Asia Duty Free & Travel Retailing - April/May 2020

DUTYFREEMAG.COM

M AY 2020 VOL 24 · NO 1

COVID-19: Voices from the industry p. 10 CDFG’s Charles Chen talks China recovery p. 16 Tasa Meng prepares for the future p. 46

Contents

No gain

I

without economic pain

t’s been a grim first quarter for the travel retail industry, as every operator, supplier, agent – big or small – faces shuttered stores, grounded airplanes, and nosediving traffic numbers amid a pandemic that has swept the globe on an unprecedented scale.

Undoubtedly, things will get worse before they get better, but green shoots are starting to emerge in China, as the country’s citizens seek to return to the “new normal” by the end of April.

In this issue, we spoke to Charles Chen, President of China Duty Free Group (CDFG), who is remaining positive about the future for the travel retail industry in China – particularly on Hainan Island, the offshore duty free resort in the south of the country, favored by local tourists visiting from the mainland.

Chen is confident CDFG will recover the losses experienced during the lockdown period. “All stores in Hainan Island are now open,” he told Asia Duty Free. “Definitely Hainan will be the forefront of recovery for our business. Optimistically we can say that in the third quarter of 2020 for Chinese people it’s very typical to travel abroad. Hainan is one place where Chinese will be traveling within the country.”

Indeed, CDFG recently opened two new offshore Duty Free Experience Stores on the island in Sanya, which began trading on April 13. These two newly added shops are located at Sanya Bay Mangrove Resort and Nanshan Tourist Area. They feature e-commerce experience areas, product display areas and other functional zones, in which top international brands are on display.

At time of writing, Airports Council International (ACI) World published a policy brief outlining a road map for the airport industry’s recovery in response to the COVID-19 pandemic.

The impact of COVID-19 on the airport sector has been profound. Passenger traffic is expected to decline by almost 40% and revenue is expected to contract by US$77 billion in 2020. In order to alleviate this unprecedented impact, ACI World issued six focused policy responses that should be implemented. Crucially for travel retailers, a concession fee waiver is among the recommendations. ACI argues that airport rents and concession fees should be waived or postponed in the form of a one-time measure for a defined period.

The policy brief also calls for protection of airport charges and urgent tax/financial relief.

Meanwhile, TFWA, the organizers of the industry’s major annual trade fair, recently shared revisions made to the pricing, format and structure of the TFWA World Exhibition & Conference, to be held in Cannes from September 28 to October 2.

Following feedback from members, the changes include: a 30% fall in per-square meter rental charges to exhibitors; free registration for all delegates, whatever their business sector; a review of the full program, which will be more business-focused; significantly reduced hotel rates; and a review of rates for other services.

Amid these exceptionally challenging times, we hope everyone is keeping safe and well, and we look forward to seeing you at the next show, when conditions improve.

MAY 2020 · VOL 24 · NO 1 The Americas Duty Free & Travel Retailing magazine (ISSN 0962-0699) is published four times a year April, June, October and November by Global Marketing Company Ltd. 26 Pearl Street, Mississauga, Ontario L5M 1X2 Canada. It is distributed throughout Central America, South America, the United States, Canada, U.S. Virgin Islands, U.S. Pacific islands, and the islands in the Caribbean.

The views expressed in this magazine do not necessarily reflect the views and opinions of the publisher or the editor. May 2020, Vol 24. No. 1. Printed in Canada.

All rights reserved. Nothing may be reprinted in whole or in part without written permission from the publisher. © 2020 Global Marketing Company Ltd. .

THE AMERICAS DUTY FREE & TRAVEL RETAILING 26 Pearl Street Mississauga, Ontario L5M 1X2 Canada Tel: 1 905 821 3344; Fax: 1 905 821 2777 www.dutyfreemag.com PUBLISHER Aijaz Khan aijaz@globalmarketingcom.ca EDITORIAL DEPARTMENT EDITOR-IN-CHIEF Hibah Noor hibah@dutyfreemagazine.ca DEPUTY EDITOR Jas Ryat jas@dutyfreemagazine.ca SENIOR EDITOR Mary Jane Pittilla maryjanepittilla@hotmail.com SENIOR WRITER Rebecca Byrne rebeccabyrne10@yahoo.com.sg ASIA CORRESPONDENT Elena Owyong owyongelena@gmail.com AMERICAS CORRESPONDENT Ronnie Lovler ronnie@dutyfreemagazine.ca ART DIRECTOR Jessica Hearn jessica@globalmarketingcom.ca

CIRCULATION & SUBSCRIPTION MANAGER accounts@globalmarketingcom.ca

Kindest Regards,

HIBAH NOOR Editor-in-Chief hibah@dutyfreemagazine.ca 4 ASIA DUTY FREE & TRAVEL RETAILING MAY 2020

THE CAFÉ COLLECTION

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Contents

32

WHAT’S INSIDE Lead Stories 10 Thoughts on COVID-19

22 Moroccanoil

Spreading the word The pandemic of 2020 has created a world that no one has ever seen before. Our industry is a resilient one, and this year it is being tested mightily. How do those in duty free and travel retail see this time? When do they foresee a recovery?

A smooth sea never made a skilled sailor Moroccanoil’s optimism prevails as it shifts more of its business to ecommerce

16 China Recovery

30 Changi Airport Update

Terminal consolidation Greatly reduced traffic forces Changi Airport Group to suspend operations at T2 and scale down operations in T4; CAG offers financial break to concessionaires while using this time for expansion and retraining

Restoring confidence In an interview with Asia Duty Free, China Duty Free Group President Charles Chen hammers home the message that the operator remains a force to be reckoned with as life in mainland China begins to normalize after the devastating COVID-19 outbreak

16 26 10

30 10

Features Cruise in rough waters Thought Leader: Angela Gittens

24 26

Lotte’s smart solution Spending as revenge

32 36

36

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Contents

38

Lead Stories 34 Domestic Tourism

42 India Round-Up

A reason to travel After months of lockdown for several regions in China, the cessation of travel restrictions combined with late spring/early summer holidays have given domestic tourism a much-needed boost

India interrupted Since the south Asian nation joined the long list of countries imposing lockdown measures, businesses there look for a strategy to move forward as India’s burgeoning US$2.9 trillion economy comes to a halt

38 TFWA Talks

46 Tasa Meng Plans Ahead

Uncertain times In an association such as TFWA, current challenges must be met head on while continuing to prepare for the industry’s future, deciding what will best serve the needs of the industry. This is especially challenging in uncertain times, and never has the world seen a time less certain than now

Preparing for the future Taiwan’s Tasa Meng travel retailer is taking advantage of the unfortunate global slowdown to complete planned renovations ahead of schedule, continuing to serve its customers and partner with suppliers in times of need

46

50

Features A letter penned from Italy Giving back

50 54

Relief measures Working from home

57 58

58

Thoughts on COVID-19

Spreading the word The pandemic of 2020 has created a world that no one has ever seen before. Our industry is a resilient one, and this year it is being tested mightily. How do those in duty free and travel retail see this time? When do they foresee a recovery?

by HIBAH NOOR

D

uring these extraordinary times we all find ourselves facing a reality we had not planned for. This is the case both personally and professionally. In short order we have been forced to immediately and drastically change our business plans from those of expansion and progress to those of survival, at the same time as our personal lives are thrown into upheaval, where we might be supporting our loved ones in ways we don’t know how.

The travel industry as a whole has been impacted especially harshly, and this is just as true for travel retail. We at Asia Duty Free have been thinking of all our colleagues and wondering how you are managing during these times.

To find out, we asked a few well-known colleagues from the industry, some of the best in the business, the five questions below so we can gain some insight. Each of the people in this group has had to weather many a storm, and they’re all known to tell it like it is.

1) WHAT WERE YOU DOING WHEN YOU REALIZED THAT COVID-19 WAS GOING TO CHANGE OUR LIVES IN A VERY SERIOUS WAY? 2) IN YOUR OPINION, HOW DOES THE IMPACT OF COVID-19 COMPARE TO PAST CRISES YOU’VE FACED IN YOUR CAREER? 3) BASED ON REPORTS AND PERSONAL THINKING, WHEN WILL THINGS RETURN TO NORMAL IN YOUR PART OF THE WORLD? 4) WHAT HAS THIS PANDEMIC TAUGHT YOU AND US AS A WHOLE? 5) HOW WILL OUR INDUSTRY CHANGE AFTER GOING THROUGH THIS CRISIS?

MICHAEL PAYNE, President and CEO, IAADFS

1) Well it’s hard to pinpoint exactly, but probably when the decision was made to cancel the Summit and the realization that things were that serious and not likely to be normal again for a while. Also, closing down the offices with no access for anyone was impactful.

2) I think this is certainly the worst from a global perspective that I can remember. I suspect the earthquake in Haiti, as an example, for a local tragedy seemed worse for the people living there and I’m sure there are other examples but for a global-type event I can’t think of one with the repercussions of this. The global travel industry is essentially shut down. That is incredible!

3) I honestly don’t know. Reports change daily. We have a month to go of stay-in-place at a minimum.

4) I think just how resilient people can be. These are major lifestyle changes in a relatively short period of time. There is uncertainty and real concern and fear out there, but people are reaching out to each other and being supportive where they can. This industry has always done it and this crisis is no exception.

5) We will definitely recover! How quickly? Who knows. Will everything be exactly the same? Probably not. I think the use of remote technology and alternative work styles has jumped ahead by years because of this and will have an impact going forward. I think you will see more changes like that that we don’t even know yet.

JUAN MIGUEL CABRERA, Head of Travel Retail and Duty Free, Loacker

1) I started to realize that something was going wrong by early February.

I had the chance to speak with some of our partners in China, Korea and Japan during ISM and it was kind of shocking. Some days later I started to receive cancelations of visits and trainings for a trip I was embarking on, around mid-February. That was when my mind started to receive alarm signals.

2) Well I’ve never lived through a crisis like this one. Initially because there is so much information, we get too much misinformation, and suddenly you don’t know how to react.

3) In my own thinking, I don’t know what is going to be normal after COVID-19. We are facing a situation where our biggest emotional reactions are limited or in some cases restricted, the social interaction is missing now, the warm conversations, hugs — all of that is missing now.

In my part of the world, Spain and Italy, things could start to resume maybe mid-May hopefully. We are still in our growing phase of the virus spread. Not to be negative in terms of business, but our channel is highly linked to mobility and social encounters, so unfortunately, I guess it will take us some more weeks after that for activity to restart, though I hope that my words and thoughts are wrong at this stage.

4) I’ve seen, at least in my area, a lot of back-to-the-roots in terms of creativity, empathy, being helpful to others, being responsible for others and ourselves, being thoughtful, and increased positivity. On the other hand it also has taught us how fragile we are in terms of decision-making (especially politics), how an external small agent can drive chaos in a whole society, affecting all social classes, no matter how strong you feel you are.

It serves as a reminder that for many years we forgot to be more humble at all levels.

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5) I hope that we don’t change. My wish is that we evolve from the teachings of this phase. This industry can learn from all that creativity, empathy and positivity that we were thrown into these past weeks. We should use this to avoid the mistakes of the past.

The trinity can use those powerful gifts to evolve and create a much higher quality channel.

COLM MCLOUGHLIN, Vice Chairman and CEO, Dubai Duty Free

1) Date wise, from January 23 we started to analyze passenger movement and sales and obviously when we got into February it was very clear that there was a severe drop in Chinese passengers and Chinese sales. Event wise, the shutting down of Wuhan, which has a population in excess of 11 million, was a very clear indicator that this was a major crisis that could affect the world.

2) In my experience this is unprecedented in the industry and around the globe. However, if the right steps are taken and people around the world follow their government’s advice to stay safe and healthy then we will recover from this. Of course it is going to take time. We have seen a quick return to travel following other viruses such as SARS; this is obviously a much bigger crisis and will take longer, but we think people will want to travel again once it is safe. We have to really just wait, ensure that we all follow health guidelines and look out for each other too.

3) It's definitely taught me that we have a great team here at Dubai Duty Free. They have all worked together and acted quickly to ensure that our staff members were taken care of, and that our business continued right up to the suspension of passenger flight. Also it has taught me of the importance of working closely with government officials, including my own boss, H.H. Sheikh Ahmed bin Saeed Al Maktoum, plus Dubai Airports Authority and the airlines, such as Emirates Airline, to ensure that we are all communicating well.

4) Everybody has worked together and shared relevant information. The Dubai Duty Free Executive team has commenced online meetings and regular catch-ups and is sharing essential information at this time.

5) Our industry has always been resilient; we've faced major challenges over the years. This is obviously the biggest challenge, the like of which we have never seen before. However, I'm really confident that given the right amount of time we will make a full recovery, but it will take time.

Thoughts on COVID-19

PETE DIGE, Travel Retail Director, Anthon Berg

1) I was in Singapore in the middle of January and at the time we were reading and getting news from China about a virus. I didn’t take notice about that because I had to go to Manila and here the volcano was very active.

The airport was closed down due to ashes in the city and we were not able to enter the Philippines. In the beginning of February we got the first cancelations of orders in Asia and then we knew that region was in a difficult situation. Asia had the experience from SARS in 2003 and was well prepared for this crisis. We faced the problem in Europe in February when all flights from China were cancelled. Then the virus came to Europe and now we are in the middle of a world crisis and travel retail has vanished for a period.

2) We have never had a crisis even close to what we face right now. In past crises SARS was primarily in Asia, and the World Trade Center attack was short, with a loss of 30-40% of the passengers for a short period. We also had a slow period in 2008 with the finical crisis for a year before we were saw positive numbers again.

3) I am born an optimist and I believe that we will be back to a normal situation in August/September this year. The reason is that we see some positive signs from China now and at the same time I think that we can have a cure in 8-10 months from now.

4) We have hopefully learned that we should react much faster if we face another issue in this category.

5) Yes, we will recover and we will get back on track again. I believe that in 2021 we will be back to 2019 levels, and from there we will see some growth in passengers and in sales in our industry.

GILES MARKS, Senior Director Global Travel Retail, Maui Jim

1) Like the rest of the world, for me each day brought a new, heightened level of fear and disbelief. Working from my Miami home office presented a different perspective.

2) I have never experienced a crisis of this magnitude, nor one with such an unprecedented global reach.

12 ASIA DUTY FREE & TRAVEL RETAILING MAY 2020

FOUAD A. JABBOUR, General Manager, Iraq Duty Free

1) It was during a regular working day but in a meeting with a supplier when the subject was mentioned. The first thing that came to mind was keeping the family safe for this period of time, as long as it takes. The next thing was going back to Baghdad in order to discuss the matter with the CEO and Managing Director to take the necessary measure to protect the employees as number one, and then find what needs to be done for business.

2) With all the ups and downs of various crises in the past, I believe that COVID-19 is the worst of them all. It had such a speedy spread throughout the world and affects the health, social and valuable lives of loved ones, colleagues and our long-time suppliers. We have compassion for people we do not know and feel for them. It will be difficult to judge the extent of the effects now, but it will not be an easy ride.

3) With the continuous rise in numbers of affected people, I do not see this easing off in the near future, but given the reports that we hear and if governments are on top of things, by midApril we might see a way back to a regular life 4) Taking things easy was simple; we need to think more deeply about what is important in life, feel more for others and make sure that we are living a healthy life.

5) We always believe in the best outcome of any situation and we should always have faith in better days. I think we will suffer for some time, but taking into consideration travels around the world, each and every one of us as operators we will do the utmost to see results improving. I think that recovery of our losses will never be complete, but we will try to minimize them.

3) This is impossible to answer. Once this crisis lessens, which will be ever so slowly, it will continue to affect developing countries for far longer. The economic and physiological damage could very well last indefinitely.

4) The fragility of our culture and society. I do strongly believe, and hope, we will come out on the “other side” with a renewed respect for each other.

5) Travel retail will recover, very slowly. The very nature of this pandemic will force all brands, from all categories, to rethink their business platforms. In some cases, sadly, certain brands may disappear.

Thoughts on COVID-19

SEBASTIEN LEVI, Vice President, Global Travel Retail, Moroccanoil

1) A very good friend of mine mentioned to me the risk of a pandemic in late January but I truly realized that this would impact all of us, professionally and personally, at the end of February, watching the number of new people infected in Europe, especially in Italy. I then truly understood that this epidemic would be different from the SARS or H1N1 that affected Asia almost exclusively. I was relieved to be able to take my flight back to New York early March, as I was starting to anticipate that the travels would be disrupted.

2) This is unprecedented because it is truly global, and it affects all of us: all generations, all industries, all countries and continents. It’s totally different from other crises because there is no way to “leave the crisis” at the office and disconnect with family and friends. My kids do not go to school anymore; I cannot see my friends; my parents from Europe cannot visit me. This is a crisis that affects us personally. And the business impact is in no way comparable to what I faced in 2008-2009, when I was already in travel retail. Then, business decreased, but it did not collapse completely. No store was shut down, no airport was closed; it was just a very difficult time for travel retail, and for the economy in general, but in no way comparable to this “world on pause” feeling we are experiencing today.

3) I would be lying if I told you that I have an answer to this question, because I don’t. Based on what I read, it seems that Asia is the first continent to show that it’s beginning to recover, with stores opening again in China, which is a good sign. It makes me hope that travel retail there may start again slowly around May, especially if Hong Kong airport and Singapore airports open again to transit passengers, which might be possible if the confinement measures in Europe and the US start to bear fruit by then. I then hope that we’ll have some recovery in June-July in Europe, as the

FRANÇOIS VAN AAL, President, Champagne Lanson

1) Our priority is the health and the safety of our employees. First, we closed the production site to let people be confined at home with their families. Then, we looked at a continuation plan to make sure our business is going through this crisis.

2) This is the worst ever pandemic because it's global

14 ASIA DUTY FREE & TRAVEL RETAILING MAY 2020

continent opens up again slowly, with the Americas probably later, as confinement measures arrived a bit later here.

I also believe that the “return to normal” will involve some major changes in our business, such as the increasing weight of digital, both in e-commerce and social media. In the past few years, Moroccanoil has dedicated more and more resources to the digital world, very successfully, and in the current crisis we have benefited from it, helping us keep the conversation open with our consumers, and we’ll make sure to emphasize this even when the crisis is over.

4) I believe that this pandemic has taught us and keeps teaching us to take nothing for granted, that everything can easily be derailed, especially in the interconnected world we live in, and that is so important for us in travel retail! So we need to always prepare for the worst and hope for the best, in the little and the big things. And I hope it is teaching us a lesson about the next looming disaster that awaits us if we do nothing; I am talking about global warming. We know what’s coming, because it has already affected us. This time, we won’t need masks and kits but to change our behaviors, both in business and in our personal lives, if we want to not be confined again, this time because our planet will have become unlivable. And the fact that carbon emissions have dropped dramatically in this crisis are stark reminder of the challenges ahead of us. I truly hope that confinement is not the solution to save our planet, because this is a heavy price to pay, so let’s work on this now.

5) At the basic level, I believe that we’ll all be more aware that pandemic is not only a scenario for a movie, but a tangible possibility that seems likely to happen again, according to experts.

It means we’ll probably have to be even more aware of some forms of social distancing in the points of sale, and for instance I would not be surprised that masks are becoming more common for travelers in Europe, the Middle East and the Americas, and not only in Asia. We may have to take this into account with the beauty consultants, with the way to apply testers etc.

Following up on my point in the previous question, I believe that the awareness about global warming and the need to act now before it is too late will only grow, for the travelers but also for the industry, and we’ll all have to play a role in that, because this will no longer be seen as optional.

and we have no visibility on when it's going to end. Also, all trade business died overnight with the closing of all restaurants/bars and the confinement.

3) We expect not to be back to normal before September at the earliest.

4) Things happen that you do not expect and you do not control. It is then a matter of doing the right things for people's safety and for the mid term continuation of the business.

5) It will take time to recover. This is a tsunami for the airline industry. People might slow down a bit their long overseas trips and rather look at more local vacation options.

 China Recovery

Restoring

confidence In an interview with Asia Duty Free, China Duty Free Group President Charles Chen hammers home the message that the operator remains a force to be reckoned with as life in mainland China begins to normalize after the devastating COVID-19 outbreak

by HIBAH NOOR

Charles Chen, President, China Duty Free Group

China Duty Free Group decided to close all its stores on Hainan Island around Chinese New Year on January 27 and reopened them on February 20

S

outh China’s resort island of Hainan is the first place where the duty free business will recover on the mainland. That’s according to China Duty Free Group (CDFG) President Charles Chen, who spoke to Asia Duty Free on April 16.

As lockdown lifts in China, and with local cases of COVID-19 infections dwindling in number, the Chinese people are starting to get back to normal life, though proceeding with caution.

At time of writing, the government is protecting people from imported COVID-19 cases with its so-called “fortress” policy of strict border controls. Most international airports are closed, which is expected to result in an influx of Chinese travel within their own country – with the southern province of Hainan Island as the go-to destination.

According to local press reports in mid-March, tourist spots in Sanya, located on Hainan Island, have received 74,000 tourists since the reopening to the public, and approximately 23,000 tourism workers have returned to work for now.

In an interview with Asia Duty Free, Chen expressed his optimism about the future, while acknowledging the huge challenges brought about by the COVID-19 crisis. “China is doing well, given the circumstances, with a gradual reopening of our stores.

Honestly speaking, the whole industry will be taking a difficult path. It’s a difficult time with most stores closed, and especially

when international airports are closed. Our government isn’t allowing international flights coming in or going out.”

CDFG operates over 200 stores in China. On Hainan Island, the company operates one shop at Haikou Airport and three offshore downtown duty free stores: the flagship CDF Mall in Sanya, the Haikou Riyue Plaza Duty Free in Haikou, and Qionghai Bo'ao Duty Free in Bo'ao. The CDF Mall in Sanya and Haikou Riyue Plaza Duty Free are among the company’s largest travel retail outlets.

In addition, CDFG recently opened two new offshore Duty Free Experience Stores in Sanya, which began trading on April 13. These two newly added shops are located at Sanya Bay Mangrove Resort and Nanshan Tourist Area. The former store has an area of more than 740 square meters. The stores feature e-commerce experience areas, product display areas and other functional zones, in which top international brands are on display. In the e-commerce experience areas, customers can understand the online-order process while accompanied by professional shopping guides who explain the offshore duty free policy.

CDFG decided to close all its stores on Hainan Island around Chinese New Year on January 27 and reopened them on February 20. Gradually, the customers are coming back.

“All stores in Hainan Island are now open,” confirmed Chen.

“Definitely Hainan will be the forefront of recovery for our

www.dutyfreemag.com ASIA DUTY FREE & TRAVEL RETAILING

17

China Recovery

The CDF Mall in Sanya (pictured) and Haikou Riyue Plaza Duty Free are among the company’s largest travel retail outlets

BOSS.COM

business. Optimistically we can say that in the third quarter of 2020 for Chinese people it’s very typical to travel abroad if the COVID-19 can be controlled by other countries at that time.

Hainan is one place where Chinese will be traveling within the country.

“Hainan is the first place where duty free business will recover.”

Chen continued: “From April and May, most people can travel within the province. Consumer confidence will return gradually and we’re preparing for this. We’re doing this by preparing our marketing activities. May is holiday time for Chinese. We are feeling confident together with the Hainan local government to do some promotions here.”

The Sanya Duty Free Experience Store boasts a spacious interior

The store features e-commerce experience areas, product display areas for top international brands and other functional zones

Beauty a priority

Marketing is more important than ever, said Chen. He paid tribute to CDFG’s vendors, who are battling the coronavirus crisis in other countries and regions. “We receive a lot of support from our vendors. A lot of the suppliers have difficulties in other countries like Korea and Japan and Europe.”

According to Chen, beauty products will be high on travelers’ shopping lists. “People definitely want to buy, especially beauty items; [despite] the economic situation.”

He is confident CDFG will recover the losses experienced during the lockdown period, adding: “It’s difficult for the Chinese to go to Korea, and maybe this means they buy from Sanya.”

Chen’s optimism stems from the fact that Hainan’s offshore

duty free stores are the only place that Chinese people can buy duty free goods. “Speaking to my General Manager and my team, we believe we will reach the same sales target as in 2019. I feel very confident with the Sanya store. We have many holidays in the second half of this year which is an opportunity for people to travel and buy duty free.”

Chen believes the Chinese government has handled the coronavirus “very well”. “The system is different here in comparison to the West. We experienced SARS 10 years ago, we know how to protect ourselves. It was a very dangerous time in China because a lot happened around the time of Chinese New Year when everyone was traveling.

China Recovery

In January, online shopping accounted for 10% of China Duty Free Group’s total sales, in February it contributed 25% of turnover, and in March that figure rose to 50%.

“We reacted very quickly, we made the decision very quickly to temporarily close the stores because there was too much exposure with the people coming through. Our first priority was to protect our staff.”

Online shopping soars

Chen thinks that shopping habits will change after the coronavirus crisis – namely, the shift to online shopping. “We send our customers pre-ordering promotion information by phone or email. Online shopping will be very popular. It’s very interesting to see the jump in online shopping.” In January, online shopping accounted for 10% of CDFG’s total sales, in February it contributed 25% of turnover, and in March that figure rose to 50%.

New store openings

Chen has good reason to be confident about the future.

During the past year the company has opened many new stores in airports such as Beijing Daxing, Shanghai and Guangzhou. But he added that opportunities to open more stores in China are “very rare” right now. “If the government will allow us to open, we will. We are waiting to see what they say,” he said.

Charles Chen is confident CDFG will recover the losses experienced during the lockdown period

However, opportunities lie further afield. “We have a lot of plans for overseas. Many Chinese are traveling within South East Asia. We had a lot of plans for that but things slowed down since COVID-19. South East Asia is an easy place for travelers to visit, there is no time difference and travel time is short.”

Chen revealed a gradual shift in Chinese travelers’ attitudes to long-haul travel. “For Europe and North America, some years ago, Chinese liked to visit there but things have slowed down in terms of Chinese visiting. Gradually now Chinese people want to relax to enjoy their holidays. Even my friends are looking to go to a place to relax the same way the Europeans do,” he said.

As for possible future store openings, CDFG is “very interested” in Laos, Thailand, Japan and Singapore. “Our priority is downtown stores and then airports. Everything depends on the situation with COVID-19 in the West. I’m hoping things will be under control by the second semester of this year.”

Chen concluded with a message of hope for the beleaguered travel retail industry. “We should be confident for the future.

People still want to travel, they still want to spend money, especially for Chinese. The way people will shop will change. “After we discuss this internally, there could be a home delivery option under the current coronavirus condition.”

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Moroccanoil

A smooth sea

NEVER MADE A SKILLED SAILOR

The Moroccanoil treatment portfolio has grown through the years to address both hair and beauty needs

MOROCCANOIL’S OPTIMISM PREVAILS AS IT SHIFTS MORE OF ITS BUSINESS TO ECOMMERCE

by JAS RYAT

22 ASIA DUTY FREE & TRAVEL RETAILING MAY 2020

T

he ripple effects of COVID-19 have made their way to both small- and large-scale business operations, as well as consumer behavior throughout the world. As the world figures out how to navigate these unprecedented seas, beauty and haircare powerhouse Moroccanoil is finding solace in its digital partnerships.

In an exclusive interview with Asia Duty Free, Moroccanoil Vice President of Global Travel Retail Sebastien Levi explains while it’s important to address the impact COVID-19 has had on its business model, travel retail needs to understand that it will not only affect business in the future, but how we do business in the future.

Ecomm era

The brand’s omnichannel approach includes hair salons, brick and mortar retailers and premium businesses like Sephora, on a domestic and international level. Most recently, the brand has launched with Amazon.

The iconic Moroccanoil Treatment has led the way to put the company on the map

“Not surprisingly we have been affected first in travel retail, then hair salons closing in Asia, in Europe and finally in the Americas. The silver lining is digital. Especially with Sephora for example, we see that our drop in sales is fairly limited. We had a major transfer in business from brick and mortar to ecommerce at Sephora.com. Moroccanoil has always been very good on Sephora.com and it normally represented 30% of our business with them, and now it represents 100%,” shares Levi.

He underscores that the brand is strong with a loyal customer base. The customers have switched to online shopping, which is an encouraging sign, essentially proving the strength and the resilience of the brand.

Open dialogue

Digital and social media also play a big part in the brand’s buoyant business model. Having strong presence on social media platforms keeps the conversation open with customers, allowing accessibility on both ends of the relationship.

“All of our efforts in the digital channel that we started about four years ago—which culminated with our launch on Amazon last year—have proven to be a big help right now,” says Levi.

He continues: “Basically our revenue in 2020 will mainly come from digital channels. But what it proves to us is that we are going to have to be very active when the crisis is over. That’s why it’s very important to us to keep the conversation open with all of the channels: premium retail, hair salons, and travel retail.”

In regards to airport operators, Levi emphasises that partners want to know that brands will have offers ready to roll when the moment is ready. Says Levi, “For us, I can tell you we have some aggressive offers when the crisis is over. We don’t want to discount the brand because that’s not who we are. But we need to be proactive with offers that really give value to the customers when they travel again. We are showing the operators that we are here and we are ready.”

Moroccanoil does not want to imply it is business as usual.

However, Levi stresses it’s important to stay connected and present with operators as it will inevitably affect business in the future.

The team plans to have a virtual Singapore show with the ‘top Asia players’ to compensate for the cancelled TFWA Asia Pacific show. This will allow the team to have a more proactive response to customer needs as they anticipate Asia will be the first region to show signs of recovery.

“We want to show everyone that we are here and that we are not going anywhere. We are ready to partner with them when the time is right,” states Levi.

The company has also been very responsive, working with retailers to understand their concerns and their needs. Moroccanoil is working directly with partners to amend orders and cancellations to ensure business continuity. Levi reiterates that Moroccanoil is not just there to take orders, but to build strong, lasting partnerships.

This policy extends to the company’s 400 global employees as well. Throughout this entire process, the company has emphasized the importance of retaining all employees as this is the primary focus of senior management. The company wants to employees to know that ‘we are in this together.’

Foreseeable future

Levi is optimistic that business will show movement in June or July. He predicts movement will be limited to inter-Asia for now, due to global border closures.

Globally, business may be affected this whole year due to the loss of revenue. Summer may not show a surge of holiday makers and millennial globe trotters as travelers asses the current global situation. He stresses the goal for 2020 is realigning shared strategies and expectations, as he looks forward to a very strong recovery in 2021.

The future of physical duty free stores will also be changed as everyone adjusts to the new normal. Beauty and cosmetics companies that rely on the physical touch and feel for travelers to test products will have to change their strategies. Wearing of masks while traveling will extend beyond Asia and may become a ‘must-have’ as opposed to a ‘nice-to-have’ item. There will be a major shift to the click-and-collect movement as travelers look to ecommerce. Says Levi, “It won’t affect business, but it will affect the way we do business.”

www.dutyfreemag.com ASIA DUTY FREE & TRAVEL RETAILING

23

Cruise

ROUGH WATERS While the COVID-19 pandemic has affected the entire travel and tourism industry, the cruise segment is especially hard hit, because its image was hurt along with its bottom line. With some ships becoming virus hotspots, passengers unable to disembark, cruise ships becoming stranded at sea and a CDC warning to avoid cruise travel, the depths couldn’t go much lower for cruise lines

by JAS RYAT

A

fter steady year-on-year growth since 1990, 2020 was gearing up to set a record high for the cruise industry, helped in large part by the rapidly developing Asian market. Between 2013 and 2018, cruises and voyages in Asia increased approximately 250%.

And the good news kept coming.

Cruise Lines International Association’s (CLIA) annual prognosis report last year showed that 32 million passengers were expected to set sail globally in 2020. To meet ongoing demand, 19 new ocean ships were scheduled to make their debut in the upcoming year, resulting in a total of 278 ocean cruise ships projected to be in operation by the end of 2020.

pleted their sailings; the remaining had various dates of return to March 30, but many of them found themselves unable to dock as port after port turned them away.

At time of writing, while all passengers have been allowed off of cruise ships, the same cannot be said for staff, many of whom find themselves stranded at sea and unable to return home.

In Australia, police in New South Wales have launched a criminal investigation into the conduct of Carnival Australia over whether the company was transparent about the scale of the Covid19 outbreak on one of its cruise ships, the Ruby Princess.

Stuck at sea

For the first time in 30 years, The Centers for Disease Control and Prevention (CDC) has intervened with a global warning against traveling on cruise lines. This warning carries great weight, as the CDC does not normally comment on travel matters.

Over the years, the cruise industry has faced setbacks such as floods, collisions and minor viral outbreaks, but never a tempest with the wrath of COVID-19.

Passengers have been forced to quarantine

When on March 13 CLIA announced the voluntary suspension of cruise ship operations by its members, approximately 40 ships and 90,000 passengers were currently at sea. Of those 40 ships, 29 were in the midst of their itineraries, and 11 had departed that evening. Over the initial 30-day period, approximately 500 cruises and 1.2 million passengers were impacted by suspended itineraries.

On March 16, 11 of these 40 ships com-

Can cruise recover?

The cruise industry was amongst the hardest hit during the COVID-19 pandemic. The industry projects to resume business by late summer 2020

in close quarters on ships weeks after they were supposed to have returned home; they’ve been virtually held hostage as ports refused docking, and they’ve been put in harm’s way by being forced to share space with those already sick. How will the cruise industry ever recover from this image? As of writing, many in the travel industry, such as airlines, will receive government bailouts to help them weather this storm, but the cruise industry is unlikely to.

Preparing for reopening

Industry experts believe it will take up to a year for the cruise industry’s image to begin to improve. To help provide impetus to recovery, cruise lines are offering discounted ticket prices in order to generate some income while the industry is effectively inactive.

“We do not take this decision lightly, and we want the traveling public to know in no uncertain terms the commitment of this industry to putting people first,” said Adam Goldstein, CLIA Global Chairman. “During this time, we will continue to work with the CDC and others to prepare for resumption of sailings when it is appropriate.”

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Thought Leader: Angela Gittens

PROTECTING AIRPORT JOBS DURING COVID-19: the importance of skilled and qualified employees

by ANGELA GITTENS, Director General, ACI World

W

hile aviation has faced notable shocks over its lifetime, the fast spread of COVID-19, compounded by travel restrictions, is a shock that has led to a severe drop in airport traffic and economic activity. It represents an unprecedented threat to the airport industry’s financial viability.

Impact of COVID-19 on airport revenues

Airports are two-sided businesses, engaging in a commercial relationship with both airlines and passengers. They receive their revenues from two primary sources: aeronautical activities and non-aeronautical activities.

Both revenue streams are vital to support the operation and sustainable development of airports. They are used to recover the large capital costs incurred by airports—and these are significant as 26 ASIA DUTY FREE & TRAVEL RETAILING MAY 2020

the airport industry is highly asset-intensive—as well as operating expenses.

Revenue channels are paralyzed by the unprecedented drops in aviation and commercial activity.

The shortfall in the number of passengers and the cancellation of flights has resulted in reduced revenues from airport charges (landing and aircraft parking charges paid by airlines and passenger service charges and security charges paid by passengers).

In a similar way, commercial activities are not generating revenues and are forced to shut down.

Since airport revenues are contracting rapidly, airport operators are taking all possible measures to preserve financial viability. While airports have high fixed and unavoidable costs, they are reducing, to a minimum, variable costs by closing portions of infrastructure, furloughing staff, and postponing capital expenditure.

These are difficult decisions with serious impacts for the community. They are not taken lightly but are necessary in response to the crisis facing the industry.

Non-aeronautical sources of revenue usually provide diversification of airport income streams and serve as an additional cushion during economic downturns.

Considering the ongoing large-scale lockdowns, however, commercial activities are equally damaged.

ACI forecasted that, prior to the COVID-19 outbreak, global airport revenues for the first quarter of 2020 would reach close to US$39 billion.

Based on traffic trends under COVID19 and the inevitable reduction in overall commercial activity, ACI now estimates a 33% loss of revenues equivalent to an approximate revenue shortfall of US$13 billion.

While the industry was expected to generate about US$172 billion at current

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Thought Leader: Angela Gittens

market exchange rates and assuming flat evolution of unit revenues, it may lose about 45% or over US$76 billion by the end of this year in light of the ongoing crisis.

These figures are based on the ACI Advisory Bulletin published on 1 April.

Due to the fast and radical shifts in the world and the air transport industry, ACI will continue to periodically update the impact of COVID-19 on airport business.

The importance of a skilled and qualified employees

Still, the safety, security, and health of airport staff and passengers remain paramount for airport operators during this crisis. Many employees that work at an airport are actually employed by outside entities – generally, these workers provide the commercial activities, such as food and beverage and retail services, aviationrelated services such as ground handling, and governmental services such as border control and security.

In fact personnel employed by airport operators and personnel employed by outside entities add to more than 6.1 million jobs globally. The entire aviation sector accounts for 10.3 million jobs so 60% of employment in the aviation sector is generated “on the ground” at airports.

Most on‐airport businesses that cater to passengers – such as retail outlets, duty free shops, restaurants, and car parking facilities – now have significantly reduced economic activity with many of them already shutting down.

In addition to providing essential services to the traveling public, these represent key revenue channels for airports.

The typical hub airport has as many as 40,000 employees either working for the airport operator or on the airport site for other employers. The livelihood of mil-

28 ASIA DUTY FREE & TRAVEL RETAILING MAY 2020

lions of people needs to be considered in the face of the recent measures to mitigate COVID-19.

Jobs beyond airports and aviation

According to Air Transport Action Group (ATAG), aviation’s direct, indirect, induced and tourism catalytic employment effect is in the realm of 66 million jobs. This is comparable to the populations of France or the United Kingdom.

Aviation’s global economic impact is the realm of US$2.7 trillion or 3.6% of global Gross Domestic Product (GDP).

For decades, aviation has remained a major catalyst in supporting growth in other industries such as tourism. In fact, as much as 57% of international tourism is supported by air travel as the leading mode of transport.

The industry is hugely important to the social and economic welfare of millions of people across the planet. According to the United Nations World Tourism Organization (UNWTO), tourism accounts for 10% of global GDP with one-in- ten jobs linked to tourism.

Unfortunately, the measures introduced to limit the spread of COVID-19 have already resulted in significant loss of employment with many airports announcing lay-offs and the possibility of more to come.

Financial relief to protect the livelihoods of airport staff

There are financial relief measures that States should consider in alleviating the significant drop in cash flows and to ensure operational and business continuity of airport activities, including: • The immediate provision of government assistance through grants and subsidies to support operat-

ing expenses, and mainly wages to airport staff to safeguard the labor force and hence continuity of airport operations once the crisis is over is fundamental.

• Ensuring secured financing and loans at preferential rates and bank guarantees will also be an important measure to alleviate debt obligations.

• The suspension of all national and local aviation specific taxes for 2020 – including passenger departing taxes are required as a further stimulus for air transport demand.

• The waiving or postponement of airport rents and concession fees applicable to airport operators, irrespective of their ownership status, given the financial stress they are experiencing. Such waivers could be a one-time waiver for a certain period of time, without the requirement for airports to pay back the waived amounts later.

States must also consider maintaining a minimum level of employment to allow continued operations and to preserve a rapid return to full operations. This would mean supported wage guarantees with regards to those still employed and bridgein programs for those temporarily laid-off.

Other measures include fast track procedures such as security clearance with regard to the re-appointment of personnel temporarily laid off during the whole duration of the crisis. This would help minimize the impact on operations when traffic bans are removed.

Recognizing that the entire aviation ecosystem has been affected by this crisis, requested financial relief should be nondiscriminatory and not benefit one actor at the expense of another actor in the aviation ecosystem.

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Changi Airport Update

Terminal consolidation Greatly reduced traffic forces Changi Airport Group (CAG) to suspend operations at T2 and scale down operations in T4; CAG offers financial break to concessionaires while using this time for expansion and retraining

C

hangi Airport Group (CAG) announced the consolidation of terminal operations due to the steep decline of passenger traffic as a result of COVID-19. This move will enable CAG and its airport partners to save on running costs such as utilities and cleaning as well as to optimize resources across the airport’s terminals to align with low travel demand and airlines’ flight operations.

Airline relocation

As of May 1, 2020, operations at Terminal 2 (T2) will be suspended for 18 months, with airlines to be relocated to the remaining terminals. Details of airlines’ relocation to other terminals will be published on the Changi Airport website closer to May. This suspension of operations will allow for the current T2 expansion works to be accelerated, with expected completion, currently scheduled for 2024, brought forward possibly by up to one year. CAG is in discussion with airport partners and concessionaires in T2 regarding options available to them.

30 ASIA DUTY FREE & TRAVEL RETAILING MAY 2020

Because of minimal flights in Terminal 4 (T4), operations have been scaled down considerably, with a small number of aircraft boarding gates kept in use and shops allowed to close early after the last flight for the day. If the remaining airlines at T4 choose to suspend or adjust their flight schedule, CAG will also consider suspending operations at T4 temporarily but with the objective of restarting operations quickly when airlines confirm the resumption of flights.

Assisting concessions

Concessions at Changi Airport have been significantly impacted by the reduced air passenger traffic and weakened consumer demand. CAG has been in discussion with the concessionaires on assistance measures based on their business circumstance. CAG has waived all rentals for concessions operating in T4 for two months from March 24, 2020, given the very low passenger traffic in the terminal.

CAG and its partners are identifying retraining and redeployment opportunities for airport staff to protect as many

as jobs as possible during this downturn.

As an example, ground handler SATS is sending staff for training courses to train them as airside drivers to support airlines.

CAG is partnering with Certis Aviation Security to streamline and right size its operations such as deploying security officers at pre-boarding security screening stations and at access control points to restricted areas.

Standing ready

Mr Tan Lye Teck, CAG’s Executive Vice President of Airport Management, said: “With airlines suspending flights in response to the sharply reduced travel demand, the consolidation efforts seek to help our airport partners during this difficult time. While the scale of our operations will be reduced in the near term, Changi Airport remains open to serve the airfreight and passenger flights that continue to operate. Even as our airport capacity is being optimized for the current situation, we will have the flexibility and we stand ready to ramp up operations quickly once the recovery takes place.”

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Digital Innovation

Smart solution LOTTE DUTY FREE HAS UNVEILED THE ‘SMART STORE,’ THE FIRST STORE IN THE INDUSTRY THAT INCORPORATES DIGITAL INNOVATION TECHNOLOGY TO CREATE A COMFORTABLE SHOPPING EXPERIENCE DESPITE REDUCED HUMAN CONTACT

S

outh Korea’s largest travel retailer, Lotte Duty Free, has opened its newest innovation, the “Smart Store,” on the first floor of the Lotte Duty Free Myeongdong Main Store. The Smart Store, with a floor space of 520 square meters, features cosmetics, perfumes and beauty devices.

The Smart Store takes consumer sentiment about COVID-19 into consideration, allowing a store shopping experience with less health risk, through cutting-edge technology that minimizes human contact.

“The Lotte Duty Free Smart Store is the first store in the industry enabling this new digital experience,” said Lee Gap, Lotte Duty Free CEO. “Lotte Duty Free will strive to continue providing innovative shopping services in the future.”

Easy and comfortable

This enhanced service minimizes faceto-face contact while allowing Lotte Duty Free to continue offering a comfortable shopping environment and a personal experience. Each brand will have the ability to offer unique services, such as virtual makeup assistance.

Customers visiting the smart store first scan the QR code installed at the store entrance with their smartphone to access their own dedicated mobile cart.

They then scan the product-specific bar code to check product details, reviews, inventory quantities and other details, and to add the item directly to your mobile cart. When finished shopping, a customer 32 ASIA DUTY FREE & TRAVEL RETAILING MAY 2020

Lotte Duty Free offers domestic and foreign shoppers a futuristic shopping experience through its ‘Smart Store’

simply shows the QR code and pay for his or her chosen items.

The program was created with both foreign and domestic shoppers in mind.

Mobile cart access QR codes can also be scanned with WeChat, China's largest mobile messenger, and detailed productspecific information is available in four languages: Korean, English, Japanese and simplified Chinese.

Beauty brands offer something new

Leading global cosmetics brands such as SK-II, Shiseido and Estée Lauder are showcasing unique digital shopping services and the Smart Store.

SK-II provides the Magic Ring Skin Analysis, which recommends products suitable for customer's skin through the diagnosis of five factors that determine skin age. Shiseido explains products through LED screens in a digital store, where the store lighting changes according to the selected product.

Estée Lauder introduces a virtual

makeup service based on AR technology that makes it easy and fun for customers to find the lipstick they want, and also a Digital Shade Finder that identifies the color that best matches their skin tone.

La Prairie Facial Cabin is a spa service room that provides skin care services as a product of the Swiss luxury cosmetic brand.

“Bitti,” a digital system that sells curated products, has also now entered the industry in this store.

New wave of change

Through the opening of this Smart Store, Lotte Duty Free expects to increase the convenience of customer shopping through cutting-edge technology and to bring about a new wave of change that acknowledges customer sentiment regarding COVID-19.

Lotte Duty Free is planning to expand this concept to other offline stores at home and abroad, starting with the opening of the Smart Store at the Myeongdong headquarters.

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 Domestic Tourism

A R E A S O N T O T R AV E L

After months of lockdown for several regions in China, the cessation of travel restrictions combined with late spring/early summer holidays have given domestic tourism a much-needed boost

I

t’s clear that, since the COVID-19 epidemic abated within China, travel and tourism are once again becoming an attractive option. The upcoming Chinese holidays in late spring and early summer are proving to be an especially strong incentive for domestic tourism as the industry recovers.

Domestic improvement

During the three weeks from February 26 through March 18, China showed a steady, if modest, improvement in its domestic tourism industry, according to Air4casts.

Domestic air travel improved more than 6% per day, and trips to popular tourist destination Hainan Island increased steadily, week on week.

Hotel occupancy has also improved, with figures from March 18 showing a substantial increase of 74% over occupancy rates from just three weeks earlier.

Over 70% of hotels on the Chinese mainland had resumed operations as of March 22. Additionally, online travel platforms have reported a large increase in searches for hotel bookings.

Travel bookings on the rise

During the week of March 17 to 23, bookings for train tickets to popular scenic 34 ASIA DUTY FREE & TRAVEL RETAILING MAY 2020

by HIBAH NOOR

areas surged by over 100%, while hotel reservations increased by approximately 30% compared with the previous week.

Most of these train bookings were for inter-provincial travel. Of particular note, tickets to Urumqi, the capital of the Xinjiang Uighur autonomous region, increased 100% year on year for the May Day holiday.

According to Alibaba’s travel service platform, Fliggy, travel plans rebounded for the Tomb Sweeping Day holiday from April 4 to 6. This rebound was especially apparent in tourism sectors in Shanghai, Chengdu, Sichuan province, Hangzhou, Zhejiang province and Shenzhen and Guangzhou in Guangdong province.

Other popular searches concerned information on flights to Shanghai, Shenzhen, Guangzhou, Chengdu and Beijing.

Labour day especially popular

The Labour Day holiday has been extended to five days this year, from May 1 to May 5. This is proving to be an especially popular time to time to travel, demonstrating a clear ongoing recovery in the tourist sector. With the continued abatement of the epidemic in China and the opening of all regions, this holiday has proven to be the first tourism peak of the

year 2020 with a surge in the purchase of air tickets, train tickets, accommodations and scenic spot tickets during the holiday.

Hoping to normalize

While the positive signs are undeniable, it will take time for the hospitality sector to fully recover. Although hotel occupancy rates improved greatly during the first three weeks of March, for example, this was from a low of -90% from the year before. An increase to -75% year on year may be substantial, but this is still very far off from normal. The hope is that the spring holidays are not only successful in their own right, but also that they normalize travel once again.

Unsurprisingly, the epidemic forced massive cancellations of travel reservations, and most of these cancellations were for the Spring Festival holiday, which this year took place at the end of January, just as the epidemic was taking hold. This holiday is normally the busiest travel time of the year.

Currently, all travel bans in the country have been lifted, and tourism departments country-wide state that all tourism-related businesses have resumed local operations.

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Spending Power

Spending as revenge As people in China come back out into the world after extensive lockdown, months of pent-up shopping energy are helping sales of luxury goods to ramp up

T

he term “revenge spending” might bring to mind images of going on a shopping spree courtesy of one’s ex-partner’s credit card, but in this case the meaning is quite different, and much better for the luxury goods industry.

As the rest of the world is still barricading itself inside for what is effectively a global lockdown in the fight against COVID-19, in China people are finally coming to the end of theirs, exiting freely from their homes and able to resume life.

The behaviour of this population might give a clue as to what to expect the world over, and for sales of luxury items, the news is good.

Freedom after successful curtailment

Towards the end of March, China began seeing days with zero new cases. While this is not true of every day, the number of active cases in the country has dwindled down and down until it is currently among the lowest numbers in the world.

The success of the lockdown has been such that the country is now wide open 36 ASIA DUTY FREE & TRAVEL RETAILING MAY 2020

again, and the Chinese are chomping at the bit to spend money again. The term “revenge spending” refers to these shopping-starved consumers who are overcompensating for the months spent indoors by making more purchases than they normally would.

Pent-up demand

This term was coined after the cultural revolution that brought consumer culture into China post-1980s, and, though the reason is perhaps different, the result is similar now. Pent-up demand is causing a clear return of shoppers.

The Chinese are well known for their love of luxury items; it is partly this that makes this population a clear target for the travel retail industry as a whole. Chinese shoppers account for one-third of the global luxury market sales, and two-thirds of the industry’s growth in recent years. Lockdowns in the country, especially during the prime shopping and travel time of the Lunar New Year, have therefore hit luxury brands especially hard.

In the mood to shop

The mood of the Chinese shopper is at least as relevant as his or her freedom to shop, and the mood has shown to be good as money not spent in on travel or shopping in the first quarter of the year is now burning a proverbial hole in many pockets.

Store traffic, which dropped 80% during the epidemic, has been picking up again, with brands seeing a modest jump in sales. Anecdotal evidence shows that traffic in malls is increasing, and those who are visiting are often carrying shopping bags.

E-commerce is also increasing, with many major brands showing increases even over the same time in 2019. While this might seem illogical, given the ease to shop online during the lockdown, in reality shutdowns and logistical problems made this very difficult.

Beauty, health and sportswear brands show an especially high jump in sales.

Estée Lauder, Lancôme and Nike in particular stood out with sales increases.

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TFWA Talks

times Uncertain

In an association such as TFWA, current challenges must be met head on while continuing to prepare for the industry’s future, deciding what will best serve the needs of the industry. This is especially challenging in uncertain times, and never has the world seen a time less certain than now

I

by HIBAH NOOR

n Alain Maingreaud’s second year as TFWA President he has had to face the greatest challenge the industry has ever seen. Chinese authorities were just beginning to learn of the existence of COVID-19 as he was elected for his second term, and a mere two months later the virus was well on its way to becoming a pandemic, resulting in the unprecedented closing of borders and cancellation of international flights the world over.

38 ASIA DUTY FREE & TRAVEL RETAILING MAY 2020

Significant impact

The cancellation of TFWA Asia Pacific in Singapore was far from unexpected, but still a great reminder of the current state of the world. A decision such as this does not come without expense; much of the event’s investment throughout the industry had already taken place, and certain commitments are not simple to get out of. Maingreaud says the financial impact to TFWA is going to be significant. “We continue to work with our partners in Singapore and elsewhere to evaluate the situation and plan a way forward. We need to look at and deal with a range of administrative and accounting issues with exhibitors, our partners, our service providers and others.”

In times of uncertainty, any organization must look at all decisions with a highly critical eye. This is especially the case during an extreme event such as this, when both the eventual outcome and its timeline are truly unknown. “The situation obliges us to review our priorities, and making sure that we manage our resources effectively and efficiently is now even more important than ever,” says Maingreaud. The TFWA office has now been

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TFWA Talks

closed. This has created its own challenges, though the professionalism and commitment of the staff has helped to ensure that they are ready for future deadlines and responsibilities.

Moving forward

With so many unknowns, it is impossible to know what will be the condition in the fall when TFWA World Exhibition & Conference is set to take place in Cannes. TFWA continues to monitor the situation, but Maingreaud says the association is determined that the event will provide the opportunity for companies to plan their recovery. Preparations therefore continue, though circumstances are not ideal.

“Our team members are very determined to find a way forward that is in the interests of our industry,” he says. “We appreciate the economic impact of the crisis on our members and on other industry stakeholders, and the fact that the crisis has prompted many people to review or question their plans. But we do definitely need to be ready for a rebound, and a forum such as the TFWA World Exhibition & Conference will provide a useful platform for this recovery. We will of course review all elements of the organization of the event, and adjustments will be made to the format where necessary.”

Maingreaud is hesitant to predict any outcome for attendance at TFWA in Cannes this year. He says not only is this impacted by what is happening in the world at large, the association had already been planning to introduce new elements and formats. “We won’t be comparing like with like in terms of visitor numbers, exhibition space and such. But it’s important that we’re there to start re-building solid foundations for the business to recover.”

More than just business

As with everyone who has been involved in travel retail for any length of time, Maingreaud says he has faced a number of difficult situations in his career, but nothing comparable to this — not only as it concerns business but also as it relates to the world at large: “The seriousness and scope of this crisis is exceptional and goes beyond merely the business aspect; it has had a profound impact on our lives as nothing has done in recent history.

It has become a significantly wider philosophical issue, which raises questions about the way our world is organized and how it should be shaped going forward,” he says.

Travel retail is always described as a resilient market that always bounces back; indeed, even when faced with grave social, political and economic difficulties most leaders in the industry seem to be set stoically and without worry on preparing for a return to normal. In this case, however, the word “normal” itself is a question mark.

Maingreaud says the question of when things might return is a difficult one to answer. “Some countries are having a more difficult time controlling the outbreak,” he says. “The answer, however, lies in the question. The situation is different depending on the country and the region, but everything is interconnected.

As an example, the recent measures put in place in Singapore because of the situation in Europe and in the US. We hear some positive news coming from China and we should wait and see whether the sign of the start of at least a partial recovery can be confirmed. The impact on the whole aviation ecosystem is particularly tough, and its capacity to recover will be key. Support from governments and international bodies will have a significant impact on the pace of recovery.”

40 ASIA DUTY FREE & TRAVEL RETAILING MAY 2020

TFWA’s new structure and format for TFWA World Exhibition & Conference TFWA shared revisions made to the pricing, format and structure of the TFWA World Exhibition & Conference.

• Per square meter rental charges to exhibitors will be decreased by 30% • Registration will be free for all delegates, whatever their sector of business • The full programme will be reviewed and will be more business-focused • Hotel rates will be significantly reduced; full details to follow shortly • Rates for other services are under review This crisis is undoubtedly the most severe our industry has ever faced, and we know that 2020 will prove an exceptionally tough year for all our members and partners. The steps we are taking are designed to help our exhibitors and visitors, and to ensure we can provide the event our industry needs to recover and regroup,” said Maingreaud.

Part of an ecosystem

This reality is a good reminder of the importance of regional associations, who work tirelessly on the travel retail industry’s behalf to help ensure they are not forgotten by governments who may provide aid to the aviation industry. “It is a clear fact that many airports, in particular, would find it difficult to survive without the commercial revenues to which our industry makes a very significant contribution,” says Maingreaud. “Governments and relevant authorities must understand the value our industry brings to the travel ecosystem. Without a thriving duty free & travel retail industry, it will be very difficult — perhaps impossible — for the aviation and maritime industries to fully recover.”

Of course, the travel retail industry does not exist in a realm beyond humanity. In addition to concerns about the virus’ impact on short- and long-term business concerns, cash-onhand issues and potential for recovery are real human concerns about the health of stakeholders’ staff, their loved ones and themselves. Maingreaud suggests that for everyone the uncertainty about all of these issues is the most unsettling aspect of the crisis.

Helping others

The duty free and travel retail industry is well known for its efforts in helping and supporting those in need. Maingreaud would like to remind readers of the #OneWorldOneTR initiative. “At such a challenging time, when our trade and national news channels are reporting very gloomy news, this campaign is enabling us to share good news stories about the programs and activities that have been going on around our business to mitigate some of the negative effects of the health crisis. We, as an industry, are not renowned for sitting back and doing nothing when the going gets tough, and it’s very gratifying to see so many imaginative schemes to help staff, commercial partners and the communities we serve.”

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India

India Round-Up

interrupted Since the south Asian nation joined the long list of countries imposing lockdown measures, businesses there look for a strategy to move forward as India’s burgeoning US$2.9 trillion economy comes to a halt

by JAS RYAT

A

s global economists continue to discuss whether the impact of COVID-19 will be short lived or long lasting, one certainty is the crippling effects the virus has had on the travel sector. India, like many countries, enforced a ban on international flights, creating a domino effect on the travel retail industry and all channels associated with it.

What will this mean for the rising affluent Indian population that travels abroad for leisure or business? Can India’s travel sector recover from this blow, and if so, what will it take?

Exactly one year ago today, Sri Lankan duty free operator Flemingo Duty Free was raising awareness of tourism in the country following the Easter Sunday bombings, which killed more than 300 people in April 2019. One year later, the duty free operator faces another challenge as it assesses the impact COVID-19 will have on its business.

Chennai International Airport Flemingo departures store shows how travelers are the oxygen to airport sustainability v

42 ASIA DUTY FREE & TRAVEL RETAILING MAY 2020

What will inbound and outbound traffic look like for India post COVID-19?

Asia Duty Free spoke to Flemingo’s CEO, PK Thimmayya, to get his input on how India’s travel ban has affected business.

Thimmayya expressed thoughts that naturally everyone’s mood is apprehensive, although they are closely observing and trying to understand the impact of the pandemic as it evolves.

“The travel retail business has come to a standstill in the Indian subcontinent. As of now, The Government of India has extended the lockdown until the 3rd of May. In Sri Lanka, the national carrier, Sri Lankan Airlines, has temporarily suspended its operations. We are hopeful of a start by early May,” says Thimmayya.

At this time, Flemingo finds it difficult to commit to any revenue prognosis as the situation is constantly evolving and revenue generation is directly correlated to the length of the lockdown.

“In the current environment, making any estimate until a few months have passed might not be practical. We will have to wait out a few months to understand passenger movement and also build customer and passenger confidence before making any business assumptions,” states Thimmayya.

Moving forward on the other hand will also depend on the global situation after travel bans are lifted.

YOUR CO-PILOT IN CONFECTIONERY

India Round-Up

Says Thimmayya: “It is very important for the airlines to survive the crisis. The most important aspect of the business is to build passenger confidence and to provide an atmosphere conducive for shopping. The entire customer experience will need to be revisited and new ways of working and interacting will have to be evolved.”

No time for a cat nap

The duty free industry is lucky to know India’s tiger whisperer himself, Founder of Wild Tiger Rum Gautom Menon, now approaching the one-year anniversary of his epic Roar Trip. Last year marked his journey of a lifetime from Kerala in the south of India to Cannes, France across 25 countries in 65 days, to spread awareness and raise funds for tiger conservation.

So far 2020 has not proven to be business as usual for Wild Tiger Beverages, and so the company has responded by growing its portfolio offerings. “This situation has been a jolt for us at Wild Tiger Beverages, because over 70% of our business is duty free related, which has now come to a halt. This year has been quite flat for business, but we are using the time to develop new premium line extensions and also broaden our spirits portfolio,” says Menon. “I’m personally devoting more time to building the business in other Indian states and duty paid markets internationally, particularly in Europe and LATAM. I’m hoping to see the resilient side of the duty free industry, which I have read much about in recent years. This crisis is nothing like we’ve ever seen.”

Menon continues, “India by and large has handled the pandemic well, to keep it in check, and has received much praise from WHO. I find it bizarre reading comparisons of this with 9/11. To put it simply, 911 changed the way we fly; COVID-19 will change the way we live. For travel retail to thrive again we need to embrace the three C’s: Calibrate, Communicate and Collaborate.”

He adds, “We are particularly worried as this situation delays the launch of our much-anticipated Gindia Craft Gin, for which we secured numerous listings and pre-orders. Most of this has now been deferred.”

Founder of Wild Tiger Rum Gautom Menon models custom cat PPE

44 ASIA DUTY FREE & TRAVEL RETAILING MAY 2020

Wild Tiger Gold Ginger Liqueur is one of many innovations under the Wild Tiger umbrella

What comes next

An expert committee headed by former Chief Secretary KM Abraham in the southern state of Kerala has recommended a phased relaxation of the lockdown to contain COVID-19 for areas outside the seven hotspot districts in the state.

Across the country, the Indian government has taken actions to legally enforce lockdown in order to slow the spread of the COVID-19. This may have a devastating affect on smaller businesses as they struggle to survive.

“At times like these, new brands and suppliers face the brunt as operators and buyers are more than likely to fall back on best sellers from the big suppliers. New listings are unlikely to be on their minds. We hope operators in our industry will recognize innovation and passion brought to life by smaller suppliers and embrace it where they can,” says Menon.

“We at Wild Tiger Beverages are being prudent with our time and resources. We are working closely with our design team and master blenders to curate new extensions and diversify our spirits portfolio.”

At this time, there have been no active layoffs in the Wild Tiger workforce in Kerala.

Menon underscores the brands he represents come from years of ideation and prototyping, which have now been fast-tracked for development. Each brand has an authentic relatable story behind it and a distinctive process. Once the situation returns to normalcy, he is gearing up to roar ahead.

Will this cat land on all four feet post-lockdown? Menon is sure of it. “I guess we will call this recovery ‘Roar Trip Part 2.’”

As for Flemingo Duty Free, Thimmayya is optimistic that business will start ramping up by end of the third quarter, dependent on high revenue sectors being operational without any travel ban.

Tasa Meng Plans Ahead

P R E PA R I N G F O R THE FUTURE Taiwan’s Tasa Meng travel retailer is taking advantage of the unfortunate global slowdown to complete planned renovations ahead of schedule, continuing to serve its customers and partner with suppliers in times of need

by HIBAH NOOR

Taoyuan City Mayor Cheng Wen-tsang and airport authority management show their support to duty free staff at Taoyuan International Airport

46 ASIA DUTY FREE & TRAVEL RETAILING MAY 2020

Hand sanitizer is encouraged for all customers at Tasa Meng, and staff will gladly provide it

Among other steps taken to ensure health and safety for staff and customers, staff are given a daily temperature check

B

y all accounts, Taiwan’s response to the COVID-19 outbreak has been held up as the model for the world to follow, but despite the superior job the country has done controlling the outbreak, the airport and thus airport retail have had to contend with the global reality of the pandemic: closed borders around the world and an immensely reduced number of international flights, as most have been cancelled. Many countries have stopped all commercial passenger travel, and numerous airports the world over have been closed.

Taiwan’s airports have remained open during this time, as have Tasa Meng’s shops at the country’s two main international airports. “So far our duty free shops remain open at Taiwan Taoyuan and Kaohsiung International Airports. But the number of international travellers continues to drop, and has now reached a historical low level,” says Gary Chau, General Manager of Tasa Meng.

Rising to challenges

While these direct travel effects have had by far the most impact on Tasa Meng’s drop in business, the situation has created secondary effects as well. These effects include increased labor costs due to the travel ban and general health crisis. “The labor cost of fit-out employees is high; many workers are unable to leave China and others are reluctant to work at an airport as they are afraid of exposure to COVID-19,” Chau says. Despite these challenges, while many companies have been forced to cut their work force, this has not been the case with Tasa Meng.

The company has made a point of working hand in hand with local small and medium-sized suppliers to assist them in clearing their inventory, a decision that will help all to survive, with an emphasis on food suppliers. “This strengthens our partnerships through this long and difficult period,” says Chau.

www.dutyfreemag.com ASIA DUTY FREE & TRAVEL RETAILING

47

Tasa Meng Plans Ahead

Renovations moving ahead

The company is taking advantage of the slowdown to complete some planned renovations. “We are speeding up the renovations during this difficult period,” says Chau. “Having fewer travellers means less interruption in the airport.”

While on one hand the slowdown makes circumstances optimal for construction, regulations and shutdowns have also brought about unforeseen difficulties, including higher costs.

Shop fixtures are more expensive because the factories in China and Italy have closed down. Logistics costs to get shop fixtures and fitting material such as marble have gone up because there are fewer vessels and flight cargo shipments, and the costs of the shipments available by plane have gone up, because items must be found further afield. “Additionally, the travel ban and 14-day quarantine also affect our designer, contractor and quality control team, making them unable to inspect the installations,” says Chau.

The public areas are consistently kept clean by customer service staff

New shops and brands

When the world begins travelling again, Tasa Meng will be ready for business, with improvements to its Fragrance and Cosmetics area, in addition to Fashion, Liquor and Tobacco.

“Currently we are building the structure for the new Fragrances and Cosmetics area and a new Cartier boutique. These are located right in front of immigration,” says Chau. “In addition, we are building the structure for the first Burberry boutique using the latest design concept in Taiwan, which will be implemented in the terminal ahead of the domestic market. New Bulgari and Omega boutiques are also in the pipeline, along with a new luxury fashion boutique featuring the likes of Prada, Fendi, Loewe, Ferragamo, Valentino and Versace.” Tasa Meng will also be offering new brands such as Chloe, Tod, Hogan, Marc Jacobs and Moschino at the Gate D wing area.

The company has already completed the renovations on three of its Liquor & Tobacco shops, and is planning to expand its main Liquor & Tobacco shop during the third quarter of this year.

Tasa Meng has already completed the renovations on three of its Liquor & Tobacco shops, and is planning to expand its main Liquor & Tobacco shop during the third quarter of this year

Relief in sight

During this unprecedented time, one might expect that airport retailers would have a difficult time meeting rent requirements.

Tasa Meng has seen some support in this regard. Taiwan’s International Airport Business Development Association was established in 2019 as a group of stakeholders operating in Taiwan Taoyuan International Airport. These stakeholders include individuals, airlines, duty free operators, F&B operators and logistics companies. Tasa Meng Chairman Miss Nancy Ku is the elected President. “We are fortunate that the International Airport Business Development Association has helped us to liaise with the Airport Authority and our government to support us,” says Chau. “Recently, the Airport Authority granted duty free operators the opportunity to defer payment for a few months.”

Future possibilities

Chau sees two possible scenarios for business in the months ahead. He says the hope is that a successful vaccine will be discovered by June, resulting in an opening of the skies with air traffic beginning to pick up in July. The worst-case scenario would be that no vaccine is found with at least 30% effectiveness. If this should be the case, Chau believes traffic will resume in January 2021.

“If the vaccine is developed quickly, we will see business start to pick up from Q3 of this year,” he says. “If no vaccine is found, then the overall air traffic will begin in January 2021. I believe everyone will have to learn to live with the situation, wearing face masks and other protection clothing during air travel.”

48 ASIA DUTY FREE & TRAVEL RETAILING MAY 2020

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Guest Writer

A LETTER PENNED FROM

Italy

by SANDRO BOTTEGA

Bottega President and Managing Director, Sandro Bottega, walks Asia Duty Free through the nationwide lockdown Italy endured, along with the rest of the world, during the COVD19 pandemic. A passionate Italian at heart, he assures, “we will return to our lifestyle before. It will just make us appreciate everything more.”

T Bottega President and Managing Director, Sandro Bottega looks to forward to an optimistic future

50 ASIA DUTY FREE & TRAVEL RETAILING MAY 2020

he Covid-19 pandemic is the hardest experience that the last three generations have experienced in their lives. We feel like we are in prison, without having committed any crime.

Italy has been severely affected by the virus. The Northern regions of the country registered an incredible number of deaths. The hospitals are in serious difficulties, despite the commitment of our heroic medical and paramedical staff. At the moment Bottega Company has continued the production normally, but we are worried about the future.

If the whole on trade closes or is going to close, a hard crisis will surely follow. Restaurants, clubs, bars and cocktail bars are heavily suffering in these days. Some of them will not have the opportunity to reopen after this difficult period. I hope that in our sector, after a transition and an adjustment, the consumption will come back to the normal. Taking the obvious precautions, we should return to the lifestyle of before. It will make us appreciate everything more and more.

Regarding the emergency I think all the states have moved quickly and precisely, I don't think anyone could have done better. The Italian government adopted the nationwide lockdown. There was no choice. Strict measures have been taken in

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 Contents

The streets of Italy now lay barren due to government imposed quarantine

Bottega looks to sparkling wine for category growth

52 ASIA DUTY FREE & TRAVEL RETAILING MAY 2020

accordance with the World Health Organization. It was not was not easy to declare an emergency and in a short time. After a week or 15 days also the other main European countries, followed by the US, adopted the same measures as the Italian government did before.

Bottega Company dedicates every commitment to conscientiously follow the directives of the Italian Government and the World Health Organization for the protection of its workers.

In this context, the production continues regularly thanks to the goodwill of everyone. We would like to emphasize that in the food and beverage sector the Italian legislation is by far the most rigorous. The quality and health checks of the products are carried out by public authorities. We have a production system made up of medium and medium-small dimensions, which maintains an artisan relationship with the product in compliance with strict hygiene rules.

About the future I think that all over the world there will be a desire for redemption. China and Asia, which are exiting the pandemic first, will lead this recovery already in the second half of 2020. The rest of the world will gradually pick up again at the end of the year and in 2021.

The sparkling wine category will continue to drive the whole wine category also in the next future. People like to drink sparkling. The producers have to maintain and, where possible, to improve the quality. At the same time new recipes of cocktails and long drinks, prepared with sparkling wines, will help to maintain the popularity of the category. But not only, can we find more consumption opportunities, mainly during the whole meal.

Regarding Bottega I believe we have always been a company in constant evolution, which influences some market trends. We are not better than the others, but we are very daring, we always propose some innovation.

In these difficult times I suggest to other family owned companies, as ours, to hold on and believe in their values that have allowed the development. Only in this way they will be able to maintain their identity and remain on the market.

As long as we’re apart, we’re in this together.

For your passion, your hard work, your support, and your spirit.

Here’s to you.

The original Mockingbird Distillery shack in Austin, Texas, 2018 The Shack is the first building at the Mockingbird Distillery, and where the whole thing started. For a long time it housed all of the vodka operations before we outgrew the 998 square foot structure. We’re still making vodka on the same land we started and Tito’s office is still at the Shack today.

GIVING BACK

Illva Saronno Donates 100,000 hand sanitizer pocket packs to non-profit Banco Farmaceutico Foundation Illva Saronno Holding has joined the army of alcohol companies to support COVID-19 relief. The company has decided to convert part of its production to make antibacterial gel.

100,000 small bottles 50 ml of the Disaronno brand have been transformed into hand sanitizer pocket packs and donated to the non-profit Banco Farmaceutico Foundation.

Together, they will distribute them to ten charity organizations that, throughout Italy, offer treatment and medication to poor people. This will include Caritas of Rome, Milan, Florence and Palermo, Opera San Francesco for the poor (Milan), Fondazione Progetto Arca (Milan), Fratelli San Francesco (Milan), Centro Astalli of Rome and Palermo, Banco Farmaceutico Cosenza. They will also be distributed to the Municipality of Saronno, neighboring municipalities and to Illva Saronno employees.

The charity organizations will distribute the hand sanitizer pocket packs to those who cannot afford to buy basic necessities: Due to the absence of people losing work, they are experiencing the deepest need; on the other, people who were already in a state of poverty and that, the health

emergency, which is already an economic emergency, will lead into a condition of further poverty.

Aldino Marzorati, Chief Executive Officer of Illva Saronno Holding , says: “Illva Saronno's know-how is absolutely compatible with the needs of this moment of crisis: for us, it is therefore a duty and a pleasure to make available our production plants to cope with this terrible moment and support those who need it most. Banco Farmaceutico is the right partner to make our contribution concrete, to be able to actively support people who, in this moment of extreme difficulty, are forced to give up to an asset like this, necessary for their health prevention".

Rituals shows gratitude by donating 200,000 goodie bags to Holland hospitals Dutch lifestyle brand Rituals is donating 200,000 goodie bags to Holland’s hospitals to show support during the COVID-19 Pandemic.

Last week, employees at Rituals’ HQ in Central Amsterdam volunteered to pack the goodie bags which contain products to wash and soothe tired, dry hands: The Ritual of Cha Do Foaming Shower Gel and Ultimate 4 x Hand Care Collection set.

This initiative would not be possible without the cooperation of Rituals’ partners – Total Packaging, Mainfreight, Dachser, Koolhaas Concepts & Decor, Huis vol Smaak, Hutten Catering, Fraai Projecten and Boozed Decor.

This gesture will bring a moment of positivity to those on the frontline during this unprecedented time.

Rituals CEO Raymond Cloosterman said: “Well-being is at the heart of our brand, which revolves around turning everyday routines into more meaningful moments. Over the coming weeks, this becomes more important than ever as we face this unprecedented situation.

“When we cannot actually be together, nothing beats the wonderful feeling of working together on something good for someone else, however small it may be. Rituals is immensely grateful to all the brave men and women working at the hospitals right now, risking their health and safety for the well-being of our entire community.” #hospitalheroes #realheroes #WEREALLINTHISTOGETHER

54 ASIA DUTY FREE & TRAVEL RETAILING MAY 2020

GIVING BACK

Brown-Forman announces US$1 million in COVID-19 relief US based Brown Forman Corporation recently announced a donation of US$1 million to COVID-19 response funds. The donation supports multiple locations and agencies as BrownForman assesses community and industry needs and identifies the best ways to support those impacted by COVID-19.

“As COVID-19 has spread throughout the world, we want to provide assistance to our communities in this time of great need,” said Lawson Whiting, Chief Executive Officer, Brown Forman Corporation. “We are announcing today donations totalling US$1 million that will enable us to give back to the people and communities that mean so much to our company.”

Initial contributions included in the US$1 million dollar gift include the Restaurant Workers Community Foundation, the overall hospitality industry including the United States Bartenders Guild, and a contribution to One Louisville – a COVID-19 response fund in the corporation’s hometown.

Brown-Forman officials also stated that they are actively exploring ways to expand its reach and contributions internationally noting that the company currently has employees in over 170 countries around the world.

Marshall Farrer, Senior Vice President and Managing Director of Brown-Forman Travel Retail and Developed Asia Pacific Regions added that while this is a trying time for the spirits industry and the travel retail channel, both have overcome serious challenges in the past.

“We are currently assessing the impact of COVID-19 alongside our vital customers and unfortunately projecting monumental negative impacts to the entire travel retail channel. Our first and foremost priority, however, is the health and well-being of our employees, our partners and the traveling public,” said Farrer.

Farrer noted that Brown-Forman has enacted its global crisis management and pandemic teams and that he and his senior staff are continually communicating with and providing support and updates to travel retail team-members.

“In keeping with the guidelines of government officials, health experts and company policy, the Brown-Forman travel retail team has shifted to remote working arrangements and has been granted increased flexibility and support to do their jobs while looking out for the safety of their families and loved ones,” he added.

Farrer also noted that the Jack Daniel Distillery in Tennessee and the Brown-Forman Distillery in Kentucky as well as the Herradura Distillery in Amatitan, Mexico, and Canadian Mist Distillery in Collingwood, Canada have begun producing and packaging hand sanitizer to help reduce the spread of Covid-19.

Distell to produce sanitzer in a bid to support those in need Africa's spirit, wine and cider giant, Distell, has come forward to produce hand sanitizers and other hygienic products at its production facilities as part of its efforts to help curb the spread of the COVID-19 pandemic.

“Our priority as Distell – right now and always – is the safety and well-being of our employees, our stakeholders and society at large. We are determined to support our government in its bid to halt the current rapid spread of COVID19 and in the absence of a vaccine, good hygiene remains one of the most effective options to do so,” says Richard Rushton, Distell Group CEO. As a result, the company has committed 100 000 litres of alcohol, which will be used to produce sanitizers as well as a variety of other hygienic and sanitizing products.

The sanitizers will be distributed free to vulnerable communities across South Africa as a way to encourage good hygiene practices. The company will work closely with government to identify these communities, and support the roll-out of the sanitizers.

The company said it recognized there was an acute shortage of pure alcohol to produce hand and surface sanitizers in hospitals and households.

“We fully understand that our position as a leading player in the alcoholic beverages industry comes with a societal obligation. We want communities to benefit from our presence and we are determined to rise to the challenge,” said Rushton.

The company has taken further measures to ensure it supports the government-sanctioned lock-down by cancelling all events, closing all its experiential and product tasting facilities until further notice and ensuring that all employees who are not involved in the production of alcohol work from home. All company-sponsored travel has been halted.

Additionally, Distell is empowering its employees with relevant information on personal hygiene and has made sanitizers available to all employees at its sites across the world.

www.dutyfreemag.com ASIA DUTY FREE & TRAVEL RETAILING

55

GIVING BACK

Nestlé s joins forces with the International Federation of the Red Cross and Red Crescent Societies to address COVID-19 response Nestlé is assuring its customers and consumers that it will continue to produce and deliver products to meet global demand. The team is committed and working to ensure that supply is maintained in a safe manner. The company released the following statement: "We are offering free meals and transport for staff to help reduce the risk they fall ill. In addition, we have put in place generous sick leave arrangements for those who contract the virus and will provide cash loans or advances for those in financial distress. All hourly and salaried staff affected by temporary stoppages will be paid in full for a minimum of twelve weeks Since the very beginning of this crisis, our people have led substantial local relief efforts in the communities around the globe where we operate. We have provided support to charities, medical institutions and other organizations in the frontline of the fight against this pandemic. We have worked very closely with physicians to develop new tailored COVID-19 medical nutrition and supplement treatment protocols. We have also donated to food banks and food delivery organizations to support people in need. And we are providing prompt and pragmatic support to our business partners, for example in our supply chains, who are affected by this crisis. Our efforts are continuing - and stepping up around the world."

Partnership with the International Federation of the Red Cross and Red Crescent Societies (IFRC) Nestlé also announced its partnership with the IFRC in response to its emergency appeal. The IFRC is a strong and trusted global partner of Nestlé, with expertise in providing first aid, emergency response and epidemic control. The Red Cross and Nestlé were both established over a century ago.

All partners have Swiss roots and are present in almost every country in the world. As part of the emergency response, the IFRC is providing immediate help to strengthen health care systems, where the need is greatest.

Initially, they will work together in four ways to provide urgent help for emergency services and caregivers and strengthen healthcare systems by donating food, medical nutrition products and bottled water to bring relief to those most affected by the pandemic, deploying available logistics capacities from its out-of-home business to support the needs of the IFRC in various countries, donating CHF 10 million for immediate deployment in countries where it is most needed and finally, matching 1:1 any donations to the Red Cross and Red Crescent National Societies or Federation made by our employees.

56 ASIA DUTY FREE & TRAVEL RETAILING MAY 2020

Amber Beverage Group starts production of VIRUDES sanitizer Amber Beverage Group (ABG, a Com belonging to SPI Group), has joined the fight against COVID-19, as it announced the production of hand sanitizer, VIRUDES, from its Latvijas balzams factory in Riga, Latvia. The production started last week to support the current shortage of disinfectants in the Baltic States, Latvia, Estonia, and Lithuania.

"ABG has created a hand sanitizer based on the World Health Organisation’s recommended formula. It is alcoholbased and will be available in 4-litre volumes, which can then be transferred into smaller containers. The product’s name, VIRUDES, combines both 'virus' and 'disinfection'. The hand sanitizer will be in a gel form rather than a liquid and the disinfectant will contain 70% alcohol," shares JP Aucher, Global DF/TR Director of Stoli.

Amber Beverage Group will be making the product available to major retail chains and also plans to produce enough to supply hospitals and other institutions where hand sanitizer supplies are low.

The Latvijas balzams factory produces key brands including Stolichnaya vodka, elit vodka, Riga Black Balsam, Moskovskaya Vodka. #OneWorldOneTR

COVID-19 Update

Reliefmeasures ACI World Director General Angela Gittens

ACI WORLD RELEASES POLICY BRIEF PROPOSING IMMEDIATE RESPONSES TO LAY GROUNDWORK FOR INDUSTRY RECOVERY

As

the COVID-19 pandemic has caused the cessation of flights and closures of airports the world over, the impact on the airport sector has been devastating. In 2020, passenger traffic is expected to decline close to 40% and revenue is expected to fall by US$77 billion year on year.

Airports are essential to the transport of goods and people, and despite the current decrease in passenger travel this importance has not ceased.

Airports Council International (ACI) World, which has been working with governments on behalf of airports to realize crucial aid during this time, has now published a policy brief outlining a road map for the airport industry’s recovery.

The brief, called COVID-19: Relief Measures to Ensure the Survival of the Airport Industry, ACI outlines the following six focused policy responses that need to be implemented to ensure that the airport industry can be sustained through the crisis, and to lay the foundation for recovery.

1. Protection of airport charges and revenues: Airports need to continue to function and provide basic services.

Of concern is that alleviation of these fees through suspension or blanket discounts will hamper current operations.

2. Tax relief: Immediate tax relief will help give airports enough breathing room to continue operations and safeguard jobs.

3. Concession fee waiver: Airport rents and concession fees should be waived or postponed for a defined period 4. Temporary suspension of slot usage requirements: Airport slot usage requirements in this current situation are unreasonable and untenable. ACI requests their suspension at global level, until 30 June 2020 with a reassessment of the situation based on data-driven evidence to follow.

5. Continuity of air cargo operations: Air cargo operations continue as essential goods are transported around the world. Airports should thus continue levying charges on air cargo operations in order to maintain essential airside and cargo facilities.

6. Comprehensive financial relief: ACI requests financial aid including wage subsidy, in order to allow continued operations and prepare for a rapid return to full operations. Non-discriminatory financial relief in the form of grants and subsidies, secured financing, loans at preferential rates, and bank guarantees should be made available to all.

“Airports are important engines of economic growth, wealth creation and employment and the COVID-19 pandemic’s effect on the industry and broader economy has halted the airport industry at global level,” ACI World Director General Angela Gittens said. “Passenger traffic has collapsed but many airports are open for some scheduled operations, humanitarian and repatriation flights, and cargo operations and these activities continue to induce costs for airports.

“The millions of jobs provided by airport operators must be preserved and essential operation must be sustained in the most effective way to allow for these crucial operations to continue and for the foundation to be laid for a rapid recovery.

“The relief measures that have been put forward will ensure that financial assistance does not benefit one part of the industry over another in the aviation ecosystem so that a balanced, global recovery can be created.”

The Policy Brief COVID-19: Relief Measures to Ensure the Survival of the Airport Industry is available free of charge on the ACI World website. www.dutyfreemag.com ASIA DUTY FREE & TRAVEL RETAILING

57

 Work From Home

#

H T N I E WEAR

R E H T E ISTOG

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Row Holland, Essential Communications Managing Director Isolating in UK

Candelaria PourtalĂŠ, Global Brand Manager/ Travel Blue Group Eyewear Isolating in Argentina

Pieta Jordan , Treasury Wine Estates Global Marketing Manager Isolating in Singapore

Anthony Budd, Diverse Flavours Managing Director Isolating in South Africa

Juan Miguel Cabrera, Head of Travel Retail and Duty Free at Loacker Isolating in Canary Islands

Luke Maga, Managing Director Global Travel Retail, Distell Limited Isolating in UK

Pia Kautz, Senior Brand Communications Manager at SKROSS Isolating in Switzerland

Aisling Walsh, Marketing Director, Butlers Chocolates Isolating in Dublin, Ireland 58 ASIA DUTY FREE & TRAVEL RETAILING MAY 2020

TASA MENG DUTY FREE SHOP

Today we express our heartfelt thanks to our colleagues, friends and partners for their support during this challenging period.

Together we look beyond the horizon to see a safer world.

臺灣桃園國 臺灣桃 園國際機場 際機場第 第二航廈 航廈D區 D區 TAIWAN TAOYUAN INTERNATIONAL AIRPORT TERMINAL 2 D Zone

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DUTY FREE & TRAVEL RETAILING MAGAZINE PRESENTS:

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W S’ A E CHOIC

WHO CAN VOTE?

Our readers will have the chance to vote online for their favorite suppliers and retailers in six different categories.

Winners and runners-up will be announced in September 2020.

CATEGORIES

Readers will vote for the best company in six different categories for each of the three regions: the Americas; Middle East and Africa; and Asia.

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Best #strongertogether initiative, helping others through the crisis Best Marketing During Adversity (COVID-19) Initiative Best Travel Retail Exclusive Best Product Under US$100

KEY DATES

DON’T FORGET:

April 30, 2020 - Entry deadline September 2020 – Winners announced

Your input can help shape the future of the industry by recognizing the best and brightest in the business – and if your company falls into one of these categories, encourage your colleagues to vote too.

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