ASIA Duty Free & Travel Retailing Magazine by Paramount Publishing Ltd.

T F WA A P M AY 2 0 1 2 • V O L 1 6 , N O 2

TFWA AP 2012 ”DRINKS ARE ON ME”

YOU CAN NEVER BE TOO GENEROUS

TFWA targets China p.

Indian Summer p.

Wizards of Oz p.

Premium Prospects p.

Letter from the Editor

Growth

and growing

pains he Chinese passenger has been playing a huge role in driving rising sales in Asia’s duty free market. With the Asian traveler in mind, this issue zeroes in on the skincare and cosmetics segment. The Asia-Pacific region has become a strong revenue stream for beauty houses and investment has poured in, particularly in the skincare subsector. This combination of high-end demand and Chinese influence is one reason why DFS Group has developed a new service called Beauty Concierge at its Galleria Four Seasons in Macau. The operator rolled out the service to Galleria locations in Waikiki, Hawaii last November and has further openings in the works for Singapore and Hong Kong. Beauty Concierge includes skincare analysis, seasonal beauty tips, personalized consultations, make-up trend updates and beauty workshops provided by dedicated staff. Beauty Concierge includes the services of a licensed aesthetician, who helps customers understand their skin needs and recommends products tailored to their individual requirements. This by-appointment service has worked well for DFS, especially when it comes to skincare. A number of brands are taking advantage of the skin analysis enabled by VISIA complexion analysis technology, which is proving popular with customers as well. In this issue we also put India under the microscope. It's been less than a decade since the first purely private retailer set up shop in India’s duty free market, but the nation’s travel retail landscape is on the verge of revolutionary change, with new airports and terminals under development and more and more foreign firms showing an interest in the growing number of retail opportunities. You could say that the 2010 opening of Terminal 3 at Delhi's Indira Gandhi International Airport was a watershed moment for India’s burgeoning duty free industry, considering that it gave the country’s capital city not only India’s most impressive airport terminal, but also a world-class retail offer. We round out this issue’s Asia Pacific coverage with two special in-depth reports on South Korea and Australia, but not before speaking with TFWA President Erik JuulMortensen. At press time, TFWA was about to make an important announcement— one that underscores the increasing importance of China to the duty free industry. TFWA will host a conference in Beijing in March of 2013 as a means of providing retailers and suppliers an opportunity to fully engage with this important segment of the Asian market. Mortensen provides us as many details as possible at this early juncture. We look forward to seeing you in Singapore and hope that you enjoy the TFWA Asia Pacific & GATE ONE2ONE edition of Asia Duty Free. I look forward to seeing you in Singapore.

Asia Free & Travel Retailing (ISSN 1360-9548) is published annually 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, Maldive 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. TFAP May 2012, Vol. 16, No. 2. All rights reserved. Nothing may be reprinted in whole or in part without written permission from the publisher. © 2012 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 Hibah Noor hibah@dutyfreemagazine.ca ASIA ASSOCIATE EDITOR P. Convery padraic.asiadutyfree@gmail.com CONCESSIONS, LIQUOR, & TOBACCO EDITOR Ryan White ryan@dutyfreemagazine.ca ART DIRECTOR Patrick Balanquit patrick@globalmarketingcom.ca CONTRIBUTORS Andrew Brooks James Ross Lorna Strickland-Cook

ADVERTISING SALES ADVERTISING & MARKETING MANAGER

Kind regards,

Kim Carrera kim@dutyfreemagazine.ca CIRCULATION & SUBSCRIPTION MANAGER Deepa J deepa@globalmarketingcom.ca

Hibah Noor Editor hibah@dutyfreemagazine.ca

ASIA DUTY FREE & TRAVEL RETAILING TFWA AP MAY 2012

PERFECT TASTE. ALWAYS

Industry & Retailer News

TFWA AP MAY 2012 • VOL 16, NO 2

12 16

IN BRIEF Narita to build new budget terminal ■ China Travel Retail event to change venue due to increased attendee interest ■ Eyelevel targets commercial airlines with Cartmax inflight sales unit ■ GuestLogix launches Hong Kong springboard for Asia Pacific operations ■ B&S group takes over Dufri International, renames it Dufri Global Lifestyle ■ David Dayan, an unfailing success

Q&A: ERIK JUUL-MORTENSEN

“The sheer weight of numbers” Asia Duty Free talks to Erik Juul-Mortensen about TFWA AP, the strength of China and other markets and a new addition to the TFWA events calendar in 2013

22 Indian summer

REGIONAL REPORT: INDIA India's first foreign-partnership travel retailers have had an unbroken run of success since they entered the market, and as new opportunities arise, they're set to move on to even bigger things

30 Wizards of Oz

REGIONAL REPORT: AUSTRALIA Despite a series of setbacks, Australia's travelretail sector has proved to be remarkably resilient, as operators conjure new ways of gearing up for good times ahead

36 It takes two

REGIONAL REPORT: SOUTH KOREA The duty-free market in South Korea is the domain of just two retailers, locked in a rivalry whose effects are beginning to be felt far beyond the country's borders

DENARAU DUTY FREE

40 Paciﬁc pearl

Denarau Duty Free is flourishing in the liberalized duty free market in Fiji—and the future looks sunny

42 Isle be back

DUTY FREE PHILIPPINES

Duty Free Philippines has much to celebrate in its 25th year, as it pushes forward with a mandate not only to drive sales, but to serve Filipinos returning to the archipelago from work abroad and boost tourism

HONG KONG INTERNATIONAL AIRPORT

Kong's year 44 Hong of the dragon

Hong Kong International Airport is at the centre of the action in 2012, with the duty-free industry's biggest-ever tender and ambitious plans for growth

ASIA DUTY FREE & TRAVEL RETAILING TFWA AP MAY 2012

22 46 Roar energy

CHANGI AIRPORT GROUP The Lion City's hub operator, Changi Airport Group, is once again showing the travel-retail trade how it's done, with a drive for success that's keener than ever

48 The spice of life TFAP EXHIBITORS

A record number of exhibitors are showing off their wares at this year’s TFWA AP exhibition. Asia Duty Free presents a guide to some of the industry’s leading brands

51 SPECIAL REPORT: Skincare & Cosmetics 53 A radiant glow SKINCARE REPORT

Skincare’s vitality is far from fading in Asian travel retail

science behind 56 The the brand LA PRAIRIE

Skincare shines in Asia 58 Paciﬁc SKINCARE NEWS

Beauty specialists target Asia Pacific duty free with new products and technologies

62 The color ﬁeld COSMETICS REPORT

Color is brightening up the Asia region, but gradually

COSMETICS NEWS

64 New and renewed

Cosmetics brands build on market success with updates, new launches for 2012

AMALA

65 Amala - a natural choice

The organic skincare brand has taken the spa route to expansion and brand awareness

Beauty Contact supports 66 21st Century Leaders BEAUTY CONTACT

Celebrities donate art for new fragrance designs: royalties to support global development

Contents

78 Reminiscence looks ahead REMINISCENCE

68 Loving the light SUNGLASS NEWS

New sunglasses collections emphasize individual style and retro-look designs

Luxottica strengthens travel 70 retail team LUXOTTICA

With an enviable portfolio of deluxe brands in the Luxottica stable, it’s no wonder that the eyewear supplier has appointed new travel retail personnel

Reminiscence pairs two of women’s favorite things: jewelry and fragrance. The pairing’s history is an interesting one, as the brand’s retail story and coming overhaul attest

takes aim at 80 Lacoste women’s market

DEVANLAY LACOSTE TRAVEL RETAIL

Iconic brand grows in Asia, commits Baptista’s talents to new market push

82 Golden glow JEWELRY REPORT

72 Folli in control FOLLI FOLLIE

Diversification has taken jewelry house Folli Follie to new heights

For these trend-ready jewelers, gold accents are one key to success in the Asia market and elsewhere

74 Festina - timing is everything 84 Prize potential FESTINA

AERO-COS INTERNATIONAL

The official timekeeper of the Tour de France is planning a big push in travel retail

Aero-Cos looks ahead to the prospects for Chocolates Turin in Asia duty free

FRÉDÉRIQUE CONSTANT

76 Constant craving

It's very much a case of watch this space when it comes to Frédérique Constant

86 Chocolate power BUTLERS CHOCOLATES

New products, franchise expansion keys to success in Asia and elsewhere

Contents

88 New places, new names CONFECTIONERY NEWS

Hershey’s deepens presence in Greece; Kraft Foods beefs up multiple brands in its portfolio

PERNOD RICARD ASIA DUTY FREE

90 Premium prospects

The growing luxury market in Asia means there’s more growth ahead for Pernod Ricard in the region

DIAGEO GTME

92 Two of a kind

Just in time for TFWA AP in Singapore, Diageo releases two new expression in the iconic Johnnie Walker range of blended Scotch whiskies

94 Eastern brew

100 A taste of Asia

ASIAN-INSPIRED COCKTAILS

Cocktail lovers will find that drinks in Asia are just as exotic as the region itself

102 Cognac conquers THE EDRINGTON GROUP

The cognac category is a perfect fit for a strong, growing and prestige-oriented market like Asia duty free

104 Keeping pace with growth ASIAN-INSPIRED COCKTAILS

The Edrington Group establishes new Asia Travel Retail division with Regional Director Ryan Hill at the helm to drive growth in the region

BEER REPORT

Asia’s love affair with beer goes back millennia: today’s duty free players are ringing changes on an old favorite

98 New Horizons GULF BEVERAGES

Gulf Beverages now has over a year under its belt distributing spirits in India and has a number of upcoming listings and promotions as a result of its effort

inniskillin.com

Part Frozen. All Luxury.

110 Breadth and depth

BRITISH AMERICAN TOBACCO

British American Tobacco’s market reach and product depth bring continued growth on its Asian home turf

117

NEW & NOTABLE Bottega Diamond ■ Aloha Mix ■ Desigual Travel Wallet

The best of all worlds

Aldeasa and World Duty Free together, global strength in depth EUROPE - AMERICAS - ASIA - MIDDLE EAST - AFRICA

In Brief David Dayan, International Director of LATR

David Dayan, an unfailing success Following on his success with Lacoste, David Dayan, International Director of LATR, is once more riding a wave of travel retail success with Parker and Guess Jewellery. “The writing instrument field remains an important category in term of impulse purchases,” Dayan says. “Despite the attraction of new technologies, the pen is still the gift of choice. Our strength in 2011 was the launch of Ingenuity, which is a new way of writing, an engineering feat or a ‘stroke of genius’ you could call it, which has had huge success with consumers. That’s why this year we’ll be setting up a lot of animations to highlight Ingenuity in airport locations in Jakarta, New York, Miami, London, Moscow, Gdansk, Asuncion and so on.” The main goal in 2012 is to devote the year to developmental work and innovation, Dayan says: upgrading existing locations, developing real estate dedicated to the brand—like the shop-in-shop— and building presence in Asia and Europe. The second goal for 2012 is to focus on inflight. Based on the success of Ingenuity, an Ingenuity box set has been created exclu-

sively for inflight, and airlines have been given the opportunity to list three products from the Parker range, with different price points to match passenger demand. “We’ve been approached by many airlines, and KLM has become the first in the world to present Ingenuity on board,” Dayan says. “Since the listing began, Parker is number one in accessories sales, based on results provided by KLM.” A year ago Dayan also accepted the challenge of getting Guess Jewellery into worldwide travel retail distribution. And again, the choice has proven to be the right one: 50 points of sale are open today, including Paris, Miami, New York, Warsaw, Moscow, Sharjah and Montevideo. First sales results have been excellent, Dayan says, and LATR is focused on building even better numbers through the year. To help maintain the market momentum, LATR will be showcasing Guess Jewellery’s Spring/Summer 2012 collections at the TFAP Asia Pacific show in Singapore, Dayan says.

China Travel Retail event to change

venue due to increased attendee interest Ink, the global leader in connecting companies with travelers, and GIS Events, an event’s organizer in the Chinese travel industry, announced that due to increased demand for exhibition space, The China Travel Retail Event will now be taking place at the Marriott City Centre in Shanghai on July 23 to 25 2012. The two day China Travel Retail event (CTR) has now been expanded to host 20 sponsors, over 200 delegates and a world class line up of speakers. “We have been completely overwhelmed with the demand for attendance and exhibition space since announcing the original

dates,” said Nick Tan, Managing Director of GIS. “As such, we are delighted that we have had to move the event to a fantastic new venue at the Marriott City Centre. This conference is the first of its kind in China and we are really excited about the demand for attendance that has shaped our event.” This inaugural CTR conference will bring together decision makers from airports, airlines, seaports, cruise/ferry companies and travel retail brands seeking to understand and market to the rapidly growing Chinese travel retail market. CTR will showcase best

ASIA DUTY FREE & TRAVEL RETAILING TFWA AP MAY 2012

LATR has opened 50 points of sale for Guess Jewellery to date

practices both domestically inside China at Chinese airports and airlines, at sea, as well as how companies are successfully selling to Chinese consumers travelling overseas. Jeffrey O’Rourke, Chief Executive of Ink commented: “With Asia Pacific set to overtake Europe as the largest travel retail market in 2012 and Chinese consumers making up the largest part of the Asian market, we believe that the China Travel Retail event is a must attend event for travel retailers and concessionaires, health and beauty, gifts, confectionery, eyewear, fashion & accessories, tobacco and wine and spirits brands alike. We believe that with the delegates already signed up as well as the world class speakers we have on board, CTR will become a highly successful event for many years to come.”

In Brief

GuestLogix launches B&S group takes over Dufri International, renames it Dufri Global Lifestyle The B&S group has announced that its Global Lifestyle company will take over the electronics business of Dufri International as of April 16, operating the business under the new commercial name “Dufri Global Lifestyle.” B&S says that all of Dufri International’s customers and suppliers will be notified via a personal letter and phone call. All the current Dufri International account managers will join the new entity. “Dufri Global Lifestyle will be able to support customers in travel retail with its known wide assortment of electronics and dedicated advice in assortment, training, and sales and marketing support,” B&S Group said in making the announcement. “All this will be possible in the new strong financial environment within the B&S group. The Dufri team wants to thank all relations for their trust and support in the last months and looks forward to working together in the coming years.”

Hong Kong springboard for Asia Pacific operations

GuestLogix, a leading global provider of onboard retail and payment technology solutions to airlines and the passenger travel industry, has announced that it is setting up operations in Hong Kong to service Asia Pacific airlines. “Asia Pacific is the largest region in the world for passengers, accounting for almost 34% of passenger traffic worldwide,” GuestLogix says. “However, as the region is poised for more growth and traffic in the coming years, for airlines to survive and thrive there needs to be a renewed focus on offerings that offset rising fuel and other costs that are both sustainable and attractive to passengers.” On May 7 GuestLogix Asia Pacific will celebrate the opening of its new location. Hong Kong was selected because it’s a major Asia Pacific airline hub, with around 40 million passengers arriving or passing through every year. “Hong Kong is the ideal home for GuestLogix, and the company will be able to provide improved service solutions specially tailored to the needs for the region’s airlines and the demands of its passengers,” GuestLogix says. GuestLogix was founded in 2002 and is headquartered in Toronto, Canada, with offices in Dallas, London and Singapore.

Narita to build new budget terminal Narita International Airport Corp, the operator of Tokyo's busiest international airport, is planning to build a new budget terminal to cater for Japan’s burgeoning lowcost airline sector. The airport operator says it will turn an existing building into the budget terminal, and plans to open the facility by March 2015. The new terminal will have no aerobridges, relatively simple interior equipment

in order to keep costs down, and a retail offer aimed at the budget-conscious traveler. The airport's announcement comes as at least three new low-cost airlines plan to take to Japanese skies. The first will be Jetstar Japan, a joint venture between Qantas and Japan Airlines that received its Air Operator’s Certificate in early April, and which plans to launch commercial services at Narita from 3 July.

Eyelevel targets

UK-based eyelevel, which supplies luxury products to VIP airlines and private jet operators, has launched a new airline retail unit called Cartmax. The product is designed to maximize the potential for inflight sales on commercial airlines. Cartmax was developed by eyelevel’s Managing Director Matthew Delamere. The unit is provided as a flat-packed, fold-out, recycled cardboard unit that sits within the deep tray compartment of an airline trolley. It has been designed to provide an attractive point of sale proposition utilizing colorful branding options on its exterior panels, supporting the sales efforts of flight attendants. “People buy with their eyes, and retail in general has always provided strong points of sales for their goods,” Delamere says. “You’d never see a supermarket display products without graphics to attract attention, and Cartmax simply takes this

commercial airlines with Cartmax inflight sales unit

ASIA DUTY FREE & TRAVEL RETAILING TFWA AP MAY 2012

Japan Airlines' main rival, All Nippon Airways (ANA), is also planning to start a new low-cost carrier based at Narita. And in August, AirAsia Japan is expected to start services from Narita. ANA’s new budget airline is the second it has started in just six months, following the recent launch of carrier Peach at Osaka’s Kansai International Airport. Narita International Airport handled 28.1 million passengers in 2011.

proposition and puts it on aircraft.” Cartmax can be used as an advertising medium, enabling the airline to sell “space” to outside sponsors for periods of time. It can be used to promote offers on board such as menus of new coffee ranges. Airlines can change images to boost sales of holiday-oriented items. And passengers using earphones for inflight entertainment can more easily distinguish between food and inflight sales service. eyelevel says the simplicity of Cartmax means airlines don’t have to adapt existing trolleys to use it, and because it fits inside the trolley carts and is made of cardboard, it doesn’t require extra storage space or add noticeable weight. A number of airlines are considering trials, and Delamere is hoping on board tests will get underway in May. “Airlines are always looking at means of developing ancillary revenue and it seems that Cartmax could offer great potential for increased revenues, which is why we’re reviewing trials,” says Raymond Kiersey, General Manager of Inflight Sales at UK airline Flybe, which is reviewing the unit’s potential.

Q&A: Erik Juul-Mortensen

“The sheer weight of numbers” Asia Duty Free talks to Erik Juul-Mortensen about TFWA AP, the strength of China and other markets and a new addition to the TFWA events calendar in 2013 BY HIBAH NOOR

he most recent exhibitor and registration statistics from TFWA for its annual conference and trade show in Singapore indicate what most in the industry already know—that travel retail is flourishing in Asia. President of TFWA Erik Juul-Mortensen talks to Asia Duty Free about the latest developments in the region and with TFWA.

Asia Duty Free: Are there any recent developments with regard to TFWA AP that we should know about? Erik Juul-Mortensen, President, TFWA: TFWA has set the scene for a very busy week in May at TFWA Asia Pacific & GATE ONE2ONE. The most exciting news is that the trade floor is not only fully booked, it has spilled over into a new Mezzanine level for the first time ever. We are delighted with the caliber of exhibitors who have confirmed their participation and we are anticipating a very satisfactory number of visitors based on the pre-registrations at this stage. The Conference and Workshops day will, we hope, be as inspiring and thought-provoking as ever. The theme “Power & Potential in Asia Pacific” may not be ground-breaking but we anticipate that the content will be. Following my opening address Furla CEO Eraldo Poletto will delve into the hot topic of Asia’s luxury brand-hungry consumers; Chandran Nair, CEO of the Global Institute For Tomorrow, will study the broader picture of business in Asia; and Jonathan Chippindale, CEO of Holition, will look at the role of digital marketing. 16

The workshops will address four topical subjects: “China Revisited” and “Emerging Asia” will look at development potential in China and other countries such as Indonesia, Vietnam and the Philippines. “Technology Talk” will open up the social media and smartphone technology and see how it can apply to duty free and travel retail, and “Airline & Inflight Asia” will look at different airline business models operated by flag carriers and LCCs and how they handle inflight retail. We always plan enjoyable social occasions around the event to get people talking and this year we are taking the Singapore

number of exhibitors this year—currently 236 exhibitors occupying almost 7,000 square meters of stand space compared with 212 companies on 6,330 square meters last year, which was itself a record at the time. The level of sponsorship reflects the industry’s confidence in this event as a high profile platform to promote major stakeholders in the Asia Pacific region. Our Diamond sponsor this year is Qatar Duty Free, the Platinum sponsor is Changi Airport Singapore, Heinemann and Aer Rianta International are sponsoring the workshop sessions, Ferrero is covering the coffee break, Perfetti

“Given the complexity and opportunity in the Chinese market TFWA has taken the decision to stage a China Conference in Beijing in March 2013.” Erik Juul-Mortensen, President, TFWA

Swing Party to Garden Asia, a new and rather exotic location. The week will kick off with the Welcoming Cocktail at Raffles and the Chill-Out party on Tuesday will be set at the Mandarin Oriental poolside which offers superb views of the city. ADF: Can you give us an update on confirmed exhibitors and sponsors, and how this compares to last year? EJM: TFWA is delighted with the record

ASIA DUTY FREE & TRAVEL RETAILING TFWA AP MAY 2012

Q&A: Erik Juul-Mortensen

Standards for the quality of the 2012 show were set high due to last year’s event, but to date the number of registrants and exhibitors indicates that TFWA AP is set for a record turnout

Van Melle the conference portfolio and Tommy Hilfiger the hostesses’ outfits. ADF: From your point of view, what are the main developments in Asia impacting the travel retail industry? EJM: We have heard much about the growth projections for this region with inbound and outbound tourism increasing at a rapid rate, particularly with respect to China, Korea, Vietnam and India. This growth has huge implications for transport—especially airport infrastructure, duty free and travel retail—and brand development in the region, so that is a tremendous opportunity. However, this is a complex market and with dozens of new airports and terminals springing up in the region, the question has to be whether retailers, operators and suppliers, many with a traditional Western outlook, can adapt to the new market and the new generation of consumers, and adapt fast. We have a whole new generation of consumers entering our stores—are we reaching out to them and engaging with them? 18

ADF: What are some of the challenges the region faces? EJM: Among the issues facing our industry are the current challenges to our traditional duty free product groups of liquor and

ASIA DUTY FREE & TRAVEL RETAILING TFWA AP MAY 2012

tobacco. We are tackling, for example, an industry code of conduct for the sale of alcohol which demonstrates to the doubters that our business is well managed, controlled and conducted in a responsible manner. We are also working with the authorities in many countries to agree to display and selling processes for tobacco goods which will satisfy the authorities. The emergence of so-called low cost carriers which behave differently to flag carriers; the language and cultural barriers encountered by the “new” travelers as well as making them feel comfortable and inclined to shop; and different consumer motivation

Q&A: Erik Juul-Mortensen

Currently 236 exhibitors occupying almost 7,000 square meters of stand space have confirmed for TFWA AP 2012, compared with 212 companies on 6,330 square meters last year

and behavior which requires a fresh approach to product selections, layout and merchandising. The opportunities offered by the sheer weight of numbers are evident—we just have to learn how to exploit the potential. ADF: All suppliers and retailers love the Chinese consumer. Are there any other nationalities that are following in their footsteps when it comes to buying habits? EJM: The Chinese traveling consumer is indeed a welcome phenomenon in the travel retail market—he/she travels widely, spends a large amount on their travels, has a predilection for luxury goods and aspirational brands, researches the market and is generally savvy about range and price. The Indian market is also developing fast, as are the Taiwanese and Korean markets but

with less volume and a less marked preference for high value goods. ADF: Have you seen or heard of any innovative retailer/supplier activity that deserves praise? EJM: I am constantly surprised and delighted by the innovative techniques used by brandowners and retailers to attract the attention of the consumer or indeed the connoisseur, from the prestigious Master of Spirits events staged by DFS at Singapore Changi, to motorcycle promotions at Zurich, to exclusive fragrance, spirits, confectionery and accessories launches in airports large and small all over the world. The most impressive are the ones where the brands and retailers are clearly working hand in hand like Nuance Watson pre-launching a perfume in Hong Kong, Delhi Duty Free showcasing a whisky, Aelia working with a cognac company to mount an outstanding promotional display at Paris CDG, confectionery companies using games and activities to engage the customer, and countless

cocktail and tasting bars to delight the weary traveler. These examples of cooperation are the essence of effective retail. ADF: Overall, how is this region progressing? What should we expect in the next 2-3 years? EJM: There is speculation that the “Chinese bubble” may burst and that the growth in passenger numbers may stabilize. If this should be the case and the growth rate slows to more common single digit levels we are still faced with steadily increasing passenger numbers and a major boost to demand in travel retail. Given the complexity and opportunity in the Chinese market TFWA has taken the decision to stage a China Conference in Beijing in March 2013 to give all stakeholders a chance to learn about the market, to discuss trading behaviors, to assess the potential, to meet others who have made the leap, and to develop networks of contacts in the region. We are confident that this will be a successful and valuable addition to the indusc try calendar for 2013.

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Regional Report: India

DDFS offers a world-class duty-free selection at Delhi's T3

Indian

summer DDFS says Indian travelers are highly brandconscious, and has shaped its retail offer accordingly

India's first foreign-partnership travel retailers have had an unbroken run of success since they entered the market, and as new opportunities arise, they're set to move on to even bigger things

t's less than 10 years since the first purely private retailer set up in Indian duty free, but now the country's travel-retail market stands on the edge of a revolution as new airports and terminals are built and an increasing number of foreign firms eye potentially rich pickings. The opening of Terminal 3 at Delhi's Indira Gandhi International Airport in 2010 arguably marked the turning point in the Indian industry, giving India's capital the country's most impressive airport terminal, and a retail offer to match. But it wasn't all smooth sailing at the outset for the newest kid on the block, Delhi Duty Free Services (DDFS) - a joint venture between airport operator Delhi International Airport Ltd, Indian Duty Free Services and Aer Rianta International, set up specifically to operate at the new terminal. "Logistically it was a big nightmare," says DDFS Chief Executive Steve O'Connor. "We were outperforming the budget, even in the early days. Nobody knew when the business was going to plateau at a level where it was consistent, and our biggest problem was trying to get our business fully stocked. But in the past year, we've got into a position where we have consistent stock all the time, and that's reflecting in our sales." O'Connor says DDFS's sales have increased "substantially" over the past year, with growth in double-digit percentages and a large number of regular customers.

ASIA DUTY FREE & TRAVEL RETAILING TFWA AP MAY 2012

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Regional Report: India

Nuance offers a full complement of upscale brands at Bengaluru airport

But several years before DDFS made its impressive debut in Delhi, the Indian arm of Switzerland-headquartered The Nuance Group was already setting up duty-free stores at Bengaluru International Airport, further south. The Nuance Group (India), a joint venture between Nuance and local retailer Shopper's Stop, opened its outlets at Bengaluru, which serves India's IT capital, Bangalore, in 2008, and it has been quietly refining its business since then. And all the signs are that its efforts have paid off. "Sales are growing at 30% over last year, on passenger traffic that's growing at a rate of 12-14%," says Nuance (India) Country Head Anirban Chowdhury. Behind this, Chowdhury says, are several factors. "Liquor and food are growing," he says. "That's driven by increasing leisure traffic to Southeast Asia. When we opened, in 2008, most of our revenue was coming from travelers on European flights, but now we see a clear shift towards Southeast Asian flights, and there are more and more group tours." "A growing middle class is also one of the factors," Chowdhury says. "Five years back, most honeymooning couples would travel within India.

But now, with the IT industry [in Bangalore] booming, people are traveling across the world and aspiration levels are rising - there's huge traffic on that front. And there's huge corporate leisure travel, with companies taking their staff [abroad] usually in groups of 20-40. Those travelers spend a lot of money both in departures and in arrivals. "And in Indian airports, the specialty category is almost non-existent, so that's one area [of strength] - especially with destination merchandise. I think we're the only airport that's been able to put up a concept exclusive for our destination category, which is doing very well for us." Chowdhury says the specialty category contributes almost 20% of all Nuance (India)'s business at Bengaluru, and includes products such as packaged curry paste, Indian sweets, souvenirs, local fashion and tea. It's a category in which O'Connor also sees great potential. "We have an agreement with [Delhi International Airport Ltd] for destination merchandise," he says. "It's only tea at the moment, but we're looking to expand into more destination product lines because we see good potential in that if it's done properly.

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Regional Report: India

Nuance has spent several years honing its business at Bengaluru, and now it's ready to expand

"Tea is really big business for us here ... and obviously India's synonymous with tea. We see huge potential there for the category, even though it's kind of underdeveloped at the moment ... We need to come up with something different from just stocking it on the shelves in packets. I want a concept with containers of loose tea where you can get the aroma, where people can sample it and have tea tastings and bring a bit of theatre into the category. Tea will be an element of people's gifting, and we know we can generate a lot more revenue out of it." Scotch whisky is another key category for both DDFS and Nuance (India). "We have 144 varieties," says O'Connor. "It's a fantastic range, particularly in departures, because people have time to explore." DDFS has launched a number of whisky promotions, including tastings, and is planning on sending sales staff to Scotland in the year ahead to learn more about the product as it coaxes its customers into trading up and adds niche brands to its offer. Chowdhury says Nuance (India) is also "very focused on whisky" and is setting up a single-malt zone at Bengaluru. "In most airports," he says, "refinements [in the range of single malts] are categorized only by place of origin and taste balance, but in our version we've gone a step further, aligning each taste palate with a color for better visual attraction. It's a very interesting and exciting category that we're growing very fast, and we plan to expand our range." Ranges aren't the only things that are expanding, either. Delhi's airport operator is working on creating new retail space in the piers at T3, says O'Connor. "We're looking at installing mobile [retail] units to operate at the gates and talking to Delhi Airport about other opportunities, too," he says. "We have two pier shops, but by the time people go past them, they're certainly not going to come back to them. Weâ&#x20AC;&#x2122;re looking at opening another shop at the end of our retail area with the four categories [liquor & tobacco, confectionery, food and perfumes & cosmetics] to support all of that." Bengaluru is also building out new space in its Terminal 1, which Chowdhury says should be completed by 2013. And he's bullish about

Nuance's destination offer includes a wide range of local fashion and accessories

the likelihood that Nuance (India) will win the concession to operate the new retail areas. "We have a five-plus-two-year contract, but it was not anticipated that the traffic would grow so fast and that there would be an expansion, so we've been engaging with the airport," he says. "There are very few local players in the market, and they kind of operate more from outside India, with only their retail operations here. But we have our back office here in India, so I think in any tender, that'll stand us in good stead." And, having bedded their respective businesses down, both retailers are keen on taking the next step into other Indian airports. Chowdhury says: "There are a number of other opportunities that'll be available in the next three to six months. A lot of government-run airports in places like Chennai and Kolkata are being upgraded, and airports that have opened recently in smaller cities have set good precedents - they've done a good job, with more space for retail and F&B. "We're looking at Chennai and Kolkata," he says. "Commercially they are very, very viable, and with our presence in the market - with our back-office operations here - it's much more costefficient for us to service additional airports." Cochin Airport, in the southern state of Kerala, is another opportunity, with a new terminal in the pipeline, but Mumbai Chhatrapati Shivaji Airport's Terminal 2, due to open next year, is the prize that both retailers - and many more besides - have their eye on. "Mumbai will be big and we're following it closely," says Chowdhury. "And I wouldn't be wrong in saying that every [duty-free retailer] in the world will be looking at Mumbai, especially after the success in Delhi. Everybody's looking at Mumbai, and so are we." "Aer Rianta will be chasing that business for sure," says O'Connor. "It's the next biggest airport after Delhi, so you'd be mad not to go for it. It's more complicated because of Customs and labor unions down there, but it's a massive business." As India's airport development continues apace, count on these two foreign-partnered retailers to be joined by an impressive field of big names from abroad in the race for retail in this fast-growc ing market.

Regional Report: Australia

Melbourne's T2 offers travelers a light and airy ambience

Cafe Vue offers diners at Melbourne Airport a taste of the city's renowned cuisine

Wizards

Melbourne Airport marks Lunar New Year for its growing Chinese passenger segment

Despite a series of setbacks, Australia's travel-retail sector has proved to be remarkably resilient, as operators conjure new ways of gearing up for good times ahead BY P. CONVERY

loods. An ash cloud. A strong currency. Strikes at national flag carrier Qantas. The grounding of Tiger Airways Australia. An intensifying campaign to control tobacco labeling. Australian airports and travel retailers have faced what Cairns Airport General Manager of Commercial Robert Evans describes as a "perfect storm" over the past 12 months. But with a strong determination to get through these challenges, retailers and airports alike have played to their strengths, pressed ahead with getting the best out of their businesses and are set for a period of renewed expansion. In Melbourne, airport operator Australia Pacific Airports Melbourne has been busy opening an array of retail outlets in the airport's recently expanded international terminal, bringing in a taste of the city's celebrated food culture. "Our focus is absolutely on food and beverage in our international departures area," says Deborah Price, Melbourne Airport's Manager of Retail Strategy. "Of note are two of Australia's most celebrated chefs - Shannon Bennet, of Cafe Vue, and Frank Camorra, of Bar Pulpo by Movida, who have opened outlets at the airport." The airport has also been expanding its range of brands and products, adding a number of "firsts" among Australian airports, includ-

ASIA DUTY FREE & TRAVEL RETAILING TFWA AP MAY 2012

JR Watch Co is one of the recent openings at Melbourne Airport

ing brands JR Watch Co, Swatch and Forever New, and bookstore WH Smith. "Cafe Vue Express also opened landside in T2," says Price, "and our focus for retail in general over the next 6-12 months is to stabilize our current retailers." Nearly 1,700km up the east coast, Brisbane Airport has been burnishing its image, working with advertising agency Clemenger BBDO to develop a new retail branded look and feel due for launch in April. Leeann Ellison, Brisbane Airport Corp's Marketing Manager of Terminal Retail and Commercial, says: "It'll promote the breadth and

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Regional Report: Australia

F1rst Duty Free is one of the brands under which The Nuance Group (Australia) operates Brisbane Airport's fashion zone

Brisbane Airport's food court offers a range of dining possibilities

range of categories available at the international terminal, such as duty free, specialty retail, currency [exchange] and food & beverage." The airport operator currently has no plans to launch new tenders, but has recently carried out a major market research exercise aimed at improving the airport's retail environment, which Ellison says will greatly assist in the development of a new retail master plan. Even further north, in Cairns, the gateway for Australia's Great Barrier Reef, Cairns Airport has just closed a tender for F&B in the airport's international terminal. The airport recently welcomed Australia-headquartered retailer J/R Duty Free as its sole duty-free concessionaire after previous incumbent The Nuance Group Australia decided not to bid to renew its contract. The airport's domestic terminal was given an A$200 million (US$207 million) facelift a couple of years back, says Evans, and "there are a few leases still to be signed there... and the international [contracts] have all been signed over the past few years, so this F&B one is really the last remaining." Cairns Airport may have finished inking almost all of its retail and F&B contracts, but at Perth Airport in Western Australia, the process is only just beginning. Perth recently unveiled the design of an A$750 million (US$774 million) upgrade, which includes a new domestic terminal and an expansion to its international terminal, and the airport operator is touting for retailers' business in the new spaces, which are due to be completed in early 2013. "We are keen to attract a varied and interesting range of brands suited to the Western Australian passenger market," says Perth Airport Chief Executive Brad Geatches. "The retail spaces in the new domestic terminal and expanded international terminal will provide concessionaires with good exposure and space to creatively pre-

sent their products or services." The new domestic terminal is the first in a series of projects that will deliver over 50 new retail outlets at the airport in the next three years. Perth Airport's passenger profile is quite distinct from that at all the country's other major airports, thanks to its proximity to much of Australia's mining and resources activity. Some 36,000 passengers working in the resources industry transit through the airport each week, and Geatches says the airport will be focused on providing a "relevant retail offering that represents value for money, choice and impeccable customer service". Elsewhere, an important and rapidly growing passenger segment is mainland Chinese travelers. "We've had enormous growth in the number of Chinese passengers, and we don't even have a direct flight [to China]," says Cairns's Evans, referring to Chinese travelers passing through the airport on domestic flights. "We've had 35-40% growth year on year for the past three or four years. We're up to 80,000-100,000 Chinese visitors now from about 20,000 three or four years ago." And it's a similar story at other Australian airports. Ellison says China is now the third most important inbound market for Brisbane Airport, with Chinese passenger traffic up 21.5% on 2010, and Melbourne Airport spokesperson Anna Gillett reports 23.2% growth in the number of Chinese visitors in 2011. Derek Larsen, Chief Executive of The Nuance Group Australia, which runs duty free under various brands at almost every major Australian airport, says: "We're seeing good growth in Chinese passengers in all our airports, but particularly Sydney, Melbourne and Brisbane. They're growing at a much more rapid pace than other nationalities in these airports."

Regional Report: Australia

Perth's new domestic terminal will free up space at the airport's international terminal and boost capacity More than 50 retail opportunities are set to open up at Perth Airport

"The airports are all looking much more closely at how they can adapt their services to meet the needs of Chinese passengers, and likewise, we are also looking at how we can provide specific services for them," he says. "We already have specialist Mandarin-speaking staff, and we're looking at how we can communicate with them in a more targeted way." Larsen says the way to get Chinese travelers to reach for their wallets is via gifting and premium products - a conclusion shared by almost all the airport sources interviewed for this story - and that a strong destination product offering is a big draw for the Chinese, and other nationalities besides. "Destination merchandise is a strong and growing part of the business," he explains. "We have Australia by Nature and also Jurlique - both very successful because they are Australian brands but also fit into the health and wellbeing category which is a growth area for us as well, and we are looking to develop it further. Health and wellbeing products are very popular with our Chinese customers, too, as they like natural products." "And we've developed what I think is a really impressive wine offer," Larsen says. "We have a great relationship with Penfolds, and we're working with them to bring exclusives to the airport. Last year we saw an amazing response to the release of the 2008 Special Bin 620 Coonawarra Cabernet Shiraz. We were the only Australian retailer - domestic or on-airport - to carry the wine, which was only showcased at other downtown locations. Only 1,000 cases were released worldwide. We made it available in all our stores and the response was phenomenal." Larsen says that going forward, Nuance will be revisiting the accessories and watches offer at Sydney Airport's main store to take the offer more upmarket and incorporate additional brands and that the company will be looking at doing the same in other locations too. He says Nuance is also carrying out renovations at its Express stores at Melbourne and Sydney airports. He admits the past year has thrown up its fair share of challenges, one of the most significant being the strength of the Australian dollar. "Some of our suppliers' business models have been impacted, so our pricing structures have been affected and in some cases we have had to work hard to stay competitive," he explains. "There is a real emphasis on innovation and newness, travel-retail exclusives, Nuance exclusives, gifting and 'Australiana', which provide a hedge against the high dollar."

The new domestic pier departures lounge represents a transformation of Perth Airport's interior space One of Nuance's promotions at Brisbane Airport

And despite the fact that he sees challenges ahead, Larsen is matter of fact about addressing them. "Across the business, we have implemented new government tobacco legislation, and there's more to come, with plain packaging due in December," he says." The impact of the new legislation will continue to be a major challenge, as tobacco sales directly impact other categories. "We [also] have LAGs [liquids, aerosols and gels] restrictions here, but we have processes in place now, and we also have a very good 'Shop and Collect' service available for both departures and arrivals, which removes this issue for returning Australians and residents. We've seen a steady healthy growth in that business, and actually we're dedicating more space to this service as its popularity grows." The Australian travel-retail industry may have faced one of its most challenging periods over the past 12 months, but as retailers and airports innovate to surmount those challenges - and as the resilience of the industry during that period demonstrates - the outc look is promising indeed.

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Regional Report: South Korea

Lotte is aggressively expanding beyond its home market

It takes two

P. CONVERY

The duty-free market in South Korea is the domain of just two retailers, locked in a rivalry whose effects are beginning to be felt far beyond the country's borders

outh Korea's travel retail scene has seen rapid consolidation in recent years, with just two companies coming to dominate one of Asia's key duty-free markets - big boy Lotte Duty Free and its energetic but smaller rival, Shilla Duty Free. Since Lotte acquired all of the operations of AK Duty Free - stores at Seoul Incheon and Gimpo airports and a downtown pre-order shop in Seoul - and since state-run Korea Tourism Organization got out of the travel-retail business, the two competitors have been left to slug it out alone, and the rivalry between them has become steadily more intense. That rivalry reached perhaps its most bitter point late in 2011, when Shilla beat Lotte with its bid for a partnership with luxury fashion house Louis Vuitton. Shilla became the first duty-free retailer in the world to open a Louis Vuitton store in an airport - at Seoul's Incheon - in September, causing quite an upset at Lotte. Opening the 550 square meter store was a coup for Shilla, but it came at a cost, as other high-end brands reacted angrily to the preferential treatment Shilla had extended to Louis Vuitton in order to clinch the deal. The allocation of the best retail space in the airport to Louis Vuitton and a rental of 6-7% - as opposed to the 20% paid by other brands - proved too much for Gucci to stomach, prompting it to close the stores it operated with Shilla and team up with Lotte. Chanel also refused to renew its contract with Shilla, and 36

pulled out of the airport in mid-September. Shilla is reluctant to reveal how much revenue its Louis Vuitton store - the largest of its kind worldwide - is bringing in, due to the commercial sensitivity of the information, but estimates run as high as US$65 million annually, thanks largely to growing numbers of high-spending Chinese travelers. A rise in passenger numbers from the Chinese mainland is driving sales for both Shilla and Lotte. It comes partly as a result of Chinese travelers shunning Japan following its devastating earthquake, tsunami and nuclear emergency, and visiting South Korea instead. A Lotte spokesman says: "Koreans still contribute more than half of all our sales, as they prefer to do their luxury shopping in duty-free, but a growing number of travelers - especially from China - are fast overtaking sales to locals. The high spending power of these customers is something we cannot afford to ignore." Lotte has been aggressively marketing itself in China in recent years, having opened information offices in Shanghai in 2009 and in Beijing in 2010. Lotte Marketing Director Kim Ju-nam says: "The share of sales to Chinese customers out of our overall sales increased from 8% in 2010 to 15% last year. Sales to Koreans declined about 10% due to the bad economy, but the drop was more than compensated by gains in sales to Chinese." Sales at Lotte have grown more than fivefold in the past three years, from less than 500

ASIA DUTY FREE & TRAVEL RETAILING TFWA AP MAY 2012

billion won (US$441 million) in 2008 to 2.7 trillion won last year. In 2011, the retailer's full-year sales were 17.4% higher than in 2010, largely thanks to the doubling of Chinese travelers' contribution to its revenues. At Shilla, a spokesman says the Chinese are now the biggest-spending customer segment in the retailer's duty-free stores, contributing almost half of their sales. Until 2009, Shilla's sales to Japanese travelers were almost triple its sales to Chinese visitors. "[But] sales to Chinese have been rising since the second quarter of 2010," says Shilla Vice President Jason Cha, "turning the tables between sales receipts from Chinese and Japanese travelers for the first time." Shilla has responded to that trend by hiring Chinese-speaking sales staff, and it is looking to hire more. "Arranging Chinese-speaking staff to help Chinese tourists to shop conveniently is something we consider very important," says Cha. "Our Chinese-speaking staff at our main downtown store in Seoul wear special 'panda' badges so they're easily recognizable, and we have Chinese-speaking sales staff at our Korean cosmetics zone to help Chinese visitors chose products. Also, about 30% of our sales representatives at our Louis Vuitton store at Incheon are Chinese speakers." The retailer has also organized events and promotions targeting Chinese travelers, including a card game event during Lunar New Year, with winners using coupons they win to make purchases in its stores. Shilla says

SMOKERS DIE YOUNGER. SOURCE: EU DIRECTIVE (2001/37/EC)

Regional Report: South Korea Lotte's offer at Seoul Incheon airport is highly brand-driven

it is planning similar events in the future, especially during the peak travel season and around Chinese national holidays. In March, Shilla started using social media to drive sales to Chinese travelers, with a marketing campaign on Sina Weibo - the Chinese equivalent of Twitter - offering shopping information and promotions. "We are working on establishing a relationship with Sina Weibo [for a presence on] their homepage," says Cha. Among the best-selling products to the Chinese, Shilla says, are cosmetics from South Korean brands such as Missha, The Face Shop and Innisfree, as well as highend international brands including EstĂŠe Lauder, Sulhwasoo and Dior. And it says its Louis Vuitton venture has been a hit among Chinese travelers, highlighting the luxury ambience of South Korean duty free and the quality of Incheon airport, which recently scooped Airports Council International's award for Best Airport Worldwide for the seventh year running. Although Incheon has long been a battleground for Shilla and Lotte, this year has seen the fight between the two retailers spill beyond South Korea's borders. In January, Lotte launched its first foray into Asian duty-free outside its home market, opening two stores at Jakarta's SoekarnoHatta International Airport in a joint venture with local partner PT SJ-Indonesia.

Together, they cover almost 900 square meters of floor area, with one store offering liquor & tobacco and perfumes & cosmetics, and the other, slightly smaller store selling fashion and accessories. Less than a week after that, Lotte announced that it had won a contract to open an outlet at Singapore's Changi Airport in May. Located in the transfer area of the airport's Terminal 2, Lotte's Changi store will measure 80 square meters and sell a range of South Korean products, such as ginseng. Lotte's next steps into Southeast Asia return the focus to Indonesia, where it plans to open duty-free shops at Ngurah Rai International Airport, the gateway to the resort island of Bali, a downtown pre-order duty-free store also in Bali, and a 5,500 square meter downtown pre-order duty free shop inside Indonesia's first Lotte Department Store. The store is due to open in December, in the 130,000 square meter Ciputra World Mall in Jakarta, which Lotte plans to rebrand as the Lotte Shopping Plaza Indonesia. Shilla, not to be outdone, has gone head to head with its larger rival in two big tenders - at Hong Kong and Los Angeles international airports. Hong Kong's tender, the results of which Airport Authority Hong Kong says will be out in the second quarter, is the biggest held in the history of the industry, with business

worth at least US$500 million annually at stake. The world's biggest duty-free heavyweights all submitted bids. Lotte - already the world's sixth-biggest duty-free retailer, and with a stated intention to become the world's best by 2018 - bid for the concessions for liquor & tobacco, perfumes & cosmetics and general merchandise. Shilla teamed up with local operator Sky Connection in a bid for the general merchandise category. In Los Angeles, the South Korean retailers are competing with each other - and a field of global duty-free giants - for just over 3,700 square meters of retail space currently run by DFS Group. The winning bidder will gain the concession to operate all duty-free at LAX from January 2013 for 10 years, with an option to extend for another three years. Given the scale of the ambition on display in these bids - and the fierce rivalry between the two retailers - Cha's modesty about Shilla's position is somewhat surprising. "If an opportunity comes our way, we will do our best to submit either a concession proposal or joint-venture equivalent with a local partner," he says. â&#x20AC;&#x153;We are currently in the trial and learning process with regard to going global." As South Korea's two travel-retail giants take their fight to the next level, actions c surely speak louder than words.

Denarau Duty Free

Denarau Duty Free is a new arrival on the scene, but it covers the full gamut of product categories and future prospects are good

Pacific pearl

Denarau Duty Free is flourishing in the liberalized duty free market in Fiji—and the future looks sunny BY ANDREW BROOKS

uty free is our new venture,” says Doreen Yee, Director of Fiji-based Denarau Duty Free. “We’ve been in foodservice for the last 20 years but the government’s initiative to re-introduce duty free shopping outside the airport led us to take the challenge of operating a duty free shop.” For nearly 50 years, Yee says, Fiji had two duty free players, operating in the airport and in most major hotels. Then in 2012 the government announced its intention to open up duty free throughout the country. The 340-square-meter family owned operation officially opened on January 20, 2011, and based on the year’s performance, the opportunity to open more shops has been offered, but, as Yee says, “we first have to prove ourselves before we move forward.” There are 15 people on staff. The shop is located in the Port Denarau Retail and Commercial Centre on Denarau Island in Nadi, 20 minutes from the international airport. Port Denarau is a ferry terminal and a gateway to over 50 outer island resorts. The shop derives its business from the cruise ships that visit the port—roughly two per month—and tourists from the nearby hotels. Australians make up half the tourist arrivals, followed by New Zealanders at 16%, then Europeans, Americans and Asians. About 100 flights arrive each week, on Air Pacific, Qantas, JetStar, Pacific Blue, Air New Zealand, Korean Airlines, Continental Micronesia, Solomon Airlines and Aircalin. “Our turnover at the moment is enough to buy stock, pay staff and pay the bills,” Yee says. “We don’t anticipate making huge profits in the first few years of operation.” 40

Top categories are fragrances, jewelry, sunglasses, apparel, bags and cameras. Some of the brands Denarau Duty Free carries were first contacted through the TFAP trade show and the rest are sourced through overseas contacts. Sunglasses are a popular item, with Maui Jim, Coach, Calvin Klein, Fendi, Nautica and Guess among the brands sold. In fragrances it’s Police from Italy, Jean Couturier, Leonard and Hello Kitty from France and an assortment of other names from the US. Jewelry gets a lot of attention—brands and items covered include Gold Silk, Tahitian and South Sea pearls, Red Coral from Italy, Marano glass necklaces and bracelets, Swarovski charms, pendants, rings and earrings, and gemstone rings. Nautica, Maxum, Hugo Boss, Storm London, Ed Hardy, Tap Out, Mickey Mouse and Cactus watches are on offer, and in cosmetics buyers can choose from Australia’s Napoleon Perdis, Condense from France and Fiji’s own Renui and Makasoi. Sony and Canon top out the electronics list, and a full range of accessories is also carried. Buyers can pick up Bohemia crystal housewares, Guess bags, BCBG Maxazria ladies’ clothing, Legend Soul men’s clothing and Island clothing. Local souvenir items and health products are also available Outside the airport environment, the retail landscape is a mixed bag, with fragrances, jewelry, cosmetics, sunglasses, watches and most electronics being sold duty free, but bags, clothing, shoes, alcohol and cigarettes sold duty paid, Yee says. “We anticipate a better 2012 as compared to 2011,” Yee says. “2011 has been a trial and error period. Also more cruise liners are scheduling stopovers at Port Denarau.”

ASIA DUTY FREE & TRAVEL RETAILING TFWA AP MAY 2012

Tourism in Fiji is showing good growth, the cruise market is very dynamic, and the new “superyacht” charter market, which didn’t even exist as recently as three years ago, is adding to the growth. “Apart from our regular tourists from Australia we anticipate a growth from Asia, and we are gearing up to service that market,” Yee says. “We’re already seeing a significant number of Chinese tourists, and their demands are different to the tourists from other markets. We’ve been fairly successful in that market, particularly with pearls.” The shop runs its own promotions, geared around notable holidays like Christmas and Valentine’s Day. Yee says that so far there’s no help from brands when it comes to doing promotions, but this is simply because Denarau Duty Free is so new. “When we’re able to deal fully with duty free, we will structure promotions that build volume by creating multiple purchases, but linking multi-brand promotions and by creating value added multic purchases within a brand,” Yee says.

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Duty Free Philippines

Isle be back

he past year has been a busy one for state-owned retailer Duty Free Philippines, with dynamic marketing campaigns across TV, radio, print media and transit media, and ambitious renovations at Manila's Ninoy Aquino International Airport. The company has made significant headway in revamping its brand image to celebrate the 25th anniversary of its founding, and it's set for growth. It's even publishing a coffee-table book and launching a new chocolate brand named Guimaras this summer. Duty Free Philippines (DFP) Chief Operating Officer Lorenzo Enchong Formoso Duty Free Philippines Chief Operating Officer Lorenzo Enchong Formoso is upbeat about the retailer's prospects this year as low-cost air travel continues to boom

"Following the allocation of more space in T3, we already have a plan to open a store there," Formoso says. "That means we can provide our customers with more brands and product offerings." And DFP appears to have its work cut out for it. Fueled by a boom in low-cost air travelâ&#x20AC;&#x201D;largely thanks to Cebu Pacific, which is now bigger than even national flag-carrier Philippine Airlinesâ&#x20AC;&#x201D;international passenger traffic to Philippines rose by 9.7% in 2011 from a year earlier, according to the Civil Aeronautics Board. Formoso says that, unlike a privatelyowned duty free retailer, DFP may not be the most profitable business, and nor does it have a global network of stores. But he points out that DFP has a mission beyond fattening its own bottom line: it is also tasked with promoting tourism to the Philippines and serving Filipino workers returning from work abroad, who may not be in the market for luxury brands and upscale products. "The bulk of our customers are balikbayans [overseas Filipino workers]," he says. "They shop at Duty Free Philippines for basic duty free products such as chocolates, grocery items, liquor, cigarettes and electronic appliances." And the retailer's focus on its home market and on fostering tourism is reflected in its current expansion plans. "We are currently working on the possibility of opening new outlets in provincial areas which are tourist spots as wellâ&#x20AC;&#x201D;such as Kalibo International Airport in Aklan, Embarcadero in Legazpi City, Albay, and Puerto Princesa International Airport in Palawan." It's a mandate quite unlike that of any other travel retailer in Asia-Pacific, but it's one that Formoso seems quietly dedicated to. c

says: "We are very positive about this year. Currently, we are experiencing 12% growth in sales, and we are confident that, with renewed marketing programs that specifically target the right market, this will even increase further." DFP not only markets its products through traditional channels, but also makes innovative use of social media platforms such as Facebook and Twitter, which it says helps it to stay on top of the latest trends and shifts in shoppers' preferences by taking an interactive approach that engages directly with its customers. The retailer's overall marketing strategy was reinforced by the renovation of its stores at Ninoy Aquino, which started in the first half of 2011. That program harmonized design across all of DFP's outlets, with a yellow and silver color scheme to mark its 25th anniversary. And that visual overhaul appears to have borne fruit. Formoso says DFP's Gate 15 store at Ninoy Aquino's Terminal 2, which reopened after the revamp in August, posted a 36% jump in sales between September and December 2011 versus the same period the previous year. DFP is also renovating its stores at Terminal 1's arrival gates 1 and 16, and the work is set to be complete by the end of April. A similar program of upgrades is planned for the departure area, for which DFP expects the airport DFP targets Filipino workers returning from authority's approval soon, abroad with affordable Formoso says. merchandise that's Formoso says DFP will good for gifting have more to offer when Ninoy Aquino's Terminal 3 begins full operation in the middle of this year, as international carriers gradually move from the airport's overstretched T1. T3 was supposed to be fully operational a decade ago, but after a series of delays, it wasn't until 2008 that it began even partial operations, with a number of domestic flights.

L E

N O U V E A U

P A R F U M w w w.r em i ni scencepar is.c om

Hong Kong International Airport Well-known local brands share space with international names in HKIA's large shopping areas

Travel retailers the world over bid for the contracts to operate retail at HKIA, one of the world's busiest airports

Hong Kong's year of the dragon

Hong Kong International Airport is at the center of the action in 2012, with the duty free industry's biggest-ever tender and ambitious plans for growth

irport Authority Hong Kong (AAHK) produced some slick advertising to announce the retendering of its core duty free concessions in 2011, but such was the excitement in the industry over the prospect of these lucrative contracts being up for grabs that it probably needn't have bothered. The tenders, for liquor & tobacco, perfumes & cosmetics and airside general merchandise, involve business worth at least US$500 million annually, and drew an impressive field of bidders, including state-owned China Duty Free Group, DFS Group, King Power Hong Kong, LS Travel Retail ASPAC, Chinese mainland-based Sunrise Duty Free, World Duty Free Group, South Korean heavyweights Lotte Duty Free and its smaller rival Shilla Duty Free, and incumbents Nuance Watson (HK) and Sky Connection, both of which launched a solid defense of their positions. In what was the industry's biggest tendering exercise, the airport authority offered contracts for retail space of more than 7,500 square meters, divided roughly equally between the three core categories. The contracts will run for an initial five-year term with an option to extend for a further three years. The results of the tender had been expected in January, but an AAHK spokesperson says the airport operator now plans to announce the winning bids—several of which may be awarded to partnerships that formed in the run-up to the tenders' clos-

ing date—in the second quarter of this year. A slew of impressive statistics from AAHK underline the appeal of the concessions for the bidders that lined up for them last August. The AAHK spokesperson says: “For the year 2011, Hong Kong International Airport [HKIA] welcomed 53.9 million passengers and handled 333,760 aircraft movements, representing growth of 5.9% and 8.9% respectively as compared to 2010. Both passenger trips and aircraft movements set new records." Passenger traffic to and from the Chinese mainland and Southeast Asia was particularly buoyant. "In the past three financial years, the share of mainland [Chinese travelers] in [the] total passenger number increased from 21% in 2008-9 to 22% 2010-11," says the spokesperson. And in 2011, the number of airlines serving HKIA topped the 100 mark, with recent additions including Mega Maldives, Air Busan, Mongolian Airlines, Tianjin Airlines, Airphil Express and Nordic Global Airlines. The airport now sees more than 900 flights daily to around 160 destinations worldwide. All that is reflected in the airport operator's commercial revenues, with income from retail licenses and advertising surging more than 28% for the six months ended September 2011, the first half of the 2011-12 financial year and the most recent period for which figures are available. The spokesperson says: "We remain opti-

P. CONVERY

mistic that the overall positive trend will continue in view of the latest, more encouraging economic signals coming from Europe, the US and the Chinese mainland. However, the pace of growth in overall air traffic might be slower while earnings growth in the near term is also expected to be tempered by slower traffic growth and the higher base that was [set] in fiscal 2010-11." However much the pace of growth might cool in the year ahead, AAHK is banking on a return to rapidly rising passenger traffic farther down the line, and has started work on a project to expand the airport's capacity by an initial 10 million travelers annually. It is building a new midfield concourse with a floor area of 78,000 square meters, 20 additional aircraft stands, a cross-field taxiway and other facilities. The new concourse will be located to the west of Terminal 1, between the two existing runways. It will be connected to the terminal by a moving walkway and will enable the airport to meet projected traffic demand through 2020. And beyond that, AAHK is planning a third runway—a proposal that has already won the enthusiastic backing of Airports Council International—as passenger traffic continues to outstrip forecasts. With all its connotations of good fortune and great power, the 2012 Year of the Dragon seems a highly auspicious time for one of the world's most growth-focused airports to c forge ahead into the future.

HKIA's attractive duty-free retail is currently run by Nuance-Watson (HK) and Sky Connection

ASIA DUTY FREE & TRAVEL RETAILING TFWA AP MAY 2012

Changi Airport Group

Roar energy

P.CONVERY

The Lion City's hub operator, Changi Airport Group, is once again showing the travel retail trade how it's done, with a drive for success that's keener than ever

hangi Airport Group (CAG), the operator of Singapore's eponymous hub airport, never disappoints with its seemingly endless energy, and it's redoubling its efforts to build on its success with an ambitious program of expansion and development. The airport operator is currently putting the finishing touches to a revamp of Terminal 3, focusing on the landside areas of the terminal's Basement Level 3. "The last phase of the revamp of Terminal 3's public areas, which focuses on Level 3 of the terminal, will be completed in the coming months,â&#x20AC;? says CAG Executive Vice

Stand D1

President of Commercial Lim Peck Hoon." There will be a total of seven restaurants and two retail anchor tenants located in this area." That follows an upgrade to T3's Basement Level 2, which added more than 20 new shops and which was completed late last year, bringing the number of retail brands to almost 30 and the count of F&B outlets to more than 10. "The upgrading of T1 is also near completion, with the finishing enhancements being done," says Lim. "Final completion is expected to be by the end of the second quarter this year. "The number of concessions at T1, across both the landside and airside areas, has

ASIA DUTY FREE & TRAVEL RETAILING TFWA AP MAY 2012

w w w. t r a v e l - b l u e . c o m

increased by about 25%, and total concession space has gone up by more than 10%. There are [now] over 70 retail shops and more than 30 F&B outlets in the terminal." And if all that revamping weren't enough, CAG is demolishing its Budget Terminal to make way for a new Terminal 4, geared to quick aircraft turnaround and with capacity for almost four times the 2011 passenger traffic at the terminal it is replacing. "The Budget Terminal will be closed on September 25, 2012," says Lim. "The new terminal ... will have capacity for 16 million passengers per annum [and] will have a wide choice of retail and F&B offerings, as well as passenger amenities that will better serve

the needs of travelers." Construction of T4 will begin in 2013 and CAG expects it to be completed by 2017. If CAG seems to have targeted low-cost carriers (LCCs) with the quick-turnaround, no-aerobridges T4, it's certainly not on a whim. LCCs have become a major part of Changi's traffic in recent years, and that growth show no signs of slowing. "The traffic volumes of LCCs have shown growth of about 35% over the past five years," says Lim. "Today, LCCs contribute a 25% share of Changi's total passenger volume, compared to about 8% in 2006. In 2011, LCCs carried 26% more passengers compared to 2010." She adds that traffic on full-service carriers also showed healthy growth of around 6% in 2011, from a much larger base than that of LCC traffic. In aggregate, Lim says, traffic at Changi grew 10.7% year on year in 2011, to 46.5 million passenger movements. Notable among those passengers were the increasingly commercially important Chinese mainlanders, who contributed about

20% to total concession sales at Changi in 2011, representing impressive growth of 40% year on year. Lim says they're among the top five customer groups at the airport, and that their favored product categories are liquor & tobacco, perfumes & cosmetics and luxury & watches. No doubt with this key passenger segment in mind, CAG has in the past 12 months opened airside stores such as Gassan Watches & Jewellery, wine and cigar concept Vine & Leaf and upscale Chinese lifestyle brand Shanghai Tang, among many others. Later this year it plans to open an airside wine bar named La Cave, and the airport's first fully-fledged electronics store, Electronics Hub@T3, landside, in May. And to coax shoppers into making purchases at the airport's large lineup of retailers, CAG will be running its hugely successful "Be a Changi Millionaire" promotion for a third time this year, alongside its GST absorption program, its Changi Rewards loyalty scheme and a host of other promotions

"The upgrading of T1 is also near completion, with the finishing enhancements being done." Lim Peck Hoon, Executive Vice President of Commercial, Changi Airport Group

throughout the year. With all this activity on the agenda, it's hard to see how Lim and her colleagues find the time to answer questions from journalists. The fact that they do is yet more testimony to the commitment and drive of the team that make Changi Airport one of travel retail's most respected success stories. c

TFAP Exhibitors

The spice of life

A record number of exhibitors are showing off their wares at this year’s TFWA AP exhibition. Asia Duty Free presents a guide to some of the industry’s leading brands BY HIBAH NOOR

José Chao, President, Horizon International Duty Free Where are you based? We’re based in Doral, FL, very close to Miami International Airport. Do you have any new developments in Asian travel retail? One exciting development is the excellent growth of Vice Vodka Icewine in the region. Another development is the continued growth of Hong Kong-based Equss accessories, which balance classic elegance and modern design to offer a wide range of high quality watches, jewelry and leather goods at affordable prices. Lastly, Horizon International Duty Free has been named the distributor for the ALLiSON collection of luxury Italian sunglasses. While the Americas is our primary focus, we have leeway to work with global accounts, so introducing this great new entrant to travel retail is another reason we are at TFAP. What are your bestsellers in travel retail? From Equss, we find that the watches and

pendants are the best sellers. For ALLiSON, we anticipate that Missoni—with both its flagship line (at around US$300/pair) and its entry-priced “M” line (around US$150/pair)— will do extremely well. Missoni has three boutiques in China, two in Hong Kong and one each in Seoul, Tokyo, Singapore and Taipei, so the Asian consumer has first-hand knowledge of the brand. How long have you been supplying travel retail and duty free? Horizon specializes in duty free and has been in business for just over a year. Who are you reaching out to during the TFAP show? Our primary objective is to continue to engage Asia Pacific retailers with Vice Vodka Icewine, which attracts both traditional Icewine consumers who enjoy it neat and younger consumers who enjoy Vice in cocktails. We will be introducing ALLiSON sunglasses to global

retailers. We also have meetings with brandowners who are considering joining the Horizon portfolio. Can you give us some insight on trends in your category? Horizon focuses on premium and luxury brands, a sector that continues to outperform standard brands across all categories. Of course, consumers from markets with the strongest GDP growth—such as China, Russia, and Brazil—are important targets. Those particular groups of traveling consumers are trendsetters with a tremendous appetite for premium brands, good disposable income, and the habit to buy in duty free due to the high tax rates in their home markets.

Barry Geoghegan, Founder, Barry Global Innovations Where are you based? Barry Global Innovations, distributor of Paul Sapin wines, is based in Ireland.

Domaine Peiriere Chardonnay from France; Giuliana Pinot Grigio from Italy; and The Rocks Chardonnay from Australia.

Do you have any new developments in Asian travel retail? We will be launching a range of new premium wine gift packs called "World Wine Cellar.” The gift pack contains 6 miniature bottles (18.75cl) of red from different classic regions/countries and 6 different whites in another pack also from 6 different wine countries. We are very confident that this is the first time that such a range of gifts has been created exclusively for the travel retail operators. The range in red consists of Casa Santa Maria Chilean Cabernet Sauvignon/Merlot; Devil’s Ridge Californian USA Cabernet Sauvignon; Hope Bay Shiraz from South Africa; Bordeaux Red Maison Belleroche from France; The Rocks Shiraz from Australia; and Chateau Blomac AC Minervois from France. The white pack contains Ta Moko New Zealand Sauvignon Blanc; Devil’s Ridge Chardonnay from California;

What are your bestsellers in travel retail? Our exclusive range of Paul Sapin MLP wines— the “Friendly Bottle"—are now listed in over 35 countries globally at operators like Dufry, Aelia, Nuance, DFA, Dubai Duty Free, Lotte, ARI and many more.

How long have you been supplying travel retail and duty free?

ASIA DUTY FREE & TRAVEL RETAILING TFWA AP MAY 2012

Paul Sapin SA will be exhibiting for the second year in a row in Singapore and will be represented on stand A7 by myself and representatives from Jonathan Holland & Associates, who represent Paul Sapin wines in Asia. Can you give us some insight on trends in your category? I firmly believe that other categories will also look to reduce packaging and weight, just as Paul Sapin has done for the wine category. The culture that you pay for what you carry is here to stay.

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TFAP Exhibitors

Yusuf Okhai, Managing Director of Aydya Group, parent company of Travalo Where are you based? The United Kingdom. Do you have any new developments in Asian travel retail? New listings confirmed include Sri Lankan Airlines, SunWing Airlines, Peach (DFASS Singapore) and SCOOT (DFASS Singapore). Other existing key airlines include Dragon Air, Cathay Pacific, Hong Kong Air, Oman Air, ANA, Thai Airways, Thai Air Asia, Cebu Air and Bahrain Air. What are some new collections that you will be exhibiting during the TFAP show? Travalo has found a niche with the new Travalo Touch, a 5ml refillable fragrance wand with rollerball technology. Like the earlier Classic Essential and Classic Excel models, the Touch has the patented repeat pump system so refilling with fragrance is simple and mess free. The Touch also has the addition of a

unique integrated flow regulator, so there’s no chance of leakages. The Touch is as handy and easy to use as its predecessors yet gives the added benefit of discreet and targeted fragrance application. What are your bestsellers in travel retail? Traditionally the Classic Excel and Classic Essential models have been our bestsellers and we have seen a 10% increase in travel retail listings within the past year. Travalo sells so phenomenally well due to the genuine, universal appeal as well as the simplicity and ingenuity. How long have you been supplying travel retail and duty free? Two years. Who are you reaching out to during the TFAP show? It’s our first ever booth at the show, so our objectives are more general than some other

exhibitors. Firstly, the show allows us to demonstrate and showcase the Travalo opportunity to a wider audience, and secondly to introduce the new Travalo Touch. We have aggressive expansion plans so we are reaching out to as many retailers and regions as possible, as well as maintaining our strong existing relationships. Can you give us some insight on trends in your category? Travalo is the leading refillable perfume spray within travel retail. This is because the buyers have realized that Travalo has superior design, high production values and a quality patented repeat pump system. The evolution of products means that we expect to see a steady increase in sales in the future. The new Travalo Touch with its rollerball technology will revolutionize the way in which people apply fragrances.

Gerry Munday, Head of Travel Retail, Furla Where are you based? Furla is based in Bologna, Italy. Do you have any new developments in Asian travel retail? Asia Pacific is a core region in travel retail for Furla, representing approximately 40% of the company’s business in the category. China in particular is a major growth area for us. To date this year we have opened in Haikou Airport and on Royal Caribbean’s “Legend of the Sea” with DFS and with CNSC in Beijing and Harbin, while in June we are delighted to be opening at Kunming Airport in the domestic terminal with ARI Yunnan and in the downtown galleria with Gebr Heinemann Asia. In Australia, Furla has locations in the downtown gallerias with JR Duty Free in Perth, Adelaide and Melbourne, and is opening with the same operator in Cairns Airport in May with a 10square-meter generic area.

How long have you been supplying travel retail and duty free? Furla has been selling to the travel retail market for many years; however, it was last year that the company decided to make a real focus on the category. Who are you reaching out to during the TFAP show? Our core business is with airports and downtown stores.

What are some new collections that you will be exhibiting during the TFAP show? We will be showing our Autumn Winter 2012 collection. What are your bestsellers in travel retail? Bestsellers include Candy, Piper and Amazzone. Basically it’s down to style, originality, innovation and practical designs. They’re just fabulous lines!

However, in Singapore we are introducing a new exclusive inflight collection so we are also very keen to show this to airline buyers and concessionaires from throughout the region.

ASIA DUTY FREE & TRAVEL RETAILING TFWA AP MAY 2012

Can you give us some insight on trends in your category? There is an ongoing trend towards bags which are practical and functional, yet at the same time stylish and on trend in terms of design and color. That’s why pieces like our Furla & I “It” Bag (see below), which is reversible and changes shape at the same time, is already looking like a real winner. I think consumers are also looking for interesting designs, colors and use of materials—pieces that ring the changes and are away from the normal “black or brown leather or pvc.” Again, Furla is way ahead of the rest in this respect, experimenting with different materials and combinations of materials, with fun colors and c designs.

Skincare & Cosmetics in Asia immerse your skin in the rrejuvenating ejuvenating power of the sea

radiant p. glow

New p.

color p. field

Amala p.

Skincare Report

radiant

Shiseido’s Future Solution LX

glow BY

JAMES ROSS

Skincare’s vitality is far from fading in Asian travel retail

t is worth remembering that during the global economic downturn of 2009, duty free sales in Asia Pacific continued to grow. In the beauty category, the region has become a core revenue earner for the big houses, and investment has poured in, particularly in the skincare sub-sector. After 2010’s strong rebound, 2011’s beauty performance in duty-free proved equally robust, driven by skincare. For example, at Nuance Watson (Singapore), which operates the beauty concessions at Singapore Changi Airport – one of the biggest duty free locations in the region – skincare grew at over 20%, faster than make-up or fragrance. In terms of beauty share, skincare saw a +2% gain and Senior Category Manager Chillie Por says: “We predict skincare will probably increase by a further +1.5% Cellular Power Infusion by La Prairie

“Generally we can say that our most precious collections such as Cellular Platinum Rare, Caviar and White Caviar Illuminating Système are the top sellers.” Yves Le Breton, Vice President Corporate and Sales Strategy, La Prairie

points. Skincare will remain a strong driver in 2012, in tandem with the healthy sales trend from PRC travelers, our number one tourist nationality.” Nuance Watson (Singapore) has in place several exclusive launches in the pipeline including the arrival of Coty’s US skincare acquisition Philosophy in May and, at the high end, another SKII world exclusive launch in June, part of a larger program of in-store promotions and animations that keeps the sub-sector buoyant.

Another luxury skincare brand, La Prairie, is seeing demand at the top end. “Generally we can say that our most precious collections such as Cellular Platinum Rare, Caviar and White Caviar Illuminating Système are the top sellers,” says Vice President Corporate and Sales Strategy Yves Le Breton. “Our launches have done extraordinarily well because Asian consumers like new developments in skincare. They understand the luxury and high tech approach of La Prairie.” This has helped La Prairie to establish itself well in the region. “While five years ago Asian travel retail was 25% less than the travel retail business in Europe, it is now doing 25% more than in Europe,” comments www.dutyfreemagazine.ca ASIA DUTY FREE & TRAVEL RETAILING

Skincare Report

Face off - A DFS customer gets the VISIA analysis

Le Breton. “We have a well-balanced global business now. Even without increasing our distribution, we expect to grow further in Asia, maybe with the exception of Japan. The fastest growth however will definitely come from China, Hong Kong and Macau.” At Japan’s giant beauty house Shiseido, Regional Marketing Manager Eyan Chang adds: “Skincare is still the key driver in Asia with strong sales expected in the coming months. Greater China will be the key region to look at, with Hainan coming up strongly.” Hainan Island is the resort at China’s southern tip where certain downtown retail stores operated by China Duty Free Group have been given duty free status and are seeing very strong demand from Chinese tourists. The Chinese passenger is inextricably linked to rising skincare sales in Asian duty free, but also further afield. Le Breton says: “The Chinese consumer is having an impact on our business in many other locations in the world, for example, Hawaii, Los Angeles Dubai and Vancouver. Currently no other nationality is impacting the travel retail business in a similar way. The second most important customer group in Asia for us remains the Koreans.” This combination of high-end demand and Chinese influence is one reason why DFS Group has developed a news service called La Prairie PowerChargeNight

Beauty Concierge at its Galleria Four Seasons in Macau and which rolled out to Galleria locations in Waikiki, Hawaii in November 2011, with others in Singapore and Hong Kong planned. The concept covers skincare analysis, seasonal beauty tips, personalized consultations, complimentary make-up consultations, make-up trend updates and beauty workshops from a team of dedicated staff. DFS Group says: “The Beauty Concierge is a specialized service with a licensed aesthetician who will help customers understand their skin and recommend products that are best suited for their unique conditions.” The by-appointment service has worked well for the retailer, particularly with skincare. DFS Hawaii Consumer Marketing Manager Noriko Harimoto says: “A variety of brands are taking part in skin analysis by VISIA machine [a complexion analysis system] is proving popular with customers.” Aveda’s ‘Rituals of Renewal’ program has also tempted many to spend. A cup of comforting tea, an aromatic sensory environment and stress-relieving hand, neck and shoulders treatments, and preand post-flight rituals, put customers in the right mood to shop. This sense of service is increasing in skincare, not just to pamper the passenger but also provide them with staff who know the technicalities of the products. Shiseido’s Eyan Chang says: “The key elements which customers are looking for today are new technology and effective results (in a shorter time).” Le Breton adds: “The Asian consumer, like every skincare customer, is looking for results. What differentiates them from many others however is that they, especially Chinese consumers, also like to know how it works. It’s not only about knowing that a skincare product contains platinum but understanding the benefits it has for their skin. Asian consumers are as conscious about protecting their skin from damage as they are about anti-aging.” Such demands have also enabled the brand owners to take their products into higher price brackets, or more niche areas of treatment, which has allowed the top end of the market to over-perform, in Asia especially. For example Lancôme has seen success this way in travel retail with its Génifique and most recently Visionnaire lines. Lancôme’s owner, France’s L’Oréal, the world’s biggest beauty

Skincare sales and growth in selected regions and leading Asian markets, 2008 - 2011 Region or country Japan China South Korea Taiwan Thailand India Indonesia Philippines Hong Kong, China Malaysia Singapore Asia Pacific World *preliminary, estimated

2008 18,537.6 7,316.1 2,565.4 1,438.1 1,154.6 661.5 565.4 523.0 595.4 348.1 249.1 34,415.3 81,589.0

2009 2010 18,117.7 17,939.9 8,332.1 9,422.8 2,780.6 3,009.0 1,463.0 1,496.8 1,247.3 1,337.6\ 750.6 884.3 686.9 828.0 557.0 618.6 622.1 653.3 374.3 395.6 261.9 281.1 35,707.3 37,432.0 84,237.3 88,172.1 Source: Euromonitor

2011* 17,797.5 10,626.6 3,221.4 1,535.7 1,453.3 1,039.7 997.0 686.9 678.6 416.8 298.7 39,387.5 92,662.0

Change 11 vs 10 (%) -0.79 12.78 7.06 2.60 8.65 17.57 20.41 11.04 3.87 5.36 6.26 5.22 5.09

Change 11 vs 08 (%) -3.99 45.25 25.57 6.79 25.87 57.17 76.34 31.34 13.97 19.74 19.91 14.45 13.57

house, says: “For the worldwide cosmetics mar- ishing Comfort Creme. Meanwhile in travel retail, continued growth ket, 2011 was the year of luxury.” The com- of the Advanced Night Repair franchise has been driving up sales. pany’s overall results show that its selective divi- Its other brands like Clinique, the high end La Mer and the Plantscripsion, L’Oréal Luxe, grew, on a like-for-like basis, tion line from Origins have been strong, allowing skincare to see a by 8.2% while sales in the Consumer Products sharp increase in operating income, which the company says “pridivision – which in travel retail includes L’Oréal marily reflects improved results from higher-margin product Paris – rose by just 4.5%. L’Oréal Luxe made a launches from heritage brands, as well as from higher-end prestige 35% contribution to worldwide growth, with Asia skincare products”. and the US leading the way, with Lancôme, Looking ahead, skincare in Asia looks as though it is going to Giorgio Armani and Kiehl’s seeing particularly strengthen. Based on recent growth data from Euromonitor, emerggood sales. Skincare was the fastest growing ing markets such as India, Indonesia and the Philippines hold business segment at 7.0%. much promise (see table) and even in bigger, more mature markets In the six months ending December 2011, there is plenty of potential for steady expansion. Travel retailers are Estée Lauder Companies recorded 21.7% of its looking to such markets. Le Breton comsales from Asia Pacific, up from 20.2% in the ments: “Our locations at Delhi and Kuala same period in 2010 and well above the 15.1% Lumpur are doing really well and are growshare in the company’s 2008 financial year. As ing faster than most airports in Europe for Lancôme recently Asia’s importance has example, but on a smaller scale than released Visionnaire An airport favorite grown, so too has skinChina.” But what astute brands know based on the LR Estée Lauder's care; its share of sales in the is that a trickle today can become a 2412 molecule Advanced Night Repair now in a 30th same periods were 42.9%, flood tomorrow, so being prepared Anniversary Trio Set 41.2% and 37.9% respectively, and in its last will mark out the winners and c interim report Lauder called skincare “a the losers. strategic priority”. At LVMH, Asia (excluding Japan) has also taken an increasing share of its Perfumes & Cosmetics division sales: from 16% in 2009 to 22% in 2011. However skincare’s share has declined from 19% to 17% in the same period. Dior’s Capture One Essential a new generation serum has been doing very well in Asia while Guerlain’s skincare sales have been strong, boosted by the premium Orchidée Impériale line. The Estée Lauder brand had strong sales from recent launches of Idealist Even Skintone Illuminator, Idealist Cooling Eye Illuminator and Re-Nutriv Replenwww.dutyfreemagazine.ca ASIA DUTY FREE & TRAVEL RETAILING

La Prairie

The science behind the brand

Skincare company La Prairie’s forte is its ability to produce spot-on scientific based product and adapt to the changing trends that women demand of their skincare routine well in advance. We look at the science behind the brand BY LORNA STRICKLAND-COOK uch like love, skincare is all around us. The skincare shelves are heaving at airports across the lands. But for La Prairie their products hone in on the science behind the age-old adage ‘what women want’. It seems what women want is in fact what La Prairie calls a “high tech” solution to their routine. And it is this demand and ability to supply that means La Prairie can command a high brand status. It puts them in a unique position in travel retail where shelves are already groaning with the high street names and the mid to slightly higher end positioned brands. In reality, competition comes from SKII and Crème de La Mer who are also neatly positioned with some real science sat behind their product. In Asia, Yves Le Breton, Vice President Corporate & Sales Strategy, La Prairie tells Asia Duty Free that while the marketing plays a part, it’s all about the launches and the locations. “Our travel retail business in 2011 as a whole, was a success in Asia. Apart from the terrible tragedy that happened in Japan in 2011 our sales have not been affected negatively,” he says. “Without increasing our distribution we achieved very satisfying growth rates with some extremely successful launches.” One of the brand’s most recent launches was Cellular Power Infusion. “La Prairie’s most brilliant scientific achievement to date” utilizes a unique three-dimensional agedefiance system to restore the skin – at any stage of the aging process – to a more youthful state. Its threefold action secures the cellular energy supply and protects it from the effects of external stress, supports the skin’s own renewal mechanisms and supplements its natural structural rebuilding. It promises you will “never look your age again”. Le Breton says: “We supported the launch of Cellular Power Infusion with many promotions, not only in Asia but around the world. However in Asia this product has become a best seller within weeks. Just now we are launching another spectacular product, Cellular Power Charge Night and first results promise that it will be an equal

success. Our customers highly appreciate the service aspect, not only of our promotions but also of our concept with having well trained and experienced beauty consultants that are always able to give advice and find the best products for every skin concern.” Over recent months the brand opened another door in the region on Hainan Island. It is also shortly expecting to move into new locations: City of Dreams downtown store in Macao and the Hysan Palace downtown store in Hong Kong, operated by DFS. “Our latest launches prove that the Asian consumer embraces our concept of luxury and high tech in skincare,” Le Breton says. “La Prairie is well known to be the brand with many firsts in skincare that have changed the world’s approach to skincare and our consumers trust us for what we do. “So,” he says, “we keep doing what we’ve always done best: Developing the most precious skincare that delivers results. This is what we stand for and our consumers appreciate this consistency and know that they can c rely on La Prairie.”

ASIA DUTY FREE & TRAVEL RETAILING TFWA AP MAY 2012

Steps to success 1978: First to apply cellular research to problems of aging skin with the famous patent pending exclusive Cellular Complex. 1987: First to use regenerative substances coming from the sea: Caviar Extracts. First to create a delivery system by encapsulating active ingredients in Caviar Pearls. 1996: First with anti-free radical cocktail including Pure Vitamin C. 1998: First to encapsulate Retinol in a patented microsponge delivery system combined with Co-Enzyme Q10 and exclusive Cellular Complex. 2000: First to offer intensive daytime treatment combining Retinol with a high SPF. 2004: First to combine whitening products with an ozone trap. 2009: First to use Platinum in a cosmetic product, helping maintain electrical balance in the skin and producing a unique radiance. 2011: First to act on all three dimensions of skin aging simultaneously – cells, energy and tissue.

Cellular Power Infusion

Cellular Power Charge Night

Skincare News

Skincare shines in Asia

Pacific

Beauty specialists target Asia Pacific duty free with new products and technologies BY HIBAH NOOR

L’Occitane leverages growth with skincare Provence-based French beauty specialist L’Occitane had good growth in 2011 in the Asia duty-free market, says Caroline Lhert, Marketing Manager, Asia Pacific Travel Retail. “We had new openings and renovations in Korea, and strong growth in Mainland China including the expansion of Hainan Duty Free,” she says. “The 2011 Japanese earthquake/tsunami did have an impact in some Japanese travel retail accounts but business picked up towards the end of the year.” L’Occitane’s Asian plans center on introducing competitive facecare sets and expanding some of the brand’s best selling ranges, like the Immortelle anti-aging skincare range and the Angelica skincare suite. Whitening and anti-aging products are the key segments in the Asia Pacific region, Lhert says. Shea butter hand cream continues to be a strong seller, but other segments, such as Immortelle and the extensive hair care range, which has a highly loyal following in the market, are also notable performers. Keys to Asia Pacific include product differentiation, which is critical given the number of options customers have, Lhert says. Another way L’Occitane has found to capture traveler interest is by introducing novelties on a monthly basis, similar to what the brand does on the domestic side. “Asian consumers buy skincare not only as gifts but for themselves,” Lhert says. “When they travel, they realize the good value they receive in travel retail, and that we have only the best sellers listed.” L’Occitane manufactures a wide range of fragrances, facecare, haircare, bath & body, men’s and gift products. Shea and almond butter products are among its best sellers. Its Immortelle Divine anti-aging cream was the highest rated “Anti-Aging Miracle Cream” in the 2011 Anti-Aging Beauty Bible, as independently tested by a panel of women across the UK. Shea Hand Cream and Almond Milk Concentrate are among the brand’s other award winners. The company also markets a line of Strictly Organic products and emphasizes the use of eco-friendly packaging.very satisfactory indeed.”

Collistar launches body slimming cream Collistar has introduced the new “Reshaping Body Slimming Treatment,” a body slimming cream that produces a slimming “pressotherapy” effect by stimulating the mobilization of fat and performing a targeted action on fluid stagnation. Based on Collistar’s own Slimming Complex, a superconcentrated blend of sea salts, the new cream produces what Collistar calls “an ultra-rapid ‘deflating’ effect.” Collistar recommends application at night, to take advantage of the increased draining capacities of skin tissue during sleep. The new cream comes in a 400 mL maxi size jar and joins Collistar’s Saline Slimming Cream, which combats water retention. To promote the new launch and the sale of both creams, Collistar is offering a free 75 mL tube of Exfoliating Body Scrub Regenerating SilkReshaping ifying, which prepares the skin for slimming treatment and optimizes the slimBody Slimming Treatment ming effect, along with purchase.

ASIA DUTY FREE & TRAVEL RETAILING TFWA AP MAY 2012

Immortelle anti-aging skincare range is one of L’Occitane’s best-sellers

Skincare News

Kiehl’s announces “Travel-Tested Solutions” For the first time, New York skin and haircare products maker Kiehl’s is offering a collection of FAA-compliant, travel-tested formulas titled “Travel-Tested Solutions.” This unisex collection is designed to infuse skin with essential moisture and nutrients during harsh travel and post-travel conditions. Kiehl’s Travel-Tested Solutions is available exclusively at Kiehl’s airport shops, downtown duty-free shops and onboard with Asiana Airlines, Air China, Air Hainan, China Southern and China Eastern airlines from May of this year. Seasoned and infrequent travelers notice the direct effects travel can have on skin including dehydration and skin sensitivity. These stresses start during travel and can affect skin for days afterward. “Preventing hydration loss during a flight is only half of the battle,” says Cammie Canella, Kiehl’s Vice President Education and Customer Relations. “Just as jet lag must be tended to for days following travel, travelers should actively nurture aggra-

vated skin two to four days post-travel to restore their skin’s natural balance.” Extended exposure to confined environments such as trains and planes often leaves passengers feeling psychological and physiological effects on their skin. Travelers face conditions that include low humidity, low air pressure and recycled air, which cause severely parched skin. The typical relative humidity in aircraft cabins for flights over an hour is below 10% for most of the journey—as dry as desert air—often dropping to less than 5% on longer flights. To combat these effects, Travel-Tested Solutions employs soothing and anti-microbial properties to help defend skin immediately against these adverse environmental conditions. The collection also contains cactus flower extract, which is known to deliver 24/7 hydration, and Tibetan ginseng, a mountain plant that increases skin-cell respiration at high altitudes. In combination with the blend of essential oils (lavender, geranium and rose-

mary), the products help to protect against dehydration. Kiehl’s says that all four products in the collection have been tested in-flight by pilots and crew members of Air China, Air Hainan, China Eastern and China Southern. The In-Flight Refreshing Facial Mist is designed to restore complexions irritated by severe in-flight cabin conditions. The mist is formulated with cactus flower, Tibetan ginseng and a blend of lavender, geranium and rosemary. The 24/7 Activated Moisturizer hydrates skin and helps shield it from extreme in-flight skin dryness and dullness. The First Class Purifying Hand Treatment is designed to help protect hands from impurities commonly encountered during travel. The Eucalyptus Lip Relief Class has been formulated with eucalyptus, along with cactus flower and Tibetan ginseng. Each product is available for individual purchase or they can all be bought together as a travel set, which includes a complimentary limited edition luggage tag.

Talika introduces skincare activating system

French beauty specialists Talika have introduced a new device designed to boost the performance of active ingredients in skin care products. Dubbed the Cream Booster, the device combines the delivery of pulsed light with ionotherapy and micro-vibration technology. Talika says the triple action improves the action of the active ingredients in skin care products by facilitating faster and deeper penetration into the skin. Ionotherapy enhances the permeability of the skin, which enables active ingredients to penetrate more quickly to the targeted zone, and then tightens pores after absorption so the active ingredients persist within the cells. “Cellular metabolic activity is stimulated and ingredients are delivered and perform in depth, rather than on the surface of the skin,” Talika says. Micro-vibration, meanwhile, performs an external massage of the skin, accelerating blood and lymphatic circulation, causing increased cellular exchange and enhancing cell function. The pulsed light therapy utilizes a yellow LED delivered along a 560 nm (0.59 micron) wavelength that penetrates deep into

the skin, activating fibroblasts and stimulating collagen synthesis. Visible results include the reduction of fine lines and wrinkles and the dissipation of spots and redness, Talika says. Cream Booster can be used with Talika’s own products or with other brands. Talika says it is safe to use, has no side effects and can be used anytime day or night, after application of the skincare product. Talika says it can also be used at point of sale to boost product performance quickly. “Cream Booster is the ideal solution to ‘super size’ the performance of all types of targeted skincare, ranging from general skin care such as purifying or moisturizing treatments to more specific anti-wrinkle and anti-aging care, as well as eye treatment products such as anti-dark circles and bags,” Talika says. Talika manufactures a broad range of face, eye and skincare products, based on clinical research and laboratory-tests. The company’s expertise in LED-based cosmetic treatment is exemplified by its existing Light DUO anti-aging treatment, which utilizes two different light wavelengths to

ASIA DUTY FREE & TRAVEL RETAILING TFWA AP MAY 2012

counteract the effects of aging, pollution and UV rays to restore elasticity and color while reducing wrinkles and dark spots. In addition to its light therapy products, Talika’s product range includes Lipocils eyelash and eyebrow growth enhancers, Eye Therapy Patch and Mask and other specific beauty treatments.

Talika’s Cream Booster

Nougat boosts travel profile with inflight-ready kits Philippa Thomas, Marketing Manager, Nougat London, says 2011 was an exciting year for the brand as it saw the launch of its collection into travel retail at the TFWA Asia Pacific fair. Following the launch, Nougat has collaborated with various partners in Asia and the brand can now be bought inflight on Dragonair and Philippine Airlines, with more to follow this year. “We developed a small niche collection of products with airline travel in mind,” Thomas says, “including our Flight Companion, a cute little set containing a 75 mL hand sanitizer and 12 g lip balm, which is perfect for protecting and hydrating your skin whilst flying. In addition we offered exclusive sets of our best selling items including our Tuberose & Jasmine and Cherry Blossom Hand Cream in an illustrated gift box.” The bath and body category isn’t identical to skincare, Thomas says, although it is still very much fragrance-led. In skincare the trend is led by whitening products, while bath and body aren’t dominated by the same expectations. “We find that our most luxurious products full of natural ingredients such as shea and cocoa butter, mallow extract and vitamin E are always the most popular.” Consumers look for quality and luxury at the right price, she says. Nougat’s Cherry Blossom fragrance sells especially well in Asia, Thomas says. The company has also developed a Travel Essentials capsule collection within the main range that features individual lines and mini sets designed to be carried onboard or taken along on holiday weekends. The collection also serves as an ideal introduction to the brand. In addition to the Flight Companion, Nougat’s Travel Essentials range includes a Nurturing Hand Cream formulated to soften and protect hands while also strengthening nails. The cream contains cocoa butter, almond and macadamia oils, natural extract of comfrey and vitamin E. The Mini My Feet foot buffer contains exfoliating particles of volcanic pumice blended with sweet almond oil. The Creamy Foot Soother is a blend of cocoa and shea butters. “As travel across Asia becomes more accessible, consumers are becoming much more knowledgeable,” Thomas says. “Consumers are looking more and more for exclusive offers and brands with unique selling points, but at the same time everything needs to be value for money, so it will be important for the duty free market to keep the customer’s interest.” Consumers want expert advice and guidance in purchases, Thomas says, which means packaging, marketing material and—where relevant— staff need to be as informative as possible. Asian consumers, especially in China, are heavily influenced by social media, Thomas adds. This makes it imperative to connect with consumers via this channel, to create word of mouth ‘buzz’ during peak travel times such as Chinese New Year and Christmas. As most of Nougat’s Asia business is inflight, point of sale promotion isn’t a major preoccupation, Thomas says. However, she points out that Nougat does extend marketing support to its partners in the form of advertisements, training presentations and samples and prizes for staff members.

Exclusive Tuberose & Jasmine and Cherry Blossom Hand Cream set

Nougat’s Flight Companion contains a 75 mL hand sanitizer and 12 g lip balm

Cosmetics Report

The color field Color is brightening up the Asia region, but gradually

he color cosmetics business is not uniformly popular across Asia Pacific. Whereas skincare, for example, is a one billion dollar domestic business in seven countries in the region, for color cosmetics that number drops to just two: the markets of Japan and China, with South Korea just below the threshold according to Euromonitor data (see Table 1). And while color cosmetics is big business at more than US$13 billion annually across the region, it plays second fiddle to the competing sub-sectors of skincare and fragrance when it comes to growth, despite the latter being a market worth less than US$3 billion. In the period between 2008 and 2011 color grew by 5.8% well below skincare at 14.5% and fragrance at 15.7% (see Table 2). Nevertheless the size of the color market makes it key to any beauty offer especially in travel retail where brands are increasingly presenting themselves across all sub-sectors to show passengers their complete level of expertise. At Hong Kong International Airport, Nuance-Watson Asia Regional Managing Director Alessandra Piovesana says: “Brands such as Chanel, Dior, Giorgio Armani, MAC, Bobbi Brown, etc all remain highly popular. They offer an extensive array of items including face and eye make-up, plus nail and lip

Extremely YSL For Eyes

JAMES ROSS

products that make them attractive to passengers who want everything from a single brand, often the case in Asia. The color offer at our Temptation Duty Free stores is vast because we wish to show the best products that will attract specific and/or upcoming segments of passengers at HKIA.” At L’Oréal Luxe’s travel retail division, Lancôme Brand Director Stefan Lehner says: “Markets in Asia and the Middle East are still booming and average spends are increasing. We need the best mix to make the most of this. Japan is the big color market and the ASEAN area is strong on fragrance, but we need to be dynamic across all three axes (skincare, color and fragrances).” Lehner says that Lancôme is the leader in mascaras worldwide and “we will hold onto that”. The launch of Hypnôse Dolls Eyes last year was one attempt to ensure its leadership, while Lancôme’s Rouge in Love lipstick line, fronted by Harry Potter star Emma Watson, is keeping the house’s color flag flying high. L’Oréal Luxe has also beefed up the Yves Saint Laurent portfolio with Vernis à Lèvres, a lipstick designed, the brand says, for “women who don’t know when to choose between a lipstick and a gloss”, Extremely YSL For Eyes, the latest eye make-up palette, and KLIA color - Dimensi Eksklusif is seeing strong results from MAC a limited edition for the 20th anniversary of YSL’s iconic Touche Eclat called Touche Eclat Collector. MAC meanwhile has stepped up its standalone and corner development and the brand’s art of engaging consumers using

make-up artists on a regular basis, is in demand from airports in Asia. One of the most recent incarnations is a ‘pop-up’ at Singapore Changi Airport’s budget terminal, which will remain until the demolition of the building this September to make way for the new T4. In the meantime the 25 square meter unit appears to be popular. Operator Nuance‑Watson (Singapore) comments: “We wanted to drive penetration in the low cost carrier environment with its relatively younger profile. Results so far have exceeded expectations.” At Malaysia’s Kuala Lumpur International Airport, retailer Dimensi Eksklusif is delighted with MAC which is currently its leading color brand followed by Chanel. “MAC has become the main trendsetter and introduced colors to die for, plus innovative campaigns,” a spokesperson says. “They have limited colors in one-shot production at affordable prices which attract all ages. Creative events or themes which they have had, such as Hello Kitty and Wonder Woman, have paid off. Their latest collection on the Barbie Doll concept is doing well with us.”

Lancôme’s Rouge in Love range

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Table 1. Color cosmetics sales and growth in leading Asian markets, 2008 - 2011 US$ million (retail value) 2008 Japan 7,656.4 China 1,811.3 South Korea 815.0 India 237.8 Thailand 327.8 Taiwan 402.7 Indonesia 199.9 Hong Kong, China 177.1 Kazakhstan 127.8 Malaysia 114.5 Philippines 107.2 Singapore 95.9 Asia Pacific 12,325.7 World 43,030.4 *preliminary, estimated

2009 2010 7,369.8 7,189.3 1,920.9 2,099.9 853.1 898.8 298.7 375.5 361.2 396.1 408.2 418.8 218.2 239.8 182.5 187.1 134.3 144.0 119.2 127.8 116.8 125.1 98.8 103.6 12,378.4 12,638.3 44,500.5 46,943.3 Source: Euromonitor

Dior declined to comment on its color business in travel retail due to restrictions from parent LVMH, but the group says that Asia Pacific is performing very robustly. In 2011, total color sales reached €1,096.3 million allowing the sub-sector to hold onto its 34% share of LVMH’s perfumes and cosmetics business, whereas skincare slipped one percentage point to 17%. Duty free retailers are making the most of traveling consumers’ desires when it comes to color. In Hawaii, all though March, DFS Group’s Waikiki Galleria ran a big promotion called Beauty After Dark, where a heady mix of champagne, DJ music, complimentary makeovers and photo shoots in the renovated Beauty World area were all designed to build excitement in the color category and encourage consumers to experiment. Already the biggest beauty area in Hawaii with more than 1,860 square meters of space, Beauty World has also added new color options for its customers including Burberry

Ultra glossy YSL's Rouge Pur Couture Vernis à Lèvres collection

2011* 7,067.2 2,292.7 951.1 474.1 441.7 429.7 264.9 193.3 157.5 135.9 135.9 108.7 13,036.9 49,569.5

Change 11 vs 10 (%) -1.70 9.18 5.82 26.26 11.51 2.60 10.47 3.31 9.38 6.34 8.63 4.92 3.15 5.59

Change 11 vs 08 (%) -7.70 26.58 16.70 99.37 34.75 6.70 32.52 9.15 23.24 18.69 26.77 13.35 5.77 15.20

Beauty – the only store in Hawaii carrying the line, plus a series of brand boutiques from the likes of Aveda, Origins and Shiseido some of which carry both skincare and make-up. In addition there is a new Beauty Concierge service at the DFS Galleria which caters to both makeovers and skincare treatments (see Skincare article page 53 for further details). For Dimensi Eksklusif, make-up has been contributing a steady 5% to 7% of beauty sales and that color overall is 16%. The retailer believes that a number of factors are helping the sub-sector. Managing Director Zainul Azman says: “Some of the big brands have started to recruit sales people who double as make-up artists while major events for individual makeovers to ‘model look-alikes’, reality TV, and the K-Pop Star show from Korea have inspired younger people to be different in their looks. A small percentage of men (normally young adults) have also started to purchase make-up as part of their daily routine.” But Azman confirms that the Chinese remain big spenders on skincare and “usually buy make-up

palettes for gifting due to the lower price point”. Back in Hong Kong, Alessandra Piovesana says: “The color cosmetics category at our Temptation Duty Free stores is showing constant growth. In common with other sectors , the majority of our make-up revenues come from premium brands or products due to their optimal pricing, positive image, substantial promotion and availability. Both make-up and skincare have always been top sellers and have consistently appealed to Asian travelers. While Asian customers still prefer skincare to makeup, in term of interest and revenue generation, they are becoming more eager to further beautify their appearance and match fashion trend with color cosmetics.” As fashion and beauty continue to converge, the color business will become more central to the store offer. From a regional perspective, future opportunities for brands lie in both establishing presences in the major markets such as South Korea, Japan and China, but also identifying those markets where growth is going to be most dramatic. Based on sales between 2008 and 2011 the biggest growth (among the 12 top markets) came from India by far at +99.4%, Thailand at 34.8%, Indonesia at 32.5% and the Philippines at 26.8%. China, as well as being a giant market also grew quickly at 26.6% in this period, while little known Kazakhstan, grew by 23.2% and its airports in Almaty and Astana are locations where beauty brands might do well to showcase themselves to an c increasing wealthy demographic.

A light touch - make-up artists are proving popular in travel retail (shown here at DFS Galleria Waikiki)

Color cosmetics sales versus other beauty categories in Asia Pacific, 2008 - 2011 2008 2009 2010 Fragrance 2,503.5 2,594.5 2,726.3 Colour Cosmetics 12,325.7 12,378.4 12,638.3 Skincare 34,415.3 35,707.3 37,432.0 *preliminary, estimated Source: Euromonitor

Change 2011* 11 vs 10 (%) 2,896.8 6.25 13,036.9 3.15 39,387.5 5.22

Change 11 vs 08 (%) 15.71 5.77 14.45

www.dutyfreemagazine.ca ASIA DUTY FREE & TRAVEL RETAILING

Cosmetics News

New and renewed

Cosmetics brands build on market success with updates, new launches for 2012

La-tweez to reveal

Pro Make-Up gift packaged brush set in Singapore

As La-tweez’s most popular product, the Pro Illuminating Tweezers has won two Beauty Awards, and is currently selling in more than 40 countries worldwide. The product is also listed on more than 50 airlines, including Air France, Iberia, Alitalia, Singapore Airlines, KLM, CAL, Qantas, Air Berlin, Lufthansa, Cathay, Dragronair and Thai Airways. Manufactured in professional grade stainless steel, the tweezers feature wider flexible arms for better handling, hand-filed slanted tips that enhance alignment for improved grip and a perforated design that reduces the product’s weight. The integral LED light illuminates hard-to-reach hairs and the auto shutoff function conserves battery power by switching the light off. The lipstick style compact carrying case has a built in magnifying mirror so that the kit can be used on the go as well as at home. The kit is available in black, white, pink and stainless steel.

At this year’s TFWA Asia Pacific trade fair, La-tweez will launch its new Pro Make-Up Brushes gift packaged travel set, which will include five professional brushes for eyes and face. “The Pro Make-Up Brushes are perfectly contoured and made from the finest materials to ensure flawless application for a professional effect,” La-tweez says. McG Consultants, the exclusive travel retail and inflight consultants for La-tweez, has reported a 25% increase in sales in 2011 and says that it anticipates a similar increase in 2012. McG Consultants specializes in the inflight, duty free and travel retail market.

Estée Lauder announces Pure Color Blush and updates to Color Palette Estée Lauder has unveiled its new Pure Color Blush, available from May of this year, which has been created in collaboration with Estée Lauder’s Creative Makeup Director Tom Pecheux. “Now cheeks are vibrant with fresh, radiant color in an expansive new palette of shades that embrace a diverse range of skin tones,” the company says. “High-performance technology combines with skin-loving ingredients in this ultra-silky, modern powder blush to add instant dimension and glamour to the face, from a soft flush of color to dramatic contours that last all day.” Estée Lauder says that the color lasts all day without streaking or fading, and that the ultra-silky powder sweeps on sheer for a natural glow in two finishes—Satin and Shimmer. The application builds for “contoured and sculpted definition with luminous optic technology.” An exclusive contouring brush is included. Estée Lauder says that its “True Vision Color” maximizes color impact, enhances vibrancy, clarity and dimension and increases brilliance. "Cheeks come to life when you highlight and contour,” says Tom Pecheux. “This defines a woman." In addition to cheeks, The Pure Color collection encompasses shades for eyes, lips and nails. Estée Lauder has also announced a forthcoming update to its “Ingenious Color Palette” with new eyeshadows, lip colors and a new blush shade. The palette will include AeroMatte Ultralucent Pressed Powder and Magnascopic Maximum Volume Mascara, “which encompasses everything you’ll need for a gorgeous, glowing look.” The lip and powder compact inserts detach for “grab and go” functionality. The updates to the Ingenious Color Palette will be available from June of this year.

ASIA DUTY FREE & TRAVEL RETAILING TFWA AP MAY 2012

Pure Color Blush

Ingenious Color Palette

Amala Amala packaging simple, clear and eco-friendly

Amala a natural choice The organic skincare brand has taken the spa route to expansion and brand awareness

s skincare goes, Amala is considered to be top flight. The Germany-based skincare house takes great pains to point out its careful sourcing arrangements of the plant and other extracts that are key to its products and their manufacture. The company says: “The effectiveness of our skincare is reliant upon the ingredients we source exclusively from our global fair trade farmers. Each plant ingredient is grown organically and sustainably in its native habitat to ensure peak potency.” The name Amala was carefully chosen: the ancient name has a mix of meanings from “most pure” in Sanskrit, “revered mother” in Tibetan, and “love her” in Spanish, all of which give the brand a wide base from which to communicate its concept. Founder Ute Leube, who began blending her own skincare as early as the 1970s, says: “The word Amala has many unique meanings, but it is the harmony of all of them that resonates most with us. We believe that to create the world's most pure skincare products, we must conduct ourselves most purely. It's the power of the whole plant that separates Amala from the bunch.” Eco-responsibility is another core element of the brand's DNA and that is reflected in the product packaging which uses sustainable outers made of post-consumer fibre, and cork stoppers, while the printing is vegetable ink on reusable packs. The effect is a natural look, but Amala has managed it in a way that does not detract from the high-end nature of the brand, and risk placing it in tree-hugging territory, a hard feat to pull off successfully. This passion for purity and the environment makes the brand stand out in the beauty world - and in travel retail. However Amala's relationship with travel retail has been topsy turvy. It first launched at Singapore's Changi Airport in 2008, shortly after its debut at the TFWA Asia Pacific show in Singapore, with an exclusive presence at retailer Nuance-Watson (Singapore)'s beauty locations at the airport. Prior to that, the brand was only available in spas in the US.

JAMES ROSS

Thereafter Amala opened up further travel retail locations including big ones like Hong Kong International Airport and The Nuance Group Europe's World of Wellness concept at Stockholm Arlanda Airport. But with strategic marketing and distribution changes happening at Amala, including a decision not to expand in some local markets such as Singapore, in preference to expanding more strongly in the high-end spa business instead, has meant that travel retail is less of a priority now than when the brand first made its Asian debut. Duty free distributor, Escale Holding, President Caroline Cheung says: “The sales results have been great at Hong Kong International Airport, but the brand has delayed its domestic market distribution to focus on its high-end professional line for 5-star spa properties like Mandarin Oriental, Fairmont Group and others. Therefore it has been difficult to gain brand awareness for travel retail.” Cheung adds: “At a later stage the company may consider airport spas but currently it is focusing on, and doing very well with, really exclusive highend spas.” Nevertheless at a time when duty free beauty buyers are more attuned to the green movement and to natural products, other possibilities will

no doubt appear if Amala decides to look for them. One possibility for the future is to tie up Amala's spa focus with new beauty concepts in travel retail where spa and niche skincare brands have high prominence - for example at Cocoon from World Duty Free Group (mostly in the western hemisphere), ME from King Power Thailand at Bangkok's Suvarnabhumi airport, or specialist concepts from DFS Group in Asia and the Pacific. c

Purity and plants two core elements of the amala DNA

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Beauty Contact

From left: Beauty Contact’s Mario Pages, International Sales and President Alwyn Stephen

Beauty Contact

HIBAH NOOR

supports 21st Century Leaders

Celebrities donate art for new fragrance designs: royalties to support global development

lobal fragrances consultancy, agent and distributor Beauty Contact has been licensed to release a new series of fragrances by 21st Century Leaders Foundation, a global charitable initiative founded in 2003 to contribute to global development projects. Beauty Contact will help manufacture, promote and sell a series of fragrances, with sales generating contributions to the foundation’s work. An 8% royalty from sales goes to the foundation. US$8,750 has already been paid to the charity and Beauty Contact has also committed to raising a minimum of US$166,250 over the next three years. The mission statement of 21st Century Leaders Foundation says that the purpose of the organization is “to assist and encourage a generation of influencers—royalty, Nobel Peace Prize laureates, and well-known leaders in the fields of film, music, fashion, art and literature, etc.—to raise awareness and funds for international development causes, thereby leading the way in promoting positive environmental and sustainable human development solutions.” 21st Century Leaders is supported by over 600 celebrities who donate artwork for licensees to produce products. Each licensee pays a portion of sales in royalties to charity, says Alwyn Stephen, President of Beauty 66

Contact. “We’ve included the fragrances in this. The whole point is to make people conscious that they can buy something and a part of that is going to go to a good cause.” Stephen says that over the next 36 months Beauty Contact will create some 30 different limited edition fragrances, each in a run of about 10,000 pieces and anchored on a different celebrity’s donated artwork. Fifteen of the celebrities’ works have already been selected. “We’ll launch fragrances designed with George Clooney, Daniel Craig and Pink’s artworks first, in the next three months,” Stephen says. “Around September we’ll bring out three more. Every four months there will be three new ones launched. The intention is to have nine fragrances out on a 12month cycle.” The fragrances will be in 100 mL sizes. Stephen says that these will be high-end products, not mass-market, and will be sold through top retail stores worldwide. Celebrities who already have their own fragrances, like Katy Perry and Dame Vivienne Westwood, have instead donated artwork to be used on other goods. Katy Perry, for example, has donated artwork that has been applied to stationery items. Beauty Contact is a licensee, producer and service provider for luxury goods operating out of Dubai, the US and Canada. With professionals in management, finance,

ASIA DUTY FREE & TRAVEL RETAILING TFWA AP MAY 2012

sales/marketing, operations, quality control, production, design and development, Beauty Contact provides turnkey solutions for those who want to launch private label projects or to enter the fragrances market. 21st Century Leaders Foundation has worked with notable figures such as Archbishop Emeritus Desmond Tutu, Nelson Mandela, Sir Paul McCartney, Sir Roger Moore, Sir Bob Geldof, Sir Richard Branson, George Clooney, Nicole Kidman, Claudia Schiffer, Donna Karan, David Bowie and Coldplay, among many others, to further a broad range of global charitable and educational projects. The campaign has grown to include art contributions from over 600 well known personalities. These have enabled 21st Century Leaders Foundation to raise funds and awareness for multiple charitable projects. Causes include combating climate change, protecting and enhancing biodiversity, water and sanitation projects, education initiatives, improving labor conditions and more. In addition to its own projects, 21st Century Leaders Foundation has also supported charitable work undertaken by other organizations. UNICEF, Greenpeace, Oxfam and the World Wildlife Fund are among the organizations the foundation has supported financially. To date, the foundation has raised over US$94 million in support of its own c work and projects by other agencies.

Sunglass News

Loving the

Silhouette

introduces “Premium” sunglasses line Silhouette has unveiled two new sunglasses collections for 2012, which accent fashion-forward design and high-end function. “The demands of the wearers of sunglasses are becoming more and more individual,” says Silhouette Co-Owner and Chairman Arnold Schmied, who was closely involved in the development of the new lines. “Our challenge is to anticipate and recognize this. With the new 2012 sunglasses collection we are not following a trend but making statements.” Silhouette says that the combination of mainly rimless eyewear design and robust protection from the hazards of sunlight rests on the company’s decades-long involvement in sunglasses development. The process combines research, design, product development and production, resulting in the new 2012 sunglasses collections, which Silhouette calls “a celebration in the sun.” The 16 models offer sun protection but also offer comfort because of their lightness and the way they are manufactured—as much as 80% of the work is done by hand. “The two collection lines, Lifestyle by Design—for that chic look and good vision in the sun—and Action by Design—for sporting moments in the sun—give expression to the basic philosophy as a core message and structure the collections in two lifestyles,” says Brand Director Andreas Aschauer-Martinelli. “Sunglasses are now one of the most important accessories all year round,” says Klaus Schmied, Coowner and Director Responsible forTechnology, Research and Production. “Not only are they decorative, but more and more people are becoming aware of the real function of sunglasses. We want to meet these ever higher expectations—paired with lifestyle and design— so we offer many additional features such as polarized sun protection lenses, a sophisticated lens system, the option of prescription lenses and much more.”

ASIA DUTY FREE & TRAVEL RETAILING TFWA AP MAY 2012

light

New sunglasses collections emphasize individual style and retro-look designs

Polaroid brings 75th anniversary

2012 collections to Singapore

Polaroid says that its 2012 sunglasses collections, which celebrate the brand’s 75th anniversary, are proving well suited for travel retail with distribution continuing to grow. At TFWA Asia Pacific & GATE ONE2ONE this year, the company will be highlighting its Core, Premium and Trend collections, as well as its Best under the Sun range, at the Polaroid stand (M5). The Core Collection offers a choice of metal and acetate frames for men and women, from classic aviator style to wide fashion frames with just-oversized rounded lenses. Temple arms go from drainpipe style and thin cut-outs to chunky decorative fashion or deep-set functional styles. The Premium Collection offers men’s designs moving from double-bridge aviators and single masks to simple black wayfarer-style frames. Styled jewelled tones for women combine with delicate metal arms and large dark lenses. Frames are encrusted with semi-precious gemstones and come with shaped gradient colored lenses. The Trend Collection introduces rapper-style dark colored acetate frames, some with metal detailing on the frame top, teamed with gradient lenses for a moody look. Alternatively there are big mirrored lenses in tear-drop style metal frames in silver combined with blue, red or black. The Best under the Sun 75th Anniversary Collection is inspired by designs from the 1930s to the 1980s. Each model comes in two colorways and is made from TR90 high tensile nylon, enhancing durability and clarity in the frames. Nostalgic 1940s styling is reflected in the simple demi or black frame designs of Buddy, contrasting with the 1950s California sunshine frames of Bel Air for him and Jive frames for her. For would-be road rebels, there are curved Rider frames from the 1960s or the big framed Twist in plum or brown colorway. For the 1970s, there are disco-diva Sophia frames with open temple arms or cat-suited Elvis-era Las Vegas frames in silver or gold. The collection rounds off with two tear-drop aviators: Vice in gold or gunmetal and the Wave frame in black or brown. Polaroid is also highlighting a new aviator design called Seventy-five, which draws on Polaroid frame designs from the 1970s. Made from Monel nickel alloy and corrosion proof sprung stainless steel, these frames offer flexibility for allday comfort and bear discreet Polaroid branding on the temple arms. From the Best under the Sun 75th Anniversary Collection

reflect your

brilliance

Business is Brilliant with Maui Jim速 How can it be otherwise? Maui Jim offers the utmost in protection from glare as well as extraordinary clarity and color enhancement, all courtesy of our patented PolarizedPlus2速 technology. And now they are available in more must-have styles than ever! Bring Maui Jim on board at your Duty Free shop. See just how brilliant business can be! For more information, please contact Giles Marks, Director of Duty Free Sales, at gmarks@mauijim.com

Luxottica Luxottica’s display at Aldeasa’s store in Alicante Airport, Spain

Luxottica strengthens travel retail team

With an enviable portfolio of deluxe brands in the Luxottica stable, it’s no wonder that the eyewear supplier has appointed new travel retail personnel BY LORNA STRICKLAND-COOK

arketing a portfolio of brands including Ray Ban, Oakley, Tiffany, Chanel, Bulgari and more recognizably deluxe brands than you can shake a sunglasses case at, Luxottica has been strengthening its marketing team over the past few months. It’s strength has been from appointing personnel from outside the sunglasses category to gain “best practice” from other categories. Francesco d'Amelia has joined as Marketing Manager Travel Retail, responsible for the company’s global marketing activity in the channel. D’Amelia brings solid experience in various marketing and sales roles with companies such as Vodafone, FinecoBank, Sisal and, most recently, in travel retail working for British American Tobacco as Account Manager Southern Europe Travel Retail. He will be based in London reporting to Francis Gros, Luxottica Group Travel Retail Director, and replaces Charlotte Hamel, who moves within the Luxottica Group to the position of Global Brand Manager for the Coach license. Commenting on the appointment, Francis Gros says, “I’m pleased to welcome Francesco on board, and look forward to his contribution as we build on the great success we’ve seen in Luxottica Travel Retail over the last few years.” “Our dedicated travel retail team, now nearing 20 people strong, has vast experience from within Luxottica Group and other leading travel retail brandowners in perfume and cosmetics, liquor, tobacco and confectionery. Enriching Luxottica’s leadership in sunglasses with best practices from other categories, we are in an excellent position to 70

continue to drive forward the sunglasses category in travel retail.” Luxottica Travel Retail now has a strong marketing team in place to drive further growth and innovation in the channel through three regional marketing specialists and a Training Manager reporting to d’Amelia. The appointment of Averis Papastefani as Training Manager Travel Retail is a new step for the company as it only recently created the role. Papastefani joins Luxottica Travel Retail in this new role within the division tasked with developing and implementing travel retail–specific training programs with key travel retail operators. “Staff training is a key element of Luxottica’s Category Management approach,” Gros says. Papastefani has spent over 13 years in various positions within the Luxottica Group in Italy and Dublin. She has worked across production, brand management, marketing and sales roles giving her huge experience in all aspects of the company and the sunglasses category. Gros adds, “Papastefani’s appointment is a significant development for Luxottica Travel Retail. Her role has been created to help work with our travel retail partners to achieve our objective of making travel retail the specialist channel for sunglasses. Front-line staff are the key protagonists in any service proposition, which is even more important with such a personally specific luxury product as sunglasses. Our new tailored training programmes

ASIA DUTY FREE & TRAVEL RETAILING TFWA AP MAY 2012

Luxottica carries prestigious names such as Dolce & Gabbana and Vogue

will help differentiate travel retail and continue to drive growth for the category.” Bettina Danet, Marketing Coordinator Europe, Near East & Africa joined the company in 2010 and has been instrumental in the rapid development of the sunglasses category in Europe over the last two years. Prior to Luxottica, she gained experience with Guerlain, Thierry Mugler and Chanel. Now based in London, Danet is responsible for planning and execution of Luxottica’s marketing and promotional initiatives within Europe, Near East & Africa regions. Anna Ng, Marketing Coordinator Asia Pacific joined Luxottica Travel Retail in 2010, bringing with her over 5 years experience in travel retail with Estee Lauder where, amongst other roles, she was regional Marketing Manager for the Jo Malone, Bobbi Brown and La Mer brands. Based in Singapore, she is responsible for the planning and execution of Luxottica’s marketing and promotional initiatives within Asia Pacific and the Gulf region. Martha Galvis, Marketing Coordinator Americas, joined Luxottica Travel Retail in September 2011, having spent much of her career in travel retail where, amongst other roles, she handled marketing in travel retail and domestic markets in Latin America for Coty Prestige. Based in Miami, she is responsible for the planning and execution of Luxottica’s marketing and promotional initiatives across the c Americas.

BERLIN DÜSSELDORF LONDON ATHENS NEW YORK HONG KONG SEOUL SHANGHAI BEIJING DUBAI MCMWORLDWIDE.COM

Folli Follie

Folli in control

Diversification has taken jewelry house Folli Follie to new heights reece may be in the media today for all the wrong reasons, but there are success stories to report from the economically-stricken country—and one of them is one of its best known brands Folli Follie. The Folli Follie Group, stock-exchange listed since 1997, was originally founded in 1982 by Dimitris Koutsolioutsos as a jewelry maker, but has since diversified into watches and fashion accessories as well as into retailing through its Hellenic Duty Free Shops division, Attica department stores and Elmec Sport and Factory Outlet chains in the Greek domestic market. Travel retail has become a core channel for the brand since it entered the market in 1999 at Athens International Airport followed, in 2000, by a collaboration with DFS Group thanks to its high brand awareness in Japan. The first Folli Follie flagship store in duty free was opened at London’s Heathrow Airport Terminal 3 and today the house has more than 50 points of sale in travel retail. “It is a highly important strategic channel working in parallel to our local market channels. Combined, they reinforce our brand development,” says Folli Follie Vice President - International Division Johnnie Voutsas. That development now spans 25 countries and over 380 standalone points of sale and 700 in total, including the UK, Switzerland, Japan, France, US, China (with more than 120 shops) and Russia. The rapid move to own-store formats— one of its most celebrated being at Hong Kong International Airport—has been accompanied by a strong presence on airlines, especially in Asia. “Our inflight business started with Eva Air and British Airways but has since evolved to cover more than 40 airlines reaching more than one million passengers on a daily basis,” says Voutsas.

JAMES ROSS

“The Asian market is of high importance and the significant awareness for Folli Follie has assisted the brand in establishing a strategically important presence with a very good financial performance.” Johnnie Voutsas Vice President - International Division, Folli Follie

Asia is a key market for Folli Follie where expansion is expected to become a big driver of revenues. The brand already has more than 10 directly and indirectly controlled subsidiaries in the largest Asian markets, with a strong, if relatively recent, presence in mainland China. This time last year, Guo Guangchang, Chairman and Founder of China’s largest private conglomerate Fosun, took a stake in FFG of almost 10%, a move that suggests the faith he has in the company’s prospects. At the time, George Koutsolioutsos, Folli Follie Group CEO, said: “We believe that both Folli Follie and Fosun Group will come out stronger from this strategic alliance. The added value deriving from this partnership will be significant and fruitful, as both will mutually benefit: The Folli Follie Group by further establishing its presence in the Chinese and other Asian markets, and Fosun Group by taking advantage of the Folli Follie Group’s expertise in travel retail, tourism and brand retailing.” Voutsas adds: “The Asian market is of high importance and the significant awareness for Folli Follie has assisted the brand in establishing a strategically important presence with a very good financial performance.” No surprise then that the brand’s current global cam-

ASIA DUTY FREE & TRAVEL RETAILING TFWA AP MAY 2012

paign features Gaile Lai, the Macau-born Chinese model, as the brand ambassador. Folli Follie says that what makes it stand out among its competitors is that it “holds a leading position in the global fashion scene” thanks to a team of designers “who always seek new and fascinating ways to respond to the needs of the Folli Follie fans and to their distinct styles”. The brand has been clever in migrating the most unique designs and motifs from its best-selling jewelry collections to other categories such as handbags. The watch business too has played a crucial role and Folli Follie now claims to be “a global power” on the fashion watch scene. From a travel retail perspective, the biggest hurdle the company sees is as a result of its own success. “Our real challenge is to manage our growth in the face of a rising demand,” says Voutsas confidently. With Fosun onboard, China’s strategic importance will be magnified, especially as the market rebalances towards increased domestic consumption and internally-led growth, including that from luxury goods and aspirational brands. FFG expects to exploit this with the Folli Follie brand as well as Links of London, which it also owns, to become one of the leading fashion and accessories c groups in the country.

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Festina

Festina timing is everything

Festina’s bestseller - Gent’s Fashion Chronograph

The official timekeeper of the Tour de France is planning a big push in travel retail BY JAMES ROSS estina watches have become well-established in certain parts of the duty free business, but the more-than-a centuryold brand's history in the channel is relatively recent. As a market leader in the Spanish domestic market, it was natural that the Barcelona-based company's first travel retail client was Iberia—and, following that decisive move in the nineties, the brand's inflight business has grown progressively. “We went onboard in 1997 and have had the honour of being a supplier ever since,” says Worldwide Director of Travel Retail Jason Newman. “For the Festina Group, Iberia was the vehicle that initially gave our brands a multinational image and was the key that opened many doors in duty free,” recalls Newman. Today the company enjoys a travel retail business with a multimillion euro turnover with top operators worldwide. Inflight has been a core channel for the brand but there has also been expansion in airport stores, although airlines continue to be a focus. Festina regards travel retail as very much a complementary channel to its domestic business, with crossover sales a benefit in both markets. “We consider airports as showrooms because the purchase of a Festina watch may not always take place in an airport, or up in the clouds,” says Newman. “Many people contact us via social networks or customer services asking where they can purchase the brand domestically after having seen, for example, a particular watch onboard.” For years many brands, particularly those in the luxury goods sector, have used travel retail to generate this kind of exposure and interest from traveling consumers that they regarded as a perfect target profile. In Festina's case, its target is much more wide-ranging, but the downtown benefit appears to be just as strong. As such, travel retail has become a vital channel and the brand's strategy is to keep growing in inflight as well as to capture more airport retailers. Newman says: “We plan to focus our efforts over the next three years on those markets where penetration is weak. In geographical terms we want to develop our presence in the Middle East and Asia.” Asia Pacific is the biggest challenge for the brand, both domestically and in duty free because the Festina brand is not well distributed in the region currently and, despite a few attempts, it doesn't enjoy the penetration that some of its European competitors have there. “In terms of figures, our results in the region are insignificant

ASIA DUTY FREE & TRAVEL RETAILING TFWA AP MAY 2012

Festina is seeing strong sales from ceramic ladies watches

“We consider airports as showrooms because the purchase of a Festina watch may not always take place in an airport, or up in the clouds.” Jason Newman, Worldwide Director of Travel Retail, Festina compared to what we sell elsewhere,” admits Newman. “Our priority is to open more doors domestically and increase brand awareness through travel retail in 2012 and 2013.” One aspect that Festina counts in its favor when expanding in Asian travel retail is its combination of European design, quality and what Newman calls “the ever-important value-for-money concept”. He adds: “In travel retail we are one of the few international brands that offers true savings to clients as well as an authentic international guarantee to our consumers.” The Festina brand also carries weight in sporting circles thanks to its connections with cycling (the brand is the official timekeeper of the Tour de France and other 'tours' in Europe), several marathon running events in Germany and ice hockey. Cracking Asia will be a key to taking the brand's share of sales from travel retail higher. Currently the duty free business corresponds to less than 5% of Festina's sales according to Newman but he says: “There has been a lack of focus on this business in the past and in the next few years we plan to push it much more and increase our c global presence in the channel.”

Frédérique Constant

Constant craving BY

Frédérique Constant's Double Heart Beat Black Beauty which was launched at Basel World

JAMES ROSS

It's very much a case of watch this space when it comes to Frédérique Constant

eter and Aletta Stas founded Swiss watchmaker Frédérique Constant in 1988, initially as a hobby. But their enthusiasm soon spawned an international business in the accessible luxury watches segment covering more than 100 countries and around 2,700 points of sales including travel retail. Fittingly the company's slogan is Live Your Passion. “It remains our strategy to offer classical, Swiss-made watches at sensible prices,” says Frédérique Constant International Sales Manager Adrienne Ogier. “The core of our sales are between US$500 and $5,000 retail. Based in Plan les Ouates, Geneva the company has an ultra-modern production facility to hand-assemble its watches. Frédérique Constant has been in the duty free channel for almost a decade and made the move “in order to enhance the brand’s international status and image, and to complete the brand-building that we had initiated in the local markets,” says Ogier. She adds: “Travel retail is a fast-growing market for us. It follows the strong developments of the brand in different domestic markets throughout the world and, in certain cases, duty free outperforms domestic in terms of percentage growth.” The company's travel retail sales grew by 20% in 2011, supported by a successful international advertising campaign, and the first quarter of 2012 is also seeing doubledigit growth. The company expects an equally strong year in 2012 and is aiming for another 20% hike in sales. From a regional perspective, Asia continues to experience sustained growth in travel retail, according to the company, spurred by strength in Hong Kong, China, Singapore and Thailand. “The brand also performed very well in Russia last year,” says Ogier “and we experienced doubledigit growth in the Middle East which is our strongest region and continues to show outstanding performances even though the

Far East is developing at a very fast pace.” Frédérique Constant is now consolidating its presence in these markets with new POS openings while plans to expand its travel retail presence in the Americas are also pipelined. “Our main focus for 2012 is to expand our visibility in all travel retail channels,” confirms Ogier. “We will strengthen our presence in airports and downtown duty free stores and, whenever possible, we will personalize with dedicated furniture in the existing ones.” At this point the company is aware of bigger watch brands increasingly moving to standalone boutiques in airports. The

tion in Chengdu Airport scheduled for June.” To keep this momentum going the company says it constantly reviews its business models “in order to meet the expectations of very demanding travelers”. Ogier is clear about the task in hand: “Trends indicate that consumers are still conscious of prices and looking for classical designs and more affordable items. Our mission is to let more people enjoy luxury and we will continue to provide them with high quality, classical and innovative watches at a reasonable price. Exclusives and limited editions have proven to be very successful and we have once again increased our offer for 2012.”

“Frédérique Constant has grown exponentially in China's domestic market and has over 100 points of sales today.” Adrienne Ogier, International Sales Manager, Frédérique Constant challenge for independent players like Frédérique Constant is twofold: be presented in the right retail environments with complimentary brands, and receive adequate display space in multi-brand watch and jewelry environments. In Asia, the brand expects further opportunities this year through existing partners, as well as new strategic markets in the region such as Greater China where the brand has had robust growth over the past three years. “Frédérique Constant has grown exponentially in China's domestic market and has over 100 points of sales today,” says Ogier. “Last year we opened our very first 130-squaremeter boutique in China, located at Taiyuan, one of the most prestigious areas in the Shanxi Province. We will also grow our presence in Chinese travel retail with a new loca-

ASIA DUTY FREE & TRAVEL RETAILING TFWA AP MAY 2012

Frédérique Constant believes its “accessible luxury” approach resonates well with duty free shoppers and the company regularly runs GWP promotions to reinforce its message. “Classical design, special packaging and price positioning, these three elements are the key of our success in travel retail,” concludes Ogier. c The Slimline range is a bestseller in travel retail—a women's range is also available

Reminiscence

Zoe Coste and Nino Amaddeo, the founders of Reminiscence, with Lilla Amaddeo and Sebastien Coste

Reminiscence looks ahead

Reminiscence pairs two of women’s favorite things: jewelry and fragrance. The pairing’s history is an interesting one, as the brand’s retail story and coming overhaul attest BY

LORNA STRICKLAND-COOK

hallenging the austerity of the department store and developing your own retail concept is a brave move. To do it on a global scale is even harder. Reminiscence’s own take on retailing originated in the 1970s, at a time when the world was still abuzz after the swinging 60s taught everyone to challenge everything. At the end of the 1970s, when India and the Orient were fuelling the imagination of designers enchanted by their iridescent colors, Zoé Coste launched her artisan jewelry collections for the first time. Coste met Italian visionary Nino Amaddeo and opened their first boutique in Juan-les-Pins on the Côte d’Azur. The Reminiscence saga had begun, uniting love of creation and the spirit of enterprise. Inspiration was born of travel and the treasures the two discovered together: keys, feathers, wood, pearls, crosses and chilies among others. All these symbols became the Reminiscence “signature.” In London, Coste discovered Patchouli essential oil, imported directly from India with its mythical fragrance associated with the freedom of an entire generation. But this rather ‘out there’ collection of trinkets was joined by a hint of classicism. Back in Grasse, Coste met a perfumer and told him “I want a perfume that smells like that.” The famous Patchouli by Reminiscence was born, quickly followed by Ambre and Musc, the brand’s now-classic fragrances. This vision was quickly translated into retail sales as one by one, boutiques flourished in Paris and Cannes. Reminiscence created concept stores in a bazaar-chic style where shoppers could find jewelry, perfumes, accessories, candles, caftans, bags and more. The brand spread through France, Italy, Europe and the Middle East and today there are over 3,000 points of sale across the world. Emotions and dreams have been at the heart of Reminiscence creations for 40 years, with baroque, ethnic, romantic, childlike jewelry and fragrances evoking memories of distant climes. “Every object expresses a taste in expertise and beautiful materials, a sense

ASIA DUTY FREE & TRAVEL RETAILING TFWA AP MAY 2012

Reminiscence’s newest fragrance launch: Crazy Rem

of the exceptional and the expected, a pleasure in imagining and communicating,” says a spokesperson from Reminiscence.

New launches and regional strategy This year, Reminiscence aims to surprise its customers by modernizing the brand, without losing sight of its identity. “We want to reach a new, younger target,” says the company. Launched in the 70s on the French Riviera, the brand is now consolidated in France, Europe and the Middle East. “Based on the two pillars Rem and Patchouli, and on a family of unique, story-telling fragrances, the range benefits from an interesting multichannel distribution,” says Reminiscence. The seventeen Reminiscence boutiques, a presence in the major international and national chains and department stores, and concept stores are all key components to this success. “We are now focusing more than ever on the international expansion of the brand, basing our approach on the regional specificities of the markets,” Reminiscence says. “For the Asia-Pacific region, with the help of our agent, we are currently carrying a series of meetings with potential distributors to consolidate our presence and to identify the best partner. We believe our Rem line will be our best brand ambassador in the area, with its marine, fresh and floral notes particularly appreciated during our presentations.” The newest launch is Crazy Rem, the “flanker” of the best seller Rem, with the same bottle and the same packaging. But as this new edition’s mission is to be “shocking,” the brand decided for both the jewelry collection and the fragrance packaging to use trendy colors from this season: shocking pink and fluorescent yellow. “This launch is totally in line with the brand,” says the company. “Since 1970, Reminiscence has always been a trendsetter and an c innovator.”

Devanlay Lacoste Travel Retail

Lacoste

takes aim at women’s market Iconic brand grows in Asia, commits Baptista’s talents to new market push BY

HIBAH NOOR

rench luxury brand Lacoste has a strong presence in Asia. The brand is currently present in 10 countries, 25 airports and 56 total points of sale in the region, says Catherine Bonelli, Director, Devanlay Lacoste Travel Retail, and continued expansion is on the agenda “everywhere,” she adds. “In Asia we have a huge potential to develop. We’ve been in China for 27 years, and Chinese customers recognize us as a luxury brand. For Asians, having a French brand is something special.” Lacoste posted 23% growth in 2011, Bonelli says. “The feedback is very good.” For travel retail, Bonelli notes that Lacoste has a new inflight exclusive line on hand, which it launched at TFWA in Cannes last year and will be highlighting at the upcoming TFWA Asia Pacific in Singapore in May. The line includes a navy blue or red nylon canvas foldable shoulder bag with integral pouch, a navy blue or red leather grained card holder with embossed Lacoste crocodile logo on the flap, and a tricolor nylon threein-one multi-currency pouch with snap closure. This accessory enables the traveler to keep his/her foreign currencies in different pouches. These can be snapped together for storage and then taken individually on trips or, for multidestination travel, taken as a dual or triple pack. There’s also a navy blue or red cotton canvas two-in-one pouch that can be worn on a belt or over the shoulder. Lacoste is one of the legendary names in upscale menswear, with excellent brand visibility around the world. This year’s travel retail trade fairs have provided a showcase

Multi-currency pouch

for the brand to highlight its new collection, and to unroll a new phase in its branding and market strategies—a concentrated push to occupy more territory on the women’s wear side of the market. Thirty-seven-year-old Felipe Oliveira Baptista, who has been Lacoste’s Artistic Director since September 2010, is taking up the challenge of moving the Lacoste portfolio to the next level, says Bonelli. “Felipe is someone new and trendy and the press love him. He’s young—his Spring/Summer 2012 Lacoste collection was his first. Lacoste’s focus is still 70% on men, but the new target is to develop the women’s side and that’s the challenge for Felipe.” Accordingly, at TFWA Asia Pacific and GATE ONE2ONE, Lacoste will be

ASIA DUTY FREE & TRAVEL RETAILING TFWA AP MAY 2012

Foldable shoulder bags

showing its Fall/Winter 2012 collection, a follow-on to Spring/Summer 2012, which was shown at IAADFS. For the new collection, Baptista has taken as his touchstone a meeting of rugby and ski clothing. The collection features a sporty line with tapered legs that allow for subtle layering. Large “egg-like” parkas drape more naturally and the loose knitwear multiplies the clothing’s textural effects, adding volume and relief to both the men’s and women’s items. c

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Jewelry Report

Golden glow T BY

HIBAH NOOR

For these trend-ready jewelers, gold accents are one key to success in the Asia market and elsewhere

From Toscow’s RIO collection

he upcoming TFWA Asia Pacific trade fair in Singapore should be a hotbed of new releases in the jewelry category, with new and established makers eager to show off their creativity—and their awareness of the latest trends in this fast-changing space. The Asian duty free market has become a byword for growth, but that doesn’t mean that jewelers—or anyone else for that matter—can afford to be careless in how it presents itself. Asian consumers are happy enough to put their spending power to use, but they are also discriminating and have very well defined product preferences. Australian jeweler Toscow is bringing a Latin theme to market. The company has announced that it will launch a new Carnival-themed collection, titled “RIO,” at the Singapore show. The collection will feature a range of playful pieces with Toscow’s colorful signature crystals as the centerpiece. The use of “a rainbow of colors” is important for the upcoming summer season, says Toscow General Manager Francis Ng. “I was dazzled by the colors and joy of the Rio Carnival and wanted to bring out a collection that was alive with passion after visiting the Rio Carnival a few years ago,” he says. The RIO collection features a spectrum of colors ranging from red, yellow and orange to blue, green, indigo and violet and a range of shapes from olive and round to teardrop. “Silver colored rhodium plating generally is more popular than gold plating,” says Ng. “However we see there’s a very strong comeback of gold plated jewelry in recent years.” Toscow’s RIO collection features 18 carat gold and rhodium plated versions targeted to a range of different consumer preferences. A bangle, ring, pendant and earrings are available with the bangle being the signature piece. The bangle features a spring hinge and is an easy-wear item. Pricing for the RIO collection ranges from US$79 to $229. Frey Wille’s best sellers are its Gustav Klimt and Hundertwasser collections. Its new GMS collection features an increased use of gold, including white gold, says Wessam Elmona, Director Duty Free, Worldwide General Manager Middle East & Africa. “Gold is more dominant in this collection,” Elmona says, citing the presence of ivory, pink, blue and shiny gold in the pieces. In addition, Frey Wille’s new Magic Sphinx collection features the Frey Wille sphinx symbol and three-dimensional enamel canvasses finished in a high-shine mirror effect. 24 carat yellow bands line the designs. The collection comes in Coral, Ivory and Royal Blue variants and features Frey Wille’s first use of three gold surfaces within the enamel. Of course gold is an iconic element for Clogau, which features gold in every piece it produces, including a touch of rare Welsh gold. “On cruise ships and land based business we’re selling more and more actual gold pieces as opposed to silver and Pieces from Frey Wille’s new Magic Sphinx collection

ASIA DUTY FREE & TRAVEL RETAILING TFWA AP MAY 2012

gold combined,” says David Butler, Clogau’s Lum says, all inspired by the aurora display in the night The new Glamour pieces mark a change from Head of International Sales. “This is also 18 carat sky. “We believe these ranges have huge potential in travel traditional pearl jewelry and gold for the Asian market. The price points don’t retail,” Lum says, “attractive to customers of all ages, and signal a renewed desire to seem to be an issue.” Current travel retail best sellperfect as an impulse buy for self-purchase or as a gift.” depict natural beauty ers are the Kensington Key Pendant and Key Locket, Building the channel both designed in association with Historic Royal Frey Wille’s market focus right now is on developing existPalaces. ing duty free footage rather than acquiring or opening new Mixing metals like rose gold and white gold is going slots, says Wessam Elmona. “With the development of the brand to continue to be very popular this season, says Frank Lum in the local market and the requirements we need for a perof Australian fashion jeweler Pica LéLa. The three-dimenfect presentation in duty free, not many travel retail shops are sional aspect of the jewelry will definitely be emphasized our target for the time being,” Elmona says. and celebrated. “Jewelry this season is boldly ‘going beyond,’” Having just landed a listing on JAL, its biggest airline slot so far, Lum says. “It curves away from the finger, puffs out from the Clogau is now listed on four large airline carriers in Asia, as well wrist and coils away from the collarbone. Design goes 3D.” as on many smaller ones, Butler says. The brand is also to be In May, Pica LéLa will launch new products within the found aboard cruise ships in Asian waters, and the company is Mosaic and Flexi collections, which are exclusive to travel always careful to stay very close to its own airport shops. “There’s retail. “The Flexi Collection combines edgy designs with creso much activity that we now have an Asian specialist working ative craftsmanship to depict an ‘I can change’ attitude for Clogau in this area,” Butler says. and create an ‘I’ style,” says Lum. Flexi is based on Trends vary within Asia, but it’s an open the geometry of the sphere. Individual pieces such as the new secret that the China market exhibits a strong “Glamour” mark a change from traditional pearl jewelry and preference for Western brands, Butler says. “The bigger the brand, the more successful you can be, but there are opportunities for smaller brands to take advantage of this trend.” Clogau currently has a GWP promotion in the form of a key ring in the style of Kate Middleton’s sapphire engagement ring. The company is in the process of changing all of its POS materials, and is also designing an interactive touch-screen airport unit that will help to tell the brand story. This technology will be shown at TFWA Asia Pacific in Singapore. Francis Ng, General Manager, Toscow Pica LéLa expects its strongest growth market this year to be the Middle East, where it believes it will double its business from 2012 signal a renewed desire to depict natural beauty and explore the to 2013 thanks to new accounts such as Etihad Airways and some realm of aesthetics, Lum says. The pieces are rendered in a variety of new store openings in Iran. Pica LéLa’s key sales drivers include a clear crystal and pearl balls that look unique from different angles when well established brand presence with strong visual merchandising, viewed in reverse. Lum says. Maintaining a consistent customer experience across The Mosaic collection is offered in a mix of flavors and colors to multiple markets is also key, as is promotional activity. “Duty free suit a broad range of tastes. The new “Aurora” piece leverages a promotions are getting more and more important as customers range of colorful expressions under a sheen of colored stones to con- have no lack of choice,” Lum says. “Our experience indicates that the vey positive elements such as love, faith, hope, friendship and joy, best promotion is the one that strengthens the brand personality.” An example of just such a promotion, says Lum, is the Christmas promotion Pica LéLa ran in Jeju Free International City Development Centre in Korea. This featured a quality lip gloss as GWP for purchases over a certain value. “It was very well received because we did it in a very dry season, which gave the customer a very good The Kensington Key Pendant incentive to buy our brand,” Lum says. is one of Clogau’s best sellers Pica LéLa keeps a close eye on market trends. Each year the company sends design teams to attend local jewelry workshops as well as major global trade fairs to keep pace with what’s happening in the jewelry business, and to support its strategy of identifying and developing products for different cultural preferences around the world. Besides its intrinsic attraction as a quality marque, Pica LéLa also offers a c five-year international warranty.

“Silver colored rhodium plating generally is more popular than gold plating. However we see there’s a very strong comeback of gold plated jewelry in recent years.”

www.dutyfreemagazine.ca ASIA DUTY FREE & TRAVEL RETAILING

Aero-Cos International

Prize potential BY

ANDREW BROOKS

Aero-Cos looks ahead to the prospects for Chocolates Turin in Asia duty free lobal travel retail distributor Aero-Cos International continues to intensify the work it does with Chocolates Turin, the Mexico based chocolatier. The relationship started seven years ago, and in the last couple of years Aero-Cos has taken on the responsibility for accelerating Turin’s advances into the global duty-free market. That responsibility represents a challenge and an opportunity at the same time, says AeroCos President and CEO Nathanael Barbanel, especially since Turin added Johnnie Walker to the line of liquor-filled chocolates that it manufactures. The series already featured prominent brands such as Jose Cuervo, Baileys, Kahlua, Grand Marnier and Jack Daniel’s. The brands all enjoy superior recognition in just about any market you can think of, but in terms of global brand visibility Johnnie Walker is probably in a class of its own. “For Diageo to appoint Chocolates Turin to manufacture a brand like Johnnie Walker is a huge endorsement for Turin and its management team, which is headed by Octavio Penaloza and Samuel Gutierrez Carranza,” says Barbanel. “Johnnie Walker has prestige positioning. This is a major opportunity and a major challenge at the same time as this product will have to be positioned on a much higher level.” Brands like Baileys, Kahlua and Grand Marnier are leaders in their own right, but Johnnie Walker dominates a category that has a much longer history and a much more “traditional” appeal, particularly to men, who account for the bulk of liquor sales in duty free. The selling of alcohol is a problem in some countries in Asia due to religious or legal restrictions. Not so much in duty free, Barbanel notes, where alcohol is sold in airport shops, but nonetheless the restrictions have led Turin to create a line of non-alcohol liquor-flavored chocolates, which parallel the liquor-filled variety but can be sold as confectionery. Aero-Cos will be attending the TFWA Asia Pacific exhibition in Singapore, but will not be exhibiting. They intend to schedule meetings with some major key operators, Barbanel says. The Asia market is in the early stages of development for Aero-Cos, which is focused largely in Europe and the Middle East so far, but it’s a priority for Chocolates Turin, and therefore for Aero-Cos. “In Asia we’re just beginning,” Barbanel says. “But there’s so much demand in Asia we really wanted to make sure we enter the market properly—we don’t want to just jump in before we’ve figured it out properly.” It helps that passenger numbers in China are growing at a phenomenal rate, and that the buyers have a distinct orientation to recognized prestige brands. The appeal of Johnnie Walker will carry well in this market, where Scotch whisky enjoys a high reputation and where spending power and market growth represent incredible potential, Barbanel says. “Asia is virgin territory and we anticipate good growth, no question,” Barbanel notes. The company has an office in Hong Kong, and he says that a likely point of attention will be China Duty Free, which is an important and strategic operator. The first focus in Aero-Cos’s Asia push will be airport shops, with inflight and border shops also high on the agenda. The cruise market won’t get the same focus, simply because of its inherent space limitations. India is another target, though it’s different from other markets in that it tends to be “parceled out” among the major operators, and has to be approached differently. “We understand the brand because we’ve worked with them for many years,” c Barbanel says. “We’re determined to build a global brand for Chocolates Turin.”

ASIA DUTY FREE & TRAVEL RETAILING TFWA AP MAY 2012

Aero-Cos has started distributing Johnnie Walker liquor-filled chocolates

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Butlers Chocolates

Butlers is aggressively opening Chocolate Cafés around the world, including planned airport locations

Chocolate power BY

Butlers’ Signature Chocolate Collection

ANDREW BROOKS

New products, franchise expansion keys to success in Asia and elsewhere

he presence of Butlers Chocolates has increased steadily in Asia over the past year, says Sales Director Karl Marnane. “We’re working hard to forge relationships with our customers, and we opened a dedicated overseas office in Singapore last year to service the region,” Marnane says. Another new office was opened in Dubai as well. The company, which is based in Ireland, exports to 40 countries worldwide. Butlers’ Asian presence is a relatively recent one, having launched in 2010. Since then the company has seen good growth, and Marnane is hopeful that this trend will accelerate in the coming months as more and more customers in the region become familiar with the brand. Butlers has been very well received in the Asian market, Marnane says, where there is ever increasing demand for high quality premium chocolate and confectionery products. The company is doing a lot of one-onone work with retailers, and has also designed some exclusive lines for different retailers in the region, Marnane says. This custom work has been backed up with the development of specially designed gondolas and display units. In March of this year, Butlers and Prime Hospitality announced they had signed a franchise agreement to open outlets in the United Arab Emirates. The agreement stipulates that Prime Hospitality will open Butlers Chocolate Cafés in the UAE market, with the first two due to open by the third quarter of 2012. Prime Hospitality is the food and beverage arm of Ghobash Trading and Investment Group, which has a major presence in the region in markets that include retail

and hospitality, oil and gas, real estate, healthcare and information technology. “The UAE has always been a market of immense interest to us,” said Owen Sorensen of Butlers Chocolates in making the announcement. “We have been carefully looking for a local partner with a successful track record and high reputation to represent our brand. Prime Hospitality was the ideal choice for us with their expertise, quality, and network to maximize the success of Butlers Chocolate Cafés in the UAE, and potentially the region. Our common vision of how the market should be developed was a key factor in our decision to partner with Prime Hospitality.” Butlers operates a franchise program for the international market, with current franchisees in New Zealand and Pakistan. The UAE agreement represents the third franchise partnership Butlers has entered into. The Butlers Chocolate Café concept was launched in Dublin in 1998, and the locations serve chocolates, hot beverages and sweet and savory treats—Butlers Hot Chocolate is the house specialty. There are currently 23 locations around the world, including the New Zealand and Pakistan franchises, and Butlers says it is in negotiations with a number of potential franchisees in further markets around the world. Butlers runs a Chocolate Café in Dublin Airport, and Marnane says Butlers is targeting other international airports for further openings.

ASIA DUTY FREE & TRAVEL RETAILING TFWA AP MAY 2012

Butlers has developed a dedicated travel retail range that is selling well in Asian markets, Marnane says. “The range includes premium boxed chocolate assortments, a stunning range of 100 g bars, luxury filled chocolate truffles, alcohol free selections and promotional lines. We’ll also be launching new ranges at TFWA Asia Pacific in Singapore.” New product development is one of the pillars of Butlers’ success, in Asia as well as elsewhere. This year the company is continuing to work on new product development for specific regions. The brand developed a special box to celebrate Chinese New Year, one of the signal selling points on the calendar in Asia. In addition, the company developed other deluxe gifting packs featuring new selections of alcohol-free chocolate. When it comes to promotional activities, Marnane says that Butlers has developed special value-added promotional lines exclusive to travel retail that are designed with gifting and sharing purchase drivers in mind. “As we’re a small company, we’re very close to our customers, and we feel that the one-to-one relationship that we have with our customers is beneficial in driving sales,” c Marnane says.

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New places, new names

Hershey’s deepens presence in Greece; Kraft Foods beefs up multiple brands in its portfolio

KFWTR drives category growth in Asia Pacific Kraft Foods World Travel Retail (KFWTR) has announced that it will present a new array of products at the Tax Free Asia Pacific trade fair in Singapore. The launch will include a mix of new offers from well known travel retail brands such as Toblerone, Cadbury and Milka, as well as the introduction of the Oreo brand into travel retail. Toblerone is aiming at the formal gifting and snacking sharing segments with two new offers. The Toblerone Variety Gift Box brings together four Toblerone flavors, including milk, white, dark and ‘Snowtop,’ a milk-white chocolate combination previously unavailable in travel retail. The Toblerone peaks are presented in a gold triangular gift box. Also, the Toblerone White Minis Pouch will offer one of Toblerone’s most popular flavors in a snack format. Cadbury will be presenting two new gifting offers. The Cadbury Chunk Box offers 26 individually wrapped pieces of Cadbury Dairy Milk chocolate in a new gift box modeled on a piece of Cadbury’s Milk Chocolate. And the newly introduced Cadbury Travel Mix offers a selection of six Cadbury favorites—Dairy Milk, Caramel, Twirl, Fudge, Eclairs and Twist. The Mix is presented in a box designed with an exclusive travel theme twist. The Milka chocolate range has recently been expanded with two new taste and texture combinations. Milka Popcorn is a combination of slightly salted popcorn with Alpine milk chocolate. Also new to the channel is the Milka Crispello Pouch offering individually wrapped pieces of chocolate-covered wafer filled with milk chocolate cream. The Côte d’Or Belgian brand has been reinforced with the Finest Milk Chocolate Miniature, a new pure milk chocolate offer featuring individually wrapped mignon-

Cadbury Travel Mix

The Cadbury Chunk Box is a new gifting offer Hershey’s display in Athens International Airport

Hershey’s World Travel Retail adds Greek locations

nettes in a travel exclusive gift box. And the Swedish Daim brand has seen the launch of the Daim Bars Pouch, which extends the original bar format into the snacking and sharing segment, with 15 Daim presented bars in a sharing pouch. The travel retail exclusive Bassett’s boxes make their return with a new design for flavors including Liquorice Allsorts and Winegums. And the new ‘travel exclusive Bertie’ icon is prominent on every pack. In addition, hanging bags for Winegums and Liquorice Allsorts cover the self-consumption need. Oreo has made its entry into travel retail with a range of six novelties aimed at driving incremental sales in an underdeveloped category: biscuits. Targeted at the premium gifting segment, the Oreo Tin is a giant Oreo-shaped biscuit tin full of cookies. For more informal gifting, Oreo Chocolate Gift presents a box of cookies covered with milk chocolate, while Oreo Travel Pack offers two flavors in a suitcase-shaped box designed for travel gifting. Also, the Mini Oreo Sharing Pouch delivers 10 individual Mini Oreo bags in a travel pouch, while Mini Oreo Canister offers bite-sized cookies in a cup-shaped snack pack. Finally, the Oreo cookie also comes in the Oreo Snack Bag, designed for on-the-go consumption and presented in hanging bag format. KFWTR will be at booth P20 at Singapore Suntec Center.

ASIA DUTY FREE & TRAVEL RETAILING TFWA AP MAY 2012

The Hershey Company has announced an expansion of its World Travel Retail program in Greece with the opening of an island display at the Athens International Airport. The island is a kiosk that offers a 360-degree display of Hershey’s products in the airport’s concourse. The kiosk is adjacent to a duty free shop that also features Hershey’s products. Starting from gondola displays in a few Greek Travel Retail airport locations two years ago, the Hershey’s presence now boasts multiple branded displays in all Greek airports and points of sale in all 40 Hellenic Duty Free Shops in Greece. “Hershey products have proven to be very popular in Greece, and we’re expanding Hershey’s retail presence across the country to meet the growing consumer demand,” says Steve Bentz, General Manager, World Travel Retail. “Greece is the first European country to feature Hershey’s products in its duty free shops, and the Greek people and visitors to Greece have firmly embraced the Hershey brands.” There are currently 36 different Hershey’s products in Greek travel retail locations and the product mix is continuously refreshed to meet consumer needs. The most popular products include Reese’s Peanut Butter Cups, Cookies ‘n’ Crème Giant Bars and Hershey’s Giant bars, as well as Hershey’s Kisses. Hershey World Travel Retail works with Magister Artium Group as its exclusive distributor in Greece. According to Pantelis Velentzas, President of Magister Artium, “The portfolio of Hershey’s products offers a new tasting experience to Greek and European customers.”

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Pernod Ricard Asia Duty Free

The Martell Millésimes eau de vie had an exclusive launch at the dedicated Martell Experience boutique shops in Kuala Lumpur and Hong Kong (pictured)

Premium prospects

The Glenlivet Master Distiller’s Reserve, a travel retail exclusive, at HKIA

The growing luxury market in Asia means there’s more growth ahead for Pernod Ricard in the region BY ANDREW BROOKS ernod Ricard Asia Duty Free (PRADF) is a leader in the Asian travel retail and duty free market. While it covers the full range of channels in the duty free market, airports are definitely the main focus of activity, says John O’Sullivan, Marketing Director, Pernod Ricard Asia Duty Free. As air travel is especially strong in Asia these days—and growing— 2011 was a good year, O’Sullivan says, with the business rebounding quite well from the lows of the 2008-2009 economic crisis. According to the research that O’Sullivan and his team have access to, the Asia travel retail market is actually growing at a rate that puts it ahead of global trends in terms of passenger numbers, but also by volume and in terms of the value of the travel retail business overall. Asia presents quite a complex and varied mix when it comes to the combination of nationality profiles and preferences. It’s even more complicated when you factor in the amount of intraregional travel done by passengers of different nationalities. Koreans favor aged whisky, which puts Pernod Ricard in the sweet spot, with premium brands like Ballantine’s, Chivas Regal and Royal Salute. The big emerging market in Asia is of course China, and with Chinese passengers traveling more and more throughout the region, the Chinese buyer’s preference for premium brands represents a real opportunity for Asian travel retail. Here, O’Sullivan says, whisky and cognac are among the keys to success. In addition to the whiskies mentioned earlier, the Martell cognac marque in particular is a leading brand for the Chinese consumer. Shopping is an important part of the travel experience for Chinese travelers, O’Sullivan says. “They’re brand-conscious—a luxury consumer category is developing. Our presence is strong and our brands are well recognized, so we’re in a good position. It’s a matter of making sure that when Chinese passengers travel elsewhere in Asia, we engage them at strategic airports like Hong Kong, Macau, Singapore and so on.” Promotions play a double role. Of course they bring in added sales, but they also play an important part in boosting brand profile. “We work both levels with special packaging, limited editions, new launches, exclusive products,” O’Sullivan says. “All of these

ASIA DUTY FREE & TRAVEL RETAILING TFWA AP MAY 2012

help us to tell the brand story and increase interest.” New launches are an important vehicle for creating excitement in the duty free channel and Pernod Ricard has released a number of new products in the past 12 months. Absolut has always been an active brand and its latest release was Absolut Mode, the fashion-themed bottling. Chivas is another brand that is regularly innovating and this is particularly evident with the Chivas 18 series of designer bottle releases. The latest was based on the work of British fashion designer Vivienne Westwood. Previous releases have been developed with fashion designers Christian Lacroix and Alexander McQueen. Other recent launches from Pernod Ricard include the Master Distiller’s Reserve expression of The Glenlivet, exclusive to travel retail, which was particularly visible recently in Taiwan and Hong Kong. And cognac brand Martell has recently benefited from the Centenary Edition of Martell Cordon Bleu with special packaging and, more recently, Chanteloup Perspective in the Extra category, named after the home of Martell. Significantly, the travel retail team collaborated with the domestic side to launch Glenburgie Edition, a 17-year-old limited edition Ballantine’s celebrating one of four signature Ballantine’s distilleries. The launch was initially focused on Korea, and response was “outstanding,” O’Sullivan says, with a high proportion of the travel retail allocation flying off the shelves in the first days. O’Sullivan also notes the recent launch of a single Martell eau de vie in the two dedicated Martell Experience boutique airport shops in Hong Kong and Kuala Lumpur. Titled “Millésimes,” the very excluc sive launch came out in December.

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Diageo GTME

Johnnie Walker Blue Label – The Casks Edition is described as having rich woody notes, deep smoke, traces of spice and a long, lingering oak finish

Two of a kind

Just in time for TFWA AP in Singapore, Diageo releases two new expression in the iconic Johnnie Walker range of blended Scotch whiskies BY RYAN WHITE iageo recently announced that two new expressions of its iconic blended Scotch whisky Johnnie Walker will be available in travel retail. The first—a global travel retail exclusive—gives one of the brand’s legendary expressions a new woody, smoky twist, while the second—inspired by the Walker family tradition of creating exclusive “private” blends—offers consumers a strong, sweet and elegant spirit crafted in traditional Speyside style.

Rarity redefined A new limited edition release of the world’s leading blended Scotch whisky will be released exclusively in global travel retail: Johnnie Walker Blue Label – The Casks Edition. Crafted from some of Diageo’s rarest casks, each noted for their intensity and depth of flavor, this special edition, bottled at 55.8% ABV, has intensified wood flavors and “is a tribute to the perfect harmony of the oak casks used in the blending of Johnnie Walker Blue Label,” says Diageo. Johnnie Walker Master Blender Jim Beveridge says: “This limited edition is a chance to enjoy the remarkable experience of Johnnie Walker Blue Label in a new way. Only one in ten thousand of our casks have sufficient character for Johnnie Walker Blue Label and in creating this special edition we really wanted to showcase the incredible flavors that come from the casks themselves. The flavors drawn from these carefully selected casks have intensified to produce a robust and powerfully fla-

vored blended Scotch whisky that has rich woody notes, deep smoke, traces of spice and a long, lingering oak finish.” Produced in limited quantities and blended in small batches, the bold blend is a contemporary expression of the powerful 19th century character pioneered by the Walker family, created for true connoisseurs who are seeking new depths of flavor. Steve White, Marketing Director, Diageo GTME, said: “Johnnie Walker Blue Label – The Casks Edition is a Scotch whisky with a remarkably powerful flavor, the result of almost two centuries of unbroken blending expertise. This limited edition release is a rare opportunity to enjoy a bold amplification of the powerful cask flavors contained in Johnnie Walker Blue Label—it is rarity redefined.”

Precious metal

Diageo’s second new addition to the Johnnie Walker range is Johnnie Walker Platinum Label. Inspired by the Walker family’s historic tradition of creating exclusive “private blends” for favored customers, directors of the company and select private gatherings, Johnnie Walker Platinum Label has been crafted by Jim Beveridge “for today’s increasingly sophisticated global consumers—the ‘new whisky set’—to enjoy at their own intimate gatherings,” says Diageo. It is a delicate, smoky blend that embodies the characteristic full flavors of the Johnnie Walker range of blended Scotch whiskies. Jim Beveridge explains: “Like the rare and precious metal after which it is named, Johnnie Walker Platinum Label is rich and refined, delivering the distinctive depth and complexity that is synonymous with Johnnie Walker. In fact, I believe that if John Walker were to create a whisky today, Johnnie Walker Platinum Label would be the result. It is a bold, intense and smooth blend, crafted from some of our most treasured whiskies, for the evolving tastes of 92

ASIA DUTY FREE & TRAVEL RETAILING TFWA AP MAY 2012

today’s global whisky consumer.” “Johnnie Walker Platinum Label is the richest, most precious crafted 18 year old blended Scotch whisky John Walker & Sons has ever created—its price point reflects this,” says Steve White. “We believe that consumers will quickly develop a real affinity for Johnnie Walker Platinum Label and that it will offer real value for our trade partners. “It is a thoroughly modern interpretation of the ‘private blends’ that our company has produced from the very beginning and is a contemporary blended Scotch whisky that is perfect for exclusive occasions,” he added. Johnnie Walker Platinum Label is available now in 75cl size in limited Asian Duty Free locations with a global Duty Free launch of the 1L variant from June 2012. Priced at an RRP of USD $100 for 1 liter in duty free, Johnnie Walker Platinum Label is a premium whisky that will sit c towards the top end of the Johnnie Walker range.

Johnnie Walker Platinum Label has been crafted for today’s increasingly sophisticated global consumers—the “new whisky set”— to enjoy at their own intimate gatherings

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Beer Report

Asia’s love affair with beer goes back millennia: today’s duty free players are ringing changes on an old favorite BY ANDREW BROOKS sia is a “beer-friendly” market with a history of brewed alcoholic beverages going back some 5,000 years. Although many of the region’s beer brands, such as China’s Tsingtao, were founded by transplanted Europeans, Asians have made beer their own, even exporting the product to western countries more usually associated with strong beer traditions. Tsingtao, for example, is now the largest consumer branded product exported from that country. And India’s renowned Kingfisher brand claims to be the second largest beer brewer in the world. Another good example is Asia Pacific Breweries which, through the wholly owned Tiger Export Pte Ltd., has a global network in some 50 countries where its brands are exported. This is a true Asian success story, with notable names like Tiger, Tiger Crystal, Baron’s Strong Brew and ABC Extra Stout enjoying high market profiles in export markets, as well as in Asian duty free. In addition to airport shops, the Tiger brands are also available in selected in-flight slots as well as on cruise lines. “In the area of Asian duty free, we’re now focusing on expanding our presence and channels, especially in Indian subcontinent and East Asian areas, where we seek to work more actively with key retailers and airline operators to list and promote our brands,” says Royston Loh, General Manager, Tiger Export Pte Ltd. The duty free market is a strategic avenue for brand-building, Loh says, complementing the various volume growth drivers for the company’s beer brands, especially Tiger, which is making strong gains in Malaysia and Vietnam, among other markets. Tiger is one of the company’s best sellers in Asian duty free, with the European-style brand enjoying excellent recognition with travelers from other parts of the world. Doubtless this is due in large part to the fact that the beer is not only available in 50 export markets around the world, but is also brewed locally in a further ten. Awards like the World Beer Cup and brewing Industry International Award also go a long way toward building recognition. Beer consumption is on the rise in emerging Asian markets like Vietnam and China, but the category’s strength is also based on its established, long-term popularity and high consumer demand in Japan, Korea, Taiwan and other more developed economies, Loh says. The product is purchased mainly for personal or family consumption, but also has solid market-making potential in the gifting category. Loh notes that beer isn’t a heavily promoted category in duty free as price is the main sales driver. But Tiger does deploy prominent product displays, especially near checkout counters, where this is an option. Beyond that, an ongoing, concerted marketing and distribution campaign in the regional Asian markets keeps the brand profile and customer awareness high. “For instance,” Loh says, “Tiger beer is a choice brand in Asia, while it has an intriguing premium brand proposition in the western markets. Being a brand that’s widely enjoyed by millions across 60 markets globally, Tiger beer is a recognizable brand at the duty free shops. This marks a competitive edge over other brands which are new or less familiar to the consumer.”

ASIA DUTY FREE & TRAVEL RETAILING TFWA AP MAY 2012

Tiger Beer has enjoyed singular success as a premium Asian export into countries that have their own strong beer traditions

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Beer Report

nnovative promotion is helping propel the beer category ever deeper into the premium product niche. Heineken Western Europe Export & Global Duty Free caused a stir in February with the launch of its “World of Beer” interactive display in Barão Free shop in Rivera Uruguay, in cooperation with Kraudal Trading. The display was launched in response to what Heineken says is growing demand for a broader range of beer products in travel retail. Heineken offers a wide range of beer brands, and the interactive display allows retailers to customize a beer offering to the shopper’s profile. Designed by Amsterdam agency Uxus, World of Beer aims to create a premium look and feel and is available in multiple formats, from a standalone aisle to In reporting on its a full wall fixture. results for the second half of Following its South America launch, the World of Beer is being 2011, Diageo noted that beer was one of rolled out at a number of border the primary drivers in and diplomatic stores in Africa. delivering double-digit growth in the Natascha Waterbeek, Marketing Southeast Asian Manager, Heineken Region Westmarket ern Europe Export & Global Duty Free, says there aren’t currently plans for rollout in Asia, but that this could change with the right clients. New brands for Tiger include Tiger Crystal, which was added to the lineup in Singapore duty free outlets in August 2011. A lighter-tasting beer, the brand’s popularity in Singapore duty free echoes the experience in China, Thailand and Vietnam, where the brand’s presence is on the rise, Loh says. In reporting on its results for the second half of 2011, Diageo noted that beer was one of the primary drivers (the other being Scotch) in delivering double-digit growth in the Southeast Asian market. Guinness performed well, the company noted, especially in Malaysia and Indonesia, where the “Arthur’s Day” and Guinness “World Series Pool” promotions fostered gains in market share (In 2010, Malaysia was one of two markets chosen to test the new Guinness Black Lager).

orporate social responsibility (CSR) is a hot topic these days, and some breweries are eager to demonstrate their commitment to operating ethically and to minimizing the impact their operations have on the environment. In a March press release, Denmark-based Carlsberg issued a progress report on its CSR initiatives, and laid claim to being the most efficient brewer in the world. Among its notable milestones for 2011, Carlsberg says, was its investment in a waste water recovery plant for its Hyderabad Brewery in India, where expected annual savings on water from the plant is expected to be 585,000hl (15.4 million gallons). Carlsberg also pointed to improved performance at its brewery in Huizhou, China. Here, the company says it reduced CO2 emissions by around 35% by introducing steam from biomass-powered boilers. Overall, the company says, it reduced energy consumption in 2011 by 9.3%, water consumption by 5.6% and CO2 emissions by 8.3%. The amount of water required to produce 1hl (211 pints) of beer was driven down from 3.5hl (739.7 pints) in 2010 to 3.3hl (697.4 pints) in 2011. Carlsberg's Swiss business Feldschlösschen now offers customers

ASIA DUTY FREE & TRAVEL RETAILING TFWA AP MAY 2012

Heineken’s innovative World of Beer display in Uruguay; while no plans are in the works to roll the concept out in Asia, the company notes that if operators show interest it may be a possibility

“Arthur’s Day” is an annual promotion commemorating the 1759 founding of Guinness and the company’s founder, Arthur Guinness. The company sponsors a series of musical events around the world. In the Asia market in 2011, notable events were held in Malaysia (Kuala Lumpur) and Indonesia. The Kuala Lumpur celebrations, held on September 23, attracted some 10,000 people who attended at the Selangor Turf Club. The Indonesia celebrations were held in November and December, and included a four-city musical concert that attracted a total of 22,000 attendees. The promotional value of the effort can’t be denied, with the Arthur’s Day Jakarta event on November 12 becoming the second most trending topic on Twitter worldwide. Guinness World Series Pool was held last June and July in different cities in Indonesia, matching that nation’s top pool players against the world’s best. Guinness was also a factor for Diageo in the North Asia market, where the brand delivered a growth in net sales of over 30%. Diageo said this gain was driven by TV advertising in Korea and increased distribution of Guinness surger in Japan. The surger is a unit that controls the pint presentation; with the push of a button an ultrasonic shockwave is sent into the beer to create a clean head. The unit is operated using special surger-ready cans of Guinness. Originally developed in the late 1970s, the system was reintroduced in 2003 when a redeveloped version was rolled out for testing in Japanese bars that are too small to accommodate a traditional keg-and-tap system CSR in action: electric delivery trucks at Carlsberg’s brewery in Feldschlösschen, Switzerland

a CO2-neutral delivery option, where the customer and the Feldschlösschen logistics department identify the CO2 emissions linked to the delivery process. The identified amount of CO2 emissions will then be offset with CO2 credits. The income from these credits is c then invested in climate protection projects, Carlsberg says.

Gulf Beverages

The Jose Cuervo Margarita Mix gift pack is currently at DFS in Mumbai and at Cochin Airport; it will be in Delhi Duty Free and Flemingo outlets in Colombo and Hyderabad in the near future

New Horizons

Gulf Beverages now has over a year under its belt distributing spirits in India and has a number of upcoming listings and promotions as a result of its effort BY RYAN WHITE

ulf Beverages has set its sights on being the go-to distributor for suppliers looking to crack the challenging Indian market. Asia Duty Free speaks with Leon Ashford, Director of Business Development at Gulf Beverages, about what the company has accomplished to date and what’s to come in the months ahead.

well received in the domestic market. We have some good duty free listings as well. It will be going into Delhi Duty Free in the next month or so and in Flemingo locations. In Bangkok Airport we were looking at the stats on Jägermeister and something on the order of 40% of the sales were to Indian passengers, so there’s certainly a lot of potential for the brand within India.

Asia Duty Free: What advantages do you offer suppliers looking to get into the Indian market? Leon Ashford: Logistically we have the ability to get stock into India easily due to our location in Jebel Ali. Furthermore, we’re learning more and more about the idiosyncrasies of the Indian market as time goes on, making us a valuable partner for wine and spirits suppliers. I think our model truly does provide something different from the traditional model, which has been importing from the point of production or taking from one of the domestic operators, which is difficult given taxation and other regulations.

ADF: You must get excited at the work Delhi Duty Free has been doing in terms of upping the standard of airport retail in India. LA: Delhi Duty Free is spearheading the revitalization of duty free in India and they’re a fantastic partner with a truly world-class travel retail experience. We’ve got some single malts going in there very soon, such as The Glenrothes and Tobermory. In fact they will also be taking a very top end Jose Cuervo 250 Year Anniversary edition around the festival period in September.

ADF: What have you been up to in the region lately in terms of promotions? LA: The Jose Cuervo Margarita Mix gift pack is currently at DFS in Mumbai. It’s been there for a few months now and the response has been very positive. It’s also in Cochin Airport and will be in Delhi Duty Free in the very near future. Travelers who buy a bottle of Jose Cuervo Gold get a free margarita mix in the package.

ADF: You mentioned wines earlier. Is there anything happening of note with your wine portfolio in India? LA: We are actually launching our wine and champagne portfolio into India. We’ve been up and running in India for just over a year now in earnest and to date most of our focus has been on the spirits side of things, but we’ve always felt that there’s huge potential for our wine portfolio. Right now we’re launching about 30 or so SKUs. We’ll also have a broader range launching in travel retail.

“What we provide operators is a one stop shop that gives them a variety of great brands. Right now it’s about exploring all the options in order to expand our business.” Leon Ashford, Director of Business Development, Gulf Beverages The challenge with Indian travel retail is that Indian travelers generally gravitate toward buying whisky. To get them away from this you have to provide a few incentives, and the Margarita Mix gift pack has done just that. The pack will also be going into Flemingo outlets in Colombo and Hyderabad in the coming months. ADF: Are there any new listings to speak of? LA: We now have rights to Jägermeister and it has been incredibly

ASIA DUTY FREE & TRAVEL RETAILING TFWA AP MAY 2012

ADF: You’re also supplying spirits to Indigo, correct? LA: We’ve been supplying Indigo for about a year and we’re pleased with the volume they’re doing. Furthermore, as an LCC there’s no pouring—everything we supply is for sale onboard. In addition to this, we’re just now starting to look at diplomatic duty free stores and other possibilities such as military canteen stores. We do a lot of diplomatic duty free business in the Gulf so our track record there is well established. Really what we provide these operators is a sort of one stop shop that gives them a variety of great brands. Right now it’s about exploring all the options in order to c expand our business.

The Glenrothes will soon be listed in Delhi Duty Free; pictured is The Glenrothes Robur Reserve

Asian-inspired Cocktails

A taste of Asia

Cocktail lovers will find that drinks in Asia are just as exotic as the region itself BY RYAN WHITE

sia is known for, among other things, a wide range of amazing culinary creations. Ask any professional bartender and they’ll tell you that this creativity certainly extends from food to the world of mixology. Below Asia Duty Free presents some Asian-inspired cocktails made with some of the travel retail industry’s most popular spirits. Some of these drinks are classics, while some are new—the only criterion is that all are delicious!

The Pearfect Serve Chivas Regal is hugely popular among Asian spirit connoisseurs and certainly deserves its place in our cocktails list. In travel retail Chivas is regularly innovating and this is particularly evident with the Chivas 18 series of designer bottle releases.

The Sun and Moon U’Luvka Luxury Polish Vodka will be exhibiting again this year with Horizon International Duty Free at the TFWA AP exhibition in Singapore. U’Luvka is not so much a new arrival on the scene as it is a great revival. It is a recreation of a legendary royal vodka from the late 16th century made today under the strictest of quality standards. Recipe ■ Sage leaves ■ 1/2 ounce of sirop de gomme ■ 1 3/4 ounce of U’Luvka Luxury Polish Vodka ■ 3/4 ounce of pineapple purée ■ 1/2 ounce of lime juice ■ Soda water

Recipe ■ 1 1/2 ounces of Chivas Regal 12YO ■ 1 tsp of brown sugar ■ 2 drops of vanilla essence ■ 1 pear slice

Method Muddle the sage and sirop de gomme until the sage oils are released. Add the rest of the ingredients and a scoop of crushed ice. Churn to mix then top with soda water. Garnish with a wheel of pineapple and a sprig of sage.

Method This drink can be served warm or cold depending on the season. Warm Chivas Regal 12YO in a saucepan with sugar and pear slice. Pour into a rocks glass. Garnish with a second pear slice with a vanilla pod speared through it.

Ginger Lychee VICE The Original Singapore Sling In addition to being a great-tasting spirit in its own right, Bénédictine D.O.M, owned by Bacardi, has the distinction of being a musthave ingredient for a proper Singapore Sling. Recipe ■ 1 part Bombay Sapphire gin ■ 1/2 part Bénédictine D.O.M ■ 1/2 part cherry brandy ■ Club soda ■ 2 lime wedges Method Pour the Bombay Sapphire, Bénédictine D.O.M and cherry brandy into a highball glass. Fill with ice cubes and top up with club soda. Squeeze and drop one lime wedge into the glass and then stir. Garnish with the other lime wedge.

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A big step for VICE Vodka Icewine is that it will be exhibiting on its own at this year’s TFWA AP Singapore show. Indeed, Vice Vodka Icewine proved extremely popular at last year’s show—especially with in-flight buyers—given the popularity of Icewine with Asian consumers. Recipe ■ 1 1/2 ounces of VICE Vodka Icewine ■ 1/2 ounce of lychee liqueur ■ 1 sprig of ginger ■ 3 dashes of Orange Flower Water Method Serve in a martini glass or tumbler over ice and garnish with an orange rind.

Cognac Report

Cognac conquers

Bache-Gabrielsen’s XO cognacs are 20 years old—the premium packaging is a recent redesign

The cognac category is a perfect fit for a strong, growing and prestige-oriented market like Asia duty free aron Otard Cognac, a Bacardi brand, is present in the Asia market primarily through airport stores, says Philippe Jouhaud, Sales and Marketing Director. However, there’s also a strong footprint in border stores and inflight—Baron Otard is the pouring cognac onboard Singapore Airlines and Malaysia Airlines. The cognac category is very healthy, Jouhaud says, with sales at record levels. With the Asia market driving demand, the trend is set to continue, he says. Globally the category is up five percent over the last 12 months, and in Asia the superior qualities (i.e. above VSOP) have grown by 14%. This trend is reflected in the growth of Baron Otard in travel retail. “With Baron Otard still increasing its distribution in travel retail, there’s enormous potential for growth in the years ahead,” Jouhaud says. “The introduction last year of the rarest ever Baron Otard Cognac—Fortis et Fidelis—was a great success.” This has helped to raise awareness of the superior quality of Baron Otard, Jouhaud adds, further establishing its credentials at the luxury end of the market. “We’ve been strong in Scandinavian markets for years and we very recently entered Asian markets,” says Aristide Chevaillé, Asia Director at Bache-Gabrielsen and Dupuy Cognac. “We’re currently mainly distributed in domestic markets and we now want to use this increasing awareness to enter into duty free markets.”

Chevaillé and his team are banking on the premium appeal of the cognacs they bring to market, which he characterizes as being noted for the elegance and smoothness imparted by a long process of aging. “The XO cognacs in the range are 20 years old.” 2012 is the second year for the new Dupuy Tentation range, “still with VS, VSOP and XO,” Chevaillé says, “but with some new vintages coming, like the sublime 1966.” Also new is the premium packaging treatment of the XO entrants under the BacheGabrielsen brand. For A. de Fussigny, a major Asian strongpoint is Taiwan, where the brand is present with all airport retailers as well as airlines. Malaysia and China are other points of presence, says President and CEO Jean-Dominique Andreu. The category is popular in Asia, and that popularity has helped to support the brand’s strong resurgence since its relaunch. “The intrinsic qualities of our cognac have guaranteed our rapid and self-evident success,” Andreu says. “It is the exceptional character of our cognacs that brought A. de Fussigny immediately both recognition and a legitimate place in the cognac scene. Today, within only two years since A. de Fussigny was relaunched, were are represented in over 45 countries worldwide by some of the best companies to market and sell high quality spirits.” Growth is continuing at an exceptional pace, starting from zero in 2008 and passing quickly to 3,000 cases in 2009, 9,000 cases in 2010 and reaching 18,000 cases last A. De Fussigny’s 24 Carat XO, a top-of-the-line Grande Champagne vintage

year. Andreu says the figure is expected to hit 25,000 for this year—all of it in the premium tranche, with a strong proportion of that in the XO category. China is an interesting case when it comes to cognac, says Jacques Ielli, Managing Director, Duty Free for CL World Brands, which oversees the Hine cognac marque. “For the time being the Chinese market starts with VSOP and older qualities,” Ielli says. “Today VS is not really sold in this market. Promoting a brand like Hine in a market dominated by the big players is a very motivating challenge and we feel that the quality of the Hine brand awareness is an excellent basis from which we can build the brand.” As a small company focused on the high end of the market, Hine has been posting double-digit growth figures over the last A. De Fussigny’s JeanDominique Andreu: the brand has accelerated from zero to 18,000 cases in three years—expect 25,000 this year

four years without even having made such a growth rate a high priority, Ielli says. That said, the company is affected, as is the entire cognac industry, by the current shortage of old eaux de vie, a situation that Hine needs to take into account. For this year, Ielli says, they expect sales figures to finish slightly higher than those of 2011. The Asian presence of CL World Brands is still young, Ielli says, focused primarily on Korea and China. Other than airport stores, there’s an inflight presence on Asiana Airlines, and there is quite a lot of activity in border stores in south China, Hong Kong and Macau. There’s an enormous potential for growth in the Chinese market given the fact that China, particularly the southern portion, accounts for at least one third of global cognac sales. Once the cognac market weathers the shortage of eaux de vie, which Ielli says should last for the rest of this year and most of 2013, things should pick up again.

The Dupuy Tentation range is only two years old, with “sublime” vintages on the way

Market momentum On the plus side, Bache-Gabrielsen is currently experiencing a major sales increase, Chevaillé says, observing that one contributing factor is the brand’s newness in the Asia market. Also, Asia is a very dynamic market, he says, and can propel very solid growth rates once a brand establishes a good, longterm relationship with the right partner.

As a small company focused on the high end of the market, Hine has been posting double-digit growth figures over the last four years without even having made such a growth rate a high priority

“Cognac is getting more and more recognition and is getting more and more space in duty free,” Chevaillé says. “In Asia, cognac is a synonym of a gift and a lot of it is bought in duty free.” A. de Fussigny’s Andreu seconds that notion: “Cognac is the luxury spirit par excellence. Passion, excellence and the spirit of innovation are timeless virtues which inspired the most magnificent cognac makers’ creations in the past and will inspire all those of the future.” The notion of “exceptional” is overused by firms for whom luxury is merely a marketing posture, Andreu believes. “As words no longer have any significance, we have allowed our cognacs to speak on our behalf. The passion with which they have been designed, the meticulousness and talent with which they have been blended… all this speaks for itself and the connoisseur knows how to recognize this.” For Aristide Chevaillé, a key market differentiator is the length of the aging process, which he says generates a smooth and elegant taste that contributes to an award-winning legacy—Dupuy XO won the “Best in Class” Gold medal at the most recent IWSC competition. The packaging, which is both modern and traditional, also plays a role, he says. For TFWA Asia Pacific in Singapore, Baron Otard will be releasing the Baron Otard Vintage 1972, a limited 2,500-bottle edition. “We are anticipating significant interest from cognac connoisseurs,” says Jouhaud. “The 40-year-old cognac, which has a classic, contemporary-style bottle design, will be priced at approximately €400 (US$520) for a 70 cl (24 fl. oz.) bottle.” Jouhaud says that the distinctive taste of Baron Otard goes back to the Château de Cognac, the home of Baron Otard (and the

birthplace of King Francis I of France) and a landmark in the Cognac commune in Charente, France. The cognac is aged in the cellars of the château, where the thickness of the walls and the nearness of the River Charente establish the required humidity and constant temperature. Jouhaud says that these characteristics are what establish the characteristic smooth, round taste of Baron Otard. On the promotional front, Baron Otard is reinforcing its high-end positioning by extending its partnership with Christophe Pillet, the French designer who created the award-winning crystal decanter for Fortis et Fidelis. In partnership with Pillet, Baron Otard has now created a new airport display that provides superior stand-out and showcases the quality of the brand. As this went to press, the display was scheduled for rollout in Kuala Lumpur in April. It’s been a landmark year for Baron Otard, Jouhaud says. As well as the launch of Fortis et Fidelis, Baron Otard also introduced a new look for the Baron Otard portfolio. The feedback received from operators and consumers has been very positive, Jouhaud says. “It’s initiatives like these which are helping us to raise the profile of the brand in Asia. In the year ahead, we will be building on this momentum with more new initiatives including the launch of the Baron Otard c Vintage 1972.”

Baron Otard’s Fortis et Fidelis, its rarest-ever cognac, boosted the brand’s luxury credentials when it was introduced last year

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The Edrington Group

Recently, all 10 bottles of The Macallan Masters of Photography II Albert Watson Edition allocated to Sky Connection were sold within five days of being put on shelf at HK$12,800 (US$1,641) each

Highland Park is among a number of other Edrington brands, including The Famous Grouse, Brugal and Cutty Sark, that will be areas of concentration for the new Asia Travel Retail division

Keeping pace with growth The Edrington Group establishes new Asia Travel Retail division with Regional Director Ryan Hill at the helm to drive growth in the region BY RYAN WHITE he Edrington Group recently announced that it has established a separate business unit which will drive growth and development of its brands, including The Macallan, Highland Park, The Famous Grouse, Cutty Sark and Brugal, in the dynamic Asian region. The new Asia Travel Retail division (ATR), led by Regional Director Ryan Hill from its base in Hong Kong, owes its foundation to five years of rapid growth for the premium whisky brands in the duty free and travel retail channel. The new division reports to Martin Reimann, Managing Director Asia Pacific for The Edrington Group. Hill joined The Edrington Group in late 2006 as Area Manager based in Shanghai and subsequently held various roles covering domestic and duty free markets across Asia. Since the demise of Maxxium Global Travel Retail three years ago, The Edrington Group’s brands have been distributed through a network of distributors and agents, including Rémy Cointreau TRA in the Americas, FIX in the Middle East and Beam in South East Asia, Australia and New Zealand. With the strong growth of its own brands in Asia, The Edrington Group was driven to assume direct control of its own distribution and has been managing duty free and domestic sales through its four wholly-owned local operating companies in Korea, Hong Kong, China and Taiwan. These companies also distribute wines and spirits for third parties such as Rémy Martin, Bols, Campari, Skyy (Korea and Hong Kong) and Jim Beam (Taiwan). The Macallan has been the star brand in the dramatic growth enjoyed by The Edrington Group’s brands, with duty free sales volume

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doubling in just four years making it currently the leading single malt by volume and value in Asia. Indeed, The Macallan is one of the world’s most admired and awarded single malt whiskies. Traditionally known for maturation in Spanish oak, sherry seasoned casks, The Macallan’s range of outstanding single malts includes Sherry Oak, matured in Spanish oak casks seasoned with sherry; Fine Oak, matured both in sherry casks of Spanish and American oak and in American oak casks seasoned with bourbon; and the 1824 range, exclusive to global travel retail. In fact, high praise for the brand in the region is the fact that some truly rare expressions of The Macallan were snapped up by consumers at HKIA recently. The rarest and most exclusive expression to have been offered for sale was a unique bottle of The Macallan Fine and Rare 1949 which retailed at HK$338,800 (US$43,435). Additionally, three bottles of The Macallan in Lalique III rare limited edition were supplied to HKIA and at last count two were purchased at HK$288,000 (US$36,923) each. Finally, all 10 bottles of The Macallan Masters of Photography II Albert Watson Edition allocated to Sky Connection were sold within five days of being put on shelf at HK$12,800 (US$1,641) each.

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“The pace of growth plus The Edrington Group’s ambition to control its own route to market and the high regard in which we hold this channel as a vehicle for brand building, have resulted in a critical need to create a dedicated business division,” said Hill. “The creation of Asia Travel Retail is a very exciting chapter for both the brands and the company.” The Asia Travel Retail division, which became fully operational on April 1, is in the process of recruiting sales and marketing professionals to key roles in the new organization. New appointments to date include Mandy So to Senior Brand Executive, Asia Travel Retail and Joseph Liu to Duty Free Sales Manager c Taiwan, Asia Travel Retail.

The Edrington Group calls the Macallan its “star” in Asia, with duty free sales volume doubling in just four years

The Russian Standard display at Hong Kong International Airport

Patrón releases XO Cafe Dark Cocoa, partners with WDFG on Ice Bar promotion

RYAN WHITE

Liquor News BY

Russian Standard Vodka

demonstrates “Vodka as it should be” at Hong Kong Airport Hong Kong is the latest airport location to be treated to a demonstration of “Vodka as it should be” by supplier Russian Standard Vodka and distributor Rémy Cointreau Global Travel Retail with the presentation of their portfolio of premium vodkas, including a limited edition exclusive to the airport retailer. The “Vodka as it should be” campaign brings to life the real Russian vodka experience in travel retail by offering the world a portfolio of authentic Russian vodkas of superb quality and great style: Russian Standard Original, Russian Standard Gold, Russian Standard Platinum and IMPERIA. During January and February a special pillar display encrusted with crystals was created to put the spotlight on IMPERIA Crystal Crown, a limited edition of the ultra-premium IMPERIA vodka, which was made available in Asia exclusively through Sky Connection. To celebrate the splendor of Imperial Russia, Russian Standard created for IMPERIA an elegant

red cylindrical cap reminiscent of the tall fur-lined hats worn by Russian nobility from the 15th century. In this limited edition, the dark red cap is studded with 24 Swarovski crystals of flawless clarity evoking the extraordinary purity of the vodka. Commenting on the special promotion, Matthew Hodges, Marketing and Business Development Director, Rémy Cointreau GTR, said: “We were delighted to share this unique promotion of the Imperia Crystal Crown exclusively with Sky. This is a product of supreme quality presented in a most impressive and alluring way which has resulted in sales far above what we would expect for a normal two-month period.” Walter Kooijman, Commercial Director Global DF & APAC, Russian Standard Vodka, says: “Working with Rémy Cointreau and key retailers we have been conducting an orchestrated campaign to raise awareness of the Russian Standard Vodka brand in the Asian market and the results have been very satisfactory indeed.”

Vincor launches Winter’s Kiss Icewine Vincor has launched a new Icewine brand to complement its existing well established portfolio. Winter’s Kiss was launched earlier this year with current listings in Korea. This brand was designed for the new demographic of Icewine drinkers at a more affordable price point. “Winter’s Kiss is produced from the highest quality Icewine grapes from the Niagara region at a selective temperature of -8⁰ Celsius,” says Amanda Dolotowicz, Business Development Manager at Vincor. “The Icewine harvest for both the Riesling and Cabernet Franc Icewine began in December of 2011 and lasted until the first week of January 2012. Our winemakers selected various vineyards in Niagara to be used in this Icewine’s blend—Icewine grapes that truly showcase the most desirable characteristics that make Canadian Icewines so lovely to enjoy.” For the first vintage only a couple hundred cases of each of the varietals—Riesling and Cabernet Franc—were produced, and Dolotowicz says that the wines are typical of the Niagara Region, displaying minerality, acidity and some alluring aromas. Visitors to this year’s TFWA AP exhibition can visit Vincor at stand M34. Winter’s Kiss is produced from the highest quality Icewine grapes from the Niagara region at a selective temperature of -8⁰ Celsius

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Patrón Spirits, World Duty Free Group and Birmingham Airport joined forces to install an Ice Bar on April 5 at the airport’s landside departures area, where passengers were able to sample Patrón’s ultra-premium tequilas and liqueurs, along with its Pyrat rum. Patrón also used this opportunity to introduce a new chocolate and coffee liqueur called Patrón XO Cafe Dark Cocoa, which it says will be a European exclusive for World Duty Free Group and Birmingham Airport, making this the only European location in domestic or duty free where the new spirit can be purchased. Patrón XO Cafe Dark Cocoa will be rolled out worldwide at a later date, Patrón spokesperson Greg Cohen told Asia Duty Free. “In addition to promoting our products, more importantly this initiative is designed to showcase the duty free and airport shopping experience,” says Mike Hill, Vice President for Europe, Africa and the Middle East at Patrón Spirits International. “Our goal is to drive penetration and growth by giving travelers who might not consider shopping in the airport’s duty free store a compelling reason to shop.” Despite launching as a WDFG exclusive in Birmingham, Patron notes that XO Cafe Dark Cocoa will be rolled out worldwide in the coming months

Bodegas Torres receives international award for wine tourism Drinks International has highlighted the work of Bodegas Torres in the area of wine tourism, giving it one of its first "Wine Tourism Awards.” Bodegas Torres has been recognized in the category of "Most Innovative Vineyard or Cellar Tour" thanks to the success of the innovative activities offered to visitors. Bodegas Torres provides an extensive range of wine-related experiences, including tastings, wine and cheese pairing seminars, cooking courses, VIP Tours, Ecotours and Natureo tours, aimed at all kinds of people with a wide range of interests. Proof of the popularity of the activities is that the Visitor Centre has received more than 1.5 million visitors in the last 25 years. At the Visitor Centre people can learn about Gran Coronas and the entire Torres portfolio through a number of innovative activities

Cresta Swiss Chocolate Liqueur

returns to TFWA Singapore For the third consecutive time Lateltin AG will present its premium product Cresta Swiss Chocolate Liqueur at TFWA Asia Pacific & GATE ONE2ONE. Cresta is a cream liqueur with the taste of Swiss chocolate. Its unique bottle shape and the real gold print represent the smoothness and high quality of the liqueur, while the design focuses on its Swiss origin. First produced in 2006, Cresta was initially exported to Bangkok four years ago. Later it was launched in Singapore and is now available in many Asian and European Duty Free destinations. Lateltin AG, the producer of Cresta, is a Swiss company formed in 1899. At the end of the 1930s it became a private, familyowned business. Lateltin is a manufacturer of liquors and distillates and the sole distributor for many well known international brands in the domestic Swiss market, with Cresta Swiss Chocolate Liqueur as its main export product. Attendees to this year’s TFWA AP exhibition in Singapore can visit Lateltin at stand A5. Cresta is a cream liqueur with the typical taste of Swiss chocolate in a unique bottle with real gold print

The latest Crystal Stag Gondola was presented to The Nuance Group Australia by Glenfiddich Global Brand Ambassador Ian Millar (pictured) following a day of staff training

Glenfiddich takes centre

stage in Australia with Nuance March 28 saw the unveiling of the latest Glenfiddich Crystal Stag Gondola at Sydney Airport through The Nuance Group Australia. The first in Australia, the Glenfiddich Crystal Stag Gondola has a high profile position in the main mega walkthrough store and forms part of a significant brand presence with a Glenfiddich 50 Year Old Plinth, branded tasting table and freestanding units, enabling promoters to offer tastings and brand information. The Stag was presented to The Nuance Group Australia team by Glenfiddich Global Brand Ambassador Ian Millar following a day of staff training to ensure complete product knowledge and understanding. The placement is supported by advertising and imagery throughout the departure zone, including the Customs window and nearby pillar. “We have an extremely good relationship with The Nuance Group Australia and are very pleased to be unveiling the latest Glenfiddich Crystal Stag Gondola here in Sydney,” says William Grant & Sons Regional Manager Asia Pacific Scott Hamilton. “It’s part of an ongoing campaign of high profile activations for William Grant & Sons brands here at Sydney and Melbourne airports which we have developed in very close cooperation with Nuance Australia.”

Cointreau Mabille to be launched in travel retail Cointreau celebrates French elegance with a fashionable limited edition bottle designed by French haute couture fashion designer Alexis Mabille. In the new limited edition Mabille revisits the bottle of the iconic French liqueur with a special sleeve decorated with his signature bow tie, his favorite emblem and a timeless symbol of sophistication and edginess, in lustrous gold. Cointreau Mabille will be launched exclusively by Remy Cointreau GTR with Aelia in Paris in May before the product becomes available globally. There are promotional events planned in Brazil, USA, Italy, Greece and all across Asia. Cointreau was founded over 160 years ago in Angers, in the Loire Valley of France, and has become the most renowned and distinguished orange liqueur in the world. Its iconic square bottle with rounded shoulders and amber color is synonymous with heritage and quality. Cointreau Mabille will be launched exclusively by Remy Cointreau GTR with Aelia in Paris in May before a global rollout with promotional events planned in Brazil, USA, Italy, Greece and all across Asia www.dutyfreemagazine.ca ASIA DUTY FREE & TRAVEL RETAILING

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Liquor News

World of Patria World of Patria International (WOPI) has announced that Singapore will see the introduction of the FirstCape range of wines to the Asian and Australasian markets. FirstCape offers a range of white, red and rose wines plus a recently introduced lighter alcohol Café Collection which aims to become a 5 million-case brand in the UK. FirstCape is now setting its ambitions on the Far East following the decision to sponsor the Lions Tour in Hong Kong and Australia next year. “We’re extremely pleased to be supporting FirstCape on its mission to secure distribution within Asia Pacific and Australia and the opportunities for high profile activations throughout airports in the region are amazing,” says WOPI Director Andy Butcher. “While the brand is positioned more at the entry price level, it has

a huge following in the UK and growing business in Europe, and its new lighter alcohol Café Collection is proving extremely popular." Also new in WOPI's wine portfolio is the super-premium Lindhorst range of wines, comprising six 2007 vintage red wines, including the signature Shiraz-dominated blend “Statement” and a fresh 2011 Sauvignon Blanc. Other wines being highlighted on the stand include the popular Blossom Hill selection; Follador premium Prosecco selection, which includes a special gift tube for travel retail; and Champagne Penet Chardonnet available as a Cuvee Diane Claire Grand Cru and Grand Reserve Grand Cru, both presented in a gift box. Additionally, in Singapore WOPI will be giving one lucky visitor the chance to win a bottle of The Last Drop 1960 Blended Scotch Whisky, with a suggested retail price of US$2,700, through a simple business card

WOPI will be giving one lucky visitor the chance to win a bottle of The Last Drop 1960 Blended Scotch Whisky at TFWA AP Singapore

draw. Finally, new to the WOPI portfolio are unique products from the British based Chase Distillery, including award winning five times distilled Chase English Potato Vodka; Chase Marmalade Vodka; and William’s Chase Gin.

Tequilera Corralejo DFS premieres brings 99,000 Bacardí OakHeart in Asia biggest product launch very excited to be partnering Hours, Vodka The from Bacardi in 15 years, with Bacardi Global Travel OakHeart, has arrived Retail for such a significant Boker to Bacardí in Asia. In partnership with new product launch in Asia. Singapore DFS, Bacardi Global Travel Changi is the perfect place to Continuing its passion for traditional production methods, Tequilera Corralejo is introduc99,000 Hours is aged in single Kentucky oak ing a special commemorative barrels (no bigger than edition premium tequila at this 200 liters) for 18 year’s TFWA Asia Pacific & months and double GATE ONE2ONE exhibition distilled using copper and column stills (stand A15): 99,000 Hours. 99,000 Hours is aged in single Kentucky oak barrels (no bigger than 200 liters) for 18 months and double distilled using copper and column stills. This premium tequila is presented in a rounded carafe-style bottle and is designed for drinking neat, on the rocks or in cocktails. Also new at the show is Vodka Boker, a unique Mexican corn vodka presented in a highly attractive and unusual deep blue bottle that has a twisted effect. Initially launched to travel retail markets in India, Central America, Mexico and Canada, Vodka Boker is described as versatile and smooth, but with the added bonus of a direct link with centuries of history and culture. Tequilera Corralejo notes that it is steadily expanding outside the Americas and now reports significant duty free business in India, the Maldives and Sri Lanka, plus in Spain through Aldeasa and via Russian border stores. The Middle East and Asia Pacific are next on the hit list and the company is keen to make new contacts at this year’s Singapore show.

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Retail will be unveiling Bacardí OakHeart for the first time in the region at Changi International Airport. As Bacardi celebrates its 150th Anniversary, the introduction of Bacardí OakHeart in Asia is set to make a dramatic impact on the spiced rum category and the rum category as a whole. Bacardí OakHeart has already proven successful at growing the broader rum category in North America and it’s expected to do the same in Asia. Backed by Bacardí craftsmanship and expertise, Bacardí OakHeart is a new, expertly blended, smooth and smoky, spiced spirit drink which is reaffirming the brand’s leadership position in rum. Bacardi now has expressions across all rum segments—traditional, flavored and spiced. John Hoover, Vice President of Spirits Merchandising for DFS, said: “We are

ASIA DUTY FREE & TRAVEL RETAILING TFWA AP MAY 2012

exclusively unveil a spirit designed for the modern day adventurer and we are delighted that our consumers will be the first in Asia to taste Bacardí OakHeart.” “Bacardí OakHeart is a perfect illustration of the way in which Bacardí is still innovating after 150 years,” says Paul Francis, Regional Director – Asia-Pacific, Bacardi Global Travel Retail. “The reception it has received from our customers and consumers in North America has been beyond our expectations and we’re looking forward to building on this success in Asia.” The Maestros de Ron Bacardí have created the perfect base for the liquid, using rums that have been mellowed in specially selected, charred American white oak barrels to impart a hint of smokiness, enhanced by natural charred oak extract to give the rum woody notes. Finally, they add carefully

The TFWA AP exhibition marks the launch of Bacardí OakHeart at Changi Airport; pictured is the launch party at the 2011 TFWA WE in Cannes

selected flavors and spices including honey essence, Madagascan vanilla, cinnamon and nutmeg. The result is a truly unique boldly spiced rum, velvety smooth with just a hint of smokiness that mixes well with cola or tastes great straight. Bacardí OakHeart will be available exclusively at DFS Changi International Airport from May before being rolled out across the region in July.

British American Tobacco

Breadth and depth British American Tobacco’s market reach and product depth bring continued growth on its Asian home turf BY ANDREW BROOKS ritish American Tobacco International, through its Global Travel Retail Asia Pacific (GTRAP) team, currently distributes its brands in more than 22 countries and locations in Asia, dealing with more than 70 customers. Products are present in all major airports, border locations, ferry terminals, railway stations and inflight, as well as onboard trains and ferries, says James Li, Head of Brand, GTRAP. Li echoes the sentiments of many others involved in Asian duty free by observing that Asia is an exceptionally strong growth market right now, driven by the compound effect of increased passenger numbers combined with rising spending power per passenger. As the world’s second largest quoted tobacco group by market share, British American Tobacco’s products already enjoy very high visibility in most Asian markets, Li says. Notwithstanding, GTRAP is still managing to generate strong organic growth by adding new customers. This pace of organic growth mirrors the expansion that is taking place on the domestic/duty paid side. “Popular brands for us include the ‘Global Drive Brands,’ which are Dunhill, Kent, Lucky Strike and Pall Mall,” Li says. In Asian travel retail, he adds, State Express 555 and Benson & Hedges are also highly popular, posting sales on a par with—and in some cases even ahead of—sales of some of British American Tobacco’s major brands. The gifting impulse is noted as a major factor behind sales in other categories in Asian travel retail, and there’s no exception with regard to tobacco. Besides gifting, Asian adult consumers in travel retail are especially attracted to limited edition products, and travel retail exclusives are also a strong draw. “British American Tobacco continues to work hand in hand with our customers to leverage on those unique qualities,” Li says. As far as prospects for this year are concerned, Li says that it’s too early to predict outcomes but that British American Tobacco is confident market growth will continue. 2011 travel retail sales were excellent. Based on comparative data, sales volumes marked high single-digit increases last year compared with 2010, driven for the most part by British American Tobacco’s Global Drive Brands, where growth was in the double digits. During the 2008-2009 economic crisis, Asian passenger numbers fluctuated by less than 2%, and sales within British American Tobacco International weren’t seriously affected. After that the market bounced back quickly, with passenger numbers for 2010 growing by 10% over 2009. “In 2012, we’ll continue to work with our customers in order to provide the premium shopping experience for adult tobacco consumers in travel retail, which British American Tobacco International is known for,” Li says. “We’ll continue to innovate and provide new offers.” On the new products front, British American Tobacco has a number of recent and forthcoming releases. For the third quarter of 2012, the company plans to introduce Dunhill Release, a product that incorporates a capsule in the filter that

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Dunhill’s limited edition Special Reserve 2010 will be center stage at TFWA Asia Pacific

releases an extra burst of menthol flavor with a click. The smoker can wait for the “Blenders’ Mark”—a dotted line—to be reached, or activate the capsule at a time of their own choosing. In the second quarter of 2012, the Chinese Year of the Dragon, British American Tobacco plans to issue a limited edition for Lucky Strike. The packaging will be available in three core variants, and targets adult smokers in search of limited edition products. Also slated for the second quarter is a 555 limited edition exclusive to GTRAP, which will reinforce 555’s key marketing attributes of smoothness and exclusivity. At this year’s TFWA Asia Pacific trade fair, British American Tobacco will highlight Dunhill’s limited edition Special Reserve 2010, which features leaves from some of the world’s top tobacco regions that have been carefully aged, cured and blended. Head growers from British American Tobacco have selected the leaves from tobacco farms in Brazil’s Itajaí Valley and the Nile Valley in Uganda. Special Reserve 2010 will be available in selected markets for a limited time. Dunhill’s Fine Cut Exceptional Edition (FCEE) is also being highlighted as a new super-premium expression of the brand’s Fine Cut offers. British American Tobacco says that FCEE is “differentiated by attention to detail delivered through its packaging, c format and refined 46 cuts per square inch of the tobacco.” A 555 limited edition exclusive to GTRAP is slated for release in the second quarter of this year

AFTER A GOOD MEAL

the natural herbal digestive

worldwide after a good meal since 1846 Find us on the TFWA Asia Pacific at stand A4 www.underberg.com

Made in Germany

Ray Tobacco

STAR EAST IN THE

Born in a tough economy, Ray Tobacco knows how to survive—and thrive BY

ANDREW BROOKS

ay Tobacco is based in Hong Kong and only started in 2008, making it a genuine newcomer. The bulk of Ray’s business is still domestic, says Chris Pfister, the recently appointed Export Director. Duty free strong points right now are in Malaysia, Laos, Thailand, Cambodia, Indonesia and Vietnam, but expansion plans are afoot. The fact that the company started up in 2008 gives Pfister an interesting perspective on the 2008-2009 recession that spiked the plans of so many other companies in travel retail. Starting out during a recession is never part of any businessperson’s plans, but as Pfister points out, it had some advantages in Ray’s case.

Walton is Ray’s other main cigarette brand, which Ray has taken into whisky and beer products

“It was unfortunate timing, definitely,” Pfister says. “We started out right when the market was at its lowest point. But we were young and new and we didn’t feel the reces112

The Ray American Blend cigarette brand continues to be Ray Tobacco’s flag carrier

sion as much as older players in the market. While they were losing business, we were getting our first listings. So we were growing when others were struggling.” Now that the recession is more or less behind us, the growth prospects for Ray are inviting to say the least. The Asian portfolio is concentrated in airport and border shops, with inflight not yet on the scope. Growth across all markets is good, Pfister says. The company is young enough that growth potential is still strong in the markets where Ray is already present. The company is continuing to make inroads in the Middle East, where it took its first steps outside of Asia and where it has already turned in positive results. In Egypt, Ray is present in airport and border stores, as well as in the high street, with its full range of products. Ray has also listed with border shops in Lebanon, Iran, Iraq, Turkey and most recently Libya. More Middle Eastern markets are in the offing. Ray Tobacco’s main products in duty free— and generally—are the Walton Royal Blend and Ray American Blend cigarette brands. New products are under development, Pfister says. Interestingly, two years ago Ray also ventured into the whisky market

under the Walton imprint, with a new blend produced at one of Scotland’s largest distilleries. “It looks a bit like Johnnie Walker,” Pfister says. “The taste is also similar. The differentiator for us is the combination of high

ASIA DUTY FREE & TRAVEL RETAILING TFWA AP MAY 2012

quality with a very attractive price point.” With a new brand, and especially a new brand in a new category, Pfister says, you have to convince the customer first, and the low selling price is the way to go. “People who try it are surprised by the quality of the product,” Pfister says. “We’re working with low margins so we can sell at a good price and build sales. So far the strategy is working very well for us.” Echoing the experiences of so many others, Pfister finds that Asian customers are very interested in high-end items, but he notes that Ray’s price-active approach also reflects the reality that even here there are customers who can’t afford top-line purchases, and many operators in Asia are very much on the lookout for better pricing. “There are always customers who can’t afford the big-ticket items and go for the cheaper ones,” Pfister says. “It’s a good opportunity—not everywhere of course, but in certain markets.” Ray followed up on the success of its blended whisky last year when it introduced a new beer product, also under the Walton label. So far it’s been launched in Asia, the Middle East and Africa. The latter is a very beer-friendly market, and prospects are also good for South America, another region known to favor a good brew. Ray is an active participant in the trade show circuit, and Pfister was pleased with the quality of new contacts he made at the latest IAADFS event. The trade show agenda for Ray always involves showcasing the full portfolio, instead of selecting a few “stars” from the lineup. For the future, Ray remains focused on growing organically in Asia and its “newer” markets. Ray tends to work with smaller, locally oriented operators, where close cooperation and the intimate understanding of local markets pay big dividends. “They do a good job,” Pfister says. “If we work closely with them it works out well for us.”

Tobacco News Ana López, Marketing Director of Habanos, presents Romeo y Julieta Churchills Reserva 2008 at the close of the XIV Habanos Festival

The first Romeo y Julieta Reserva closes the XIV Habanos Festival The XIV Habanos Festival ended after bringing together innumerable international personalities and lovers of Habanos. The Gala Evening, dedicated to the Romeo y Julieta brand, closed the event. During the Gala Evening, two new Habanos were launched and sampled by attendees: the Romeo y Julieta Churchills Reserva 2008— the first reserve of the brand—and Romeo y Julieta Petit Churchills, a new vitola that will delight connoisseurs with its characteristic aromatic and balanced flavor, suitable for any occasion. Romeo y Julieta Churchills Reserva 2008 demands the most stringent selection criteria in creating the reserve, Habanos says. From the long, careful process of aging the best tobacco

from Vuelta Abajo* (D.O.P.) for at least 3 years to the tasting committee comprised of more than 50 experts who have supervised the selected blend to guarantee a unique flavor that is harmonious, balanced and aromatic. The Reserva of Romeo y Julieta is a unique product with an extremely limited production run of only 5,000 numbered cases, each containing 20 units. The new Romeo y Julieta Petit Churchills vitola completes the current Romeo y Julieta offering by adding a format that has been highly favored in recent years by Habanos enthusiasts. The cigar can be smoked in twenty minutes. Ahead of the dinner and the new Habanos tastings, the traditional Auction of Humidors

took place. This year it raised US$963,506. The six humidors auctioned feature artisan-crafted designs of the most prestigious Habanos brands (Cohiba, Montecristo, Romeo y Julieta, Partagás, Hoyo de Monterrey and H. Upmann). Over the past 12 years the auction has raised almost US$10 million, all of which has been donated to the Cuban Public Health System. Other events during the festival included the XI Habanosommelier International Contest, the 2011 Habano Awards and the international contest “Habanos in images.”

J. Cortes announces new releases for TFWA AP exhibition J.Cortès Cigars has announced the launch of two new products that will be launched at this year’s TFWA AP & GATE ONE2ONE exhibition: Neos Mini Menthol Filter and J. Cortès Wood Tip cigarillos. Neos Mini Menthol Filter cigarillos, packed in a bespoke tin, are made from a perfectly balanced tobacco blend and carry a premium Ecuadorian light shade wrapper. The fresh menthol flavor turns these filter cigarillos into a very accessible and pleasant smoke, says J. Cortes. J. Cortès has also created a new concept involving wooden tip cigarillos, available in three different tastes: natural, vanilla and ginger. These rich and tasteful cigarillos come

Attendees to this year’s show can learn with a quality Java Besuki wrapper and are packaged in an innovative and exclusive box more about these products, as well as the that holds eight smokes and features an rest of the J. Cortes portfolio, at Booth F10. easy-to-use magnetic closure system.

Attendees to this year’s show can learn more about new J. Cortès Wood Tip cigarillos (pictured) and Neos Mini Menthol Filter at Booth F10

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Tobacco News

Eve Binard

joins Oettinger Davidoff in global travel retail role The Oettinger Davidoff Group has announced that effective April 10, Eve Binard joined its Global Travel Retail Business Unit as Trade Marketing Manager – Global Travel Retail. She will report to Christian Vonthron, Head of Global Travel Retail. During her professional career— in cosmetics in Paris, in tobacco with BAT Global Travel Retail and in Zug and Asia with GlaxoSmithKline— Binard has concentrated on brand management, merchandising and packaging design. In her new role, she will assist Oettinger Davidoff Group in all marketing tasks, the company says. Eve Binard, The Oettinger Davidoff Group’s new Trade Marketing Manager – Global Travel Retail

New pack design for Mild Seven Japan Tobacco International (JTI) has announced that it has restyled its Mild Seven packaging. The company calls this the next evolutional stage for the world’s undisputed number one charcoal filtered cigarette brand. David Francis, General Manager Worldwide Duty Free Vice President at JTI, said: “Mild Seven has continuously set the pace in packaging design since its debut in Japan in 1977. JTI is pleased to bring the next generation pack to the travel retail market as we take confident new steps to upgrade the image of one of our core brands. This new, elegant exterior is a fitting tribute to the quality of this famously smooth cigarette and acknowledges the discerning sophistication of the adult smokers throughout the world who select Mild Seven as their premium cigarette brand of choice.” The new, asymmetric pack creates a more sophisticated image to better align the brand to the status and desires of Mild Seven adult smokers, and at the same time attract new interest from adult smokers in today’s increasingly competitive market. The familiar Blue Wind icon is maintained as a hallmark of Mild Seven’s uncompromising commitment to superior quality, and reinforces the inspiring and smooth taste that is synonymous with the brand. The depth and creativity of the design reflects Mild Seven’s active evolution and commitment to reaching the next level of excellence. An upward curve, gliding into the future, symbolizes success and expansion, and the new pack also has a special tex-

tured finish to strengthen even more its already premium feel. The new packs will be available in duty free outlets from June 2012 and will further enhance brand awareness of Mild Seven amongst adult smokers in the global travel retail market. The new, asymmetric pack creates a more sophisticated image to better align the brand to the status and desires of Mild Seven adult smokers, and at the same time attract new interest from adult smokers

Imperial Tobacco to reveal “Davidoff’s Greatest Idea” in Singapore Every great invention, every memorable song, every tear-jerking film, every stunning piece of artwork—starts with a great idea. At this year’s TFWA Asia Pacific & GATE ONE2ONE exhibition, Imperial Tobacco will be revealing its latest and greatest idea for premium brand Davidoff (stand J1). The aim, says Imperial Tobacco, is to target a wider audience for Davidoff using an inspirational and artistic approach. The company notes that all details will be revealed in Singapore where Imperial Tobacco will be presenting the new concept and celebrating with a special launch party. “This is the most important launch from Davidoff for many years and we are incredibly excited about it as we believe it will open up the brand to a completely new audience of smokers,” says Jennifer Thanscheidt. “The initial launch announcement will take place in Singapore and we will further push this inspirational concept with another major presentation at TFWA World Exhibition in October.”

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Imperial Tobacco calls “Davidoff’s Greatest Idea” the most important launch from the brand for many years

LIQUOR & TOBACCO Follador Prosecco Selection Company: World of Patria International Description: The Folladors are a family passionate about their wine-making heritage. They have quietly gone about marrying traditional vineyard cultivation with the latest production techniques to create wines that are highly respected among their peers. Follador’s Superior Line of wines includes 4 DOCGs in the Torri di Credazzo Cuvée, Cartizze, Brut and Extra-Dry categories Booth Number: A26

New & Notable Balmoral Dominican Selection Collection 12

Company: Royal Agio Cigars Description: The BDS Collection 12 offers a luxury assortment box containing Small Panatela, Panatela and Corona cigars. All blended of carefully selected tobaccos from the wide region of the Caribbean Booth Number: E9

Bottega Diamond

Company: Distilleria Bottega Description: Bottega Diamond is a sparkling wine produced with a selection of Pinot Noir grapes from Oltrepò Pavese. This wellstructured wine is characterized with dry, velvety and fruity notes, enriched by a slight aroma of bread crust and a pleasant aftertaste of fresh fruit and spices Booth Number: J9

Avondale wines, from Paarl, South Africa Company: Diverse Flavours Description: Avondale’s collection of seven hand- crafted wines, with the ethos, ‘Terra Est Vita’ meaning ‘Soil is Life’ encapsulates Avondale Estate as a dynamic living system where nothing compromises the growing of healthy, balanced grapes and the making of naturally delicious wines Booth Number: Q8

CONFECTIONERY Temptations mixed 537g pouch Company: Guylian Description: Convenient sharing bag with 50 pieces of artisanal, creamy filled and individually wrapped Belgian Chocolates in the unique Guylian Seahorse chocolate shape. Mixed flavors including original praline, milk truffle and dark praline Booth Number: K10

Souvenir Company: Godiva Chocolatier Description: An assortment of Godiva chocolate pieces in a Gold Rigid Box covered with a sleeve of different destinations. The souvenir box is a perfect way to remember your favorite destination. The box contains 15 pieces of Godiva chocolates and is also available with 16 different destination sleeves Booth Number: H2 www.dutyfreemagazine.ca ASIA DUTY FREE & TRAVEL RETAILING

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New & Notable CONFECTIONERY Butlers 200g Limited Edition Assortment Company: Butlers Chocolates Description: In celebration of Butlers 80th birthday, the company has created a limited edition assortment, containing a selection of alcohol-free chocolate truffles and pralines including Chocolate Trio, Chocolate Flake and 70% Truffle Booth Number: Q9

Chinese Year of the Dragon Limited Editions Company: Nestlé International Travel Retail Description: These two exclusive tins- in red, silver and gold for Nestlé Swiss and red and gold for KITKAT- are embossed with Dragon graphics and have a premium look and feel. Containing 350g (66) Swiss Napolitains and 450g (10) KITKAT 4 Finger bars Booth Number: G30

Aloha Mix Company: Hawaiian Host Description: Aloha Mix includes an assortment of individually wrapped macadamia favorites including Hawaiian Host Signature Chocolate Macadamias, hand-selected macadamias covered in Hawaiian Host’s secret milk chocolate recipe, and MacNut Crunch, a great combination of diced macadamias, crisp rice and milk chocolate Booth Number: P13

ACCESSORIES 2012 Collection Company: Buckley London Description: The new collection incorporates the best selling designs from previous seasons and includes stunning new designs along with contemporary looking packaging Booth Number: N9

Heartstrings pendant Company: Clogau Gold Description: Inspired by the musical instrument of Wales, adopted in the 17th century, the Heartstrings collection elegantly acknowledges a tradition begun in 1660, where an official harpist was appointed to the Royal court. The harp is said to symbolize the bridge of love connecting heaven and earth

Lip Smackers Company: Scorpio Distributors Description: Fun and popular lip balms in multipacks for the travel retail market. Each balm has its own distinctive scent and flavor – including Coca Cola, Sprite, Fanta and other household names Booth Number: K28

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Desigual Travel Wallet Company: Desigual Description: A functional design for an unforgettable travel experience. Desigual's spirit, color and fun come alive in this unique wallet that is perfectly designed to carry passports, tickets, travel cards, insurance, bills and coins

Tribe (Zebra) It Bag Company: Furla Description: This multi-functional bag not only changes design when reversed but shape as well – working as a N/S Shopper on side A and as an E/W Shopper on side B. Color contrasts inside and out with shiny nappa on one side and printed zebra on the other Booth Number: E19

WWW.LAPRAIRIE.COM ÂŠ 2012 LA PRAIRIE INC.

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Success in ITR comes in many colours.

As one of the leading confectionery players in ITR, you’ll find Mars’ brands at almost every travel location across the world. Focusing on the key purchase motivations our stunning product portfolio, containing the nr. 1 and nr. 2 brands M&M’s and Snickers, is backed by creative merchandising driving the purchase decision. Our combination of insight, category vision and global strength enables us to optimize the effectiveness of our unmatched portfolio of global favourites. Finally, we continue to develop exciting new concepts. For example, we now have all Wrigley products fully integrated into our ITR program, creating even more opportunities to drive your business.