the airport,” he continues. For suppliers specifically, Stasiulevicuis tells us that a concentration on exclusive launches and duty free-specific packaging will help travelers understand the points of difference between duty free and domestic retailing. He gives Absolut Unique, a limited edition release from Absolut that offered travelers the chance to purchase a one-ofa-kind bottle, as a great example of how suppliers can capture the imagination of travelers and make them feel like they’re being offered something special.

Interrupting the journey With airports becoming destinations in their own right, it’s no wonder touchpoints to c onnect With non-shoppers 1. At home booking

5. Instore activity

2. Journey to airport

6. At fixture

3. The airport process

7. On board retail

4. Airside communication

8. In destination

Communicating value In much the same way as communication is key to both dispelling the perception that travel retail offers nothing new and enticing travelers distracted by other activities to enter the stores, CIR says that duty free’s value proposition must be clearly communicated outside the shops. Stasiulevicuis notes that 73% of Asian non-shoppers tend to relax in the seating areas at their gates, and that this is a great place for retailers and suppliers to start a dialogue. “Furthermore, 61% of Asian non-shoppers visit F&B outlets at some point during their journey,” Stasiulevicuis adds, “opening up the opportunity to drive mutual benefits for F&B outlets and duty free stores by offering price-off vouchers to drive footfall and conversion.” And while there’s a lot of talk about high-spending Asian travelers, Stasiulevicuis notes that they tend to set aside a significant portion of time at their destinations specifically for shopping, meaning that travel retail’s value proposition is of the utmost importance. Furthermore, Chinese shoppers in particular are known to research their purchases before the journey to ensure that they’re getting the best price. “Indeed, Asian travelers are big spenders, but our research indicates that they’re not spending as much as they could in travel retail,” Stasiulevicuis concludes. “They’ve got plenty of other opportunities to spend during their travels, so it’s really about travel retailers making sure they’ve got the right range with the latest stock, that they’re offering the best customer service experience and perhaps most importantly that they’re communicating the benefits of shopping duty free in the right places to entice non-shoppers to enter the stores and make a purchase.” c

there are multiple opportunities to connect with non-shoppers throughout the journey

ASiA duty Free & trAvel retAiling sePteMber 2013

inflight sales group recently carried authentic panama hats, handmade in ecuador, which were very successful onboard

Inflight Sales Group

New

heights

by Melissa silva

Inflight Sales Group works to improve the inflight sales experience for airline crews and the brands

nflight Sales Group (ISG) has been in the industry long enough to understand the influence technology has on the onboard retail experience. In an industry where a large percentage of the product and brand offerings on airlines are similar—if not identical—technological advancement can be a key differentiating factor. With this in mind, ISG has set out to utilize the latest technology to improve the inflight sales experience for both crew and passengers. ISG has enjoyed a strong year so far. In April it re-signed the Cathay Pacific Group (including Dragonair), which has proven to be a successful venture for the company over the years. In the coming months, ISG will be deploying a new POS solution for both airlines, which will have crew members utilizing handheld devices provided by ISG’s technology partner Guestlogix. “While the POS device and software itself is highly-intuitive, perhaps more so than what is on any other airline that I have seen, what I really like about it is the analytics module within the back office—it brings us to another level,” says Vimal Rai, Executive Director, Inflight Sales Group (HK) Ltd. “It’s not just about collecting cash or credit card information and processing transactions; it’s about using the data captured in the sales process, like seat numbers and passenger profiles.” Running an analysis of such data will help ISG optimize retailing procedures and also forecast buying patterns and consumer behavior. “When you have a scale of an operation that’s averaging over 300 flights per day, you need a machine to do all of this for you,” says Rai. “You can’t be collecting raw data and have two people sit down and find the answers anymore.” Rai believes that once ISG begins this process, and proves that it works, other airlines will become interested. “If you look at the industry, it’s really the start of big data in inflight retail, which no one else is doing,” says Rai.

Ideas in motion Making changes to inflight sales processes brings its fair share of challenges. According to Rai, the process must begin by having a discussion with the brands featured onboard. “Brands may not always be ready to support due to the inherent nature and risk of change. It’s a dialogue and it takes time,” he says. “But we are driven by so much more by the desire to improve the experience of shopping, not just the value of the transaction itself.”

quee lin “yi yi” necklace in 18-carat white gold featuring pave diamonds

Equally challenging is ensuring the crew will be engaged and interested in the brands they sell. “It’s not easy when you have a metal tube, sales staff that may not be really into sales, limited product quantities and limited display opportunities,” Rai adds. For ISG, the key to overcoming this challenge is to transform crew members into brand ambassadors, with training offered by the brand itself. “The idea is to have the selected ambassadors onboard to train the rest of the crew, provide them with testers where possible [for liquor products] and have them walk around the aircraft after the meal to pour samples of the brand’s top-of-the-range product,” Rai explains. Ideally, samples will be served to the passengers that have already purchased top-ranking products, to act as an incentive for additional purchases. “The idea is to have the crew member say, ‘I noticed you had this, so I’d like to invite you to try this other product and if you love it, it’s available for purchase in inflight duty free,’” says Rai. “So it’s the whole experiential part of it and both the brand and customer benefit in so many ways.” Although ISG is heavily invested in revitalizing the inflight retailing experience, it remains equally focused on selecting the right products to offer onboard. The company recently brought in Quee Lin—self-identified as the first luxury Chinese jewelry brand and recently purchased by LVMH—which ISG started selling onboard Cathay Pacific in January 2013. ISG also recently carried authentic Panama hats, handmade in Ecuador, which were a huge success. “We had around 200 pieces and sold out—every single piece,” says Rai. “That’s the kind of thing we do—we bring in new brands, new products and new concepts.” Looking ahead, the dual focus by ISG on marketing and analytics will be crucial to continue improving the dynamic of inflight retail. By gathering intelligence beforehand and using the collected data to strategically curate products and effectively train crew members, ISG believes it has a way to realize the full potential of inflight sales, thereby delivering higher ancillary revenues for its airline partners. c

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quee lin “Wulu” bracelet in 18-carat rose gold with diamonds

ASiA duty Free & trAvel retAiling sePteMber 2013

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Cathay Pacific

Knowledge-based success Understanding the customer makes Cathay Pacific a winner in inflight

by HIBAH NOOR

cathay pacific will be launching an internal mobile app called “cX shopedia” that cabin crew can download to their mobile devices to support their sales activity

cathay the cover of edition of pacific’s May azine ag m t igh its infl

or repeat award-winner Cathay Pacific Airways, the best way to stay ahead of the inflight sales market is to understand exactly what customers want, and the airline is prepared to go to some lengths to find out. James Ginns, General Manager Inflight Services, explains that the airline makes fact-finding a part of its regular routine. “We talk to our customers all the time,” Ginns says. “Every other year on every flight we do a survey in terms of customer service. Once every 18 months we dedicate two weeks just for inflight service. We pick eight to 10 flights. [We ask] what do they want to buy, why they’re not buying, what they want to see.” Cathay Pacific hires a consultancy, which analyzes the results and presents them to the airline. Another measure of how serious Cathay Pacific is about inflight sales is the approach it takes to the crew side of the equation. Ginns explains that we offer cabin crew training in sales techniques, and they not only sell better but can provide extra feedback to the airline about what products work best and what customers are looking for. Of course technology plays a role too. Ginns says that the airline is about to launch an internal mobile app called “CX Shopedia” that cabin crew can download to their mobile devices to support their sales activity. Running on both iOS and Android platforms, the app provides detailed product information, location search functions, LAG/duty free

ASiA duty Free & trAvel retAiling sePteMber 2013

allowance regulations, selling techniques, promotion updates and more to improve sales productivity. It will also enable the airline to collect customer feedback on product offerings and promotions. The airline also invests on upgrading inflight POS, handheld apps and its website functionality, to support its own sales force and increase contact with the customer. Ginns says that Cathay Pacific never lets a customer touchpoint go to waste. The airline makes sure to have a presence and a message at every opportunity, be it website, boarding pass, countertop leaflets, social media platforms, or inflight entertainment and public address systems. Coordinated messages at every step along the way reinforce the special values available through inflight sales, and the airline works intensively with its Marco Polo Club and Asia Miles teams to engage frequent fliers and build loyalty. At the same time the airline is careful not to overdo the messaging either. One thing Cathay Pacific found out through its intensive research-gathering is the strong affinity Hong Kong travelers have for exclusivity. “They don’t want stuff that’s common,” Ginns says. One result was the “Beyond Duty Free” program Cathay Pacific launched about five years ago. The campaign, which launched by featuring Louis Vuitton trunks and Hermes clocks, won a number of awards, Ginns says. The airline’s approach to the Hong Kong market takes advantage of the demographic’s

James ginns, general Manager inflight services, cathay pacific

love of the travel lifestyle, and also stresses the importance and value of local products and home-grown talent through collaboration with designer Vivienne Tam. On the product side, Cathay Pacific recently added the Ice-Watch and Talika brands to its inflight sales lineup. “Ice-Watch and Talika are definitely star products in our program,” Ginns says. “Both have generated strong sales performance and positive feedback from our passengers.” Ice-Watch is available in several models and colors—the multiples add up to more than 500 different combinations in the brand’s full assortment. For Talika, Ginns highlights the Light X, a slimming and skin-regenerating device that uses a combination of ultrasound and vibrating massage. Shortly after its appearance in Cathay Pacific’s third-quarter lineup, it enjoyed extremely good results and is particularly popular in the summer season, Ginns says. A new major brand set to debut in the airline’s fourth quarter inflight ensemble is La Perla from Italy. The brand will lead off with its silk-satin slips. “We’re always on the lookout for innovative brands that our customers will find interesting and attractive, and that shows that we’re keeping the product line fresh,” Ginns says. “That’s how we make sure that new brands have a chance to have a place at the table alongside the bigger established brands.” c

La Prairie

one step A h e A D

la prairie’s anti-aging eye and lip contour cream targets both the eye and mouth area and can be used twice daily

La Prairie is focused on revitalizing its product offering with an eye to consumer demand by Melissa silva

or skincare trailblazer La Prairie, 2013 has been a year of revitalization in terms of products. From successfully launching three additions to its White Caviar Illuminating Système in January to launching Cellular Power Serum in April—the product is still performing very well—La Prairie continues to focus on delivering innovative skincare driven by consumer expectations. For the remainder of the year, La Prairie aims to stay true to this strategy by launching several new products and posting additions to existing collections. At this year’s TFWA World Exhibition in Cannes, La Prairie will launch its new Cellular Swiss Ice Crystal collection, featuring two products, which will officially launch in travel retail locations worldwide in February 2014. Prior to Cannes, in September La Prairie will add two new products to its Anti-Aging Collection. “Our number one mission is to keep skin looking as young as possible for as long as possible,” says Katharina Walther, Business Development Manager Travel Retail Worldwide. Currently, the collection boasts several products, including La Prairie’s top-selling Anti-Aging Stress Cream, Longevity Serum, Day Cream with SPF, a Night Cream and an Eye Cream with SPF. “We wanted to incorporate more multi-

ASiA duty Free & trAvel retAiling sePteMber 2013

tasking solutions within the collection, with a definitive focus on two areas on the face that show aging first—the eyes and lips,” says Walther. To address these areas, La Prairie has launched Anti-Aging Eye and Lip Perfection à Porter and Anti-Aging Eye and Lip Contour Cream.

Anti-aging on-the-go “The eyes and lips are very vulnerable to aging,” explains Walther. The Anti-Aging and Lip Perfection à Porter is an on-the-go touch-up treatment for eyes and lips in one compact product. “We put our eye cream on in the morning, we go to work, we have lunch, perhaps we step outside and it’s essential to provide continuous hydration and protection to these areas exposed to the elements,” says Walther. “We don’t want to take off all of our makeup and redo the entire routine, so with this product you can easily touch up over makeup.” The Anti-Aging and Lip Perfection à Porter is designed to hydrate skin while leaving makeup untouched, even over heavy foundation or a long-lasting lipstick. The eye creamgel and lip balm are enclosed in a compact cylinder in two separate compartments. A small, zippered leatherette case houses the cylinder. Both products are easily accessible—by

snapping the top closed, the user can snap the bottom open—and each is accompanied by its own mirror. “It’s a great product to take with you on-the-go—when you open it, it looks very chic,” says Walther. La Prairie intends for the Anti-Aging and Lip Perfection à Porter to become the product first-time La Prairie users purchase, regardless of age. “We have created a multi-functional product that appeals to everyone,” explains Walther. “Whether it’s the world-traveling woman looking for a solution on-the-go or the aspirational luxe consumer, at a price point of €130 (US$170), this product can be a spontaneous purchase, especially in travel retail.” In terms of treatments—not touch-up products—the second addition to La Prairie’s Anti-Aging Collection is the Anti-Aging Eye and Lip Contour Cream. Similar to the Anti-Aging Eye and Lip Perfection à Porter, the Contour Cream targets both the eye and mouth area. The amino acid complex fills wrinkles and hollows in the eye area, while an anti-discoloration complex with marinederived Glycosaminoglycans works to prevent dark circles from forming. As for the lips, a volume-enhancing ingredient smoothes the skin and tropical fruit acids exfoliate and stimulate the delicate area for a younger, fresher look. The enclosed

ELIXIR 7.9

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La Prairie cooling wand dispenses the emollient cream while simultaneously soothing the lip area. Conveniently, the wand remains positioned atop the silver jar after use, thanks to its magnetic properties. The Anti-Aging Eye and Lip Contour Cream can be used twice daily and is priced at €164 (US$214).

just not possible. “Customers often ask for a cream that will deliver dramatic results. Our products help clients achieve subtle, natural results that will ensure their skin looks and feels healthy. Beyond anything else, healthy skin is youthful skin,” says Walther.

Out with the old, in with the new In addition to renewing its Anti-Aging collection, La Prairie also identified an opportunity to improve its Caviar Collection and promptly went to work. Currently the collection features two body products, originally released several years ago—an indication a facelift was needed. “We decided we wanted to put the latest technology in terms of firming and moisturizing into the new product,” says Walther. “So we decided to remove the older products from the assortment and created a new one called Skin Caviar Luxe Soufflé Body Cream.” Designed to leave skin feeling smooth, La Prairie’s Skin Caviar Luxe Soufflé Body Cream offers the same benefits expected from skin caviar, but in a body cream. In addition to updating its Caviar body creams, La Prairie recognized an opening for a nighttime treatment within the same collection, which led to the development of a two-in-one product—the Skin Caviar Luxe Sleep Mask, which is both a night cream and a mask. “Normally when you have a mask you put it on after cleansing your face and you have to wait, because you need to leave it on for 10, 15 or 20 minutes,” Walther says. “With this mask you don’t have to wait—it can be left on the skin all night and by morning, the treatment is complete.” Set for launch worldwide at the end of October, the new night cream works to firm, moisturize and hydrate skin of any type and any age. It penetrates the skin immediately, so there is no wait time. “With this product, you’re not leaving money on your pillow,” Walther says.

skin caviar luxe soufflé body cream features a soufflé-like texture and offers the same benefits expected from skin caviar

Calling all customers Looking ahead, La Prairie plans to continue requesting customer feedback when developing new products and treatments. “When customers request something like a night cream, we always aim to exceed their expectations and deliver more than just a night cream. In this case, we have a beautiful night mask as well,” explains Walther. “With the Anti-Aging Eye and Lip Perfection à Porter, we developed more than just a lip care product, but an on-the-go, touch-up lip and eye care compact instead.” La Prairie also receives requests that are

ASiA duty Free & trAvel retAiling sePteMber 2013

skin caviar luxe sleep Mask offers the benefits of both a mask and a night cream in one product

Entering the latter half of a profitable year, with sales up by 15% globally, robust growth in Asia and a surprising increase of 8% in Europe—the brand’s slowest region— La Prairie plans to stay focused on sales and customer-driven product development. c

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Kosé

From Japan to

the world

one of Kosé’s high-prestige brands Jill stuart is available in several airports in asia, including Kansai international airport, located in the middle of osaka bay

With a strong following in Japan and a solid portfolio, Kosé stays focused on increasing its presence in Asia by Melissa silva

ounded in 1946 by Kozaburo Kobayashi, Kosé has become a household name in Japan and is slowly increasing its rank in the beauty and cosmetics categories in duty free. Today the company has close to 100 duty free counters in Asia for its house brand Sekkisei and its prestige brand Jill Stuart. Although sales are currently strong, Kosé aims to expand further into other airports in other regions with a special focus on Changi Airport. In January, Kosé opened a gondola as part of Chubu International Airport operator Centrair’s cosmetic outlet at the airport, which serves Nagoya and the greater Chubu region. In June the brand expanded its Sekkisei line with the launch of its clear whitening mask and clear facial soap. This month Kosé has plans to launch new products, although specific details have not yet been released. Back in April 2011, Kosé launched a series of new policies that would be carried out over the next three years to target three major business initiatives: concentrate on growth drivers in new businesses and overseas expansion; reinforce core brands in its Selective Brand and Consumer Brand businesses; and build a stronger operating framework in cost competitiveness and asset performance.

Categorized growth Kosé has divided its brands into three categories: High-Prestige, Prestige and Cosmetaries. The High-Prestige category includes Anna Sui, Jill Stuart and Cosme Decorte; Prestige includes Paul Stuart and Sekkisei; and Cosmetaries includes Rimmel and Marie Claire among others. Kosé’s High-Prestige and Prestige brands are the only two brand categories currently offered in duty free. In 2010, Kosé celebrated the 40th anniversary of High-Prestige brand Cosme Decorte and invited world-renowned designer Marcel Wanders to be the brand’s art director. Kosé also decided to extend the brand by unveil36

ASiA duty Free & trAvel retAiling sePteMber 2013

ing the AQ MW skin care line and in 2011 launched a new fragrance line, Cosme Decorte Vice & Virtue. Kosé brought in world-famous perfumer Olivier Polge to work with Wanders on creating the new fragrance. Sekkisei, Kosé’s skin-brightKosé’s Jill stuart counter ening skincare brand, was creat fukuoka airport, serving ated with the specific needs hakata-ku, fukuoka, Japan of Japanese women in mind. “There are three things that Japanese women will always want: prevent Awake brand features natural cypress oil. To gray hair, prevent wrinkles and maintain give back to the forests that produce this oil, skin luminosity,” said then-President Reijiro Kosé donates a portion of Awake sales to the Kobayashi in 1985. With Sekkisei, Kosé focuses More Trees organization, a forest conservaon creating products that allow for continued tion group. use and feature Chinese herbal medicine, Aside from the environment, Kosé is also known to heal the body from the inside out. an equal opportunity organization. The comIn 2010 Kosé celebrated the 25th anniver- pany created Advance Co. Ltd. in 1992 to sary of Sekkisei. The brand has been hugely support employment for physically-challenged successful for Kosé, currently available in individuals. This made Kosé the first company Japan, Taiwan, Hong Kong, China and the in the cosmetics industry to be certified as a US. Sekkisei does particularly well in China special subsidiary under the law concerning thanks to the increasing interest among Chi- employment of physically-challenged persons. nese women in skin-brightening skin care. Additionally, Kosé regularly supports female athletes, specifically in figure skating and synchronized swimming. The company Best face forward For several years Kosé has made giving back to is an official partner with the Japan Skating its community, the environment and support- Federation and is the cosmetics partner for ing arts and culture initiatives a main focus of the Japanese synchronized swimming team. Kosé is also a sponsor of Project Hope—a its overall operation. In addition to developing environmentally-friendly products, Kosé’s program supporting children whose economic production division has achieved zero waste at circumstances prevent easy access to educaits Sayama and Gunma factories. In five years, tion—and regularly donates funds for building the company’s efforts have reduced carbon schools. Since 1998, the company has been dioxide output in cedar forests equivalent subsidizing the Chun Si Li Xi Wang Elemento 3.2 times the volume of the Tokyo Dome. tary School in Hangzhou, China. In addition to new products, expanding Kosé has also announced plans to move forward with a program to replace lighting in its into new regions and continuing its initiasales fixtures and counters with power-saving tives—both cosmetic and philanthropic—Kosé ultimately aims to live by its founder’s motto: LED lights. One brand in particular in the Kosé port- to operate as a trustworthy and sincere comfolio reflects the company’s environmental pany and to stay committed to creating honest initiatives most effectively—Awake. Kosé’s products. c

Fashion forward

the victoria tote is a trend-setting accessory

Victoria Collection mixes scents with accessories, function with fashion This season Victoria’s Secret has set its sights on mixing its signature fragrances and contemporary glamour-styled accessories through the new Victoria Collection, available at Victoria’s Secret Beauty and Accessories. The new collection introduces pairings that the brand says combine the iconic scents with fashion-forward accessory stylings. The Victoria fragrance is a formula created with premium perfumers from both sides of the pond—Paris and New York. The rose-scented floral mixes the brand’s exclusive Victoria Rose blend with fresh fruit accents and crème brûlée. “The result is totally irresistible,” the brand says. “A statement scent that’s equal parts playfully chic and timelessly sexy. The attention to detail extends to the bottle design, luxe enough to display and all tied up with an iconic handcrafted bow.” As the complimentary accessory, its signature “Victoria Tote” has been created to combine luxury accents with classic styling. Made of genuine Saffiano leather, noted for its exceptional suppleness, the structured bag features trend-accented styling. The matte black and the silver cloud versions are offered for customers who want a wear-everywhere basic, while the ultraviolet piece is available “to

channel your inner it girl.” Additionally—and of special interest for the travel retail and duty free channel—the brand has introduced a range of travel essentials. The signature cosmetics cases aim to balance the need for immediate practicality and functionality with the desire for strong fashion values. This collection is available in multiple shapes and sizes and is aimed at the traveling customer striking the perfect balance between must-have function and runway-worthy panache.

victoria’s secret introduces a range of travel essentials

the floral victoria fragrance

Cacharel Paris

alights in Cannes

Mondottica, the highly recognized designer and distributor of highend fashion eyewear, has announced that it will be bringing its new brand Cacharel Paris to the TFWA World Exhibition (Red, K30). Created in 1962 in the southern French city of Nimes, Cacharel was named after founder Jean Bousquet’s favorite local bird. Bousquet’s now-iconic seersucker and Liberty-print blouses firmly established the brand’s credentials, with the signature blouse earning the sobriquet “Le Cacharel” from the press. The fashion garment became a highly desirable clothing item for fashion-conscious purchasers and was a prominent feature in many wardrobes in the 1960s and 1970s. Today the collection has been developed closely in line with the brand’s foundational design values, which it describes as “unostentatious femininity, charm and gracefulness.” Still designed in France, the collection features subtle feminine shapes complemented by understated color treatments. There are ten bespoke designs available in the Sunglass launch collection, giving the Cacharel Paris range good coverage of a broad palette of fashion preferences.

Mondottica will be unveiling new cacharel models during the tfWa World exhibition

www.dutyfreemagazine.ca ASiA duty Free & trAvel retAiling

Godiva

deligHtFul

engagement

for the second half of the year, godiva launched its new truffles collection, which features luxurious packaging, eight new recipes and a limited edition gift box

Godiva builds its Asian business with a strong focus on regional taste and demand by Melissa silva

odiva Chocolatier has long stressed the importance of quality, craftsmanship and authenticity when it comes to running its business, both domestic and duty free. Applying this mindset in Asia has proven to be very successful over the last few years, bringing increased sales and generating some promising developments on the inflight side. In April, Godiva launched the travel retail exclusive limited edition Chocolats Exotiques, which will remain on shelves until the end of February 2014. Chocolats Exotiques features a selection of individually-wrapped chocolates and was launched with special presentations and activities, as well as a gift with purchase offer. The collection continues to receive positive feedback. For the second half of the year, Godiva launched its luxurious Truffles Collection. The newly designed gift boxes feature eight new recipes. Aside from new collections, Godiva has spent most of 2013 focusing its efforts on developing an innovative and interactive shopping environment via new pop-up concepts and boutique-style formats. Godiva decided to improve the shopping environment not just to increase consumer interest, but also to appeal to retailers. “Retailers are more specific on product segmentation today,” says CS Lam, Travel Retail Regional Director Asia Pacific. “They are not just looking for innovative and quality products, but also have high standards on visual merchandising and personalized fixtures.”

ASiA duty Free & trAvel retAiling sePteMber 2013

Maintaining appeal

For Godiva, increasing customer interest involves understanding the needs and expectations of each consumer in each region. “It’s important and should be the leading principle of running a global business,” says Lam. “We don’t only focus on understanding the culinary trends, but also take pride in offering and developing treats, assortments and gift boxes that reflect the taste and preference of chocolate lovers worldwide.” One region Godiva has been paying special attention to is Asia. “We closely follow Chinese consumers as they rise to the top of the nationalities travelling, including in and outside of Asia,” Lam says. Lam feels the Chinese consumer is looking for international brands that reflect Asian heritage. “A recent study of ours in Shanghai and Beijing showed that Godiva is known by the Chinese consumers for offering the highest quality and excellent craftsmanship, thanks to the delicious taste and texture of our chocolates and our strong Belgian heritage.” To maintain its appeal in Asia, Godiva annually launches special collections specifically targeted at Asian consumers to celebrate events and holidays, such as Chinese New Year. The brand has also started to introduce region-specific flavors, like various teas, Asian fruits and spices. Godiva’s efforts in Asia have been paying off; the company’s Asian business has shown positive results during the first half of 2013 versus the same period last year. “By continu-

ously focusing on surprising and delighting travelers with intensive animation programs and new launches we expect the second half of the year to be in line with this growth projection,” says Lam. The strong cooperation between Godiva’s travel retail and domestic teams is another key strategy for further development in the region. A recent joint initiative resulted in the introduction of the exclusive Carré selection onboard several Chinese airlines. The 36-piece assortment featuring milk and 72% dark chocolate carrés will be exclusively available on Air China, China Eastern Airlines, China Southern Airlines and Hainan Airlines as of October 2013. To reinforce the launch, Godiva’s domestic team secured airport light box advertising in Beijing Capital International Airport’s Terminal 3 this past July, along with an advertising opportunity in the inflight magazine published by Civil Aviation Administration of China (CAAC), which will appear this month. With the end of 2013 in sight, Godiva is working on initiatives for 2014. The company plans to continue its mandate to “delight and bring joy” by focusing on what travelers are looking for when it comes to gifts and souvenirs. “Each innovation is sure to charm chocolate lovers with irresistible creations and stunning gift boxes,” says Lam. “Offering Godiva is not just about exquisite chocolates; it’s about engaging yourself and others in a delightfully delicious chocolate experience.” c

Jacobsens

Making the

big move

As it transitions from domestic to duty free in Asia, Jacobsens Bakery Ltd. eyes the challenges and the prospects by Melissa silva Making the transition from the domestic market to travel retail brings a set of unique challenges when it comes to the confectionery trade. From modifying its marketing strategies to altering its ingredients and package design, Jacobsens Bakery Ltd. is concentrating on making the right moves to manage a successful changeover. Producers of renowned Danish butter cookies, Jacobsens has been in the biscuit industry for the last 45 years. The company entered travel retail five years ago, but it’s only within the last four that Jacobsens has started to seriously focus on the demands of the industry, specifically in Europe and Asia. For Jacobsens, making the transition from domestic to travel retail involves adapting to a completely different mindset—an entirely new way of thinking about business. “We’re huge in domestic retail, but [duty free] is something we’re taking step-by-step,” says Bo Keller, Export Manager. “So to go from that kind of thinking and volume to this environment—the marketing expectations here are totally different. The expectations are so high, in terms of gadgets, presentation and marketing support.”

Taking it all in stride One of the first steps Jacobsens took to meet the expectations of the market—specifically in Asia—was changing the size of its cookie tins. “The small tins are our newest novelty,” says Keller. “These tins are suitable for travel retail, because they’re so small. And with gift-giving such a big thing in Asia, these tins represent value to both buyer and receiver.” Changing the size of the tins was a relatively straightforward task, but what Jacobsens found to be more challenging was distribution and developing effective presentation concepts. “The challenge is how to present the tins

on the shelf, such as what kind of shelving to use,” says Keller. “Part of the challenge also involves educating the stores and of course questions regarding turnover—this product isn’t competing, it’s supplementing what the stores have. So to get all of that right and to communicate it clearly is a bit of a challenge.” In order to overcome this challenge, Jacobsens is currently working on building its distribution network and testing presentation and concepts in airports in the Philippines, Beijing and Shanghai. “Our strategy to overcome the challenge is to get out there and get the first five stores right,” says Keller. “Distribution and concepts are what we’re working on.” The brand’s strong presence in China’s domestic market over the last 15 years will certainly prove to be helpful as the company moves on to expand its travel retail distribution in China in the coming months. “We have agreements at the moment,” Keller says. As Jacobsens expands, Keller understands that product changes will become inevitable, especially regarding taste, since European flavor expectations differ greatly from those in Asia. “For example, the sugar on top of our cookies—the crystal sugar—is fairly big and

the most significant change Jacobsens had to make when entering travel retail was reducing the size of its tins from 20 cm to 14 cm, making them ideal for gift-giving

ASiA duty Free & trAvel retAiling sePteMber 2013

crunchy,” he explains. “We think it’s nice, but Asians hate it because it’s too crunchy—they don’t like that at all.” The most significant change was reducing the size of Jacobsens tins from 20 cm to 14 cm. “This size represents relatively good value compared to other kinds of gifting products,” says Keller. “Value is a big consideration in our mind, because that is one of our desired deliverables. It doesn’t mean the product is cheap, it just means we are very conscious of going to the stores and saying, ‘we have something that we think can give you additional business, additional sales and additional value because it won’t take away from chocolate, it will supplement the other products.’” In addition to working on distribution and concepts, Jacobsens is also working on developing destination tins. The company also plans to significantly invest in its production capability throughout the second half of 2013 and to capitalize on gift-giving, especially in Asia. “The bulk of our sales happen in the second half, but that’s also outside of travel retail,” says Keller. “But in Asia, gift giving is all the time. With something like 84 million Chinese traveling—a number which is expected to increase— gift-giving is on the rise.” c

Butler’s

butlers produces a range of eleven gourmet-flavored bars and supplies a different range selection according to each market’s requirements

Finding the key As Butlers works to open up the Asia market, it finds gifting and a focus on ingredients are vital to regional success

lthough known for being one of the longest-standing confectionery suppliers in duty free, supplying 50 airports around the world from Sydney to Delhi and Dubai, Butlers Chocolates is still a relatively new brand to Asia. As a regional novice, Butlers plans to focus on building distribution and brand awareness, goals the company has steadily worked towards over the last twelve months, having already secured key listings in Singapore, Kuala Lumpur, Indonesia, the Philippines and Thailand. Currently Butlers is growing its business via three key initiatives: branded units, high-profile promotions (HPPs) and tastings. Asia may be a new field for the company, but it’s also the brand’s fastest growing market. “Butlers is continuing to develop new markets, especially the further north [in Asia] it explores,” says Karl Marnane, International Sales Director. “There are still a lot of airports we would like to get into in Asia. We just got into Hong Kong International Airport with LS travel retail in the new chocolate store, so that’s our first representation at HKIA.”

Appealing to the masses One way Butlers believes it can grow its business in Asia is by aligning itself with the most popular purchase motivation for the Asian traveler—gift giving. Souvenir boxes have been a staple in the confectionery category for quite some time, so Butlers decided to launch a Singapore box, adding to its already extensive lineup of souvenir products. Planned for official launch at this year’s TFWA WE in Cannes is

Butlers Dark Chocolate Premium Assortment gift box and a new Irish Whiskey Liquor range. “In the majority of places that we are listed, Liquor truffles are an integral part of the range offered,” says Marnane. Aside from these new offerings, Butlers is developing new products and has plans to redesign the selections in some of its existing gift boxes to attract more Asian consumers. “We’ve done a lot of research in key airports in terms of tasting,” says Marnane. “We have taken these comments into consideration to develop different taste profiles for different consumers.” Simplicity has served Butlers well from a sales perspective, as its most popular product is its 100g bar range. “The solid bars have been great in terms of markets where people don’t know of the Butlers brand,” says Marnane. “It’s a very inexpensive way of getting people to taste our product.” Butlers produces a range of eleven gourmet-flavored bars and supplies a different range selection according to each market’s requirements. “It’s interesting in different markets and regions as to what flavors work and what flavors don’t work,” explains Marnane. “One of the things we’re doing this year is really focusing on the chocolates themselves, the ingredients and how we can maintain our quality credentials while serving different markets.” Butlers’ most popular selling SKU in the Middle East region is its current liquor chocolate range, while in Asia the luxury sharing packs perform quite well, along with the Chinese New Year gift box. “We do lots of seasonal items, like our spring box, and our Christmas box,” says Marnane. “We’re trying to introduce the seasons into our range.” Regardless of the region, tasting events have always been a success for the brand and a key activity, along with HPP’s to increase exposure. Marnane says as Butlers moves forward with growing its business in Asia, tastings will most definitely be on the priority list. “Tastings are key for us, in order to build customer engagement and conversion.” c

to increase its appeal in asia, butlers offers several gifting options, like its twist Wrap packs and gift boxes

ASiA duty Free & trAvel retAiling sePteMber 2013

by Melissa silva

Discover HersHey’s portfolio of iconic global brands and innovative Travel retail exclusive products. ®

These travelers’ favorites are joined in 2013 by premium BrOOKsIDe chocolates, made with smooth ®

dark chocolate-covered real fruit juice pieces offering unique flavor combinations.

Connect with us at Stand D231 at the Tax Free Asia Pacific Show.

HERSH EY ’S ® I H ERSH EY ’S ® KI SSES ® I R E E SE ’ S ® I I C E B R E A K E R S ® I J OLLY RA NC H E R ® I B R OOKSI D E ®

Piquadro

Ahead of the

piquadro’s sartoria line allows customers to custom design their own bag, including the color of the thread, lining and leather

curve Piquadro tackles duty free with new store openings and high-value collaborations by Melissa silva

or new brands entering travel retail from the domestic market, the transition can be challenging. Although the luggage category may not pose the same challenges as a highly competitive category like confectionery, newcomers still have to be on their toes. For Italian business bag and accessory brand Piquadro, however, the transition has been relatively seamless, eased perhaps by winning the Best Bag category for its latest range of laptop backpacks, “Coleos,” in Wallpaper*’s Design Awards 2013. Founded in Italy in 1987 by Marco Palmieri, an engineering student, Piquadro originally produced leather goods for small third parties like Prada and Dolce & Gabbana before launching its own brand 10 years later. Today, Piquadro operates according to three core values: design, functionality and technology. “The good thing about Piquadro is that we’re not just a luggage company,” says Florence Nguyen, Travel Retail & Wholesale Director Asia Pacific. “We do have luggage, but

piquadro’s signo collection allows customers to personalize the design and construction of a small leather tag, which is attached to the bag

ASiA duty Free & trAvel retAiling sePteMber 2013

if you look at our total sales, we have a good balance—briefcases, day bags and accessories represent approximately 30%, while luggage is about 7%, which is good because we have a diverse product offering.” Having only just entered travel retail, Piquadro is doing well for itself, already opening a POS in a corner with King Power International in Pattaya Downtown Duty Free, Thailand; a corner in Shanghai Hongqiao Airport Terminal 2 with Dufry; and a corner in Macau Airport with King Power Duty Free. This month Piquadro is set to open its first duty free shop in Daegu, Korea. “We are in the midst of really expanding the brand internationally, not only in Asia but in Europe as well,” says Nguyen.

Setting itself apart Technology is big for Piquadro, which could help to set the brand apart from other accessory and luggage brands. “This is how we define ourselves—tech inside,” says Nguyen. “Functionality is also big for us.” In addition to technology and functionality, Nguyen also cites innovation and Italian design as other characteristics that distinguish Piquadro from others in the two categories. “One of our core values is innovative design, and we design for people who travel and want something convenient, but also fashionable,” she says. Piquadro also offers its products in a range of colors, as opposed to the more common monochromatic shades, to further differentiate itself. “Compared to other brands that usually only offer products in black or brown, we came up with colors,” says Nguyen. Furthermore, offering exclusive services in addition to a diverse color range provides consumers with greater choice and the opportunity to personalize their purchase. “We have a line called Sartoria where customers can create their own bag,” says Nguyen. “They can choose their own thread, the color of the inside of the bag, the color of the outside of the bag—everything. It’s custom made.”

“this is how we define ourselves—tech inside.” – florence nguyen, travel retail & Wholesale Director asia pacific

Earlier this year Piquadro launched a collection called Signo, which like the Sartoria collection, provides customers with the opportunity to personalize the design and construction of a small leather tag, which is attached to the bag they wish to purchase. Customers can go online to enter their design and color choices of the tag and the finished product is shipped to them. Piquadro’s product offering is geared mostly towards young professionals, both men and women, at a ratio of 80% and 20% respectively. Nguyen feels the brand appeals most to customers that have a design mindset and are looking for competitive pricing. “I think what’s important is the value for money,” she says. “Nowadays people are more conscious about the money they spend, so they look for something that is good quality and will last for a long period of time at an affordable price. This is where we enter.” Opportunities have continued to arise for Piquadro as 2013 progresses. Just this month the brand launched its first collaborative capsule collection titled, “Antonio Marras + Piquadro” in Asia, the product of a partnership with Antonio Marras, who has been the creative director for Kenzo for the past eight years. “It’s the first time that we’ve done a color version with a creative designer,” says Nguyen. This kind of collaborative effort could provide a good pattern for Piquadro’s future. c

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Edrington

The nexT step The Macallan, Highland Park and The Famous Grouse are already performing very well in Asian travel retail, and indicators suggest that the brands will only continue growing by ryan White

sia Duty Free recently sat down with Claren Wong, Asia Travel Retail Marketing Manager at the Edrington Group, to discuss the company’s business in Asia over the first half. She tells us that having a number of popular single malts in its portfolio certainly isn’t hurting business for Edrington, and the company is focusing on innovation and premiumization—namely with the recent launch of The Macallan M—to keep sales up over the second half. Not surprisingly in Asia, Edrington’s top-selling brands are The Macallan, a single malt whisky from Speyside, and Highland Park, a single malt from the Orkney Islands. “Both malts showed very steady growth in the region despite allocation issues,” Wong explains. Performing well for Edrington in the blended Scotch arena is The Famous Grouse. Despite already being somewhat of a global phenomenon as the number one Scotch in Scotland and firmly rooted in the top six blended Scotches worldwide, Wong notes that sales of The Famous Grouse are “picking up nicely in parts of Asia,” and specifically within India.

Upping the ante Indeed, Edrington has emerged as a major player in Asia given the strength of its whisky portfolio, and for Wong the key to continued growth in the lucrative Asia market lies in premiumization and innovation, both of which can clearly be seen in the recent launch of The Macallan M. The variant—a collaboration among The Macallan, designer Fabien Baron and crystal maker Lalique—was unveiled at a spectacular launch party at the end of May in Hong Kong and was presented for the first time in travel retail in early June at Singapore Changi Airport. During its introduction at Changi The Macallan M was exclusive to DFS, but retailers at several Asian airports, including Seoul and Hong Kong, featured the variant later in the summer. Of course, fans of The Macallan will know that the brand has collaborated with Lalique previously on, among others, The Macallan Oscuro Lalique gift pack, which contained a unique “Cheval Kazak Running Horse.” Indeed, only 300 of these very special gift packs were created, and Wong says the response has been favorable in Hong Kong, Kuala Lumpur and Seoul where it was released earlier this year. In addition to the above, the Highland Park brand has its own limited edition launches that have been sweeping Asian airports of late. 46

ASiA duty Free & trAvel retAiling sePteMber 2013

“Asian economies are growing, consumption and travel is growing, and all this bodes well for both the short and long term growth prospects for edrington brands.” Claren Wong, Asia Travel Retail Marketing Manager, Edrington Group

Highland Park’s Thor and Loki releases, designed to hark back to ancient Viking legend, have also been well received in Asia. “These variants have really succeeded in capturing the imagination of consumers, even if they have no prior knowledge of Viking lore,” explains Wong. Finally, The Famous Grouse has released its most exclusive whisky to date, a rare 40 YO blend bottled at 47.3% ABV. Just 276 70cl decanters have been made, and at press time the launch was limited to Europe. Wong says she expects an October launch in Asia travel retail to great fanfare given the exclusivity of this very special variant.

Giving them what they want We asked Wong what she believes Asians are looking for in their whiskies, and she cited exclusivity and collectability as two important factors. Furthermore, she says there is a growing number of connoisseurs who appreciate the subtleties in flavor offered by different single malts and are prepared to pay a premium to acquire the best from their favored distillery. Fortunately for Asian consumers, Edrington has worked hard to give them the products they’re looking for. “Our brands have long been associated with premium expressions and we have responded to the demand for luxury with limited editions of rare and very fine malts, as well as superb collectable decanters which reflect heritage and superior quality,” she concludes. “Furthermore, Asian economies are growing, consumption and travel is growing, and all this bodes well for both the short and long term growth prospects for Edrington brands.” c

at press time, the latest release from the Macallan, called the Macallan M, was making its way across select asian airports

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Diverse Flavours

MaKing strong heaDWay Diverse Flavours exhibits for the first time at TFWA WE after sustained success in Asia with its range of New World wines from leading South African wineries by ryan White

iverse Flavours was founded in late 2009 by Anthony and Michiko Budd in Cape Town, South Africa. Anthony, who previously worked for Allied Domecq and Pernod Ricard in Europe, Canada, Japan, Korea and South Africa, tells Asia Duty Free that he identified a “huge untapped potential for South African wines” in Asia and travel retail in general. Diverse Flavours now exports a range of premium South African wines which offer a unique variation of regionalism, diversity, history and taste profiles to Asia and the travel retail industry at large. The company’s impressive wine portfolio includes Cederberg (the highest winery in South Africa); Ernie Els Wines (owned by the famous golfer); Avondale (organic/bio-diverse wines); Deetlefs (the

second-oldest winery in South Africa and still under the ownership of the same family); Eagle’s Nest (the steepest winery in South Africa); Hidden Valley (from the top terrior in Stellenbosch), Mount Vernon (boutique wines), Napier (from Wellington, New Zealand); and Raats Family Wines (a Cabernet Franc specialist with many accolades from Robert Parker, including a rating of 96, the highest he’s given for a South African wine). Indeed, most of the wine estates with which Diverse Flavours works have received international accolades and awards for the wines they produce. “The wines are targeted at all sectors of the travel retail market, from airport duty free shops, onboard pouring and in-flight sales to cruise ships, ferry operations, diplomatic sales and border shops,” explains Budd.

A trusted partner

“South African wine is making strong headway internationally, and with the consumer always looking for something different and unique, I am confident that South Africa is well placed to offer consumers new and exciting brand names and experiences.” Anthony Budd, Managing Director, Diverse Flavours 48

ASiA duty Free & trAvel retAiling sePteMber 2013

Despite the fact that Diverse Flavours is still rather new in travel retail, the company has made significant headway. Indeed, the noteworthy listings secured to date speak volumes about the quality of the wines in the portfolio. Diverse Flavours currently works with DFS, Dubai Duty Free, Lotte Duty Free, Sky Connection, King Power Thailand, Plaza Bali, Korean Air, Asiana Airlines, Bangkok Airways, ANA, Dragonair, Cathay Pacific, a number of regional border shops and with domestic retailers throughout Asia. “We are currently in talks with numerous operators in Asia with regard to expanding their wine ranges to include our premium South African wine portfolio,” Budd adds. Budd chalks a lot of Diverse Flavours’ success up to a business model that holds flexibility, speed, quality of service and allowing operators the benefit of consolidating wines from multiple estates with ease and reliability as its key tenants.

Committed to the channel While this year marks the company’s first time at TFWA WE (Stand L34 in Red Village), Diverse Flavours has exhibited for the last three years at TFWA AP in Singapore. Budd tells us that he’s looking forward to developing the same kinds of lasting relationships in Cannes as he has in Singapore.

“This will give us a great opportunity to meet up with those clients we currently deal with in Asia and the Middle East, but also allow us to talk for the first time with operators in Europe and the Americas, so it is very exciting!” he says. Diverse Flavours will be exhibiting its entire portfolio at TFWA WE. While familiar to most operators and consumers in Asia, Budd points out that new and notable offerings for attendees at the Cannes show may be Cape Nectar, Raats Family Wines, Ernie Els Wines, Cederberg and Avondale. “South African wine is making strong headway internationally,” concludes Budd, “and with the consumer always looking for something different and unique, I am confident that South Africa, with its 350-year-old winemaking history and its mix of old and new world styles, is well placed to offer consumers and operators in travel retail in Europe, The Americas and Asia new and exciting brand names and experiences.” c Diverse flavours exports a range of premium south african wines which offer a unique variation of regionalism, diversity, history and taste profiles to asia and the travel retail industry at large.

Liquor News

Grey Goose Cherry Noir receives Asia premiere Bacardi Global Travel Retail has partnered with DFS to give Grey Goose Cherry Noir its Asian premiere at Singapore Changi Airport. Available from this month, Grey Goose Cherry Noir is the first new flavor in five years from Grey Goose vodka, the super-premium category leader. “Grey Goose is an iconic spirit brand in travel retail so we wanted to ensure that the Asian premiere of Grey Goose Cherry Noir was something special,” said Irving Wong, Regional Director – Asia Pacific, Bacardi Global Travel Retail. “The level of craftsmanship behind Grey Goose Cherry Noir makes it all the more important that there are no compromises in the quality of a consumer’s first taste of the spirit,” Wong continued. “Through our excellent partnership with DFS we have ensured that passengers can enjoy freshly prepared Grey Goose Cherry Noir cocktails expertly made at beautifully styled in-store bars.” Grey Goose Cherry Noir represents the bold, rich and sensuous side of the super-premium category leader. The new flavored vodka has an aroma of fresh cherries and sweet red fruits. Its dark fruit flavors and layers of spice are followed by a long, warm, lingering finish. Indeed, every detail of the execution has been carefully considered whether passengers are traveling through Terminals 1, 2 or 3 of Changi Airport. In each of the three terminals, the bars and display units take their inspiration from the rich, sensuous qualities of the new flavored vodka and at the same time reflect the luxury credentials of Grey Goose vodka. Passengers sampling the new Grey Goose Cherry Noir cocktails can also have their photograph taken using a tablet computer which applies a red filter to the image, picking out red tones and turning the rest of the

picture black and white. The result is an image which re-imagines the subject’s world to create a Grey Goose Cherry Noir moment. Jennifer Tokunaga, DFS Merchandise Manager, said: “The launch of a new Grey Goose flavor is a rare event so we are particularly pleased to be partnering with Bacardi Global Travel Retail for the Asian premiere of Grey Goose Cherry Noir. Changi is no stranger to luxury brand launches and we are delighted to be raising the bar in the quality of how our consumers experience Grey Goose Cherry Noir for the first time.” grey goose cherry noir is a masterful blend of grey goose vodka and the finest cherries, including rare black cherries handpicked in french basque country

Distilleria Bottega brings a taste of Italy to Cannes Distilleria Bottega will attend this year’s TFWA WE with a number of new products that were positively received during May’s TFWA AP exhibition in Singapore. Those making the trip to Cannes for the biggest travel retail show in the world will find Bottega Rose Gold, Il Vino dei Poeti Bolgheri Rosso DOC and Amarone Prêt-à-Porter at Bottega’s stand, in addition to other tried and true favorites in the company’s portfolio. Bottega Rose Gold is a new sparkling wine that completes the glamorous Bottega wine collection and follows the worldwide success of Bottega Gold. The packaging of the bottle is characterized by its charming pink color, while inside is a Pinot Noir sparkling wine, produced with a selection of grapes harvested in Oltrepò Pavese. Il Vino dei Poeti Bolgheri Rosso DOC is a red wine produced in the Castagneto Carducci area of Tuscany, a region that is well known for its red wines. Il Vino dei Poeti Bolgheri Rosso DOC is described as winy, balanced, saline and structured, characterized by small red fruit, plum and balsamic notes, with hints of minerals and spice. Amarone Prêt-à-Porter is aged for a period of four years, and Distilleria Bottega describes it as a “very elebottega rose gold is one of the many italian wine products that attendees at this year’s tfWa We will find at Distilleria bottega’s booth

ASiA duty Free & trAvel retAiling sePteMber 2013

gant, full-bodied and long-lasting wine.” The renowned American designer Denise Focil has partnered with Bottega to create a bottle that features a white leather label nestled in a bespoke white leather case embellished with debossed black lettering. As a way of gaining more visibility in travel retail and starting a dialogue with travelers, Bottega has been running a successful promotion called “The Italian Experience” with select travel retail operators in Asia wherein consumers are given the opportunity to taste the products. “Tasting is the closest thing to getting a firsthand experience of our country,” explains President of Distilleria Bottega Sandro Bottega. As value for money is also important, staff are trained to stress the high-end packaging of the company’s products when talking with the prospective buyer. “The main objective with any activity of this nature is to work more closely with the operators while at the same time raising the profile of our brand,” Bottega adds. Attendees at this year’s TFWA WE can get their own firsthand experience of Italy by visiting Distilleria Bottega at Blue Village A11.

DanZKa vodka, known throughout the industry as the world’s best traveling vodka, will be exhibited at tfWa We this year at Waldemar behn’s stand in green village h52

Liquor news

INTERNATIONAL BEvERAGE makes encouraging inroads IN ASIA TRAvEL RETAIL James Bateman, Global Travel Retail Manager at International Beverage (Marine Village S2), tells Asia Duty Free that while the company has a relatively small brand footprint across duty free in Asia, sales have been growing yearon-year—high double-digit percentages—in the locations where the company has listings. He gives Mekhong, known as “the original spirit of Thailand,” as an example. Sales of the brand at Bangkok International Airport have doubled in 12 months despite what Bateman calls a tough retail environment. “We think a lot of this is due to the explosive growth of first-time visitors to Thailand from Russia and China,” he explains. The growth isn’t limited to Mekhong, though. Old Pulteney, likely International Beverage’s best-known international brand, grew at about 13% year-over-year during H1 in Asia as a whole. In fact, the company recently released the super premium Old Pulteney 40 YO to the trade to a positive response from consumers and operators alike. Furthermore, in a move that plays to Asians’ penchant for exclusive and collectable spirits, International Beverage will soon release the Old Pulteney Lighthouse Collection, a travel retail exclusive, in Asia.

DANZKA Vodka expands in Asia

“on one hand there is a retail consolidation focusing on the biggest spirits brands, but on the other hand i think there will be opportunities for smaller premium spirits brands that can work quickly and perhaps be more nimble.” James Bateman, Global Travel Retail Manager, International Beverage Another notable success this year, says Bateman, was listing Balblair single malt Scotch with Everrich and Tasa Ming in Taiwanese duty free. “It’s a small brand entering a big malt market,” he explains. “It’s an exciting opportunity for us.” Indeed, Bateman sees the Scotch market in Asia travel retail as “very healthy” at the moment, noting that International Beverage’s greatest opportunity likely lies in engaging affluent new travelers hungry for new, quality brands. As is the case anywhere, though, Bateman notes that getting the chance to compete in a channel where major brands dominate the category space is one of the company’s biggest challenges. Nonetheless, he is optimistic for the future of International Beverage’s brands: “I think the evolution of the category over the next couple of years is going to be dynamic. On one hand there is a retail consolidation focusing on the biggest spirits brands, but on the other hand I think there will be opportunities for smaller premium spirits brands that can work quickly and perhaps be more nimble as a form of competitive advantage.”

DANZKA Vodka has established itself in the Asia region and brandowner Waldemar Behn GmbH reports that it is now busy expanding the brand’s reach to include India, Indochina, Bali and Guam. Indeed, Waldemar Behn GmbH, with headquarters in Eckernförde, Germany, has strategic plans for DANZKA Vodka throughout Asia and globally, says Rüdiger Behn, Managing Director of the Behn Group. “We are also assessing opportunities for the Behn portfolio outside of DANZKA Vodka, including Dooley’s Creams,” he explains. “We are looking to launch this liqueur line in Asia in connection with the upcoming Cannes show in October.” At TFWA WE this year, Waldemar Behn and sister company Nannerl of Salzburg will have their biggest stand ever in Green Village H52. More than double the size of the previous stand, the company reports that this year’s stand will show its clear commitment to the duty free and travel retail industry. As part of its long-term focus, Waldemar Behn will also exhibit in Singapore and Orlando in the coming year.

www.dutyfreemagazine.ca ASiA duty Free & trAvel retAiling

agio Cigars

the balmoral Dominican selection assortment box has won multiple industry awards and has established itself as a favorite gifting item

On target by RyAn WhITE

with travelers Agio Cigars exhibits at TFWA WE in Cannes this year with a clear focus on travel retail exclusives and capturing the gifting occasion

gio Cigars will be exhibiting at this year’s TFWA WE in Cannes at Yellow Village H49, and Export Manager Gertrude Stormink tells Asia Duty Free that the company has a number of products that are sure to have attendees buzzing. Chief among the new offerings that the company will showcase this year are Agio Tip Sweet Cigars and Balmoral Dominican Selection Cigars in the new Short Corona size. Of course, cigar fans will be able to find popular international Agio brands Mehari’s and Panter at the booth as well. “We’ve been focusing on Agio Tip Cigars in travel retail as it’s a very established brand with worldwide distribution,” says Stormink. “Indeed, Agio Tip Cigars have proven to be very popular with enthusiasts the world over.” The latest addition to the Agio Tip Family, Agio Tip Sweet, boasts a java wrapper and a filter that guarantees a mild taste and aroma. Furthermore, the product is offered in a bespoke tin, perfect for capturing the gifting occasion. Agio’s other new product at Cannes this year, Balmoral Dominican Selection Cigars in a Short Corona size, is the result of the company’s commitment to ensuring that it meets the modern smoking needs of cigar consumers. This short but sturdy cigar brings an explosion of flavor without being too time consuming to smoke, and with a blend of Dominican and Brazilian tobacco, aficionados can be sure that they’re getting the best. “Each cigar is individually packaged in cellophane to guarantee optiperennial favorite panter brand cigars will be on hand at agio’s booth in cannes this year, along with other popular brands such as Mahari’s

ASiA duty Free & trAvel retAiling sePteMber 2013

mum quality,” Stormink explains. “Furthermore, despite its length, it offers a full, aromatic and perfectly balanced smoking experience. Hints of vanilla, coffee and cedar offer a mild but full taste. It’s a very rewarding cigar!” Of course, fans of Agio’s products will know that the Balmoral Dominican Selection was originally launched in 2001. Twelve years later, the range has established itself as one of the best-selling offerings in the industry. From the Small Panatela to the Churchill Tubos size, each of the cigars is made in the Dominican Republic using the finest quality tobaccos. “And for those consumers who can’t decide on which size Balmoral Dominican Selection to choose, we’ve developed a beautiful assortment box,” Stormink tells us. “It contains a wide selection of cigar sizes to suit any taste.” Indeed, Agio last year won two awards—one from Frontier and one from DFNI—for its Balmoral Dominican Selection assortment box. Always mindful of ensuring giftability in travel retail, the company has enjoyed successful listings of the assortment box onboard KLM Royal Dutch Airlines in the Holland Herald inflight magazine.

A clear focus Agio Cigars is concentrating on major airport hubs in Europe, Asia and the Middle East to ensuring continued growth in travel retail. “Travelers are spending time in the retail shops and looking for cigars and cigarillos as a gift or to treat themselves,” says Stormink. She also tells us that in the months to come, offering travel retail exclusive packs and giftable items will be a continued focus for Agio Cigars: “We’re always trying to fulfill the demands of consumers by offering attractive and convenient travel retail packs and exclusive travel retail gift boxes.” Despite challenges in some regions with regard to the display of tobacco products, Agio Cigars is confident that it will experience continued growth in travel retail. Indeed, where applicable, the company runs promotions that feature price-offs and GWPs as a means of keeping excitement high around the products. With this proactive focus on promotion, combined with a commitment to developing channel-specific products, we’re inclined to agree with her. “We look forward to seeing our existing customers and meeting new business partners at this year’s TFWA WE in Cannes,” concludes Stormink. “We invite attendees to visit us at booth H49 in the Yellow Village to see our latest products.” c

EVERYONE HAS A HOME, OURS INSPIRED A RANGE.

We are all shaped by our home, it defines our character, values, and ideals. The Glenrothes is no different. In celebration of this, we are proud to introduce the Manse Brae Reserves; our very first range of whiskies developed exclusively for Travel Retail that pay tribute to our home, The Manse, at The Glenrothes distillery in Speyside.

Share responsibly.

theglenrothes.com

Tobacco news

Asia contributes strongly to Oettinger Davidoff’s cigar sales

by RyAn WhITE

Basel-based Oettinger Davidoff Group (ODG), a worldwide leader in the premium cigar business, has announced that it has “resolutely implemented” its strategy of focusing on its core cigar business in 2012, as reflected in the company’s sales figures for the previous business year. Sales of Oettinger Davidoff’s cigars increased by over 5% compared to the previous year. The company notes that all major markets grew, but the company reports that the US was the growth vehicle in 2012, posting a sales increase of almost 20%. Significantly, Asia and global travel retail & duty free also posted strong growth. Indeed, Davidoff’s market share in the premium cigar segment amounts to approximately 8% worldwide. Oettinger Davidoff Group

notes that it has continued to grow in its core business segment of cigars. Despite this, the Group’s turnover slightly decreased from CHF 1.29 billion (US$1.36 billion) to CHF 1.23 billion (US$1.3 billion), or -4.5 % compared to the previous year due to the divestment of activities outside the core business segments, in particular the petrol station shop segment and the restructuring of the distribution and wholesale business segment. In the context of these divestments, the workforce also decreased by nearly 3% worldwide to 3,590 employees, the company notes. The firm’s own cigar production was cut back due to high stock levels. As a result, production amounted to 31.2 million units last year as compared to 34.4 million units in 2011.

Arturo Fuente Cigars to introduce travel retail exclusive travel bags to Asia duty free The travel retail channel is a priority for Arturo Fuente Cigars, Vice President of Operations Karl Herzog tells Asia Duty Free. Earlier this year the company introduced an innovative duty free exclusive travel bag that contains five Arturo Fuenate Sun Grown Double Chateau Cigars. A nice touch for operators, says Herzog, is that the packs have an integrated barcode for easier scanning. “We’re also working on two other duty free exclusive travel bags specifically for the Asia region,” he notes. “The packs will contain three Arturo Fuente Sun Grown Double Chateau Cigars with a red ribbon given that this is seen as a very auspicious color in many parts of the region. We originally wanted to go with four cigars in the pack, but as that’s seen as an unlucky number, we went with three to get the price down a bit.” Arturo Fuente Cigars has also noticed that keeping product fresh is a big concern for operators. As such, the company has developed three different resealable multipacks that will stay fresh for two-plus years. In conjunction with this, special furniture is also in the works to display the new packs. “Most operators tend to have little or no humidor space so this is really about finding creative solutions,” says Herzog. “The 54

ASiA duty Free & trAvel retAiling sePteMber 2013

operators that have seen the packs to date have been very excited about them.” In terms of new listings, the company recently began working with a new operator partner in Australia. Despite this, Herzog is honest in his assessment of the company’s work in travel retail to date: “We haven’t done as good a job as we can in putting boots on the ground and getting more travel retail listings,” he explains. “We’re currently undergoing a bit of a reshuffling right now with the aim of focusing more on travel retail and regions that we identify as being underserviced.” A refining of the distribution system has also led to more competitive pricing without sacrificing quality, which will certainly help in terms of listings and sales. Having said this, luxury cigar brand Opus X is still a big concentration for the company. Opus X Rare Estate Reserve 1992 in striking tin packaging was just recently released

to great fanfare in the cigar world, and although quantities are very limited, Herzog tells us that duty free listings were secured so that travelers could have the opportunity to enjoy these rare gems. Attendees to this year’s TFWA WE can visit Arturo Fuente Cigars at Blue Village B1 to see the company’s new offerings for themselves. the new opus X rare estate reserve 1992 is available in very limited quantities