Asia TFWA/APTRA China 2015 by Paramount Publishing Ltd.

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TFWA/APTRA CHINA 2015

DUTYFREEMAGAZINE.CA MARCH 2015 · TFWA/APTRA CHINA · VOL 19 · NO 1

Paul & Shark President & CEO Andrea Dini shares his vision on luxury brands in China p. 62

DF industry hits US$60bn p. 16 Year of the Chinese shopper p. 20 Heinemann makes waves p. 40

LETTER FROM THE EDITOR

Shopping and

Chinoiseries

xcitement and anticipation are in the air as the travel retail industry prepares to gather at the bi-annual TFWA China’s Century Conference in March in Shanghai. The first installment of the event in 2013 was an amazing event, superbly organized by TFWA and one of the best industry conferences ever staged, according to many attendees. The latest figures for China’s travel retail market, compiled by industry analyst Generation Research, make equally exciting reading. As global travel retail and duty free sales reached US$60 billion in 2013, China was the number two country in US Dollar sales, with 7% market share and an impressive 23.5% rise in value terms compared to 2012. Overall, Asia and Oceania took the largest share of sales with 37.2%, narrowly beating Europe at 33.6%. Also in this issue, i2i Group China CEO Alexander Glos, an expert on the Chinese travel market, tells Asia Duty Free he believes 2015 will be a record-breaking year for Chinese tourism despite the slowdown. Even though China’s economy slowed in 2014, growth remains in excess of 3% and affluent Chinese travelers continue to grow their disposable income, impacting forecasts for 2015 of a 10%-15% increase in shopping spend. He indicates that one of the biggest impacts in 2015 will be the growth in visafree access for Chinese travelers and more liberal visa rules. Tourists from second tier cities in China are growing in importance too as airlines develop new routes. Furthermore, the rise of the cruise line sector in China is set to spark further interest in travel shopping. The average Chinese traveler is already spending in excess of US$3,800 per person on shopping, either duty free or in-destination shopping, and that figure looks set to grow. Looking at the wider Asia Pacific region, preliminary figures for the full calendar year 2014 released by the Association of Asia Pacific Airlines showed healthy growth in international air passenger demand. A total of 256.1 million international passengers flew on the region’s carriers in 2014, representing an annual upswing of 4.8% from the previous year. Sustained growth in Asian regional economies, and the stronger US market, helped underpin business and leisure travel demand. As the industry gathers in Shanghai to debate developments in China, there will certainly be a buzz around travel retail’s star performing airport, Seoul Incheon, where local Korean companies Lotte, Shilla, Shinsegae and Charmzone triumphed in the airport authority’s recent duty free tender. Some 35% of customers at Incheon are Chinese, and nearly 80% of transiting Chinese travelers spend more than US$500 per person in the duty free shops, even though they are not spending any time in Korea, i2i’s Glos notes. TFWA promises a themed evening of flamboyant East-meets-West “Chinoiseries” at the DFS-sponsored gala dinner during the Shanghai event, and we hope you enjoy reading about this vibrant—and seemingly ever-growing—market in this issue. Kindest Regards,

Hibah Noor Editor-in-Chief hibah@dutyfreemagazine.ca 4

ASIA DUTY FREE & TRAVEL RETAILING TFWA/APTRA CHINA 2015

MARCH 2015 · TFWA /APTRA CHINA· VOL 19 · NO 1

Asia Duty Free & Travel Retailing (ISSN 1360-9548) is published by Global Marketing Company Ltd. 26 Pearl Street, Mississauga Ontario L5M 1X2 Canada. It is distributed in the following countries, states, regions and territories on the Asian continent and in the Pacific Rim: Australia, Bangladesh, Bhutan, Brunei, Cambodia, China, Fiji, French Polynesia, Guam, Hawaii, Hong Kong, India, Indonesia, Japan, Macao, Malaysia, Maldives Islands, Myanmar, Nepal, New Caledonia, New Guinea, New Zealand, Philippines, Saipan, Samoa, Singapore, South Korea, Sri Lanka, Taiwan, Thailand, Tonga, Vanuatu and Vietnam. The views expressed in this magazine do not necessarily reflect the views and opinions of the publisher or editor. March 2015, Vol 19, No.1. All rights reserved. Nothing may be reprinted in whole or in part without written permission from the publisher. ©2015 Asia Duty Free & Travel Retailing.

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

PUBLISHER Aijaz Khan aijaz@globalmarketingcom.ca EDITORIAL DEPARTMENT EDITOR-IN-CHIEF Hibah Noor hibah@dutyfreemagazine.ca EDITOR Wendy Morley wendy@dutyfreemagazine.ca ASSOCIATE EDITOR Ryan White ryan@globalmarketingcom.ca OVERSEAS CORRESPONDENT Claire Malcolm claire@dutyfreemagazine.ca ART DIRECTOR Jessica Hearn jessica@globalmarketingcom.ca LAYOUT Sarit Scheer sarit.scheer@gmail.com

ADVERTISING SALES ADVERTISING & MARKETING EXECUTIVE Jacqueline Hammill jacqueline@dutyfreemagazine.ca CIRCULATION & SUBSCRIPTION MANAGER accounts@globalmarketingcom.ca

LETTER FROM THE EDITOR

中国旅游购物风今年三月，旅游零售商们齐聚上海，满怀期待与兴奋，共同参加一年两次的TFWA“中国的世纪”峰会。TFWA在2013年举办的首届峰会广受与会者好评，被赞誉为“有史以来最好的行业峰会” 。旅游业数据专业公司Generation Research发布的最新中国旅游零售业数据同样令人欣喜。2013年，全球旅游零售和免税销售收入达到600亿美元，中国的销售额相较2012年增长了高达23.5%，占有市场份额的7%，居于全球第二位。整体而言，亚洲和大洋洲占比最高，为37.2%，欧洲次之，为33.6%。中国旅游市场专家爱戴爱集团中国总裁亚历山大•格罗斯告诉《亚洲免税杂志》，说虽然中国人海外旅游增势放缓，但是2015年仍将成为破纪录之年。尽管2014年中国经济增速放缓，但是增长率仍然保持在3%以上。中国人的可支配收入继续增加，据此可以预测，2015年中国游客境外购物消费将增长10%-15%。他还指出，2015影响中国游客出境旅游的最大因素之一就是越来越多的国家给予中国游客免签证入境和更宽松的签证规则。随着航空公司们不断开辟通往中国二线城市的新航线，这些城市的居民越来越成为中国海外游客的主力军。而且，中国邮轮旅游业的兴起将进一步刺激海外旅游购物的需求。目前中国游客人均境外购物消费超过3800美元，要么在免税店购物，要么在目的地购物，而且这一数据还在持续增长。亚太航空公司协会于2014年公布的全年初步客流量显示，泛亚太地区的国际航空客运需求还在持续健康地增长。2014年，有2.561亿国际旅客选择搭乘该区域的航班，同比去年增长了4.8%。亚洲区域经济的持续增长和强劲的美国市场，不断刺激着商旅和休闲旅游的需求。当零售商们云集上海，共同探讨中国旅游零售业的未来发展时，行内的“业绩明星”首尔仁川机场必将成为热议的话题。就在最近刚举行的机场管理局的免税招标活动中，乐天、新罗、新世界和婵真这些韩国企业大获全胜。据格罗斯称，在韩国仁川，有35%的旅客来自中国，而他们中有将近80%的过境游客在免税店人均消费超过500美元，虽然他们并不是每次到韩国都要消费一番。在峰会期间，TFWA会举办一场由DFS赞助的主题晚宴，题为“中国风——华丽的东西方之遇”。中国的旅游零售业市场充满活力、蓬勃向上，我们真诚地希望本期的报道能为您带来阅读的乐趣。敬上

Hibah Noor 主编 www.dutyfreemagazine.ca

ASIA DUTY FREE & TRAVEL RETAILING TFWA/APTRA CHINA 2015

1935-2015 For 80 years, La vie est belle with Lanc么me Founded by the visionary and pioneer Armand Petitjean in 1935, Lanc么me is celebrating 80 years of beauty in 2015. An opportunity to celebrate the women who inspire the brand, from its customers to its ambassadresses, and to affirm all year long through a series of joyful initiatives that indeed, life is beautiful with Lanc么me.

What are 80 years? What does it mean to celebrate eight decades of beauty, scientific innovations, exceptional fragrances, skincare and makeup products, of joyful celebration of femininity that is always true to itself yet is ceaselessly being reinvented? This is the question that Lancôme wished to answer on the anniversary of its creation. Looking back in order to move forward even more successfully, for a House is first and foremost a story that inspires the future and shapes what lies ahead. Lancôme’s story began in 1935 with the vision of a man ahead of his time, Armand Petitjean: a beauty that is French, therefore free and – as a result – happy. Beauty that lightens and strengthens. The beauty of being oneself. Happy beauty. “Lancôme is an incredibly dynamic House that has been continuously reinventing itself for 80 years while upholding the values and vision of its founder Armand Petitjean,” states Françoise Lehmann, Lancôme International General Manager. During its almost 80 years of success, Lancôme has become the # 1 brand in the women selective cosmetics market by offering unique and complementary skin care, make-up and perfume in more than 130 countries with 20,000 beauty advisers in as many points of sale relaying a message of French excellence. Today more than ever, ultra-femininity, French excellence, joiede-vivre, happiness and beauty are at the very heart of Lancôme’s DNA. A spirit that asserts itself through one ambition which is that every woman who comes to Lancôme to be more beautiful leaves happier. Because Lancôme affirms that happiness is the most attractive form of beauty. Lancôme is a pioneering brand and visionary ahead of its time.

Armand Petitjean’s vision, which we have honoured for 80 years, is a powerful science that caters to women’s real desires… This makes the brand intrinsically modern and proves its avantgarde approach.” Life is beautiful in colour: the colours of the legendary L’Absolu Rouge lipstick or the Hypnôse eye palettes… Life is beautiful with fragrance, from Trésor’s leather-infused peachrose composition to the wonderfully tasty iris of La vie est belle, the heirs of a line of exceptional perfumes that have marked the history of femininity and won awards since the 1935 Brussels World’s Fair. Life is beautiful with delicious sensations, those provided by skincare at the cutting edge of scientific innovation, skincare products that have become must-haves, such as Advanced Génifique and Absolue l’Extrait. Life is beautiful like the exceptional know-how by which the House perpetuates a certain idea of French luxury. Last but not least, life is beautiful just like the Lancôme ambassadresses, who radiate a beauty that is confident, distinctive and always free. Women who leave their mark on their age, whether Isabella Rosselini, the original epitome of Lancôme femininity for generations of women up to the present day, or Penélope Cruz, Kate Winslet, Julia Roberts, Lupita Nyong’o, Lily Collins and Alma Jodorowsky, who allow the brand to shine around the world. Women who are accessible,

free, committed, who cultivate their happiness as a way of life, seriously yet lightheartedly, inspired and inspiring in equal measure. “All Lancôme muses are “beautiful people” states Françoise Lehmann. They are role models who embody something more powerful than superficial beauty. They represent young women who take action and do things, women who are not just pretty to look at. It is very important that young women, who are in the midst of building their identity, have role models who are not superficial figures. Our muses are exceptional women who, like Lancôme, believe that beauty should be celebrated and not dictated. They believe that happiness is the most seductive form of beauty and that every woman has the right to it. In this way, they are very inspiring for other women.” adds Françoise Lehmann. What could be more natural for the brand with the rose than to cultivate happiness? And what more fitting way to approach its birthday than as an invitation to savour the beauty of life to the full throughout a year filled with surprises? Beginning with an irresistibly imaginative film – a Lancôme first – revealed on 20 February 2015, the anniversary of the day on which the House was founded. (http://youtu.be/lpsgyRPFr4s) A summary of all that Lancôme is in a surrealist style with a thoroughly modern glamour. Joy already, in colour and movement. Another highlight is a coffee-table book of the kind that you will want

to keep and look at time and again, published by Editions du Regard and available in a selection of bookshops around the world as of March. A story of happiness, of course, written with an elegant pen by the French author Stéphane Guibourgé. The story of a House whose ambition has always been to offer women the freedom to flourish. The story, too, of the French woman, cultivating her happiness as a way of life, always standing out from the crowd without ever trying to, or artlessly, seemingly effortlessly, like the ultimate form of sophistication. An account in a lively, poetic style that also gives pride of place to images, continuing the spirit of the great artistic collaborations that have always characterised Lancôme, with the participation of illustrators David Downtown, Vahram Muratyan and Cécilia Carlstedt, among others, and photographers Charles Helleu, Nico, Alexi Lubomirski and Nick Knight, to name just a few. A book can also be discovered on Lancôme counters, which was launched on the birthday celebrations on 8 March to mark International Women’s Day, which the brand honours every year. They will also be showcasing all the major highlights of Lancôme’s 80 years, along with limited-edition sets of iconic products. In addition, the celebration will take digital form, with the first limited edition exclusive to the Lancôme website: three original colours of L’Absolu Rouge inspired by heritage shades, along with a participatory and creative platform where

Lancôme in the words of its ambassadresses Lancôme shop at Haitang Bay, Sanya Island in China. Copyright L’Oréal. Photographer: Rolento

Lancôme devotees will be able to have the floor, all the better to express their vision of the brand. To close the year, Lancôme will be offering two super-deluxe objects in homage to fine craftsmanship and its French artists who have worked alongside it since the beginning: a new interpretation of the lipstick “Les Jumelés” (1958), one of the jewels in the Lancôme collections, and a jewelled edition of the extremely precious La vie est belle L’Absolu de Parfum, a few drops of concentrated happiness nestled at the heart of a crystal smile. We will have come full circle: more than ever, life will be beautiful with Lancôme. Since 1935, today and for many years to come… Françoise Lehmann states : “With 80 years of history under its belt, Lancôme is probably one of the most respected brands. This makes it a reassuring brand and proves its seriousness and quality. To perpetuate the legend, we must make the brand a coveted brand, an endearing brand, a personal brand. The most well-loved brand of them all…” She concludes : “For this 80th anniversary, we wanted this celebration to be a moment of joy,” comments Françoise Lehmann,. “Because – for Lancôme – beauty goes hand in hand with happiness.” Something of a nod to La vie est belle, the name of an incredibly successful fragrance that has become the symbol of happy beauty, a brand signature.

“The Lancôme woman is graceful and timeless, a beautiful and empowered women.” Julia Roberts “When you look at the women who have represented Lancôme, their beauty penetrates to a deeper level, an emotional level, as opposed to just being about the façade.” Kate Winslet “Lancôme is like an homage to all women.” Penélope Cruz “Lancôme celebrates beauty of all backgrounds. Its ambassadors are all individual women whose beauty goes way beyond skin-deep.” Lupita Nyong’o “Lancôme is class, elegance, grace, but also beauty that comes from within.” Lily Collins “For me, Lancôme is synonymous with delicacy. It’s a brand that conveys a refined image. It also has a prestigious and very Parisian side.” Alma Jodorowsky “Lancôme talks to all women, its vision of femininity is elegant, not superficial, sensitive, generous. It goes straight to the heart of women…” Daria Werbowy

CONTENTS

What’s inside 40

FEATURES 16 Global TR & DF Statistics INDUSTRY SALES HIT US$60 BILLION IN 2013

40 Retailer News: Heinemann MAKING WAVES IN SINGAPORE

2013年旅游业销售收入达到600亿美元

46 Retailer News: Ever Rich Duty Free EVER RICH BETS ON PENGHU AND KINMEN ISLANDS FOR GROWTH

Global travel retail and duty free sales reached US$60 billion in 2013, according to the latest figures from industry data experts, Generation Research, Sweden 旅游业数据专业公司Generation Research发布的最新数据显示，2013年全球旅游零售和免税销售收入达到600亿美元。

20 Guest Writer: i2i Group – Chinese travelers 2015 WILL BE THE YEAR OF THE CHINESE SHOPPER – AGAIN

Alexander Glos, an expert on the Chinese travel market, believes 2015 will be a record-breaking year for Chinese tourism despite the slowdown

2015 —又一个中国购物者之年中国旅游市场专家亚历山大·格罗斯认为，虽然中国人海外旅游增势放缓，但是2015年仍将成为破纪录之年。

Heinemann Asia Pacific launches its third beach resort-themed ferry terminal outlet in Singapore to capitalise on the rising number of passengers

Taiwanese operator Ever Rich is working on a brand new hotel and duty free shopping complex on the Penghu islands, having recently celebrated the opening of a similar project on Kinmen

52 Beauty: Kiehl’s TRAVEL RETAIL PERFORMS BEAUTIFULLY FOR KIEHL’S

Kiehl’s is proving a hit with Chinese travelers thanks to a number of initiatives, says Adele Zhang, the cosmetics brand’s General Manager in Asia Pacific travel retail

30 Retailer News: The Nuance Group TAILORING TRAVEL RETAIL IN THE INFORMATION AGE

In-depth research into the consumer psyche and technology first mover advantage is helping The Nuance Group break the cultural code and drive business in Asia

信息时代的定制旅游零售业深入研究消费者心理和技术先发优势有助于纽安斯集团破解文化密码，推动在亚洲的业务

38 Retailer News: King Power DOING BUSINESS IN CHINA: THE INSIDER PERSPECTIVE

With 30 years’ hands-on experience in China, King Power Group has a unique take on the evolution of this intriguing market. Sunil Tuli, its Managing Director, shares his thoughts

REGULARS Brand buzz for Incheon Reaping the rewards of retail investment LS travel retail wins Auckland Airport contract APTRA sets out priorities for 2015 TFWA views 2015 with positive anticipation Editor’s Picks Sales sparkle for Toscow in China Hunting World’s China appeal

26 36 44 48 49 50 54 56

Sweetening confectionery 60 Guest writer: Catherine Bonelli 62 Philips takes smart beauty on the move 64 A new and growing demand 66 Liquor News 68 An American in China 70 Habanos in Havana 72 Tobacco News 74

â&#x20AC;&#x201A; GLOBAL TR & DF OVERVIEW

Industry sales hit

US$60 billion

in 2013

ASIA DUTY FREE & TRAVEL RETAILING TFWA/APTRA CHINA 2015

Global travel retail and duty free sales reached US$60 billion in 2013, according to the latest figures from industry data experts, Generation Research, Sweden

lobal travel retail and duty free sales reached US$60 billion in 2013, according to the latest figures from Generation Research, the industry data specialists based in Sweden. By product category, fragrances and cosmetics led the way with 28.8% of total sales (US$17.3 billion), followed by wines and spirits with 16.4% (US$9.9 billion), fashion and accessories (14.6%/US$8.8 billion), tobacco goods (13.1%/US$7.9 billion), watches, jewelry and fine writing instruments (10.4%/US$6.2 billion), electronics, gifts and other goods (8.9%/US$5.3 billion), and confectionery and fine food (7.9%/US$4.7 billion). Fashion and accessories topped the charts in terms of the percentage increase in sales over 2012, boosting its share by 10.1%. Fragrances and cosmetics also grew its share of sales, with a 9.3% upswing on the previous year. Notably, wines and spirits climbed by 8.5%, narrowly beating confectionery, up 8.4% on the year. Smaller increases were registered by tobacco goods, up 3% year-on-year, and electronics/other at 2.4%. By region, Asia and Oceania took the largest share of sales with 37.2%, narrowly beating Europe at 33.6%. Americas contributed 18.6% of sales, followed by the Middle East at 9.3% and Africa (1.4%). Asia and Oceania increased its percentage of sales by 12.1% year-on-year, while the Middle East grew its share by 11.1% versus 2012. Africa managed to up its share by 7.3% on-year, with smaller upticks registered by Europe (4.5%) and Americas (2.8%). By sales channel, airport shops took the lionâ&#x20AC;&#x2122;s share of sales, with 57.8% of turnover, followed by other shops (33.5%), airlines (5.0%) and ferries (3.7%). Other shops and airport shops boosted their share of sales compared to 2012, up 8.8% and 8.6%, respectively. Airlines managed a smaller pick-up of 1% year-on-year, while ferries lost 8.4% versus 2012.

South Korea was the number one country in US dollar sales, with a market share of 10.5% and an 8.9% rise in value terms compared to 2012. China followed with 7% market share (+23.5% in value), then US with 5.9% market share (+18.9%), UK with 5.5% (+1.3%), Hong Kong with 4.9% (+7.7%), Germany with 4.7% (+2.3%), United Arab Emirates with 4.1% (+16.1%), Turkey with 3.5% (+7.7%), Singapore with 3% (+9.6%) and Thailand rounding out the top ten countries, with 2.8% market share (+38.7%). France, the most visited country in the world, took 11th spot in the top 25 countries ranking, with 2.4% market share (+12.9% in value terms), followed by Japan, Russia and Taiwan, which each registered 1.8% market share. Brazil was ranked 15th with 1.7% market share. Further down the list, Macau sat in 24th place, with Australia one spot behind. The worldâ&#x20AC;&#x2122;s top 50 shops ranking was headed by Dubai Duty Free, with sales exceeding US$1 billion at Dubai International Airport. Seoul Incheon Airport took the number two position, followed by Singapore Changi, London Heathrow, Bangkok Suvarnabhumi and Hong Kong International Airports. Rounding out the top 10 shops were Shanghai Pudong, Beijing Capital, Paris Charles de Gaulle and Frankfurt Airports. Scandinavian ferry line Tallink/Silja Line was the first nonairport outlet to appear in the top 50 shops ranking, coming in at number 11, while Korean Air was the top airline, in 48th position. Asia Pacific outlets included in the top 50 were: Taipei Taoyuan Airport (12), Tokyo Narita Airport (16), Cheju International Airport (21), Osaka Kansai Airport (29), Guangzhou Baiyun Airport (32), Kuala Lumpur International Airport (33), Sydney Airport (37) and Manila Airport and FSC (39).

www.dutyfreemagazine.ca ASIA DUTY FREE & TRAVEL RETAILING

GLOBAL TR & DF OVERVIEW

2013年旅游业销售收入达到600亿美元旅游业数据专业公司Generation Research, Sweden 发布的最新数据显示，2013年全球旅游零售和免税销售收入达到600亿美元。总部位于瑞士的旅游业数据专业公司Generation Research发布的最新数据显示，2013年全球旅游零售和免税销售收入达到600亿美元。按照产品类别，香水和化妆品销售额居首，占总销售额的 28.8%（173亿美元）；葡萄酒和白酒次之，占16.4%（99 亿美元）；然后是时装和首饰（14.6%/88亿美元），香烟（13.1%/7.9 美元），手表、珠宝和精美书写工具（10.4%/62 亿美元），电子产品、礼品和其它商品（8.9%/53亿美元），糖果糕点和美食（7.9%/47亿美元）。同2012年相比，时装和首饰占总销售额的比例上升了10.1% ，位居排行首位。香水和化妆品占比同比增长9.3%。同比增长显著的还有，葡萄酒和白酒增长8.5%，糖果糕点增长 8.4%。香烟和电子产品/其它同比增长相对较低，香烟为3%，电子产品/其它为2.4%。按照地区，亚洲和大洋洲占比最高，为37.2%，欧洲次之，为33.6%。美洲占比为18.6%，然后是中东9.3%，非洲1.4%。亚洲和大洋洲占比同比增长12.1%，中东同比增长11.1%。非洲增长7.3%，欧洲为4.5%，美洲为2.8%。按照销售渠道，机场商店营业额获得最大份额，占总销售额的57.8%，其次是其它商店（33.5%）、航空公司（5.0%）和游轮（3.7%）。同2012年相比，其它商店和机场营业额

ASIA DUTY FREE & TRAVEL RETAILING TFWA/APTRA CHINA 2015

占比分别增长8.8%和8.6%。航空公司同比增长较小，仅为 1%，而游轮同比下降8.4%。韩国在以美元结算的销售收入中排行第一，市场份额占到 10.5%，价值同比增长8.9%。中国以7%的市场份额位居第二（价值+23.5%），然后是美国5.9%（+18.9），英国5.5% （+1.3%），香港4.9%（+7.7%），德国4.7%（+2.3%），阿联酋4.1%（+16.1%），土耳其3.5%（+7.7%），新加坡3%（+9.6%），泰国排名第十，市场份额2.8% （+38.7%）。法国作为世界上游客最多的国家，在前25名国家中排名11，市场份额2.4%（价值+12.9%）；其次是日本、俄罗斯和台湾，市场份额都是1.8%。巴西排名15，市场份额为1.7%。榜单下面，澳门排名24，澳大利亚排名25。世界前50家免税店排名：位于迪拜国际机场的迪拜免税店拔得头筹，销售额超过10亿美元。首尔国际机场免税店获得第二名，然后是新加坡樟宜机场免税店、伦敦希洛机场免税店、曼谷素万纳普机场免税店和香港国际机场免税店。排名前十的免税店还有上海浦东国际机场免税店、北京首都机场免税店、巴黎戴高乐机场免税店和法兰克福机场免税店。斯堪的纳维亚游轮公司的塔林客/诗丽雅豪华游轮免税店是排名前五十的商店中第一个非机场免税店，排在11位，而大韩航空公司免税店是排名最高的航空公司免税店，位居48 名。位于前50名的亚太地区免税店还有：台北桃园机场免税店（12）、东京成田机场免税店（16）、济州国际机场免税店（21）、大阪关西机场免税店（29）、广州白云机场免税店（32）、吉隆坡国际机场免税店（33）、悉尼机场免税店（37）和马尼拉国际机场免税店（39）。

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GUEST WRITER

2015 will be the year of

the Chinese

shopper – again Alexander Glos, an expert on the Chinese travel market, believes 2015 will be a recordbreaking year for Chinese tourism despite the slowdown by

ALEXANDER GLOS, CEO, i2i Group China

hinese global travel in 2015 is poised to continue to break records. The World Tourism Organization (WTO) predicts global Chinese tourism will exceed 110 million travelers by the end of 2015. Thirty percent of these travelers are choosing medium and long-haul destinations. The average Chinese traveler is now spending in excess of US$3,800 per person on shopping, either duty free or in destination shopping. This cumulative impact is now in excess of US$130 billion. Even though China’s economy has slowed in 2014, growth remains in excess of 3% and affluent Chinese travelers continue to grow their disposable income, impacting forecasts for 2015

Alexander Glos, CEO, i2i Group China

ASIA DUTY FREE & TRAVEL RETAILING TFWA/APTRA CHINA 2015

Chinese travelers use credit cards for most of their purchases, with China UnionPay leading the way

of a 10%-15% increase in shopping spend. One of the biggest impacts in 2015 is the growth in visa-free access for Chinese travelers and more liberal visa rules. Late in 2014, the US began to offer multi-year, multi-entry visas for Chinese travelers up to a maximum of 10 years. In 2015, we are likely to see similar relaxation of visa regulations in Australia, Europe and Korea. This not only spurs added travel, but longer stays and sends a message that these destinations are open and friendly for the Chinese. In 2014, Korea became the number one foreign destination for outbound Chinese, attracting nearly five million visitors. Japan, Thailand, Singapore and Indonesia remain strong Asian destinations. Chinese tourism to the US increased by 27% in 2014. Travel to Schengen Europe increased 23% in 2014. Increasingly, second tier cities in China are becoming an important source of Chinese tourism. Most airlines are developing new routes from China’s secondary cities. In 2015, there will be 11 daily long-haul flights into China’s secondary cities connecting 26 destinations, up from only four in 2010. In 2015, at least eight foreign airlines, including KLM, Lufthansa, Etihad Airways, Qatar Airways, British Airways and United Airlines, will operate secondary routes, in addition to five Chinese airlines. With this substantial growth in global travel, duty free shopping is increasingly seeing the impact across destinations and global transit centers such as Dubai, Singapore, Hong Kong and Frankfurt. Duty free operators in these airports in 2014 reported an average increase of 37% in sales to Chinese visitors. Chinese are not only spending more, but they are increasingly spending on higher value and higher profit items, including watches, jew-

elry, luxury wine and liquor products as well as electronics. At Incheon, South Korea, nearly 80% of transiting Chinese travelers spend more than US$500 per person in the duty free shops, even though they are not spending any time in Korea. Even in destinations such as San Francisco, New York and Los Angeles, which have limited duty free shopping opportunities, sales increases in 2014 have exceeded 30%, with Chinese impacting sales by as much as 69%. Of course, the Chinese use credit cards for most of their purchases, with China UnionPay leading the way. However, in 2014 two newcomers to the purchasing services business have become the players to watch, including AliPay and Wallet. Both are supported by strong national Chinese technology and social media companies, with a combined client base of 1.3 billion active and daily consumers. Both payment services offer mobile ease and direct debit from bank accounts, allowing the customer to immediately know what they have spent in RMB, as well as point of sale convenience, security and record keeping. In 2015, per WTO rules, China will remove UnionPay’s interbank clearing monopoly, enabling other credit card companies to more aggressively pursue the China market, especially Visa, MasterCard and American Express, which offers both card issuance and merchant services. The top brands desired and purchased by the Chinese continue to receive nearly 75% of all consumer spending, including Louis Vuitton, Gucci, Chanel, Armani and Montblanc. Cosmetics, perfumes, natural health products, shoes and increasingly confectionery products are leading the way for Chinese shoppers. A new growth opportunity for duty free and shopping will be the expansion of Chinese into the cruise market. In 2015, larger cruise ships are being based in East Asia and substantial China-focused marketing spend is budgeted by the major cruise operators. Royal Caribbean, Carnival and other independent cruise companies are expanding sailings from Shanghai, Tianjin and Qingdao. Ctrip, China’s largest online ticket reseller, recently purchased a cruise ship, while Spring Travel is chartering 15 cruises in 2015. By 2016 Chinese will become the second largest national group cruising. Chinese owned, operated and focused hotel groups have started to dominate the market. Home Inn is now the ninth largest hotelier and Jin Jiang is 10th in terms of total available beds. After the successful launch of its Metropolo mid-range hotel brand in 2014, Jin Jiang will unveil its J Hotel brand on the upper floors of the new Shanghai Tower in 2015. Nuo, a joint venture between Beijing Tourism Group and Kempinski, will open its first luxury hotel in Beijing. Dalian Wanda will introduce its Wanda hotels and Resorts worldwide from London and Madrid to Chicago and Australia’s Gold Coast, while Home Inn and Jin Jiang are expanding throughout Southeast Asia. In 2015, segmentation of Chinese outbound tourism and a desire for new experiences, especially at the top end of the market, is encouraging tourism organizations to focus on specialty and niche promotions. Australia is enticing Chinese travelers with its culinary offerings, Switzerland is marketing ski resorts and Canada is promoting winter holidays in the Rocky Mountains. Cruise, safari and adventure in winter sports travel marketing are all being ramped up in China in 2015 as well as self-drive car hire. WeChat continues to be a major player in helping brands and retailers connect effectively with global Chinese shoppers.

Fifty-two percent of Chinese shoppers indicated that WeChat influences their purchasing decisions. Nearly 100% of all smartphones in China offer WeChat, and 600 million consumers are using it on a daily basis for purchasing, information and interaction. Retailers are being especially successful utilizing it to encourage brand loyalty, deeper product information, and pushing consumers from O2O [online to offline] and ultimate conversion and sale. As robust as the overall impact is from Chinese global shoppers, even with a slowdown, the fundamental Chinese domestic economic growth factors continue to drive affluent and upper-middle class Chinese shoppers abroad. Import duties on in-China luxury items continues at 50%-125%, depending on the product. As travel becomes more status-focused for many Chinese, the cachet of buying products in New York, London, Paris and Singapore is almost more important than the actual shopping. The Chinese global shopper is not going on vacation anytime soon. Last year Korea became the number one foreign destination for outbound Chinese, attracting nearly five million visitors

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GUEST WRITER

2015

—又— 个中国购物者之年中国旅游市场专家亚历山大·格罗斯认为，虽然中国人海外旅游增势放缓，但是2015年仍将成为破纪录之年。 2015年中国人海外旅游有望继续创造新纪录。世界旅游组织预测，到2015 年底，中国到海外旅游的人数将超过 1.1亿。30%的游客将选择中长线旅游。目前中国游客人均境外购物消费超过3800美元，要么在免税店购物，要么在目的地购物。这种累积效应现在已经超过1300亿美元。尽管2014年中国经济增速放缓，但是增长率仍然保持在3%以上。中国人的可支配收入继续增加，据此可以预测，2015年中国游客境外购物消费将增长10%-15%。 2015影响中国游客出境旅游的最大因素之一就是越来越多的国家给予中国游客免签证入境和更宽松的签证规则。2014年底，美国开始向中国游客提供最高为期10年的多次入境签证。2015年，澳大利亚、欧洲和韩国也可能对中国出台类似的放宽签证条件的规定。这不仅刺激更多中国游客

到海外旅游，而且表明这些目的地国家对中国人友好开放。

利润商品，包括手表、珠宝、奢侈葡萄酒和白酒以及电子产品。

2014年韩国成为中国出境旅游最大目的地国，吸引了接近500万中国游客。日本、泰国、新加坡和印尼仍然是亚洲热门旅游目的地。2014年，中国到美国旅游的人数增长了27%，到欧洲申根成员国旅游的人数增长了23%。

在韩国仁川，将近80%的过境中国游客在免税店人均消费超过500美元，虽然他们并不是每次到韩国都要消费一番。即使在旧金山、纽约和洛杉矶这些免税购物机会有限的城市，2014年的销售额也增长了30%，来自中国游客的销售额增长了69%。

中国二线城市越来越成为中国海外游客的重要来源地。大多数航空公司正在开辟通往中国二线城市的新航线。2015年，将有11个每日一班的长途航班飞往中国二线城市，连接26个目的地国家，这样的航班2010年只有 4个。2015年，除5家中国航空公司外，至少还有8家外国航空公司（包括荷兰皇家航空公司、德国汉莎航空公司、阿提哈德航空公司、卡塔尔航空公司、英国航空公司和美国联合航空公司）将开通飞往中国二线城市的航线。随着国际游客的大幅增长，在各旅游目的地及迪拜、新加坡、香港和法兰克福等全球交通枢纽，免税购物越来越盛行。这些机场的免税店运营商报告显示，2014年免税店对中国游客的销售额平均增长了37%。中国人不仅出手大方，而且越来越钟情高档、高

ASIA DUTY FREE & TRAVEL RETAILING TFWA/APTRA CHINA 2015

当然，中国人大多使用信用卡购物，用的最多的是中国银联卡。不过，2014年两种新的支付方式在购物服务业务崭露头角，包括支付宝和钱包。两者都有中国强大的技术和社交媒体公司作为后盾，活跃客户加起来达13亿之多。两者都提供移动支付和通过银行账户直接支付的服务，让客户立即了解其人民币消费情况，而且售点方便、安全、能保存购物记录。

GUEST WRITER

根据世贸组织规则，2015年中国将取消银联在银行间结算的垄断地位，让其它信用卡公司大胆进入中国市场，尤其是维萨、万事达和美国运通，它们既发行信用卡，也提供商户服务。中国人青睐和购买的顶级品牌商品继续占到中国游客总消费量的近75%，这些品牌包括路易威登、古琦、香奈儿、阿玛尼和万宝龙。化妆品、香水、天然健康产品、鞋类和糖果糕点居中国游客购买商品的前列。更多中国人进入邮轮市场，为免税和购物提供了新的增长机遇。2015 年，东亚将成为大型邮轮基地，主要邮轮运营商投入大量预算，以中国为中心，大力开展营销活动。皇家加勒比、嘉年华及其它独立邮轮公司正在增加从上海、天津和青岛起航的航线。中国最大的在线售票商“携程” 最近购买了一艘邮轮，而“春秋旅游”2015年要包租15艘邮轮。到2016 年，中国人将成为世界上第二大邮轮旅游民族群体。

中国人拥有、经营和关注的酒店集团开始主导市场。如家快捷酒店现在成为第九大酒店经营商，锦江酒店就总床位而言居第十位。锦江酒店2014 年成功推出“都城”中档酒店品牌之后，将于2015年在新上海大厦高层推出“J Hotel”品牌。北京旅游集团和德国凯宾斯基酒店成立的合营企业“ 诺金”的第一家豪华酒店将在北京开放营业。大连万达将在伦敦、马德里、芝加哥和澳大利亚黄金海岸等世界各地建立万达酒店和度假村，而如家快捷酒店和锦江酒店正在向整个东南亚扩张。 2015年，中国人出境旅游和寻求新体验的细分市场，尤其是高端市场，将激发旅行社重点关注特色旅游和利基市场促销活动。澳大利亚在用美食引诱中国游客，瑞士在兜售滑雪场滑雪活动，加拿大在落基山脉促销冬季度假活动。邮轮，游猎，冬季冒险运动，还有自驾车出租，各国旅游公司 2015年卯足了劲在中国加紧营销。

ASIA DUTY FREE & TRAVEL RETAILING TFWA/APTRA CHINA 2015

微信仍然是帮助品牌公司和零售商有效联系中国海外购物者的主要平台。52%的中国购物者表示，微信影响着他们的购买决策。近乎100%的中国手机提供微信服务，6亿消费者每天都使用微信购物、收发信息和互动交流。零售商尤其成功，他们利用微信提高品牌忠诚度，提供深层次产品信息，引导消费者从线上来到线下，最终实现转化和销售。中国经济虽然增速减缓，但仍然像中国海外购物者扫货一样坚定有力，中国国内经济增长的基本因素将继续推动富裕的中上阶层中国人出国购物。中国奢侈品进口税，依据产品种类不同，仍然保持在 50%-125%。由于许多中国人越来越把旅游视为身份的象征，所以在纽约、伦敦、巴黎和新加坡购买产品就成为一种炫耀的资本，比实际购物本身重要多了。中国海外购物者很快就要牺牲假期出去购物。

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Adriana Viejo, Travel Retail Director, Puig Asia Pacific

AIRPORT REPORT: INCHEON AIRPORT

Brand buzz for

Incheon by

CLAIRE MALCOLM

The world’s most profitable airport duty free operation, surpassing the US$2 billion sales barrier in 2014, Incheon International Airport’s long awaited tender results have set the ball rolling for the future

ne of the world’s busiest airports, Incheon achieved double-digit growth in P&C sales during 2014. It also has the distinction of being the largest airport, downtown and inflight travel retail market in Asia Pacific (ASPAC) for fragrance sales, with a combined value of US$300 million; and the region’s third largest airport for fragrance sales alone, as per Generation Research’s 2013 statistics, valued at US$93 million. When it revealed the results of its long awaited tender in midFebruary, with Lotte Duty Free and The Shilla Duty Free awarded seven of the eight large company contract packages, Korean department store Shinsegae securing the eighth, and Charmzone scooping the only SME package (with three to be re-tendered); travel retail brand managers reached for their planners. Duty free sales exceeded the airport’s 10.1% (44.9 million) passenger growth figure for last year, largely thanks to a 40.9% increase in Chinese travelers in the first 11 months of the year (5.7 million or 43.5% share of total arrivals) and also a significant increase in Korean outbound passengers, which grew by 7.4% in the same period.

ASIA DUTY FREE & TRAVEL RETAILING TFWA/APTRA CHINA 2015

Perfumes and cosmetics (P&C) accounting for 38% of total sales at Incheon and it is Koreans who continue to dominate duty free spend, registering almost 50% of total sales, but the Chinese and Japanese are hot on their heels, together accounting for 39%.

The fragrance house: Puig Spanish fashion and fragrance icon, Puig, is investing heavily in growing brand awareness in South Korea, both at major travel retail locations and in the domestic market. This has also dominoed into China’s domestic market in response to the influence of Chinese passengers coming to Korea. Commenting on expectations for the brand portfolio this year, Adriana Viejo, Travel Retail Director, Puig Asia Pacific, says: “Prada and Valentino are two of our key brands and already top 20 fragrance brands in China travel retail, with Nina Ricci is a third key brand. “Even though it was only recently introduced into the Chinese market, Valentino is already ranked number 23, according to 2013 Generation Research data. This mirrors Puig’s

Eva Yu, Managing Director, L’Oréal Travel Retail Asia Pacific

Nina Tentation promotion at Singapore’s Changi Airport

brand-building investment in the South Korean and Chinese domestic markets.” In terms of key differentiators for Incheon against other ASPAC locations, Viejo is vocal about category under-representation, as she explains: “It is a unique location, with aggressive pricing and a dominant presence of Korean skincare brands— both premium and masstige—which unfortunately takes away space and visibility from the fragrance category. “The terminal design, passenger flow and multiple operator format also causes some offer duplication. The result is less space allocated to promotional and retail theatre areas for fragrance brands. This is a reality that limits the growth of fragrances at Incheon today, however we have proven elsewhere that we are able to contribute hugely to the customer experience and sales growth through retail-tainment activities.” Puig’s best-selling brands at Incheon match those doing well in China travel retail, namely Chanel, Dior and Bulgari; and are a direct reflection of the shopper mix. “[We] aspire to progressively position our strategic brands in the top 15 fragrance brands at Incheon. Prada, Valentino and Nina Ricci are luxury fashion brands which resonate well with the Asian consumer and Puig is an expert in translating the image of fashion brands into the fragrance arena,” remarks Viejo. “As with all brand owners, we seek to be a preferred partner to grow the fragrance category in travel retail. At Incheon, we believe the growth potential is significant.

The beauty giant: L’Oréal Travel Retail Asia Pacific Incheon’s global profile and reputation makes it a key player in L’Oréal’s regional portfolio, as Eva Yu, Managing Director, explains: “Incheon was a pioneer in the duty free arena with an innovative business model that is considered a benchmark for many other airports around the world.” “Its continued growth, with double digit growth in P&C sales

in 2014, means that it is only natural for us to keep a close eye on business here as the main gateway in and out of Korea.” Yu’s expectations for the brand portfolio at Incheon are centered on the development of the current environment into a much more complex arena, influenced by the customer nationality mix and their purchase preferences. She says: “We are seeing more and more first-time travelers from emerging markets including China, Russia, and Brazil who are accessing the premium P&C market for the first time in their lives through duty free stores. “In order to cope with this complex situation where the spectrum of consumer demand is so diverse, one of the most significant changes/improvements we plan to apply to Incheon Airport is the introduction of brands from the group’s Active Cosmetics Division and Professional Products Division, which we added to our travel retail portfolio in 2014.” This will enable L’Oréal to offer customers products with a different concept and tailored to individual customers, from globally renowned brands such as Vichy, La Roche-Posay, Roger&Gallet, and also Kérastase. Korean passengers lead beauty sales for the group at Incheon and are sophisticated shoppers who have high quality and service expectations; but Chinese consumer needs also factor highly in the company’s airport strategy. “Although the majority of the Chinese travelers still prefer shopping at downtown duty free shops in Korea, we are making broad strides in terms of brand communication, merchandising, product/category mix, and other aspects, in order to provide these new consumers with the products/service they are looking for,” explains Yu. In terms of brand attractiveness and sales, she says that Lancôme and Kiehl’s are both strong performers with Lancome’s Genifique serum a bestseller and Kiehl’s Ultra Facial Cream also popular. Next for ’LOréal at Incheon is the rollout of a number of new luxury brands, although the final selection is still unconfirmed, as Yu explains: “Luxury brands such as Urban Decay and Clarisonic are solid candidates that can be considered for the next concession.”

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AIRPORT REPORT: INCHEON AIRPORT

sion of its SKU selection with Marks highlighting the planned arrival of more women’s fashion styles, and he also says that the company is looking forward to the opportunity to be featured within additional airport locations.

The confectioners: Lindt & Sprüngli Coming up for the brand in 2015/6 will be continued expansion of its SKU selection

The accessories expert: Maui Jim Premium polarized sunglass maker Maui Jim has been hugely successful in extending its cult follower appeal to passengers traveling in and out of the South Korean capital, and Giles Marks its Director, Duty Free Sales, says that Incheon is a crucial location for the brand. He reports that 2014 was a “breakthrough year” for Maui Jim with strong double-digit growth both at Incheon and downtown duty free. “With the release of our expanded ladies and Asian fit collections we anticipate parallel strong growth this year,” he says. However, Marks also flags Incheon’s ultra-competitive environment keeps the Maui Jim team on its toes, as Marks explains: “This is a constant challenge and to address it we have planned and implemented successful sales incentives for the sales staff and also promote unique GWPs for the consumer.” Coming up for the brand in 2015/6 will be continued expan-

Highly visual promotions and tastings are part of Lindt’s sales strategy

ASIA DUTY FREE & TRAVEL RETAILING TFWA/APTRA CHINA 2015

For Peter Zehnder, Head of Duty Free, Lindt & Sprüngli, while Incheon is one of the “most exciting shopping destinations in the world”, its confectionery offering is still underrepresented compared to other categories such as beauty. “Lindt is interested in building the premium chocolate category at Incheon by investing into exciting POS presence and we are hoping for more space to do this,” he notes. Christian Könitzer, Regional Sales Manager Asia Pacific, Lindt, adds: “As the traveler profile at Incheon becomes more international, i.e. more Chinese travelers who are familiar with Lindt premium chocolate from other journeys, we believe that this has very strong prospects. “Incheon travelers are also traditionally interested in good price-value items, so interesting promotions are key to attract their interest.” Products popular with passengers of all nationalities passing through Incheon include Lindt of Switzerland’s Assorted Napolitains Carrier Boxes, the 300-gram Gold tablets and the 400-gram Lindor tubes. Operating in a highly competitive environment, the company works closely with Haeyoung, its Korean agent, to develop more exciting promotions. “We also maintain our sales promoters to drive sales as well as to introduce our premium brand to the consumer,” notes Könitzer.

Highly visual promotions and tastings are part of Lindt’s sales strategy

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RETAILER REPORT: THE NUANCE GROUP

The Scent & Beauty concession at HKIA Terminal 2

Tailoring travel retail in the information age

Longchamps – another popular and globally recognised brand at HKIA

In-depth research into the consumer psyche and technology first mover advantage is helping The Nuance Group break the cultural code and drive business in Asia by CLAIRE MALCOLM

everaging the expertise of its newly integrated Dufry/Nuance China team to evaluate new opportunities and strategize for its domestic Chinese airport operations, Nuance is hoping to accelerate synergistic growth as the company continues to expand its presence in China and elsewhere. Research into changing customer profiles is an ongoing focus, as Alessandra Piovesana, Regional Managing Director Asia, The Nuance Group, explains: “Since the global economic slowdown, the profile of travelers had become more ‘extreme’, dominated by Asians and mainly led by mainland Chinese and fast-growing South East Asia whose countries have become a major force in the international economy. “However, emerging nationality groups like the Middle East, India and Eastern Europe are also growing, although from a small base.” Despite a slowdown in China’s economic growth in 2014, when it slipped to 7.4%, Piovesana believes that it is still strong the envy of most economies. “The implementation of the recent anti-gifting policy in China has had an impact on the luxury segment. That said, Chinese consumer sentiment has 30

not totally declined but shifted to the medium-high segment as the currency is still holding its value and thus gives travelers an advantage when spending overseas. As such, mainland Chinese outbound travelers should continue to be the main source of growth for 2015,” she says. The cachet of owning an international brand is part of the Asian, and especially Chinese, purchasing psyche, and Piovesana says that the preference for these brands will endure. However, she also points out that, due largely in part to the Internet and the focused expansion of brands into China and Asia, travelers are up-to-date when it comes the latest launches, even for niche brands. “Therefore, we must constantly pay attention to up-and-coming brands and concepts that could add value to our customer offer. We think the key in selling to these consumers is the ability to ‘break the cultural code’. To do so, we need to apply a different approach at times; one that addresses Asian customers’ characteristics, mindset and preferences in order to offer unique and targeted appeal,” she notes. The Nuance Group has identified several key trends for 2015, and is weaving them in to its regional marketing strategy accordingly. Says Piovesana: “In Perfumes

ASIA DUTY FREE & TRAVEL RETAILING TFWA/APTRA CHINA 2015

& Cosmetics, Korean beauty brands are gaining significant presence in Asia travel retail thanks to Korea’s growing cultural influence—or the ‘Hallyu wave’. This has been gaining a lot of recognition in the last few years with the massive increase in popularity of Korean pop-culture products, particularly K-pop and TV dramas. “In the Confectionery category, customers have become more eager for newness. As they travel more, especially the Chinese customers, they are not just looking for international brands, but also innovations and novelties, no matter for self-indulgence or gift giving. They want to discover something new each time they travel.” She says that to catch the consumer eye

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RETAILER REPORT: THE NUANCE GROUP

and “win their pockets,” it’s more crucial than ever to have strong differentiation in terms of branding, packaging design, flavor, shape, etc. “New brands with a deep-rooted heritage and strong reputations can fill the gap for customers who look for something different and unique. Successful examples include Valrhona, one of the world’s foremost chocolate makers and known for its high-grade luxury and vintage French chocolates, and Charbonnel et Walker’s hand-made English chocolates endorsed by the Royal Warrant as the official manufacturer for the British royal family,” she explains. “International brands have also become more active in order to bring newness to the travel retail market, such as Lindt and Anthon Berg’s sea salt chocolates and liqueur chocolates from Goldkenn, that generate interest and new demand. While these are all palatable for Asians, their originality, presentation and ‘story’ all contribute towards raising interest,” she continues. Technology is also playing a similarly

crucial role in strategizing for the future, as Piovesana elaborates: “We expect that the new wearable technology being launched will add to the headline appeal and popularity of smart phones and tablets. New wearable technology such as smart watches with mobile function and intelligent glasses/gadgets should definitely fuel the growth of this category in the coming years.” Expansion in mainland China has been mooted with the announcement last year of a three-concession retail precinct project at Xiamen Gaoqi International Airport’s upcoming fourth terminal, but Piovesana explains that this has been suspended due to various construction and permit challenges. “We have been re-assessing the market potential of different airports in China as part of the Dufry/Nuance integrations, to prioritize our strategic focus and development in the region. We believe major city airports should still be explored for potential investments, as airport retail is undergoing transformation in China, which will create many opportunities for

The existing Sound & Vision store at HKIA Terminal 1

The Attitude store at Zhuhai Jingwen Airport in mainland China carries world-leading brands beloved by Chinese travelers

ASIA DUTY FREE & TRAVEL RETAILING TFWA/APTRA CHINA 2015

international operators like us.” Elsewhere in China, Nuance is taking on the technology challenge following its technology license re-win at Hong Kong International Airport (HKIA). The win includes three existing outlets covering 500 square meters in total, plus a new location at the Level 5 Landside Arrival Hall, and will serve “meeters and greeters,” arriving passengers and those in transit to the Terminal 2 coach terminal, which connects passengers to China by road and is due to open later this year. “This time around our tender was supported by 28 leading electronic brands, many of which have granted us first launch rights for their new concepts as well as unique product offerings and exclusive services,” she remarks. The new Sound & Vision concession will also be the first in Asian travel retail to premier six new shop-in-shop branded concepts, which underlines The Nuance Group’s commitment to support HKIA’s reputation as being a global trendsetter and innovator in duty free. Airport visitors will be able to enjoy the first Samsung Experiential Concept outside of South Korea, Canon Image Square, Hasselblad Shoot Concept, Leica Gallery, Sennheiser Studio and a Beats Fever Corner. Construction is scheduled to begin after Chinese New Year with the official launch pegged for the start of the peak travel Canton Fair period in May. Says Piovesana: “To differentiate and make further leaps ahead of the market and the competition, we will introduce unique electronics statements in the form of high-tech Sound & Vision icons. “These will include an innovative Smart Mobility concept, staging Wearable Tech as the future star of smart technology to complement the smartphone and tablet offering. We will also build on the success of our i-concept by further emphasizing the human touch and introducing a qualified Apple Product Professional consultation service and free workshops.” “This year we will leverage our important technology license win to generate sustainable growth. We will also actively participate in the upcoming new tenders for several store locations in West Hall, as well as the brand new Midfield Terminal at HKIA. We expect HKIA will upkeep its status and importance amongst Asian and mainland Chinese travelers given its hub status as the gateway into China and North Asia,” she concludes.

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RETAILER REPORT: THE NUANCE GROUP

信息时代的定制旅游零售业深入研究消费者心理和技术先发优势有助于纽安斯集团破解文化密码，推动在亚洲的业务纽安斯集团正在利用其新近整合的杜福瑞/纽安斯中国团队的专业知识，评估在中国国内机场开展经营的新机遇，并制定战略，希望公司在继续向中国及其他地区扩展业务的同时，能够促进协同增长。研究不断变化的顾客概况是持续不变的重心，纽安斯集团亚洲区常务董事 Alessandra Piovesana解释说：“ 全球经济低迷，游客概况日趋‘极端化’，这一点主要体现在亚洲，而经济快速增长、成为全球经济主力军的中国和东南亚国家更为突出。 “中东、印度和东欧等新兴国家经济也在增长，只是基数较小。” 虽然2014年中国经济增速放缓，增长率下降到7.4%，但是Piovesana认为，这一数字仍然是大部分经济体羡慕嫉妒却难以企及的目标。 “中国最近实施的反腐政策对奢侈品市场有一定影响。即便如此，中国消费者的热情也没有完全衰退，而是转向了中高档市场，人民币仍然保持其价值，这为游客海外购物创造了有利条件。因此，中国大陆的出境游客会继续成为2015年增长的主要源泉，” 她说。拥有国际品牌是一种荣耀，这是 34

Technology plays a big role in Nuance’ revenue stream with outlets like Fortress at HKIA Terminal 2 a magnet for tech-minded travelers

部分亚洲人尤其是中国人的购物心理，Piovesana说，这种偏好将继续存在。但同时她也指出，主要由于互联网以及国际品牌集中向中国和亚洲扩张的影响，就最新发布的产品而言，游客总是追求新潮，即使对于利基品牌也是如此。 “所以，我们必须不断关注能够为顾客增加价值、充满前途的品牌和概念。我们认为，向这些消费者推销商品的关键是能够‘破解文化密码’。为此，我们有时需要采用不同方法。其一便是针对亚洲顾客的特点、心态和偏好，为其提供独特、有吸引力的商品，”她说。纽安斯集团已经把握了2015年的几个关键趋势，并将其融入区域营销战略当中。Piovesana说：“在香水和化妆品市场，韩国美容品牌凭借韩国日益增长的文化影响力——即‘韩流浪潮’占据了重要地位。过去几年间，随着韩国流行文化产品（尤其是韩国流行音乐和韩剧）的人气飙升，韩国美容品牌也获得了极大的认可。 “对于糕点糖果，顾客越来越渴望新产品。这些顾客，尤其是中国顾客，出境旅游的机会越来越多，他们不仅搜罗国际品牌，而且寻创新，求新奇，不管是自己享受还是送礼，莫不如此。他们每次旅游都希望发现新大陆。” 她说，要想吸引顾客的眼球，“赢得顾客的钱包”，在品牌、包装设计、风味、形状等方面保持与众不同，这一点非常重要。

ASIA DUTY FREE & TRAVEL RETAILING TFWA/APTRA CHINA 2015

“底蕴深厚、名声显赫的新品牌能填补这一需求，满足顾客猎奇的欲望。在这方面取得成功的品牌有法芙娜和查伯尼·艾特·沃克。前者是世界上首屈一指的巧克力制造商，以其高档、奢侈、经典的法国巧克力闻名遐迩；后者手工制作的英国巧克力则获得英国王室供货许可证，成为英国王室的官方制造商，”她解释说。 “国际品牌也日趋活跃，努力在旅游零售业市场创造新意。比如，瑞士莲和爱顿博格的海盐巧克力，瑞士金砖的酒心巧克力，都令人心动，销量大增。虽然这些品牌非常合乎亚洲人的口味，但是独特创意、产品介绍和品牌背后的‘故事’也为提高品牌的人气贡献卓著。技术在制定未来战略过程中也扮演了类似的角色，Piovesana对此作了详细阐述，她说：“我们希望正在推出的可穿戴技术能够增加智能手机和平板电脑的吸引力和普及率。未来几年，新的可穿戴技术，比如具有移动功能的智能手表和智能眼镜/小玩意，绝对会促进电子产品的增长。” 去年厦门高崎国际机场宣布在即将完工的4号航站楼建造一个三折优惠零售区项目，随即引发了向中国扩张的讨论，不过，Piovesana解释说，这一项目因为建筑和许可证等难题而搁浅。 “中国是杜福瑞/纽安斯整合计划的一部分，我们已经在重新评估中国不同机场的市场潜力，以便确定这一地区的战略重点和发展方向。我们认为，应当研究主要城市机场的投资潜力，因为中国的机场零售业正在转型，这将为我们这

样的国际运营商创造大量机遇。” 在再次获得香港国际机场的技术许可之后，纽安斯正在中国其他地区应对技术挑战。这场胜利让我们获得了三个现有门店，总面积为500平方米，外加入境大厅第5层的一个新店面。这里将作为‘迎接区和欢迎区’，为到达机场的旅客和转往2号航站楼长途汽车站的旅客提供服务，2号航站楼长途汽车站将于今年年底开放，届时，旅客乘坐汽车通过陆路即可抵达中国大陆。 “这次我们的投标得到28个主要电子品牌的支持，其中许多品牌已经授予我们新概念产品的首发权，并向我们提供独特产品和专有服务，”她说。新的声音和视觉免税店也将成为亚洲旅行零售业首个展示六种新店中店品牌概念的免税店，突出显示了纽安斯集团支持香港国际机场成为全球领导潮流、开拓创新的免税店的承诺。机场旅客将能在韩国以外的第一家三星体验概念店、佳能影像广场、哈苏拍摄概念店、徕卡画廊、森海塞尔工作室和Beats 发烧角享受购物。项目计划春节之后开始施工，五月将正式启动迎接广交会开幕。 Piovesana说：“为了标新立异，进一步领先市场，超越竞争，我们将采用高科技声音图标和视觉图标的形式引进独一无二的电子产品说明书。 “这些将包括富有创新的智能移动概念，展示可作为智能技术未来之星的穿戴技术，为智能手机和平板电脑提供补充。我们将以我们在i-concept的成功为基础，进一步强调人性化特色，引进合格的苹果产品专业咨询服务和免费工作坊。” “今年，我们将利用我们赢得的重要技术许可实现可持续增长。我们还将积极参与即将到来的新的招标活动，力争获得香港国际机场西大厅和全新的中场航站楼里的几家商店。香港国际机场是进入中国大陆和北亚的门户，我们希望它保持在亚洲和中国大陆游客心目中的中心地位和重要性，”她总结道。

High-end brands such as the Bally Boutique at HKIA Terminal 1 are a cornerstone for Nuance’ in the region

‘Local’ prestigious brands such as Hong Kong’s The Peninsula add value to the existing travel retail proposition and foster the luxury culture from a different perspective

Bags Unlimited at HKIA Terminal 2

Happy travelers mean a bigger basket and increased revenues for The Nuance Group www.dutyfreemagazine.ca ASIA DUTY FREE & TRAVEL RETAILING

RETAILER REPORT: LS TRAVEL RETAIL

Reaping the rewards of retail investment

LS travel retail China’s expansion plans in 2015 will center on fashion, specialty retail and food, reveal two top executives by

HIBAH NOOR

ince celebrating the opening of its first stores in mainland China in 2007, LS travel retail has come a long way. The French company now operates more than 80 outlets across the country with a presence in major airports and key high-speed railway stations in 14 cities, including Shanghai, Shenzhen, Xi’an, Nanjing, Xuzhou, Wuxi and Jiaxing. The network in China continues to deliver strong like-for-like sales growth, while the market offers great opportunities for further expansion, according to Eudes Fabre, General Manager of LS travel retail China. “In mainland China, LS travel retail has built a presence in major airports and key high-speed railway stations with a variety of concepts operated across business segments: Travel Essentials such as RELAY, Hub Convenience, Discover and Tech2Go; Luxury Fashion including high-end and lifestyle fashion and accessory brands; and Foodservice, including cafes and restaurants,” Fabre explains. In 2015, LS travel retail is scheduled to enter two major airport locations in China, as well as expand its operations in collaboration with existing landlords. The focus of expansion will be on fashion, specialty retail and food. “Our strong partnerships with brands, focus on operational quality and ability to operate across all segments of the commercial space in travel locations will enable us to grow further in terms of activity and geography,” says Fabre. LS travel retail operates in domestic and international terminals throughout China, where the market is characterized by its vastness and diversity. The overwhelming majority of passengers travel within China, notes Fabre. “Though there are few airports 36

ASIA DUTY FREE & TRAVEL RETAILING TFWA/APTRA CHINA 2015

Luxury fashion stores at Shenzhen Airport, which opened about a year ago

with significant international traffic, there is a multitude of large domestic hubs. In each region and city, consumers have different habits and expectations. The unique challenge is to have an offer that is both consistent and locally relevant,” he observes. The company’s presentation at the TFWA/APTRA China’s Century Conference, held in March in Shanghai, which will be delivered by Eudes, will focus on LS travel retail’s successful collaboration with Shenzhen Airport, where a new, state-of-theart airline terminal opened about a year ago. Ranging from 60 square meters to 150 square meters, the 13 standalone boutiques comprise Bally, Hugo Boss, Cerruti 1881, Coach, Dunhill, Emporio Armani, Ermenegildo Zegna, Furla, Montblanc, Salvatore Ferragamo, Shanghai Tang, Tommy Hilfiger and Versace. The fashion boulevard offers travelers the latest collections of readyto-wear, bags, shoes and accessories for men and women. LS travel retail serves both business and leisure travelers at its stores and restaurants. “Though customers traveling for business have traditionally accounted for most of the spending in the China travel retail sector, we are witnessing a rapid growth in the

This Discover store at Xi’an Airport Terminal 3 carries an array of travel essentials and local souvenirs

Eye Love Xi’An sunglasses store located in Xi’an Airport

LS travel retail is a global leader known for excellent customer service

number of tourists traveling within China or going overseas. These leisure travelers enjoy a rising purchasing power, and though they may be more value-conscious, they have increasing expectations of the brands and outlets they frequent, just like business travelers. Our task is to adapt our offer and service to please the different consumer segments and Eudes Fabre, General Manager of LS travel retail China give every traveler a reason to spend and indulge while traveling,” says Fabre. Indeed, when it comes to designer fashion, the company has developed a brand portfolio to target all types of travelers, according to Philippe Fontalba, Luxury Fashion and Accessories Director of LS travel retail ASPAC. He lists as customers “VIP customers who contribute high percentage Philippe Fontalba, Luxury Fashion and Accessories Director, LS travel retail ASPAC of spending for personal gifting purposes on luxury brands; business travelers who appreciate luxury branded goods and love to own them; modern and sophisticated women who are trendsetters or fashionista followers with a penchant to set fashion trends—this is a population we are hoping to tap into—and the Chinese middle class who could go for impulse purchase items with more affordable brands that are smaller-ticket transactions.” Like the travelers themselves, Eudes pointed out that the spend per head varies widely across concepts and locations. “It may be as low as a dozen yuan in convenience and as high as several thousands for luxury. The important trend to note is the continuous and robust growth in the transaction values we achieve, testament to rising sophistication of consumers and our team’s success in serving their needs,” he says. Eudes believes the scope of LS travel retail’s services gives the operator a unique selling point. “Our unique capability is our

presence across the Travel Essentials, Luxury Fashion and Foodservice categories of the airport commercial offer. In addition to fashion accessories and ready-to-wear, we offer thousands of products from a wide base of suppliers, including popular, premium and imported goods as diverse as gifts, fresh food, electronics, books, confectionery and food service.” Turning to where he sees the company’s China business in three to four years, Eudes explained: “Our medium-term strategy for China is to grow our partnerships with key landlords, ensuring we are best able to handle their needs and meet the expectations of their passengers. Leveraging our broad capabilities to take on large-scale projects, we want to be known in the market for the excellence of our operations, the competence of our teams and the strength of our concept portfolio. The management of infrastructure in China is evolving, with commercial revenue becoming a strong focus. We intend on growing by meeting these changing needs with a combination of international competencies and local market expertise. Our success will be built on offering attractive and comprehensive solutions to our existing and future landlords.” With over more than seven years’ presence and operations in China, the mainland will continue to be a major focus and a key element of the group’s business strategy in the long run, with the market offering great opportunities for growth, he adds. In the medium term, Fontalba forecasts a decline in gifting due to the clampdown on corruption, but predicts higher self-purchases: “With the highly visible Chinese government campaign aiming to crack down on corruption and encourage frugality, it is predicted that there would be a negative impact on sales of luxury goods,” he says. “Although we foresee a drop in gifting, the good news is Chinese shoppers will continue to indulge on purchases for themselves, and this portion of the business will still remain stronger in the coming years. A study has also found that the amount of luxury shopping they do abroad has grown further to 66% – which is good news for the global downtown and travel retail business.” Overall, Fontalba also expects an uptick in airport retail investment in designer apparel and accessories. “Travel retail in luxury goods will definitely continue to see growth. Airports are places where affluent tourists have time on their hands, and as a result, we foresee a big increase in airport retail investment, especially in the designer apparel and luxury accessories categories.” www.dutyfreemagazine.ca ASIA DUTY FREE & TRAVEL RETAILING

RETAILER REPORT: KINGPOWER

Doing business in China: the insider perspective With 30 years’ hands-on experience in China, King Power Group has a unique take on the evolution of this intriguing market. Sunil Tuli, its Managing Director, shares his thoughts

n order to see where the industry is going, Tuli believes that it’s necessary to take a step back and chart the development of China’s dynamic duty free and travel retail market, before bringing out a crystal ball to predict the future. He says: “Today’s China has not been shaped simply by the revolutionary changes of the past four decades, but by thousands of years of history; but for its duty free history we need to go back only as far as the 1970s.” Following de-regulation in 1979, the country opened up to new opportunities from all corners, including expansion of the service sector, the advent of private businesses and foreign investment; each helping to catalyze the then nascent economy.

CLAIRE MALCOLM

ASIA DUTY FREE & TRAVEL RETAILING TFWA/APTRA CHINA 2015

“In the same year, two remarkable men – Ayub Khan and Antares Cheng launched the first duty free venture in China. At the time only the Diplomatic Corps were allowed to import goods for self-consumption, and all travel and tourism business was handled by the predecessor of today’s CITS Group Corp CITSC China International Travel Service Corporation Head Office,” says Tuli. “Khan partnered with the young and creative Cheng to operate a Friendship Store in Hong Kong’s Canton Road, catering to mainly Japanese tourists. Based on this experience they saw the emerging possibilities in China and approached CITS Head Office with a request to consider duty free sales,” he continues. The Kiu Fat company, which was owned by a Hong Kong registered com-

pany, with affiliations to the state owned Chinese companies, was subsequently formed and led to the debut of the first ever duty free shops at Beijing, Shanghai and Guangzhou Airports. These were owned by China Civil Aviation and operated by CITS, while Kiu Fat supplied merchandise and acted as consultant for shop design and operating procedures etc. “In 1984, China Duty Free Group (CDFG)—a subsidiary of CITS Group Corp—was formed to operate and manage the duty free sales at Chinese mainland ports in line with governmental policy. In 1985, Kiu Fat gained concessions for Hong Kong International Airport, and then Kai Tak, making it the first-ever local operator to achieve that role – and King Power became a shareholder in this venture,” he explains. Tuli highlights the light speed pace of development in the Chinese market in the last three decades, which led to the creation of Orient King Power, with its first tender win of Shanghai and Pudong, also the first in China. Going from strength to strength, in 2002, China Power was formed as a joint venture between King Power and CDFG, to assist with supplies, consultancy and investments in duty free in China, and its next milestone was the tender program for Shanghai. Says Tuli: “As the market in China continued to open up, over the years we lost our Pudong concession. Others operators came in, and today you have CDFG and Sunrise as the main operators. “However, King Power continues to operate in travel retail in the domestic airports and this is now our area of focus. There are also other names involved in this market such as Dufry and Lagardère.” With 17 planned openings at Pudong, Tuli and the team are currently in the process of negotiating with brands and working out the finer points of the positioning and the mix of space. However, sustainability is key to King Power Group’s decision-making process and as we reach the midpoint of this decade, Tuli says that the group is committed to ensuring that it continues to run its businesses successfully. “The Chinese markets and the markets dependent largely on the Chinese traveler are facing a slight slowdown, and we have to be careful and make sure that our business model and our decisions to go to new locations, is always sustainable.”

Sunil Tuli, Managing Director, King Power Group

www.dutyfreemagazine.ca ASIA DUTY FREE & TRAVEL RETAILING

RETAILER REPORT: HEINEMANN

Max Heinemann, CEO of Heinemann Asia Pacific said: ‘We would like to thank Singapore Cruise Centre for giving us the opportunity to extend our partnership. The opening of the third outlet of Ocean Duty Free marks the next milestone for us as we increase the presence of our duty free business at the ferry terminals. With a much shorter transit period, we adopted a convenient and innovative retail approach to capture the attention of passengers by providing a wide assortment at competitive prices to cater to their travel needs.”

A rustic approach to the store

Christina Siaw, CEO SCC, and Constantin Wiesmann officially open the new outlet

Making Waves in

Operating just behind the immigration counters at the Ferry Departure Hall, the Ocean Duty Free outlet has been designed with a rustic beach resort theme. It carries a wide assortment, ranging from perfumes and cosmetics to confectionery and fashion accessories. Shoppers can save up to 50% versus city prices. It will also offer locally sourced brands such as Funfit and Love SG and a range of lower priced items for the more budget conscious traveller. The customer base is predominantly Singaporean and Indonesian weekend travellers. Commenting on the outlet, Constantin Wiesmann, Operation Director, Retail for Heinemann Asia Pacific said: “This is an unique approach. With many duty free shops you can be anywhere in the world. Our aim is always to look for a sense of place. Our consumers are going for a weekend of beach and golf, therefore we wanted our store to reflect that this is where their journey starts. This outlet is inspired by a beach theme with its wood paneling, lighthouse and ferry-style cash desk.” “We aim to provide the consumers more product offerings in a refreshing and relaxing shopping ambience. You will find classic duty free offerings such as chocolate and perfume, but additionally you will find offerings you would not expect to find in a duty free shop such as flip-flops, golf accessories and beach wear.”

Singapore Heinemann Asia Pacific launches its third beach resort-themed ferry terminal outlet in Singapore to capitalize on the rising number of passengers by

REBECCA BYRNE IN SINGAPORE

einemann Asia Pacific has opened its third duty free retail outlet with partner Singapore Cruise Centre (SCC), at the Harbourfront Cruise Ferry Terminal, to serve the nearby Indonesian destination of Batam. The shop, its largest to date in Singapore at 157 square meters, will trade under the name of Ocean Duty Free. The opening of two other stores under this brand at Singapore’s Tanah Merah ferry terminal, in March 2014, marked the company’s debut in the Asian cruise travel-retail market. Upgraded in 2011, the Harbourfront Cruise Ferry Terminal operates six berths serving regional ferries. Approximately five million passengers per year pass through the terminal. Heinemann Asia Pacific’s contract with SCC at the Harbourfront Cruise Ferry Terminal is for three years. 40

ASIA DUTY FREE & TRAVEL RETAILING TFWA/APTRA CHINA 2015

Max Heinemann took on the new role of CEO, Asia Pacific in 2014

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RETAILER REPORT: HEINEMANN

Strong regional growth Constantin Wiesmann went on to talk about Heinemann Asia Pacific’s strategy for Singapore. “We are interested in exploring and extending our market presence here. We see a strong growth in the passenger numbers both at the ferry terminals and cruise centre businesses. Furthermore we want to capitilize on future initiatives such as the development of the world’s largest Eco-theme Park.” Christina Siaw, SCC’s CEO, added: “We are very pleased that Heinemann Asia Pacific has chosen us as their partner once again as they expand their retail footprint in Singapore. Their choice of our strategically and conveniently located HarbourFront terminal is a testament to their confidence in our ability to manage a first class, vibrant gateway for the more than five million passengers who use our terminal annually.” She went on to say that she was very optimistic about the growth in ferry passengers. “We have had greater than 5% growth in the past three to four years and the increased connectivity between Indonesia and Singapore will continue to result in more traffic between the two countries.” Heinemann Asia Pacific is a 100% wholly owned subsidiary of global travel retailer Gebr. Heinemann. Currently the subsidiary has operations in 12 countries in the region including Australia, Malaysia, Indonesia and China. Future projects include the contract to manage Sydney’s airport duty free, which commences in February. Gebr. Heinemann is one of the top three players in the international travel retail market. As a distributor it supplies more than 1000 customers in more than 100 countries. In retail it serves more than 30 million customers annually through its 230 outlets. In 2013 the family-run business generated total sales of US$2.8 billion. The rustic beach theme is captured with a lighthouse

The brightly lit store offers a range of trendy and affordable products Constantin Wiesmann, Heinemann Asia Pacific’s Operations Director, stands behind the ferry style cashier’s till

ASIA DUTY FREE & TRAVEL RETAILING TFWA/APTRA CHINA 2015

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Available in prescription.

WANDERER | HCL BRONZE LENS

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AUCKLAND AIRPORT CONCESSION

Snapshots of LS travel retail’s Aelia store in Adelaide, South Australia

LS travel retail prepares to intrigue after Auckland Airport contract win A new Aelia Duty Free store concept, centered on the vision “Intrigue, Experience and Indulge”, will be rolled out for the first time in the region, offering innovative ideas for New Zealand’s premier gateway and big-name brands

S travel retail has been awarded one of two duty free concessions in Auckland Airport’s International Terminal, following its success in a competitive tender process in late 2014. “The win signals an exciting new chapter for both LS travel retail Pacific and Auckland Airport,” the company says. This concession precipitates the expansion of LS travel retail’s duty free network across the Pacific, where the retailer already operates duty free stores in Adelaide, the Gold Coast, Queenstown (New Zealand) and Noumea. A new Aelia Duty Free concept, which has been tailored for Auckland Airport, will be rolled out for the first time in the region. It is expected to boost the airport’s duty free offer with innovative ideas for New Zealand’s premier gateway, the company says. LS travel retail Pacific will offer big-name brands in categories such as perfume and cosmetics, local wine, liquor and souvenirs. The offer is based on three pillars, “Here and Nowhere Else”, “Art of the Gift” and “Facilitation and Care”, which the company said are aligned with the core values of Auckland International Airport’s customer strategy. “LS travel retail Pacific’s vision to Intrigue, Experience and Indulge will form the backbone to this strategy,” it adds.

ASIA DUTY FREE & TRAVEL RETAILING TFWA/APTRA CHINA 2015

Speaking about the contract win, LS travel retail Pacific CEO Matthieu Mercier says: “It’s great to see our strategy for the expansion of our duty free business reach a significant milestone with Auckland International Airport, who have been a key partner for us since we entered the New Zealand market with our Travel Essentials concepts back in 2011.” Mercier continues: “The alignment, at the very early stages of the process between our vision for a renewed retail experience at Auckland Airport, enhanced by the new Aelia Duty Free concept and the airport’s ambition, has been nothing short of amazing. Our duty free teams have been able to give this vision both a strong element of local flavor and an experiential dimension which clearly contributed to this success. “To achieve this result, we have been able to mobilize the right balance of local expertise and understanding of the specificities of the New Zealand market together with a strong involvement of the LS duty free and specialty experts across Europe and Asia Pacific.” He concludes: “Our goal now is to make it happen and to create fantastic duty free experiences that exceed passenger expectations, and I believe that our vision for Auckland Airport will achieve this and more. We are very excited to expand on our enduring partnership with Auckland Airport, and look forward

to what the future will bring.” LS travel retail Pacific’s Duty Free General Manager Ivo Favotto adds: “Auckland is a fabulous city in a fabulous country and we worked hard to build an offer that honored the uniqueness of both the city and the country, as well as its spirit of adventure. Our concept for Auckland is based on delivering unique experiences to travelers through Auckland Airport. “We plan to bring a number of world firsts to Auckland, as well as a range of unique experiences and a plenitude of new brands and product categories. Watch this space. I must also commend Auckland Airport and their retail team for running one of the most fair and collaborative of tender processes.” Richard Barker, Auckland Airport’s General Manager Retail and Commercial, explains why the company had selected

LS travel retail Pacific as one of its two duty free operators: “The selection of LS travel retail means that our passengers will be able to choose from a wide range of products and services that represent the best of New Zealand and the world,” he says. “We were very impressed by LS travel’s exciting retail concepts, including a number of world firsts and new brands that will be unveiled when our new international departures area opens late next year. We were equally impressed by their commitment to developing our online retail channel. We look forward to working with the LS travel retail team as we prepare for the licence’s July 1, 2015 start date.” Aelia Duty Free will significantly increase LS travel retail Pacific’s footprint at Auckland Airport, where the company already operates several Travel Essentials stores.

www.dutyfreemagazine.ca ASIA DUTY FREE & TRAVEL RETAILING

â&#x20AC;&#x201A; RETAILER REPORT: EVER RICH DUTY FREE

The new Golden Lake Hotel is located on the Kinmen islands, popular with mainland Chinese tourists

Ever Rich Duty Free bets on Penghu and Kinmen islands for growth

A luxury room at the five-star Kinmen Golden Lake Hotel

Taiwanese operator Ever Rich Duty Free is working on a brand new hotel and duty free shopping complex on the Penghu islands, having recently celebrated the opening of a similar project on Kinmen

ASIA DUTY FREE & TRAVEL RETAILING TFWA/APTRA CHINA 2015

ver Rich Duty Free is set to embark on a hotel and shopping plaza project in Penghu, an island situated in the Taiwan Strait between mainland China and Taiwan, as part of its ambitious plans for 2015. The Taiwanese companyâ&#x20AC;&#x2122;s plans also include launching marketing campaigns to attract more tourists from mainland China to Kinmen, where the company opened its Golden Lake Hotel in December 2014, as well as unveiling a new duty free shopping website.

Dining facilities at the Kinmen Golden Lake Hotel

The Kinmen Golden Lake Plaza shopping center boasts many luxury brands

The Rolex boutique inside the Kinmen Golden Lake Plaza duty free complex

The company tells Asia Duty Free: “The focus in 2015 is to attract more tourists from China to Kinmen, [with] more marketing campaigns there. Also, our Penghu hotel and shopping plaza project is about to start as well. As e-commerce is definitely the superstar that every brand and corporation should work on, the Ever Rich online duty free shopping website is due to open soon (expected in March 2015). There will be cosmetics, fashion items, liquor, Taiwan specialties, and so on.” The Kinmen islands will continue to be a big focus for the company this year, following the opening of its five-star Golden Lake Hotel in December 2014 and its duty free complex at the Ever Rich Golden Lake Plaza, which began trading in May. Tourism to Kinmen—a 30-minute ferry ride from Xiamen —has been boosted with the introduction of the outlying island landing visa for mainland Chinese visitors on January 1, 2015. The new visa policy applies to residents of 36 cities in mainland China whose citizens are allowed to travel to Taiwan independently. Travelers must hold a permit to travel to Taiwan that is valid for over one month and to have booked a return ferry trip. Upon arrival at Kinmen, Customs formalities are completed in two minutes. Visitors can then stay in Kinmen for up to 15 days. “This policy makes traveling to Kinmen much more convenient for people from mainland China, allowing visitors to enjoy

the unique cultural sights of Kinmen, fine local food and buy duty free international luxury goods at unbeatable prices flexibly and quickly, and also stay in Kinmen’s first five-star standard hotel,” says Ever Rich. “Traveler numbers in January 2015 have increased 20% compared to the same period in 2014. However, we still hope the travel formalities to Kinmen can be simplified more, which will definitely help the development of Kinmen’s tourism industry.” The number of customers at the Golden Lake duty free plaza has climbed by more than 30% since its soft opening in May, the company says. “But this number still hasn’t reached our expectations; with the hotel now open and more open tourist policies, we believe the number of tourists has a large potential to grow.” Some 90% of target customers at the plaza will be mainland Chinese, as more than 15 million Hong Kongers and Chinese travel to Xiamen every year. Speaking about the effect of the luxury clampdown in China, Ever Rich notes: “The luxury ban in China has made the very high-end luxury goods slow down a little in sales, but it hasn’t had a big influence. When they choose luxury products, they change from items with an obvious logo to luxury goods brands that cannot be easily identified.”

www.dutyfreemagazine.ca ASIA DUTY FREE & TRAVEL RETAILING

ASSOCIATION REPORT: APTRA

APTRA President Jaya Singh speaking at the TFWA Asia Pacific conference in 2014

APTRA sets out priorities for 2015 Representing almost 100 members across a vast geographical territory, the Asia Pacific Travel Retail Association (APTRA) is developing its core services and capabilities to better serve the industry

new schedule of retail training seminars, database enhancements, research studies and advocacy support are among the priorities set down by the Board of the Asia Pacific Travel Retail Association (APTRA) for 2015. The wide-ranging research program, conducted for APTRA by m1nd-set, has kicked off this year with a study of the shopping behavior of Chinese travelers on domestic and international journeys, including their motivations for shopping and not shopping, their product preferences as well as the customer segmentation on selected routes. The headline results of this study, which is sponsored by Diageo, will be presented at the TFWA China’s Century Conference, organized in partnership with APTRA, on March 12 in Shanghai. Future research topics will include the behavior and attitudes of Asia Pacific travelers (China, Korea, Japan, Thailand, Indonesia, Philippines, Vietnam) in the region; a focus on Russian travelers in 48

Asia Pacific; the behavior and attitudes of non-Asia Pacific passengers in the region; inflight shopping—perceptions and the impact of promotions; behavior and attitudes of Asia Pacific vs non-Asia Pacific passengers in Asia Pacific; and evaluation of future inflight shopping and concepts. The Responsible Retail Training Programme, which has already been adopted by several major retailers, will be extended to other retailers in the region, to ensure that there are consistently high standards in the Asia Pacific region. APTRA Seminars, aimed at bringing insights on successful travel retailing to member companies and at offering networking opportunities, will be organized at various locations throughout the year. The popular APTRA database will be populated with the contact details of more airports, airlines, ferry companies, retailers, distributors and suppliers to enable easy access to the right person in the right place. Key to the industry’s success in the

ASIA DUTY FREE & TRAVEL RETAILING TFWA/APTRA CHINA 2015

Asia Pacific region is an open dialogue between stakeholders and regulatory authorities, and in 2015 APTRA will continue its support of this ideal through advocacy. APTRA President Jaya Singh says: “These research, training, advocacy and database initiatives are fundamental to the missions of the association, namely safeguarding the interests of all stakeholders and driving industry growth. In the last year we saw our membership grow by 20% and revenues grow by almost 40% as more and more companies recognize the benefits they gain from the work accomplished and the need for a strong regional association. “Our wish for 2015 is that we obtain greater recognition for the industry among governments so the industry can take part in more consultation with legislators as they deliberate on new regulations that may impact our business. This business is, after all, a vital revenue stream for airports, ferries, airlines and, indeed, governments.”

ASSOCIATION Q&A: TAX FREE WORLD ASSOCIATION

Erik Juul-Mortensen, President, TFWA

Viewing 2015 with positive anticipation TFWA President Erik Juul-Mortensen sees some serious challenges ahead for the industry but also great opportunities for growth Americas Duty Free: Can you give me your opinion of the duty free business overall in 2014? Erik Juul-Mortensen, President, TFWA: The overall development of the global duty free and travel retail business in 2014 was positively supported by a continued growth in international passenger numbers. Some areas fared better than others, and the political environment and financial situation each played an important role in this.

to amaze with its glittering displays and interactive store theatre which are a delight to behold and an effective driver of sales too. I would like to see a more exciting offer in toys and gifts, a category which is under-represented in many airports. Basically, wherever suppliers, retailers and landlords combine forces to set an attractive and alluring retail scene, there is potential for significant growth in duty free and travel retail sales because we have a captive audience and travelers like to shop.

ADF: How much growth do you predict for 2015? EJM: I believe we have great opportunities to grow the industry more in 2015 than the development we saw in 2014. There are serious challenges facing us as an industry, including increased pressure from regulatory factions, continued political unrest in many parts of the world, together with a very difficult currency situation. At the same time we see a continued growth in the international passenger numbers, including newer categories of travelers, and combined with a number of new and exciting retail developments coming into force in 2015, I believe we can look at the coming year with some positive anticipation.

ADF: The China conference was a hit in 2013. Will you be filling 2016 with a different regional conference? EJM: At the moment there are no concrete plans for a regional conference in 2016, but we keep the options open and should we see a clear need or desire we shall react accordingly. However, at the moment, although we believe strongly in industry-staged events, our members feel that the industry conference and exhibition calendar is busy enough with new activities being added at regular intervals. We want to ensure that our events are essential and meet a demand in the market.

ADF: What are some of the growing categories? EJM: Statistically-speaking, each of the product categories ought to grow in line with growth in passenger numbers, but I believe there is potential to grow faster than the increase in traffic if we can get better at driving footfall and increase average basket value. A star performer in the last couple of years has been fashion and accessories, and this is likely to continue as more retail facilities are developed which can accommodate this extremely popular but space-intensive category. The selection in confectionery and fine food is ever increasing, with local specialities and travel retail exclusive lines tempting the consumer, and where there is increased diversity matched to the passenger profile there is generally growth in sales. The wine and spirits category never ceases

ADF: What are the major economic challenges for the duty free market this year? EJM: I believe the currency fluctuations are, and will continue to be, a major challenge for the industry in 2015. I also believe that the discussion on the so-called ‘industry model’ will have to be revisited – or will continue to be discussed in 2015 – as a win-win situation and is an absolute must for all partners in the industry. ADF: How is TFWA addressing these challenges? EJM: TFWA plays a major role in bringing together all players in the global industry and providing the opportunities for the industry to meet and discuss issues for the future. TFWA also plays an important role in supporting the industry with research and also through our work with, and support of, the regional trade associations as well as with the Duty Free World Council. www.dutyfreemagazine.ca ASIA DUTY FREE & TRAVEL RETAILING

EDITOR’S PICKS

A must-have miscellany These travel retail novelties caught our editor’s eye this month 3 1

1. Estée Lauder Re-Nutriv Ultimate Diamond Transformative Energy Creme: Infused with a combination of exclusive Black Diamond Truffle Extract and youth-sustaining and lifting technologies, this creme creates a more even-toned and contoured look, leaving skin feeling nourished, refreshed and soft 2. Furla Piper Medium Dome bag: This handbag is now available as a travel retail exclusive limited edition in soft Ares leather in Rose, new Caramello and Storm colors. A Furla charm not found in the main collection has been designed specially for the bag

ASIA DUTY FREE & TRAVEL RETAILING TFWA/APTRA CHINA 2015

3. Anthon Berg Marzipan Bar range: The new Marzipan Bar Nougat eight-piece box, containing chocolate-covered almond paste, is the fourth product in the popular range. The nougat variety is the best-selling on domestic markets 4. Aigner Triple Zip Bag: This luxurious yet practical bag has elegant leather trimmings in a cognac color. The intelligent interior is equipped with three separate zip compartments

7 4

5. BeeBio Manuka Honey and Bee Venom skincare: Wellington Global has added BeeBio Manuka Honey and Bee Venom skincare to its travel retail portfolio. This breakthrough product will be listed on board Singapore Airlines from March 2015 6. Tumi Peterson Wheeled Backpack: The US accessories company introduces the Peterson Wheeled Backpack in Baltic, a rich, sea-inspired shade of blue, which will be sold exclusively in travel retail locations worldwide. Its compact, versatile design allows it to be carried on the back, or wheeled down aircraft aisles

7. Travalo Milano fragrance atomizer: This upscale atomizer incorporates high-definition spray head technology, delivering a luxurious fragrance mist and an increased emotional experience

www.dutyfreemagazine.ca ASIA DUTY FREE & TRAVEL RETAILING

BEAUTY: L’OREAL

Kiehl’s Asia Flagship store in Haitang Bay, China

Travel retail performs beautifully for Kiehl’s Kiehl’s is proving a hit with Chinese travelers thanks to a number of initiatives, says Adele Zhang, the cosmetics brand’s General Manager in Asia Pacific travel retail by

ASIA DUTY FREE & TRAVEL RETAILING TFWA/APTRA CHINA 2015

HIBAH NOOR

’Oréal Group-owned beauty brand Kiehl’s is flying off the shelves worldwide—and travel retail is no exception, according to Adele Zhang, General Manager, Kiehl’s & Helena Rubinstein at L’Oréal Travel Retail Asia Pacific. “Kiehl’s has been flying with excellent performance globally,” enthuses Zhang. “Today, we are a top 10 skincare brand at a global level. And in travel retail Asia Pacific, according to the Generation Research report, Kiehl’s has been the number three skincare brand since 2013. We are very proud of our performance —in particular Kiehl’s has very selective distribution. As of now, Kiehl’s only has less than 60 points of sale in the Asia travel retail channel. You can imagine how productive each of our stores is.” Zhang notes Kiehl’s strong acceptance among Chinese consumers in the region. “Kiehl’s is growing with great momentum across the entire Asia Pacific and is very well-received by Chinese consumers. We have a strong will and confidence that Kiehl’s will continue to shine in 2015.” Regarding the brand’s main launches for the Asian and Chinese market for 2015, Zhang says that water essence is a hot trend in the cosmetics market in Asia. To capture this business opportunity, Kiehl’s will launch its first Essence Water in May this year. “It’s a transversal product that helps our consumers to build a more complete skincare routine. We do expect this new launch will further uplift Kiehl’s business growth,” says Zhang. Turning to the brand’s expansion, Kiehl’s had 10 new store openings in travel retail across Asia Pacific in 2014, including China, Japan, Malaysia, South Korea, Singapore, Taiwan and Thailand. “Above all, the Kiehl’s opening in China at Haitang Bay has been significant to us,” Zhang observes. She explains: “In September 2014, we opened the first Kiehl’s travel retail Asia Pacific flagship store in Haitang Bay. It covers 100 square meters and is the biggest Kiehl’s store in Asia. To celebrate the grand opening, we invited Mr. Li Zhi Ting [Hong Kong singer/actor] to design a limited charity version of our Calendula Toner. And for each limited-edition bottle

sold, Kiehl’s donated US$5 to Free Lunch For Children, a charity organization which provides free lunches to children in need in China. In order to reach as many Kiehl’s fans as we could for this meaningful charity campaign, we promoted and announced the campaign not only on traditional media channels but also on digital platforms. The digital communication earned us brand awareness and great PR value.” Zhang notes that the Asian and Chinese markets are significant to most cosmetic brands, not just for Kiehl’s, for two reasons. First of all, the Asia market, especially the Chinese market, is booming, she says. “Compared with Europe, US and Africa & Middle East, the Asia travel retail beauty market is the biggest and fastest growing region. And secondly, Chinese passenger numbers are rising, and they have become the biggest passenger group in the travel retail channel all over the world. It is crucial for a brand to build up a presence in China since the awareness and reputation of the brand will directly influence those Chinese travelers when they decide what to buy during their journey,” she states. Kiehl’s, which opened its first door in the Asian travel retail market in Hong Kong airport in 2006, has a good mix of consumer nationalities, mainly 60% Chinese and 30% Korean in its Asian travel retail business today. “Overall, Kiehl’s fans are relatively young, aged around 20 to 40 years old. They appreciate Kiehl’s brand heritage and product efficacy,” says Zhang. To attract consumers, Kiehl’s strong global team has a good understanding of up-and-coming consumer trends, and works closely with the R&D team to cre-

The Ultra Facial Cream is Kiehl’s number one best seller

ate new products that infuse both scientific technology and natural ingredients. “Meanwhile, our local country will select the suitable product according to local culture and trend to launch. So we always manage to bring the most advanced formula, while at the same time to meet local consumers’ expectations,” explains Zhang. On upcoming promotions, Zhang points to the Chinese New Year celebrations: “We always make sure we bring excitement to Kiehl’s fans and, of course, we won’t miss that in the Chinese New Year. We have prepared various on counter consumer engagement activities, the Kiehl’s Chinese New Year travel exclusive set as well as a special gift with purchase, the Kiehl’s Advent Calendar, all exclusively available in Kiehl’s Asia travel retail stores.”

Iris Extract Activating Treatment Essence is the company’s first essence water to launch this summer

www.dutyfreemagazine.ca ASIA DUTY FREE & TRAVEL RETAILING

JEWELRY: TOSCOW

SALES SPARKLE FOR TOSCOW IN CHINA by

CLAIRE MALCOLM

Changing consumer tastes and a newfound appreciation of quality gemstones are supporting Toscow’s sales figures in China as the brand enters its 15th year of operation in the region

hanghai Pudong International Airport was the launchpad for Toscow’s entry into mainland China in 2000, and with hub presence at Beijing Capital International Airport and key downtown locations, it is making its presence felt on the mainland. “We’ve seen strong opal sales in recent years as the Chinese are familiar with Australia’s national gemstone and treasure its value. Changing tastes have also meant that colorful crystals are doing very well, as are Tahitian pearls, and the Chinese are definitely more ‘expressive’ than before and attracted by eye-catching jewelry,” says Francis Ng, General Manager, Toscow Australia. Its two downtown Beijing operations and new high profile outlet in the world’s largest duty free shopping complex at Haitang Bay in Hainan, are also helping drive its commercial success in mainland China. Says Ng: “Our new domestic

Beijing store opened in July 2014 at the upscale Viva Plaza and is concentrated on high-end jewelry including opals and pearls. So far, sales have been extremely encouraging and have exceeded our budget expectations.” Toscow’s shop-in-shop location at Haitang Bay’s retail centrepiece, CDF Mall, which opened in late 2014, has also been doing “fantastically well” according to Ng. “We are located in the jewelry section, which attracts a lot of high spending customers. The Chinese are our main customers, but there’s also a high percentage of Russians, especially during the winter season,” he says. While no further downtown stores are in the pipeline, Ng reveals that there are plans to grow Toscow’s portfolio of airport and border shops in mainland China. On-board sales is another area where Toscow sees growth potential and with the company’s products already listed with 50 international carriers including Cathay Pacific, Singapore Airlines and Qantas, capturing prospective purchaser interest is key, as Ng explains: “It’s easy because if the design is good, people will buy; but it can also be difficult in that brand loyalty is rare and therefore sales can fluctuate significantly depending on the listed product. If Francis Ng, General Manager, Toscow Australia

Sales at the company’s new Haitang Bay outlet, located in the flagship CDF Mall, have already exceeded forecast

ASIA DUTY FREE & TRAVEL RETAILING TFWA/APTRA CHINA 2015

Opals are a popular choice with Chinese travelers who appreciate the value and heritage of Australia’s national gemstone

you change your listings your ranking can shift dramatically.” Established in 1984, Toscow celebrated its 30th anniversary last year with the launch of its ‘Dreamtime’ opal-centric collection. “Australian opals were the first thing that we introduced to the travel retail market, and so we mixed and matched them with colorful crystals for this collection. It was very well received especially among Chinese customers,” remarked Ng. Unlike other jewelry brands, Toscow isn’t intentionally targeting the Gen Y consumer, as Ng explains: “They are more fashion conscious and we offer timeless designs that can be enjoyed for years. Having said that, we will present a brand new collection at TFWA 2015 in Singapore, which has a lighter, younger appeal. “We see that the taste of Chinese Gen Y consumers is becoming closer to their Asian neighbours, such as Koreans and Japanese. With the country more open and an increased flow of information through the Internet, they are able to identify the latest trends, the same as those countries around them.” The Chinese traveler is also set to be the main influencer in Toscow’s future growth prospects. Says Ng: “Their spending keeps increasing as they look for more high-end jewelry items such as those with opals and Tahitian pearls. They are also keen to have jewelry that reflects their personality and uniqueness, Opals are therefore a preferred choice as no two gems look the same.”

FASHION: HUNTING WORLD

Practical luxury defines Hunting World’s China appeal

Its flagship Battue Surpass collection uses Hunting World’s signature nylon fabric with a polyurethane coating

Chinese travelers in search of stylish adventure are buying into the Hunting World brand philosophy as the company targets inbound vacationers by

CLAIRE MALCOLM

unting World’s connection to the Chinese market actually dates back several decades, when brand founder Robert Lee embarked on a Silk Road expedition from the remote city of Kashgar, in Xinjiang province. The company’s affinity with the market has seen it significantly grow its presence both in airport and downtown locations in China in the last few years, as well as benefit from the growth in inbound Chinese passengers to Japan. This year the brand celebrates its 50th anniversary with the launch of a limited collection in collaboration with Globe Trotter, one of the UK’s most respected trunk makers. According to Yusuke Kimura, Global Business Development Director for ITOCHU, the brand’s worldwide distributor, 2015 marketing activities will continue to primarily focus on driving domestic sales in Japan. “We see high growth in Chinese domestic buyers since the tax free rule was eased in Japan. The weak yen is also supporting traveler spend. And since there are many plans for [more] downtown duty free shops in Japan, we are looking at the possibility here too,” he says. Its brand pillars of luxury, quality, individuality and practicality, have strong market appeal with its flagship Battue Surpass collection, which uses Hunting World’s signature nylon fabric with a polyurethane coating, a natural bestseller. However, according to Kimura, leather products also have major market appeal. “Compared with other territories, I 56

feel that the sales percentage of leather products is higher,” he says. “Also, we have been getting some feedback that Chinese customers are now preferring products with more subtle use of logos; smaller logos or even products without them,” he adds. Kimura also flags the global trend and a preference for ever-smaller bags and wallets with more space for cards and less coin purses. Location is just as relevant and impacts the brand’s strategic marketing agenda, as Kimura explains: “Downtown is more for vacationing Chinese tourists and at the airports we see more sales from Japanese, Taiwanese and Korean business travelers. “It is important to distinguish between the merchandising and the promotional strategy in different sectors. Tie-ups with inflight magazines are more effective for airport point of sales, for examples, whereas tie-ups with Chinese travel agencies is more effective in generating sales at downtown locations.” Opportunities in inflight sales are not proving to be as clear-cut. Says Kimura: “We are seeing [sales] growth from Chinese airlines, this is not as fast as we expected. It is still difficult to convince Chinese people to purchase without actually seeing and touching the products.” Gen Y Chinese consumer behavior is another area where Hunting World is paying special attention from a marketing perspective, as he explains: “Gen Y are very special and they are the ones with money to spend. Products are important, but marketing efforts are even more important to this generation as they are

ASIA DUTY FREE & TRAVEL RETAILING TFWA/APTRA CHINA 2015

very forward thinking. For example, Weibo and Wechat, are two of the key platforms that are essential to marketing.” He adds: “Some 46% of luxury consumers are Chinese and 76% of them buy outside China, and we believe that this trend will continue especially given the currency issue, and also the Japanese government’s economic strategy. Therefore we think that promotion and marketing activity to Chinese customers in Japan will become even more important.” This year the brand celebrates its 50th anniversary with the launch of a limited collection in collaboration with Globe Trotter, one of the UK’s most respected trunk makers.

Yusuke Kimura, Global Business Development Director for ITOCHU, the brand’s worldwide distributor

TRAVEL RETAIL CONTACT: catherine.bonelli@paulshark.it

CONFECTIONERY: MONDELEZ

Sweetening confectionery appeal to target the traveling masses

Special offers, new products or bestsellers and in-store promotional screens are claimed to be the most successful marketing tool to convert Chinese passenger interest into spend

A new report commissioned by confectionery giant Mondelez is helping the retailer address the needs and desires of 27 million Chinese travelers as it strategizes for future regional growth by

CLAIRE MALCOLM

he December 2014 released report, entitled ‘Understanding the Chinese’ presents an in-depth look at the cultural background of the traveling public and addresses the fundamentals required to drive the duty free and travel retail sector as airline and airport expansion continues its own growth spurt. 58

ASIA DUTY FREE & TRAVEL RETAILING TFWA/APTRA CHINA 2015

According to the research data, which was culled from various local and global sources, between 2011 and 2015, China will have 70-plus airports connecting travelers domestically as well as to new and undiscovered destinations. And with just 2% of the country choosing air travel in 2013, and 80% staying within Asia Pacific, this is still 27 million passengers, making it the fourth top ranked air traveling nation in the world that year. Jaya Singh, Regional Director - Middle East and Asia Pacific, Mondelez World Travel Retail, the company’s primary focus continues to be the locations to which Chinese travel in significant numbers, and the major hubs within Asia where there are large numbers of Chinese. “Singapore Changi, Hong Kong International Airport and Bangkok Suvarnabhumi are good examples. Catering to the Chinese traveler is becoming a more global exercise as they begin to travel further and in greater numbers,” he says. In stark contrast to its conformist past, today’s Chinese are open, challenging individuals with a huge affinity for technological innovation and one of the most ‘connected’ nations in the world. They are also ‘dedicated shoppers’ says the research, with 75% of all travelers visiting at least one airport duty free shop on their last trip. Some 58% also buy on board, although this is more weighted towards the business traveler at 61%. For them, confectionery is the number one purchase followed by wines and spirits then perfumes, whereas the leisure traveler goes for confectionery again, then cosmetics, perfume, and wines and spirits. The report notes that in addition to word of mouth, the most powerful marketing tool in any arsenal, China’s online presence is exploding. It says that online sales are expected to be more than the US, Japan, UK, France and Germany combined with every second order made right now, sent via a mobile phone; and two out of every three Chinese travelers also check the airport website before departing. “Gifting is a huge tradition, and Chinese will often make these purchases when they return home, seeking out something with a local flavor that can’t be found domestically,” says Singh. “This means that travel retail exclusives and items that have some kind of sense of place are popular. We’ve recently had significant success with bespoke sleeves for Cadbury and Toblerone Jaya Singh, Regional Director - Middle East and Asia Pacific, Mondelez World Travel Retail

products, which communicate this and help satisfy that desire for gifting,” he adds. Statistics show that 53% of gifting purchases are for colleagues and/or clients, followed by 50% for family members under 18 years old and 43% for those over 18 years. ‘Good’ gifts include items such as wine (to toast health), cigarettes, good quality tea, health products for older people, regional specialties, gifts in pairs of six or eight, and red and gold items (but not red ink). There is also a high level of self-consumption and travelers tend to visit multiple categories where successful promotional mechanisms include new products or bestsellers (generating 54% consumer interest), special offers (51%) and in-store screens for promotions/services (51%). Singh says that effective and attractive promotions are the way to capture Chinese traveler spend, as he explains: “They are generally willing to spend more if they feel that they are getting good value— particularly where there is some form of promotional mechanism. This isn’t necessarily a question of pricing but value—so a GWP or a multi-buy can be particularly effective. “From a format perspective, they tend to prefer individually wrapped pieces and more premium, formal packaging. We also see that staff engagement is very important for them as they need to feel comfortable in what they are buying, so the shop floor staff/promoters need to introduce and explain the product and promotion value to them.” The types of specific promotions and activations that have been especially successful for Mondelez with regards to targeting the Chinese traveler come as no surprise. “For example, Chinese New Year elements have been incorporated into our in-store visuals and we have also heavily leveraged the gold element of the Toblerone packaging to wish shoppers prosperity over the festive season,” remarks Singh. In addition, a great deal of emphasis is placed by Mondelez on customer touch points in terms of having product knowledge-rich staff as well as digital displays and signage etc. Says Singh: “Staff engagement is very important. Our staff training includes specific elements on key selling points in Mandarin. We also create dual-language

Domestic: China has no Chocolate history. Biscuits dominate.

Discoverers Adolescents

Transitionals Snackers Chocolate is worth it

Chocoholics Source: Mondelez Global Chocolate CIS, Wikipedia.de, Chocosight (Euromonitor,Nielsen etc.)

27mn Chinese Int’l Air Travelers in 2013 Overall Traveler Ranking (air/sea/land) 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. … 28.

Chinese German US UK Russian Hong Kong Chinese Canadian Macanese French Italian Brazilians

Top 10 Air Traveling Nations 2013 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. … 20.

UK US German Chinese Japanese French Canadian Russian Indian South Korean Brazilians

in mio

52,5 51,6 37,4 26,6 18,6 18,0 17,3 17,2 14,3 13,8 … 6,9

Growth vs 2012

1,2% 1,6% 0,5% 14,5% 1,8% 1,4% 0,3% 2,3% 4,5% 8,4% … 4,4%

1400 mio inhabitants

Not Air travelers

Int'l AirAir Travellers Travelers: 2% 4%

Sources: PAXSMART 2013, CIA Factbook

promotional signage to ensure Chinese travelers understand the offers and are confident in making a purchase.” Top-selling Mondelez brands are international icons. Says Singh: “We are fortunate in that two of [our] iconic brands – Toblerone and Daim - have strong visual identities which resonate with Chinese due to the use of red and gold. “The fact we know that Chinese travelers look for individually wrapped pieces does have an influence on our NPD innovation. Toblerone Tiny has been an extremely strong performer in terms of sales to Chinese. We know that the Share segment is one that Chinese will purchase

from, and in combination with the strong Golden identity we have a product which is ideally suited to them.” Overall, the report puts the passenger conversion rate at a healthy 66%, with potential for growth, particularly in confectionery given the gifting lift. Its key takeaways include the need for various sizes and price points, impressive but affordable ‘smart packs’, well-trained Chinese speaking staff, a focus on trusted gifts and Share, lucky colors and numbers, less multi-buys and more single item price offs or lucky number promotions and good Internet presence.

www.dutyfreemagazine.ca ASIA DUTY FREE & TRAVEL RETAILING

CONFECTIONERY REPORT

Celebrating a sweet Chinese New Year Travel retail confectionery suppliers are marking the Year of the Goat with a kaleidoscope of gift items, ranging from the playful to the elegant

Fazer Magic Cube in berry flavor presented in Chinese New Year packaging

Seasonal sleeve for Fazer Fazer launched its innovative Fazer Magic product range with a seasonal sleeve for Chinese New Year. The Fazer Magic line combines the tastes of blueberry, raspberry and truffle with a coating of high quality 70% dark chocolate. Packed in a distinctive magic cube, the line is designed to mix modern thinking with Karl Fazer’s original vision of offering people new and imaginative products. “The playful kaleidoscope of colors, transformable shape and stirring sayings printed on the packages are something the world of confectionery has never seen,” says Juha Ovaska, Head of Fazer Confectionery International. “The packages are designed to make a stylish present to bring back from a trip.” Ovaska says demand for the product would be driven by the rapidly increasing number of Chinese passengers at Helsinki Airport, which he described as “the stronghold of Fazer’s travel retail”. “When visiting Finland, Chinese travelers are looking for local delicacies to take home,” he notes. “Fazer premium chocolates are well known for their excellent taste in Finland. All Fazer’s confectionery products are made in Finland from the purest ingredients using best-in-class production facilities.”

ASIA DUTY FREE & TRAVEL RETAILING TFWA/APTRA CHINA 2015

Ovaska observed that the brand’s Chinese customers have increasingly evolved from mainly business passengers towards middle-class families with children. He notes that Chinese customers tend to prefer chocolates with fillings, mainly nuts, berries or liqueurs. “Also, we have a lot of marketing material in Chinese for our Geisha product range which is a delicious milk chocolate with hazelnut truffle filling,” he says.

The year of the goat To celebrate the Chinese New Year of the goat, Godiva has unveiled two gift boxes, outlining the goat in golden strokes on a stylish red gift box, symbolizing good fortune and joy. The Belgian brand’s Chef Chocolatier has created three special pieces flavored with edible flowers and exotic roots offering a unique taste and aromatic fragrance. The two boxes contain 15 pieces of chocolate and a 48-piece carrés assortment. Beatrice Lennuyeux-Vergier, Godiva’s Associate Brand Manager Global Travel Retail, says: “Gifting during seasonal occasions such as Chinese New Year and Golden Week has always been very important for the Chinese and, as passenger figures from China continue to grow, travel retail provides an excellent opportunity to offer themed and exclusive lines. Chocolate consumption per capita in China is still low in comparison to other markets but yet with the number of Chinese passengers growing and increasing wealthy shoppers embracing global trends, the market for chocolate is growing. “One way to appeal to the Chinese is through indulgent chocolate confectionery gifts—especially those which are of premium quality, specially packaged to appeal to the Chinese people, and which are exclusive to the channel.” She adds that Chinese consumers appreciate the heritage behind the Godiva brand and know that they are purchasing a quality product and a mark of taste and international flair. At the same time, chocolate remains affordable compared to other luxury categories. Godiva is relatively a young brand in China, with a rapidly expanding retail presence in the domestic market. As a brand, it aims to bring Chinese consumers a more contemporary side to life with a touch of luxury and sophistication, she says. Godiva also wants to introduce Chinese travelers to the custom of self-gifting.

Godiva has created three special pieces flavored with edible flowers and exotic roots offering a unique taste and aromatic fragrance

GUEST WRITER

Andrea Dini, President & CEO, Paul & Shark

Forging strong relationships

Catherine Bonelli, Worldwide Travel Retail Director, Paul & Shark

Catherine Bonelli, Worldwide Travel Retail Director of Paul & Shark, considers the huge potential of the Italian fashion brand in travel retail by CATHERINE BONELLI

elegates to the upcoming TFWA China’s Century Conference will have much to look forward to when Andrea Dini, President & CEO of Italian fashion label Paul & Shark, takes to the rostrum to speak. Paul & Shark was one of the first European fashion houses to realize the potential of the Chinese market. Since opening its first boutique in the 1990s, the brand’s network has grown to cover over 40 Chinese cities including a number of important travel retail locations. Dini, the architect of Paul & Shark’s success on the mainland, will look back at the evolution of the market and of the Chinese consumer since its debut over 20 years ago and offer his vision of the future for premium and luxury brands in China. Here, Catherine Bonelli, a duty free veteran who joined Paul & Shark as Worldwide Travel Retail Director in April 2014, reflects upon the brand’s distinctive travel retail offering. Catherine Bonelli: I have been involved with the fashion industry for 15 years and travel retail for six of them. It’s an addictive business to be in—unlike any other retail environment, not just in terms of the way we do business but in the strength of relationships and friendships that we forge across all sectors. But it is not a walk in the park either. Fashion is a very buoyant category within travel retail, attracting more and more attention from airports and retailers—but the competition for retail space is becoming ever tougher. We compete within our own category, against other categories and, indeed, other services such as food and beverage. For Paul & Shark, however, it is a challenge worth taking and I was delighted to join this family-run company last year to direct the development of its travel retail business. We see huge opportunities for the brand, fueled by the ever growing number of passengers looking for alternatives to the traditional duty free categories, plus the increasing traffic from countries such as China, Russia, South America and Middle East: passenger profiles

ASIA DUTY FREE & TRAVEL RETAILING TFWA/APTRA CHINA 2015

who have money and are keen to spend it on authentic products. Paul & Shark now has around 30 points of sale in travel retail, across three continents, and we are steadily building distribution with a new emphasis on the cruise-ship business. We are very confident of the brand’s potential within the channel and are investing in its development, recruiting a dedicated team to ensure total customer service. To be successful in travel retail requires more than simply transferring a brand from the high street into the airport retail environment, although maintaining the brand’s heritage and DNA in what can be a much smaller space is imperative. The most important point we stress for Paul & Shark is the Italian know-how and expert tailoring that are brought together in every piece of clothing. Since the beginning, innovation has been extremely important. From the outset we set out to produce clothing items that are able to withstand all weather conditions. To do this we have invested in creating new, high-performance materials, many of which have been patented by Paul & Shark. The ultimate frontier for Paul & Shark research, for example, was the development of three threads twisted together to achieve one single thread. The result is a compact yarn that refuses to bobble. Equally innovative is our packaging—from the first sailing sweater introduced in 1978 in a metal can, we have endeavoured to make the packaging integral to the offer. On an ongoing basis, one of the unique elements about Paul & Shark is the company’s ability to take any item within a collection and customize it to meet a specific retailer’s requirement; for example, the length of a shirt, a particular color, or special embroidery. We can even do customization on site at a retail outlet using instant embroidery technology. This was a service that we highlighted on our stand at TFWA World Exhibition last year, which was very much appreciated. You cannot just say you are different—you have to show that you are!

ELECTRONICS: PHILIPS

Philips takes smart beauty on the move As electronic devices cross into cosmetics territory, Philips is looking to Asia to springboard this unique category into other markets by

CLAIRE MALCOLM

The recently launched VisaCare anti-ageing skin resurfacing tool is the company’s first microdermabrasion device

Philips Lumea uses an innovative light-based technology called Intense Pulsed Light (IPL)

Hi-tech devices from the salon to home range include the VisaBoost Ultrasound facial moisturizer

eauty on the move has double meaning for Philips with its travel retail strategy focused on profiling a range of sleek, chic devices that enable women travelers to upgrade their beauty regime and take the salon experience home. According to Steven van Dortmond, Global Channel Manager Travel Retail for Philips Consumer Lifestyle, this is a category with considerable opportunity for growth as electronic devices cross into cosmetics territory. “It’s really important that we use all the knowledge that we have of the travelling consumer to create additional value. Looking at the future, and at category development, one area where we see huge growth is in smarter beauty devices,” he says. “This category is expected to triple in value in the next three years and cosmetics retailers understand that these products are not positioned as electronic devices, rather they are part of the female beauty regime, and fit within the P&C section,” he adds. Philips’ range of smart beauty devices is designed to help women upgrade their beauty regime and work with their favourite topical brands, and this also allows opportunity for crosspromotional activities, as van Dortmond explains: “We are in discussion with certain leading brands in a number of markets but this is very specific per location as we don’t want to bind ourselves to just one or two brands; and consumers have their own preferred products and brand loyalty. Philips product range includes the VisaPure Advanced threein-one facial tool, which was developed in collaboration with Japanese facial massage experts, and comes with both a gentle cleansing and eye care attachment, and the Q4 2014-released 64

ASIA DUTY FREE & TRAVEL RETAILING TFWA/APTRA CHINA 2015

The VisaPure Adavanced three-in-one facial tool

VisaCare anti-ageing skin resurfacing tool – the company’s first microdermabrasion device. Securing P&C space is an “education process”, says Dortmond. “We approach it from two angles. What we are seeing is that beauty brands are also bringing devices to the market, so that helps in terms of awareness and interest in placing these products within P&C. “As Philips, we come from a technology perspective, so we also bring knowledge and experience to the table plus we have a strong beauty product heritage in terms of hair care and depilation, so now we are simply adding skincare to that.” The proof of the category’s potential lies in future sales, he notes, but it’s not necessarily an easy sell. “In some parts of the world, like Korea, consumers are familiar with this kind of hitech beauty approach, but it is still a relatively new concept to a large number of consumers and so there is huge importance placed on consultation. “We bring consultants to the shop floor to offer an additional experience—and value—for both retailers and consumers. This also allows us to position our brand in the right way, and shows that we are really developing this category for the future.” The Philips range is not confined to female customers and with strong markets, such as Korea, paying equal attention to its male consumer; there is an opportunity for the brand to target both sexes. “Korea is one of the biggest and most advanced skincare markets in the world, together with Japan, with a highly educated customer so in terms of expansion we see a strong fit with Asia, although interest is now shifting towards the Middle East and West for these kinds of products,” says van Dortmond.

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SPIRITS: PATRÓN

Guests at an event in Shanghai held to celebrate the Patrónsponsored Motorsports team competing in a race in China

A NEW AND GROWING DEMAND

he spirits market has been changing in China over the past few years, and that has allowed the introduction of decidedly different spirits. One of the newest to enter that market is Patrón tequila. Vince Santos, VP Asia/Pacific at Patrón Spirits International, discusses the brand’s reception there since it was introduced in 2013. Q: How long has Patrón been available in China, both domestically and in travel retail?

WENDY MORLEY

A: We launched Patrón XO Café liqueurs in China in 2012. Our tequilas were officially introduced there in 2013 when the country began allowing the importation of ultra-premium 100% agave tequilas. Of course Patrón has been available in Hong Kong for many years, and it’s the top-selling tequila brand in that market. Patrón is not yet available in travel retail in China, but because demand remains very high in the domestic market we’re confident that this same enthusiasm will follow the brand into travel retail when duty free operators in China choose to list us.

While Patrón has a broad appeal with all ages and both sexes, it does skew a little younger in China than in other parts of the world

Until 2013, the Chinese government did not allow 100% agave tequila to cross its borders. Since then, Patrón’s popularity has been continuously increasing

ASIA DUTY FREE & TRAVEL RETAILING TFWA/APTRA CHINA 2015

Q: How have sales been year over year? A: Since entering the market officially in 2013, we’ve seen double-digit growth. In 2014, we were up about +11% in China. Q: Who do you find is your market in China? Does it tend to be younger? Do you find that Patrón appeals more to males or females? A: Yes, it does tend to skew a bit younger, but a brand like Patrón truly appeals to so many different people, male and female, young and old. We find that our brand resonates particularly well with people who travel and have seen the strength of the brand in the US and other countries. Q: China is generally seen as a brown spirits market. How has this affected the popularity of tequila in that country? Do you see a difference in popularity of your white tequilas over your brown tequilas? A: It’s interesting to note that China is actually a white spirits market if we look at it from a total spirits point of view (Baijiu, a white spirit, comprises more than 99% of total spirits in the market). But from an imported spirits standpoint, China of course is a brown spirits market because of the popularity of whisky and brandy. Consumers in China, particularly those who have money to spend, enjoy being seen drinking popular, global ultra-

premium brands like Patrón. Because of this, Patrón Silver is still our largest seller, but Patrón Añejo and Patrón Reposado aren’t far behind. Compared to many other markets, we do sell more of our aged tequilas. So in China, we have a market that’s familiar with white spirits and with global brands, and tastes that also favor aged spirits – those are all factors that certainly contribute to Patrón’s growth and success there. Q: Are cultural changes taking place that you believe will make tequila more popular in China in the coming years? If so, what? A: Chinese consumers are traveling the world and discovering ultra-premium brands like Patrón. Also, people in China continue to place a high value on luxury brands. Several of our tequilas retail for hundreds of dollars or more, and that certainly contributes to the popularity of our spirits overall. On a separate note, for many years the only tequila available in China was the 51% agave “mixto” tequila until the government allowed for the importation of 100% agave tequila like Patrón. Now there are some signs that the Chinese government may limit some of those mixto tequilas, which means the dominant tequila in the market could one day be 100% agave tequilas.

Patrón’s Chinese New Year Tin To celebrate the Year of the Sheep for 2015’s Chinese New Year, Patrón Spirits introduced a limited-edition keepsake tin for Patrón Añejo tequila. This tin is available in select domestic markets and in global duty free. The tin, illustrated by Chinese artist Peach Tao, is red with black and gold accents. Her inspiration was the classic Chinese design “three rams bringing bliss.” The illustration includes such elements as goddesses around a lotus flower symbolizing good luck, and other modern and traditional Chinese symbols including lanterns, a ship and the phoenix. A leaping sheep on the lid reflects the wish for a year of happiness and prosperity. As a gentle reminder of the tin’s contents, the artist included the image of an agave plant and Patrón’s famous bee emblem. “Duty free shoppers enjoy finding distinctive luxury products, and unique and relevant gift ideas, when they visit travel retail. This new eye-catching tin not only celebrates the Chinese New Year holiday, it’s also a wonderful way to remember the year, long after the contents of the bottle have been enjoyed,” says Dave Wilson, President, International, and Global Chief Operating Officer at Patrón Spirits. Patrón Añejo is a high-quality ultra-premium tequila, aged in a combination of new and used American, French and Hungarian oak barrels for a minimum of 12 months. Each vintage of Patrón Añejo is carefully blended to produce a smooth and distinctive-tasting tequila. Each bottle is numbered by hand and crafted with recycled glass.

Q: Is tequila consumed or viewed in a different way in China than in other countries? A: Consumers who know and understand tequila consume it in similar fashion to people in other markets, neat, on the rocks or in inventive cocktails. Of course there will always be people who believe that tequila is only for shots or margaritas, but this notion is quickly evolving in China, just as it is across the globe. Q: Is Patrón’s approach to or expectations of travel retail any different in China than other countries? A: We are working hard in China to help change the perception of tequila from that of “party” drink to a sophisticated, high-quality, luxury spirit. That takes some time. And that also means that we need to focus heavily on tastings and trained brand ambassadors to engage and educate consumers. Patrón introduced a collectible tin for Chinese New Year, featuring illustrations by Chinese artist Peach Tao

www.dutyfreemagazine.ca ASIA DUTY FREE & TRAVEL RETAILING

LIQUOR NEWS

80th anniversary for John Walker & Sons In time for Chinese New Year, Diageo released an elegant limited edition design of the award-winning John Walker & Sons King George V as a travel retail exclusive. Created to mark the 80th anniversary of the awarding of the Royal Warrant to John Walker & Sons, this design celebrates the arts and crafts movement popular in the 1930s. The Royal Warrant is regarded as a mark of quality and excellence and is an honor John Walker & Sons still holds today. The limited edition packaging has a luxurious feel with its burgundy finish. It features an intricate motif and gold chandelier print with rich, warm colors that reflect the superpremium whisky contained inside. The bottle is elegant and sweeping, with a heavy bottom and gold details. The shape and motif reflect the design excellence of the day. The liquid inside is a distinctive blend using whiskies exclusively from distilleries in existence at the time of King George V, when John Walker & Sons was first given the honor of supplying whisky to the Royal Household. The prestigious whiskies used in this blend include the rare Port Ellen Single Malt from the Isle of Islay. The John Walker & Sons King George V Limited Edition is available in travel retail outlets for a limited time of six months and retails for US$494. Kim Crawford’s Small Parcel wines are created from carefully selected parcels of exceptional-quality grapes

Diageo celebrates the 80th anniversary of being awarded the Royal Warrant with the release of this limited edition design of John Walker & Sons King George V

Kim Crawford tours China China is a focus for the Kim Crawford wines, and the brand will be present at a number of trade events in that country this spring. The first will be the Chengdu Tang Jiu Fair from March 26th to 28th. This is a massive trade show with more than 3,000 exhibitors and 300,000 visitors, taking place in the capital of Sichuan province. In May, the winery will then take part in a series of one-day New Zealand Wine Fairs that follow in various cities throughout the country – Shanghai on May 19th, Beijing on May 21st, Guanjhou on May 26th and finally Hong Kong on May 28th. Kim Crawford wines began in a small cottage in New Zealand in 1996, and quickly made a big splash in the wine industry. The brand’s mission is “to craft wines that are vibrant, fruit driven and generous.” Kim Crawford wines are available in two tiers. The core tier winemaking style is simple: let the natural flavors of the grape flow through to the final product. This results in wines that captivate the senses. Kim Crawford Small Parcels are created from carefully selected small parcels of exceptional quality grapes, only the very best grapes from the best vintages are chosen, producing superior wines from New Zealand’s best-performing vineyards.

Edrington launches 2nd release of Papá Andrés Papá Andrés was created for the Brugal family to enjoy. For over 100 years this private reserve was carefully guarded in Brugal’s warehouses in Puerto Plata, and had never been tasted by the public until a limited number of bottles were released in 2012. It was quickly given such awards as “World’s Best Super-Premium Rum” in The Spirits Business Rum Masters 2013 competition. Papá Andrés will be released this spring for the second time, available to order from April 2015. Jassil Villanueva Quintanais, a fifth-generation member of the Brugal family, grew up around the Brugal warehouses. She trained to become a Master Blender, and is the first woman in her family to achieve that status. In her Papá Andrés 2015 Alegría Edition, Quintanais has created an exceptionally smooth, complex and subtly sweeter expression of this aged rum. The rum is well harmonized with the crystal decanter and presentation box illustrated by worldrenowned Spanish designer Javier Mariscal, who has managed to express the color, warmth and alegría de vivir, or joy of living, encountered in the Dominican Republic. Mariscal has also illustrated the collectors’ book included in the presentation box, which recounts the story of Papá Andrés and the history of Brugal. Just 1,000 of the Brugal Papá Andrés 2015 Alegría Edition decanters will be produced, and available for US$1,500 each. All profits will go to the Brugal Foundation, which was established in 1988 to support development and reduce poverty in the Dominican Republic.

ASIA DUTY FREE & TRAVEL RETAILING TFWA/APTRA CHINA 2015

Spanish designer Javier Mariscal has managed to express the color, warmth and joy of living found in the Dominican Republic

Art of blending Lauder’s Ruby Cask Finish and Oloroso Cask Finish are MacDuff’s new releases that bring the “Art of Blending” to the whisky-drinking world. The company’s Ruby Cask Finish has a slightly reddish hue, which it has taken from its time maturing in seasoned Ruby Port casks carefully selected by the master blender. The malt and grain whiskies that make up the blend are initially aged in charred bourbon casks. These individual whiskies are combined to form the blend and then returned for a second time to mature further in Ruby Port casks. The new Lauder’s Oloroso Cask Finish draws its amber hue and sweet palate from its time maturing in seasoned Oloroso Sherry casks. The malt and grain whiskies that make up the blend are initially aged in charred bourbon casks. These individual whiskies are combined to form the blend and then returned for a second time to mature further in Oloroso sherry casks. And although these new releases should satisfy fans of the brands for the time being, MacDuff Sales Director John Scott confirms that sales so far have been phenomenal and confirms that the company has much more in the pipeline: “We’ll be focusing on regionally targeted promotions for these products,” he explains. “We’re also currently developing a third Lauder’s expression, called Madeira, which will be a big focus. Finally, we expect to have gift boxes for all three of these new Lauder’s expressions as well. It’s a busy time, but well worth it when you see the finished product.”

Unlike China’s traditional baijiu, byejoe’s modern taste and design appeal to those in the coveted 25-35-year age range

Lauder’s Ruby Cask and Oloroso Cask are the first two expressions in MacDuff’s “Art of Blending” series

Crossing borders With the explosion of Chinese travelers in recent years, many have thought the Chinese spirit baijiu would enter the western world’s drink menus. Until now, no one has created a baijiu with the appeal and marketability for the western consumer. Enter byejoe. Distilled in China from 100% red sorghum, byejoe is then aged for five years, brought to the US in small batches and then further filtered and refined using patented American technology. “The result is an ultra-premium spirit,” says Alberto Fariñez, byejoe Duty Free & International Markets Manager. “It is possibly the cleanest, purest baijiu on the planet.” The demographics of byejoe are especially interesting. Slightly more women than men consume byejoe, whereas baijiu consumers are mainly men. The majority of byejoe drinkers are in the 25-35-yearold range, whereas baijiu drinkers tend to be older. The reaction from Chinese and westerners alike to byejoe is one of surprise, says Fariñez. “The Chinese are surprised by the smoothness and modernity, whereas westerners are surprised and excited by the unfamiliar and exotic flavor.” For more surprise and excitement, byejoe has introduced flavor infusions with its sweet and spicy dragon fire flavor, made with dragon fruit, lychee and Szechuan hot chilies. Certified gluten free and Kosher, byejoe is becoming a real hit with mixologists. “We believe byejoe is the best-priced, most modern baijiu,” says Fariñez. “A perfect product for the travel retail consumer.”

www.dutyfreemagazine.ca ASIA DUTY FREE & TRAVEL RETAILING

SPIRITS: BROWN-FORMAN

Sinatra had a special relationship with Jack Daniel’s, as is apparent in this Rat Pack-style lounge

An American

in China American whiskey is one of the fastestgrowing spirits categories in travel retail, and Brown-Forman Global Travel Retail is taking a leading role by WENDY MORLEY

ack Daniel’s Tennessee Whiskey, easily recognized the world over and Brown-Forman’s number-one brand, is now the number-three spirit brand in travel retail by volume, according to the International Wine and Spirit Record (IWSR). As a company, Brown-Forman is intent on helping American whiskey’s popularity continue to soar, and its premium brands are helping to make that happen. “Our goal in travel retail is to give consumers a memorable, engaging and special experience with our brands when they travel, and then covert this experience to a purchase,” says Finbar Boyle, Brown-Forman Director of Travel Retail for Asia/Pacific. “We have been doing this in a number of ways with Jack Daniel’s through display, new product and promotion initiatives. One example is the launch of Jack Daniel’s No. 27 Gold Tennessee Whiskey.” Jack Daniel’s No. 27 Gold is currently being rolled out to all key international airports around the world following a successful launch, first in airports across Asia Pacific and then in Dubai and Frankfurt in September. Jack Daniel’s Gold has been double barreled and double mellowed, extra matured in golden-hued maple barrels and then twice mellowed through sugar maple charcoal. The flavor characteristics are hints of rich, warm maple and toasted oak, offering a smooth, slightly sweet taste profile with an “exceedingly smooth” finish. 70

Ol’ Blue Eyes at 100 Jack Daniel’s enjoyed a special relationship with “Ol’ Blue Eyes” Frank Sinatra, who loved the Tennessee whiskey so much he had it onstage with him each night and was even buried with a bottle. This year would have been Frank Sinatra’s 100th birthday, and therefore is an especially important year for Jack Daniel’s Sinatra Select. This whiskey is an important and valuable addition to the Jack Daniel’s range in travel retail. It is the first ultra-premium Jack Daniel’s offer in travel retail and is helping to add value to the brand and category. “We will continue to focus on developing sales for Jack Daniel’s Sinatra Select and bringing the story of the special friendship between Frank and Jack to life in our in-store activations,” says Boyle. “One of our key goals is to trade consumers up to higher-value purchases in travel retail. Together with our promotional activity, whiskeys such as Jack Daniel’s No. 27 Gold Tennessee Whiskey and Jack Daniel’s Sinatra Select are helping to do that.”

Jack and BrownForman in China Brown-Forman Travel Retail has enjoyed strong growth with Jack Daniel’s No. 7 across China Duty Free in recent years. “Our plans call for establishing a presence across all of China for the Jack Daniel’s super-premium brands including Jack Daniel’s No. 27 Gold Tennessee Whiskey,

ASIA DUTY FREE & TRAVEL RETAILING TFWA/APTRA CHINA 2015

Jack Daniel’s Single Barrel and Gentleman Jack,” says Boyle. “We hope to replicate among Chinese consumers the increased sales success enjoyed by Jack Daniel›s products in other international airports across the Asia Pacific region.” While its importance cannot be overstated, Jack Daniel’s is not the only BrownForman brand doing well in the region. Woodford Reserve is the fastest-growing Bourbon in travel retail, and Finlandia Vodka has been enjoying strong growth in China and in travel retail. The company’s plans include increasing Finlandia’s distribution in the south of China. This is a special year for Jack Daniel’s Sinatra Select; it would have been Frank Sinatra’s 100th birthday

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TOBACCO: HABANOS

Each year visitors descend on Havana for the festival and the trade show, which combined bring more than 3,000 people to the city

Visitors can trace a cigar every step of the way, from touring the tobacco fields to making their own hand-rolled cigars to lighting them up

Habanos in

HAVANA

Each year at the end of February the world descends on Cuba to celebrate the island’s essential export by

WENDY MORLEY

or over 300 years the hand-rolled cigar has held importance on many levels for the Caribbean island of Cuba as art, craft, tradition and a major source of income. That importance is only increasing with time, as the annual cigar festival easily demonstrates. The 17th annual Habanos Cigar Festival took place in Havana, Cuba from February 23rd to 27th 2015, bringing together thousands of cigar aficionados, those in the cigar/tobacco industry and media for one week of celebration, festivities and education. In 2014 over 2,200 visitors attended the Habanos Trade Fair, which had 60 exhibitors from seven countries. The festival itself welcomed more than 1,300 participants from nearly 60 countries, in addition to 250 journalists and camera operators plus 142 other media representatives. Leading up to the 2015 Habanos Festival there was excitement around the pairing event with Habanos and Chianti wines, bringing Tuscany to Cuba and pairing the rich and complex Cuban cigar with luscious Tuscan wines. Four Tuscan wine growers took part in this event. The Chiani Superiore D.O.C.G. “Cerretello” (2011) and Chianti Rufina D.O.C.G. Riserva “Lastricato” (2010) wines from the Pieve De’ Pitti and Castello del Trebbio vineyards, respectively, were served with the Montecristo Open Eagle, a milder Habano. The Chianti Colli Fiorentini D.O.C.G. “Il Castelvecchio” (2011), from the vineyard of the same name, and Chianti D.O.C.G. Riserva “Vigna 54” (2012), from the Azienda Agricola Pugliano, will then be tasted together with Le Hoyo San Juan. This mild vitola played the leading role in the Habanos s.a. 2014 launches. Each year the Habanos Festival features the finest entertainment, including performances of national and international artists such as renowned composer, performer 72

ASIA DUTY FREE & TRAVEL RETAILING TFWA/APTRA CHINA 2015

The week is always filled with entertainment. This year multi-Latin Grammy winner Descemer Bueno performed his greatest hits at the Welcome Evening

and producer Descemer Bueno. His performance during the Welcome Evening included his hit song “Bailando,” which recently won three Latin Grammy awards for Best Song of the Year, Best Urban Performance and Best Urban Song. Gastronomy always plays a central role in the Festival, and this year was no exception. Belgian chef Anne Marie Lauwers supervised the menu for both the dinner celebrating the 25th Anniversary of La Casa del Habano and the Gala Evening, mixing Asian, European, and Cuban flavours to surprise her guests. Not surprisingly, samplings of Habanos are an integral part of the festivities. This year’s tastings included classic medium flavour of Romeo y Julieta, the new Gran Reserva Wide Churchills Cosecha 2009 and Pirámices Añejados, the new 80 Aniversario, and Churchills Añejados vitolas from the iconic Montecristo brand. Special editions were on hand to commemorate the 25th Anniversary of La Casa del Habano in addition to other outstanding Habanos that are part of its extensive range of prestigious brands. Food, wine, entertainment and cigars sounds like a combination that could not be improved upon, but the festival offers even more, bringing the visitor along every step of the cigar’s journey to existence, from touring the tobacco fields to taking a master class on rolling “Totalmente a Mano,” which means “totally handmade,” to smoking a cigar for one of the favorite festivities, the contest to create the longest ash. As the week draws to a close, guests take part in a celebrity-filled gala evening complete with entertainment and capped with the exciting yearly humidor auction, proceeds going to Cuba’s public health system.

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TOBACCO NEWS

Extremely Exclusive Offerings Oettinger Davidoff is offering a series of exciting new exclusive editions to celebrate the successful relationships between the company and its business partners around the world. Top travel retail accounts, Davidoff flagship stores and certain other appointed merchants will be able to offer these Premium Exclusive Editions. Each selection is blended exclusively for the palate of that specific location; store managers can choose their own signature blend according to their customers’ taste preferences. The cigars will also include a customized second ring. Each cigar box will feature a store identifier along with an image of the skyline of the associated city or a design relevant to the retailer. These editions could hardly be more limited and exclusive, and will be very exciting for the cigar collector. The exclusive editions available in 2015 are: Davidoff Exclusive Hong Kong (available only in Davidoff’s Flagship Stores in Hong Kong) Davidoff Exclusive Tokyo (available only in Davidoff’s Flagship Stores in Tokyo) Davidoff Exclusive Heinemann (available only in Heinemann’s top Duty Free shops) Davidoff Exclusive Madison Avenue (available only in the Davidoff Madison Flagship Store) Davidoff Exclusive Russia (available only in Russia)

Each cigar box has an image of the skyline or an image relevant to the retailer, and the blend itself is customized according to the taste of the customers at that location

The Flavor Collection

J. Cortès launches its “Flavorism” campaign, turning a spotlight on all the Neos flavors

ASIA DUTY FREE & TRAVEL RETAILING TFWA/APTRA CHINA 2015

J. Cortès has restyled its Neos cigar family. The new packaging is designed to add impact and visibility on the store shelves. The company has a new campaign to match the new design. Called “Flavorism,” the campaign turns the spotlight on all of the Neos flavors and their corresponding colors, reuniting them in one space. “The flavor collection shows our commitment to loyal as well as new consumers,” says Thomas Gryson, Export Manager and Travel Retail Coordinator. “The collection provides them with easy and well-balanced flavors according to their own preferences.” Recently the company has promoted the Neos 10 family in travel retail by launching a new flight pack holding five tins of 10 cigars, which is exclusive to travel retail. Exactly 20 years ago J. Cortès introduced its first Neos Mini to the world. The cigar was sold in the French market in a package containing 20 cigars. The first package was carton style. After a few years the company decided to switch to a tin in order to better protect the cigars and preserve their taste. The Neos 10 family, which launched in protective tins, has always been dedicated to export markets and is sold in over 70 countries worldwide.

They sell as good as they taste

Mars ITR is a leading player in the confectionery category. We combine insights, vision and global strength with powerful brands to create fantastic in-store opportunities. Contact your local account manager and see what we can accomplish together!

Let’s face it, if consumers can’t resist M, how can you?

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