Asia TFWA WE 2014

OCTOBER 2014 TFWA WE • VOL 18, NO 4

TFWA WE 2014 THE TRAVEL EXCLUSIVE ALL-IN-ONE MAKE-UP PALETTE WITH A FULL-SIZE MASCARA

Meet us at Riviera Village Stand RH5

klia2’s ELITE p. approach

14

PO-CR-6308-CoutureMmeAsia198x180.indd 1

Market insight: p.

Korea

20

ISG’s continental drift p.

30

New look at Changi p.

44

07/10/2014 18:17

MERCI, GRACIAS, TACK, GRAZIE, DANKE, TESEKKÜRLER, 谢谢, THANK YOU TO OUR AIRPORT AND BRAND PARTNERS

Your Global Travel Retail Partner Together with our partners, we deliver over 75,000 square metres of exciting shopping environments across the globe to millions of travellers every day.

To discover more, please visit www.thenuancegroup.com

Letter from the Editor

Matter of fact

F

acts, stats and analysis are the backbone of this business, and the duty free and travel retail industry in the region appears to have every reason to stand tall for the foreseeable future as our airports, ports and land borders prosper.

According to the Pacific Asia Travel Association’s (PATA) most recent visitor arrivals update, increasing numbers of intra-regional and international travelers are putting ASPAC destinations on their itineraries. The association forecasts an average growth rate of visitor arrivals between now and 2018 of 6.5%, topping more than 660 million in the next three years. Southeast Asia is set to capture the bulk of business with PATA forecasting an average annual growth rate over the forecasted period of 13.3%, followed by South Asia at 7.3%.

And the rapid expansion of the region’s middle classes, combined with ever-increasing interest in international travel, is also set to drive travel patterns and per capita spend, with Asian source markets predicted to collectively welcome 461 million visitors by 2018, up from 338.6 million in 2014 (an 8% per annum growth).

PATA has also noted Russian inbound tourist volume increases as ‘one to watch’, with arrivals expected to rise almost 20% per annum by 2018, touching close to 15 million people. It’s not just the analysts who are setting the scene for future growth; infrastructure enhancement programs, redefined tender opportunities and the evolution of new-look retail operations are also supporting the stats.

In Singapore, Changi’s phased multi-terminal revamp is changing the face of duty free retail with new duplex concept destinations and an expanded concession floor plate.

Malaysia’s capital has welcomed a new arrival and, almost six months on from its unveiling, klia2 is reportedly measuring up to its ambitious ‘airport within a mall’ positioning with its more than 35,000 square meters of retail space working to bridge the gap between delivering a functional experience and an emotive journey.

South Korea’s duty free industry has proven to the business world that it means business, topping a 2014 National Brand Competitiveness Index, beating leading automotive firms and credit card companies.

In the air, there is also strong emphasis on seizing opportunities with companies like Inflight Sales Group using its high profile Asia successes to support brand development in other markets, with the securing of two new French duty free tenders.

Ahead of this month’s meeting of minds in Cannes, we’ll leave it to DFS Managing Director Singapore, Davis Aitken, to sum up the general industry sentiment, as he says: “We believe travel retail is a growth engine of the retail industry today, and will be in the future.”

Kind regards, Hibah Noor Editor-in-Chief hibah@dutyfreemagazine.ca

Asia Duty Free & Travel Retailing (ISSN 1360-9548) is published by Global Marketing Company Ltd. 26 Pearl Street, Mississauga Ontario L5M 1X2 Canada.

It is distributed in the following countries, states, regions and territories on the Asian continent and in the Pacific Rim: Australia, Bangladesh, Bhutan, Brunei, Cambodia, China, Fiji, French Polynesia, Guam, Hawaii, Hong Kong, India, Indonesia, Japan, Macao, Malaysia, Maldives Islands, Myanmar, Nepal, New Caledonia, New Guinea, New Zealand, Philippines, Saipan, Samoa, Singapore, South Korea, Sri Lanka, Taiwan, Thailand, Tonga, Vanuatu and Vietnam.

The views expressed in this magazine do not necessarily reflect the views and opinions of the publisher or editor. October 2014, Vol 18, No.4. All rights reserved. Nothing may be reprinted in whole or in part without written permission from the publisher. ©2014 Asia Duty Free & Travel Retailing.

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

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

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

6

ASIA DUTY FREE & TRAVEL RETAILING OCTOBER 2014

20

OCTOBER 2014 • VOL 18, NO 4

Contents 14 Elite approach to retail

30 Continental drift

20 Market insight: Korea

34 Duty Free Philippines covers all the bases in

TOP STORY: klia2

Almost six months into its operation and klia2 is reporting retail occupancy of 80% with over 100 outlets operational outlets – and more on the way

KOREA

A rise in the duty free allowance and positive half-year industry performance is boosting the world’s biggest duty free and travel retail market

28 Eraman invites travelers to revel in retail heaven ERAMAN

Malaysia’s next generation hub, klia2 is a shoppers’ paradise where travel and lifestyle interact seamlessly under one roof

INFLIGHT SALES GROUP

With a 23-strong airline portfolio and east to west focus, Inflight Sales Group (ISG) is wrapping up an action-packed year with a flurry of activity in Asia and Europe

DUTY FREE PHILIPPINES

bid to boost revenues

Promotional activations, csr initiatives and social media presence key to driving sales as new government taxation hits hard and retailers report restrained consumer activity

40 Cross-continental changes for DFS DFS GROUP

Duty free operations are being transformed from North America to Asia with new concepts and regional localization fundamental to satisfying consumer demand for a differentiated retail experience

44 World firsts upping retail appeal of new-look Changi CHANGI AIRPORT GROUP

30

It’s all change in Singapore with Changi Airport group’s multi-terminal revamp heralding a new era of retail across its existing and upcoming duty free locations

HOW DO YOU LIKE YOUR COFFEE

YOU CAN NEVER BE TOO GENEROUS

56

58

46 Head for business ANGKASA PURA AIRPORTS

The commercialization of Angkasa Pura Airports’ operations may be a work in progress but the Indonesian state-owned company is already building on the early successes of its Bali business model

50 Legendary labels INTERPARFUMS

From Lanvin to Lagerfeld and Balmain to Montblanc, Interparfums’ growing brand portfolio encompasses modern day icons and timeless scents

52 L’Oréal puts male travelers in line of sight L’ORÉAL PARIS

Targeted travel retail exclusive sets and strategic products are key to convincing male passengers to purchase while upsizing is adding value to the brand’s make-up palette bestsellers

52

54 Delsey’s design revolution DELSEY

Market differentiation is the buzzword for the leading French luggage brand as it pursues a fashion forward approach to product development

56 A library of achievements FRÉDÉRIQUE CONSTANT

Frédérique Constant’s three-pronged strategy and new library concept shine a light on affordable luxury

58 Heads up for Unilever in ASPAC UNILEVER (TIGI)

Professional hair care is no longer a solely salonbased experience with TONI&GUY hair meet wardobe products joining top-end cosmetic brands on duty free beauty shelves

62 Making a play for Asia SCHAEFER

A relative newcomer to the travel retail market, toys and gadgets retailer Schaefer is banking on its tailormade approach to win new business in the region

63 Be the best; then get better TRAVALO

After four extremely successful years on the market, Travalo has a new development that shoots it into the stratosphere, offering choice for consumers and big opportunities for the company

A NEW DAY IS DAWNING

MULTIMEDIA SALES REVENUE CHANNELS

OPTIMISE TRAVEL RETAIL OPPORTUNITIES

CREW TRAINING & MANAGEMENT REPORTING

LEADERS OF PRE-ORDER & ONBOARD SYSTEMS

CONTACT JOE HARVEY T:+44 1293 772 711 M:+44 7557 922 609 JOE.HARVEY@TOURVESTRETAIL.COM WWW.TOURVESTINFLIGHTRETAIL.COM

64

68 On the growth path KRAFT FOODS GROUP, INC.

Kraft Foods Group Inc. takes Americas travel retail by storm and lays plans for future growth in the Gulf and Europe

74 A new dawn COGNAC REPORT

Cognac sales fell in Asia in 2013, but with some creativity, new launches and promotions, some companies are expecting sales to rebound in the coming year

80 A world of choice WHISKY REPORT

Asia Duty Free speaks with five spirits companies, each with different offerings but all focused squarely on the goal of bringing travelers something new when it comes to whisky

88 Beluga eyes Asia hubs SYNERGY/BELUGA

64 New concept store locations in the bag for Furla FURLA

Significant travel retail sector growth since 2010 with 175 locations in 44 countries is underpinned by plans for further expansion across asia pacific from China to Malaysia

66 Pralines and more for Ferrero in Asia

The premium russian vodka brand is making a concerted push into asia as it looks to replicate domestic sales success in travel retail

90 A question of heritage DIAGEO GTME

Two of Diageo’s whisky brands are steeped in history but truly part of the modern world

FERRERO

A novel approach in a crowded marketplace is Ferrero’s raison d’être when it comes to travel retail market growth

90

92 When art meets cigars OETTINGER DAVIDOFF

CEO Hans-Kristian Hoejsgaard feels Davidoff has found its rightful place as a strong member of the global arts community

R d’ uba

ur

20 Ho n 13 /1 nn 4 e

Top Story: Klia2

ELITE APPROACH TO RETAIL Almost six months into its operation and klia2 is reporting retail occupancy of 80% with over 100 outlets operational outlets – and more on the way by CLAIRE MALCOLM

My Lifestyle Gallery at klia2

T

he largest purpose-built terminal in the world at 257,845 square meters, Malaysia’s new klia2 low-cost carrier hub is putting its retail proposition first with its unique ‘airport in a mall’ approach to consumer engagement.

A total of 35,200 square meters of total floor space has been dedicated to shopping and entertainment and the low-cost carrier terminal’s ‘mall within’ positioning is central to Malaysia Airports’ commercial vision of growing non-aeronautical based revenue under its five-year ‘Runway To Success’ business strategic plan.

According to Faizah Khairuddin, Senior General Manager, Commercial Services, Malaysia Airports Holdings Berhad, more than 100 outlets are currently operational, giving it a retail occupancy rate of 80%, with several key retailers scheduled to open between now and the end of the year.

“These are still early days and, so far, we are happy with what we are seeing. There is so much on offer for the adventurous and curious at heart to explore,” she says.

14

ASIA DUTY FREE & TRAVEL RETAILING OCTOBER 2014

klia2 has 14% of its total gross floor area dedicated to commercial use and the retail mix is an even blend of international and local blends, as Khairuddin explains: “I was very clear that I wanted a good mix of international and local brands right from the start.

As a Malaysian airport, it is important that our retail offerings at klia2 are characterized by a distinctive local flavor.

“However, we are also an international airport, which makes it equally imperative for us to cultivate strong and recognizable international brands.”

Retailers are also required to comply with the company’s ELITE retail philosophy, which Faizah points out is the “essence” of klia2.

“The airport-in-a-mall concept came from market research we conducted when conceptualizing the terminal. The research revealed that for every passenger at an airport, there are non-passengers as well, and we need to reach out to the non-passenger airportvisiting segment as well,” she explains.

The ELITE philosophy is based around five distinctive characteristics that epitomize the retail offering at klia2: ever changing,

liberating, innovative, thrilling and experiential (ELITE), which Malaysia Airports’ deems essential to the delivery of a successful operation.

Faizah Khairuddin, Senior General Manager, Commercial Services, Malaysia Airports Holdings Berhad

PLEASE SAVOUR RESPONSIBLY

FOLLOw US ON thEMAcALL AN ANd thE _ MAcALL AN

Top Story: Klia2 It is also being positioned to reflect the traveling needs and desires of an evolving genre of globetrotting youthful traveler as a new-generation, technology-driven and shopper-oriented lifestyle hub.

“The primary users of klia2 are Gen-Ys who are connected, savvy travelers always on the lookout for stimulating new experiences.

The ELITE brand pillars will ensure that retailers keep up with the overall positioning and remain relevant and engaging to this generation of travelers,” comments Khairuddin.

“The percentage of commercial space over the gross floor area at klia2 is also one of the highest in the world and, from the outset, we decided that klia2 would be our ‘change platform’, hence the passenger fronting and centralized design of the retail spaces,” she adds.

Passengers and non-travelers accessing the main terminal building enter into an authentically Malaysian-meets-undeniablyinternational environment with Bibik Heritage, a Peranakan-themed hybrid concept store featuring Malaysia’ Baba-Nyonya food and fashion heritage on one side, and global coffee brand Starbucks, on the other.

According to Khairuddin, klia2 has been successful in attracting downtown retailers as well as new and exclusive players to the

airport with the location affording brands an opportunity to be innovative and market upscale and trend-setting styles in line with their desired target groups.

“We have a very interesting and balanced mix of local and international retailers including a few that are unique to klia2 and

The sparkling new Royal Selangor gifts and souvenir store at klia2

16

ASIA DUTY FREE & TRAVEL RETAILING OCTOBER 2014

that have chosen to use the new airport as a launch base,” she notes.

This will eventually translate into a diverse commercial mix of up to 225 outlets comprising bars and island cafés, duplex storefronts, duty free walkthroughs and specialty boutiques. Working on the idea that choice is Part of the extensive F&B offering at klia2 is the Elle Café

Top Story: Klia2 key to driving consumer spend, the wealth of strategically sited outlets are sited in high-visibility and high-traffic areas and the flexible model breaks down into 118 retail-dedicated outlets, 81 F&B venues and 26 service outlets.

This dynamic commercial offer includes Spanish high-street fashion brand Desigual; BE Duty Free by Heinemann which opened its maiden duty free store in Malaysia; Royal Selangor Pewter with its first off-site School of Hard Knocks that allows travelers to get hands-on experience of the world of pewter-making; Flying Emporium’s 3,000 square meters of walkthrough space with its concept treasure trove of travel accessories, fragrances, cosmetics and fashion; My Lifestyle Gallery featuring the first ever Elle Café in travel retail from LS travel retail, and Malaysian Recipe Café, a homegrown brand that offers authentic local food.

“Our landside offerings target both visitors to the airport and passengers while the airside facilities are obviously restricted to

those passengers who are traveling. Airside is home to our duty free outlets for tobacco, liquor, perfume, cosmetics and chocolates, and we also have a centralized shopping area located within the Satellite Building,” says Khairuddin.

The challenge for Malaysia Airports, moving forward, is to ensure that its new business model is sustainable and able to deliver on the company’s vision of enhancing its nonaeronautical revenue as well as delivering above and beyond expectations.

“The airport-in-a-mall concept was not without its detractors. It was a huge paradigm shift and, as with all changes, resistance is there; but I am confident that people will come round given time,” remarks Khairuddin.

“And the journey is far from over. Going forward we have to continue to work closely with our retailers to keep the brand promise and ensure that the concept is fresh and evolving. This is crucial in maintaining our edge and promise,” she adds.

Khairuddin reveals that an audit of the klia2 brand concept will be carried out down the road to ensure that retailers adhere to, and deliver on, the brand pillars as per their tender submissions.

“Once everything is stabilized and travelers are familiar with the terminal, we will have a more accurate handle on information across the board, such as passenger spend. We are optimistic given the positive outlook for the low-cost carriers industry,” she comments.

Airlines already operating out of klia2 include AirAsia, AirAsia X, Zest Airway, Cebu Pacific Air, Malindo Air, Mandala Air and Tiger Airways.

Built to accommodate up to 45 million passengers per year once full utilization is realized, Malaysia Airports is optimistic that there will be a substantial revenue increase of between US$31.5 million to US$47.15 million from klia2’s commercial space compared to the old low-cost terminal. c

Bibik Heritage offers an authentic flavor of Malaysia tradition at the new terminal

The popular Warung outlet at the new klia2

18

ASIA DUTY FREE & TRAVEL RETAILING OCTOBER 2014

P&C gets a makeover at the Flying Emporium

Korea Roundup

Market insight: KOREA A rise in the duty free allowance and positive half-year industry performance is boosting the world’s biggest duty free and travel retail market by CLAIRE MALCOLM

F

ollowing a tough 2013, which saw a weak Yen and drop in number of Japanese visitors hit South Korea’s duty free industry hard, 2014 to date has been a year of active recovery spurred by the Chinese traveler phenomenon and improved market sentiment.

South Korea’s duty free industry also recently topped a major 2014 businesses awareness index where 206 brands from automotive companies to credit cards were ranked by consumer recognition.

Conducted by the state-backed Korea Productivity Center (KPC), Lotte Duty Free and the Samsung Group’s Shilla Duty Free Shop were clear winners in the National Brand Competitiveness Index (NBCI), despite this being their first year of inclusion in the survey.

According to KPC, Korea’s duty free shop market is the world’s biggest, with Lotte and Shilla ranking in the top 10 globally. It is also world leader in terms of revenue, with Lotte and Shilla sitting in fourth and sixth spot respectively.

With the domestic duty free market Newly opened Lotte Duty Free Store in Guam International Airport

20

ASIA DUTY FREE & TRAVEL RETAILING OCTOBER 2014

touching KRW 6.833 trillion (US$6.7 billion) at the end of 2013, up 8% from the previous year, the Ministry of Strategy & Finance’s decision to raise the duty free allowance for travelers from US$400 to US$600, will swell industry coffers further.

The country’s first duty free allowance increase in 26 years, the government is also discussing tax reduction incentives of up to 30% (or up to US$147) for those travelers voluntarily declaring items on arrival.

For operators such as Shilla Duty Free, whose parent company, Hotel Shilla, recently reported ‘outstanding’ Q2 2014 financial performance, outperforming market consensus with its airports shops resume growth with sales up by 6.6%, duty free shop revenue hit record highs. Its non-consolidated duty free revenue increasing by 25.8% year-onyear and 21.8% quarter-on-quarter, aided by the continuing flow in Chinese inbound travellers.

Operator perspective

Following the recent big reveal of its revamped downtown Seoul store, business

for Lotte Duty Free is on an upward trend, as Ayla Yu from its Global Business Planning Team, reports: “Lotte Duty Free saw gross sales of over US$2 billion with a year-on-year increase of 24.8% as at July 2014.”

These impressive numbers are supported by traffic volume at its various duty free stores, which Yu says rose by 8.2% in the first seven months of this year.

Its Seoul store was redeveloped as part of efforts to better cater to its rapidly growLotte World Tower Skyscrapper

Korea Roundup

Snapshots from Guam International Airport

22

ASIA DUTY FREE & TRAVEL RETAILING OCTOBER 2014

ing customer base with the renovated 10,800-square meter space growing by 1,500 additional square meters against the original footprint.

Designed to stock a wider variety of domestic brands – in response to consumer demand - and provide more shopping space, the store is also home to the biggest cosmetics concession in the country, stocking 186 brands of which Korean companies produce 30%.

And this is translating into positive sales numbers. “The fashion category leads category sales with international luxury brands a steady top seller, but in the P&C category, Korean cosmetic brands have been growing in popularity in recent years,” says Yu. Lotte’s third bestselling category is jewelry and watches, with Yu reporting that luxury watch brands account for the majority of category sales. Making a beeline for its counters are predominantly Asia Pacific nationalities with Chinese, Korean and Japanese nationals the top ranking customers.

The power of the Chinese traveler purse, and growth in inbound traffic, has been essential to the pick-up in the duty free sector, especially for downtown store revenues affected by the decline last year in Japanese tourists.

According to Lotte, the top five bestselling brands among Chinese shoppers are all Korean, and it has also seen rising demand for other local products such as cosmetics, rice cookers and ginseng products.

Lotte Duty Free has an active research strategy in place, which Yu says is enabling the company to fine-tune its Korea-based offering. “We have already accumulated a lot of know-how about our Chinese, Korean and Japanese customers in particular. We recently expanded our target market to cover all regions of the world, which we are developing by using not only our skills and know-how, but by considering the specific regional differences with a localization strategy.”

Trends in traveler purchasing habits are also being regularly analyzed by the company and helping shape its marketing strategy, as she explains: “We analyze customer behavior and fashion trends on a constant basis. With this information, we are able to adjust our merchandise product range, promotional plans and the overall strategy that we need to develop in order to optimize customer satisfaction.”

Lotte’s business year has also been marked by a number of regional launches as part of its expansion program, with the opening of

nd shine ptuous body a lu vo r fo r e is D Volum Daisy wears 3

HAIRMEETWARDROBE.COM

Korea Roundup its Guam operation and the September debut of a new store at Japan’s Kansai International Airport.

Its headline-making Lotte World Tower development, which is pegged for phased completion by 2016, and which has been dogged by regulatory delays, is its most ambitious home turf project to date.

The group aims to partially open the 555-meter tall, 123-floor mixed-use tower, which will offer an amusement park, hotel and department store, this year.

“Lotte Duty Free is working hard to constantly pick up on and reflect market trends.

With the grand opening of the Lotte World Tower, this will be the number one landmark in the Asia Pacific region and a multi-cultural complex,” comments Yu.

Inside Incheon

With over 60 concession operators, more than 400 shops and outlets, in excess of 55,000 square meters of commercial space, Incheon Airport is the gateway for change for the country’s duty free industry.

“We have a changing customer profile.

Japanese visitors were historically our strongest market but this has changed to Chinese visitors,” says Sang Ahn, Director, Concession Team 1, Incheon Airport.

Shifting purchasing channels, with increased spend being directed via online shopping opportunities and recent government regulatory changes for small and medium-sized business operations (SMEs) are also impacting the airport and its operation.

“Incheon Airport is the main gateway to Korea. Since we opened in 2001 we have witnessed passenger growth of 7-8% and with our good connections to China and Japan, this has been a foundation for our growth,” he says.

According to Ahn, Incheon Airport is responsible for 30% of Korea’s duty free market, with sales exceeding passenger growth year-on-year (apart from 2013), but he acknowledges that with the growth of the city, the downtown duty free offering has also grown significantly.

The 2013 drop in Japanese travelers was a major blow and this was exacerbated by the impact of legislation introduced last year to curb the prevalence of conglomerates in the market, and open up opportunities to SMEs. Duty free sales growth slowed last year at Incheon, rising by just 5% to reach almost US$1.8 billion.

“Under this new legislation we have to allow SMEs a certain amount of space when Lotte Duty Free’s operations at Incheon International Airport

24

ASIA DUTY FREE & TRAVEL RETAILING OCTOBER 2014

Korea Roundup

Sang Ahn, Director, Concession Team1, Incheon Airport

we issue our tenders,” says Ahn. Passenger spend revolves around three nationalities with Korean (50%), Chinese (29%) and Japanese (7%) consumers accounting for the bulk of sales.

With more than 500 brands on offer including the first-ever Louis Vuitton airport shop, Incheon’s research into consumer behavior is enabling the team to develop its

retail positioning for the new terminal project.

P&C is traditionally the top Korean purchase. Says Ahn: “Koreans exhibit planned, purposeful tendencies by either making a ‘things- to-shop-for’ list before they travel or by searching for money-saving tips before coming to the airport.

“The Chinese in general, go for jewelry, watches and leather items and their buying decisions are highly influenced by their peers. They also prefer Korean products like ginseng, BB cream and electric rice cookers, for example.”

In order to maximize the average sales per passenger, targeted marketing and various promotions are executed for each category, as Ahn explains: “ We have integrated promotional programs with all our partners at the airport.

“Our commercial activity accounts for 63-64% of total airport revenues with duty free alone accounting for 38%.”

Sales per outbound passenger has risen from US$41 in 2002 to US$89 in 2013 and Ahn says category spend is led by P&C at 36% followed but leather and fashion with 21%, jewellery at 16% and accessories with 14%.

With the airport commercial tenders announcement imminent, and the big three contracts of incumbents Lotte Duty Free, Shilla Duty Free and Korean Tourism Organization set to expire end February 2015, Ahn is

eager to move forward, and is also expecting bids from international players.

The new contracts will also only be likely to run for five years, as opposed to the usual seven, due to the new mandate issued by Korea Customs.

Commercial growth is limited under the airport’s current design and peak travel times are creating store congestion, which Ahn reveals is negatively impacting sales numbers.

“Our capacity from next year will be 44 million, and with construction of our new terminal scheduled for completion by 2017, ahead of Korea’s 2018 hosting of the Winter Olympics, we have to get our retail right,” he says.

“Currently we handle 18 million transactions per year in duty free and 15 million for F&B, so a good percentage of this will be redirected to the new terminal in 2018, as well as predicted growth in traffic,” he adds.

The design for Terminal 2 is based around a centralised shopping area where Ahn envisions passengers spending the 50-or-so minutes they allocate for airside entertainment split between almost 50-50 between the 27,000 square meters of retail and F&B space.

Passenger flow will be maximized by the placement of a luxury fashion boutique zone in the center of the shopping zone with P&C, L&T and fashion queued on either side for efficient dwell time usage. c Incheon International Airport

26

ASIA DUTY FREE & TRAVEL RETAILING OCTOBER 2014

NEW lusive

travel retail

exc

When words end, my

begins.

The world’s first personalised chocolate by Frey.

Visit us at Cannes Blue Village, H27

Eraman

Chocolatte Bar at klia2

G

reen design, new-to-market brands and gourmet dining top the attractions at klia2 as the new terminal enters its sixth month of operation.

Responsible for 23 of the total 225 retail lots, Eraman has put together a retail and entertainment experience that the company says is ‘second to none’.

A LEED (Leadership in Energy and Environmental Design) accredited building with a strong environmental mandate, the terminal is being positioned as a destination in its own right where lifestyle and travel seamlessly interact.

Featuring more than 32,000 square metres of retail space, Eraman is touting klia2 as more than a place to simply buy then fly by developing a collection of venues that it says ‘stand as a haven for travelers to shop, dine and indulge in a variety of amusement’.

For a snapshot of the passenger journey, the Emporium at International Arrivals includes Eraman’s flagship in-house fashion brand, Flying Nomad, carrying everything

Eraman invites travelers to revel in retail heaven Malaysia’s next generation hub, klia2 is a shoppers’ paradise where travel and lifestyle interact seamlessly under one roof by CLAIRE MALCOLM from apparel, footwear and bags to costume jewelery and pashminas, belts and wallets.

This is complemented by the SUNGLASSES retail concept, which offers a huge selection of the latest on-trend eyewear from internationally renowned brands such as Armani, Dior and Gucci, as well as other popular names.

A new name joining the Eraman family, and located at Gateway@klia2, From Time to Time is a lifestyle watch outlet focused on the young and urban demographic with a range of fashion forward brands including Marc Jacobs, Escada, Guess, Anne Klein, Cerruti, Aigner and Kenneth Cole.

Furla also has its own dedicated space and is targeting both business and leisure travelers through the terminal with its finely crafted leatherwear luggage designed with fashion in mind but guaranteed to deliver on Furla’s history of authentic Italian artistry.

Denmark’s bestselling jewelery brand, Pandora, rounds out the accessories portfolio with passengers looking for customizable gifting options or something to add to their

Eraman’s flagship store, Flying Nomad reaffirms the commitment for delivering a world class shopping experience

28

ASIA DUTY FREE & TRAVEL RETAILING OCTOBER 2014

At Bar Metropole, travelers can indulge in a selection of timeless beverages

own personal collection making a beeline for the trinkets on offer.

A food and beverage first for Eraman, and for Malaysia, the new Chocolatte Bar has a premium menu of high-quality chocolate-based drinks and treats made using only the finest raw materials and ingredients.

According to Eraman’s marketing team, the outlet has a modern contemporary look with ‘an upscale, trendsetting style [that is] both comfortable and welcoming, to give passengers a wholly personalized experience in a world-class retail environment’.

Mirroring an airport runway and modeled after the hanger roof of an airport terminal, the new Bar Metropole is a watering holemeets-sanctuary. The in-house brand serves up a selection of alcoholic and non-alcoholic beverages including fine wines, international cocktails and mocktails, imported beers and lagers and a superb collection of some of the finest scotches available.

And Malaysia’s own home grown fast food chain, Marrybrown, adds local flavor with a halal menu featuring its renowned crispy fried chicken, specialty wraps, fresh seafood and rice delicacies.

Also part of Eraman’s culinary locations at klia2, hearty freshly cooked Italian food is the theme at Pastamania where pasta and pizza is prepared the traditional way using the freshest ingredients.

Coffee lovers are catered for courtesy of Gloria Jean’s Coffees. A brand that can be found around the world, travelers to klia2 can pick up their favorite beverage or snack with whole bean coffees, signature cold drinks, speciality teas, cakes, pastries, light meals, cookies and biscotti served by trained baristas. c

For hot or cold beverages of the coffee kind, Gloria Jean’s Coffees has travelers covered on all bases

www.dutyfreemagazine.ca ASIA DUTY FREE & TRAVEL RETAILING

29

Inflight Sales Group Jill Stuart Mix Blush Compact, US$45, Cathay Pacific

CONTINENTAL

DRIFT With a 23-strong airline portfolio and East to West focus, Inflight Sales Group (ISG) is wrapping up an actionpacked year with a flurry of activity in Asia and Europe by CLAIRE MALCOLM

I

nflight Sales Group (ISG) renewed its concession with Philippine Airlines last year, came on board with Tiger and Citylink, won the Malaysian Airlines tender for Kuala Lumpur and, most recently, secured two separate back-to-back French duty free tenders on board Corsair International and Aigle Azur.

“We are experiencing positive growth in 2014 versus 2013 so far, and we know that we are outperforming local market growth in our regions as well. We see strong growth here in Hong Kong, and are really pleased with our launch customer in Singapore - Tiger Airways - where we have strong double digit increases versus their sales in the same period in 2013,” says Tony Detter, Group Managing Director, ISG. “We are cautiously optimistic for the second half of 2014, but of course quite concerned with potential political and economic issues in Europe and the Middle East. Our business is quite sensitive to external factors so we must always keep those in mind,” he adds.

Top performing categories are skincare, watches and electronics. According to Detter, current category brand leaders are SK-II, La Mer, Estée Lauder, Talika and La Prairie in skincare; Luminox, Arbutus, Swiss Military, Aigner and Sekonda for watches; and in electronics, Fitbit, Pebble, Beats, Philips and Lifetrons.

He also reports that new launches such as the Elizabeth Arden Prevage series, Ruggear mobile phones and the Photofast i-Flashdrive are performing well.

Says Detter: “Generally speaking our top selling routes remain fairly consistent here in Asia, with flights to and from North and East Asia continuing to have the strongest sales, and Southeast Asia continuing to improve its strong second place finish.”

But with its recent French carrier wins, the company’s develop-

30

ASIA DUTY FREE & TRAVEL RETAILING OCTOBER 2014

Prevage Advanced Lash and Brow Enhancing Set, US$86, travel retail exclusive, Cathay Pacific

Inflight Sales Group ment strategy is now being refocused on two separate geographical regions, as Detter explains: “[We have] Southeast Asia where, in addition to Tiger in Singapore, we will be working with four other key airlines, and Europe, where we will base our management of our Russian business on board Aeroflot along with our two new French carriers, Corsair and Aigle Azur.”

Product portfolio development is also in expansion mode. “For our assortment strategy we are continuing to expand technology products, with wearable technology and beauty the key drivers, as it is clear that we are recruiting new customers with these products, securing as many exclusives as possible, and increasing the refresh rate with new listings.” This is further buoyed by an increase in PWP and GWP offers.

The beauty category is arguably the company’s highest flyer and Detter reports that a number of new products haven been pick up by clients in the second and third quarters.

“Some very successful key new brands/items just launched in Q2/Q3 are in beauty, including the Jill Stuart Mix Blush Compact, No No Hair Removal Travel Set travel retail exclusive and the Paul & Joe Moisturizing Primer, another exclusive,” he says.

Other star products include the travel retail exclusive Prevage Anti-Aging Eye Serum and Advanced Lash and Brow Enhancing Set, and in electronics, the Pebble Smartwatch, Fitbit Flex, Candy Tech Mobile Phone Watch and SK Telecom Smart Beam Projector.

Wit h t he first program launch for Tiger, Malaysia and Air Asia swinging into action this quarter, followed by Corsair in Q4 and Aigle Azur in Q1 2015, the company has a “pretty full plate” but Detter also has his eye on the next round of tenders.

Tony Detter, Group Managing Director, Inflight Sales Group “ We a r e continuing with tenders which have start dates in Q2 or beyond in 2015, and in Cannes we will be focused on Q2 and Q3 2015 assortment planning, where we will also be working with many of our new customers for the first time.” c

Pebble Smartwatch, US$166, Cathay Pacific

No No Hair Removal Travel Set, US$290, travel retail exclusive, Cathay Pacific

32

ASIA DUTY FREE & TRAVEL RETAILING OCTOBER 2014

Duty Free Philippines DFP’s liquor concession

Duty Free Philippines covers all the bases in bid to boost revenues Promotional activations, CSR initiatives and social media presence key to driving sales as new government taxation hits hard and retailers report restrained consumer activity by CLAIRE MALCOLM

T

he Philippines is back on the global tourism hotlist, with the country’s Department of Tourism reporting a yearon-year increase in visitor numbers of 2.47%, with two million international arrivals recorded in the first five months of 2014.

President Benigno Aquino’s administration has also implemented a number of civil aviation reforms, with the liberalization of airspace through the Pocket Open Skies Policy and the rationalization of taxes on foreign carriers; as well as plans to upgrade vital transportation infrastructure hubs.

However, while passenger numbers are on the rise, duty free is feeling the impact of the introduction of a Sin Tax on liquor and cigarettes, which has seen Duty Free Philippines (DFP) register a 4% drop in the first semester of this year although total sales hit a healthy US$110 million.

State-owned, DFP is an attached agency of the country’s Department of Tourism and

34

ASIA DUTY FREE & TRAVEL RETAILING OCTOBER 2014

an essential component in the department’s mandate to develop the country’s tourism infrastructure, programs and projects.

“We are hopeful that revenues will mark a turnaround by year-end. The decline may be attributed to the effects of the Sin Taxes as the bill does not exempt DFP, hence prices of liquor and tobacco products have become uncompetitive thereby gravely affecting the viability of the business,” reports Lorenzo Enchong Formoso, Chief Operating Officer, DFP, which manages 17 locations across the country.

“Retailers are also still bearing the brunt of the fallout from last year’s earthquake and super typhoon. These events led to a more cautious consumer with a significant shift in shopping behavior and spending habits,” he adds.

Fiesta flagship

At Fiestamall, DFP’s flagship store in Manila, a 6% drop in customer footfall in the first semester reinforces the sector trend, but

despite the drop in sales, Formoso is keen to highlight DFP’s proactive recovery strategy with a calendar of marketing initiatives and promotions in place aimed at enticing arriving travelers to shop and spend.

Confectionery, liquor and fashion continue to dominate category sales with Hersheys, Toblerone, Cadbury, Mars & Nestlé leading confectionary demand; liquor sales are dominated by Johnnie Walker, Chivas Regal, Alfonso, Fundador and Jack Daniels; and Lacoste, Ferragamo, Longchamp, Pandora and Givenchy are the label leaders in fashion.

“If we look at nationality spend, downtown at Fiestamall the breakdown has remained consistent for 2013 and into 2014.

First on the list are Filipinos, followed by Americans, Canadians, Chinese and Australians,” notes Formoso.

Purchasing habits and buyer behavior trends undergo regular scrutiny by the DFP team and, according to Formoso, a recent study conducted by the Philippine Survey

Duty Free Philippines The only Coach boutique in the Philippines

Chloe boutique

Research Center showed that customer buying behavior at DFP is influenced by three main factors: product uniqueness, comfort and frontline service.

“Through the years at Fiestamall we have been promoting and selling unique range of product offerings to a distinct market, namely the overseas Filipino workers and returning Filipino residents. The specialized assortment of products includes supermarket goods, appliances/electronics, houseware/kitchenware and sports equipment; and we have even created specific marketing programs to better serve this market,” says Formoso.

“Catering to its global traveling audience both downtown and at the airport, DFP also continues to expand its product offerings to accommodate more high-end, global brands,” he adds.

The company is also working to improve in-store facilities and enhance customer service with a focus on the rollout of exciting promotions with high-value prizes from a wide range of brands; something that Formoso says delivers a “truly satisfying shopping experience”.

36

ASIA DUTY FREE & TRAVEL RETAILING OCTOBER 2014

Duty Free Philippines

Promotions go social

For the first semester of 2014, Formoso reports that the average purchase per customer at the Fiestamall alone remained stable at US$354, against US$342 in 2013.

“To help arrest the continuing plunge in sales and reduce customer attrition, several aggressive marketing and advertising campaigns were implemented at Fiestamall, including our highly successful Peso Power promotion, where an exchange rate lower than the prevailing rate was applied,” he explains.

Promotional activity also extended across various fashion and liquor brands, while the major chocolate brands held instore games and raffles with exciting prizes such as cars, motorcycles, cellphones and other gadgets up for grabs.

In addition to classic promotional activity and savings-led campaigns, DFP has also worked with its roster of brand partners on gift with purchase promotions and boosted communication through social media channels to increase market awareness.

“We are quite active in social media with Facebook, Twitter, YouTube and Ins-

tagram presence, and we have also recently launched our newly redesigned website at www.dfp.com.ph,” says Formoso.

“This has paid off and consequently we saw a 5% increase in April and 4% in May in terms of month-on-month sales, which proved the efficacy of our summer sales promotional campaigns,” he confirms.

DFP is also upping its game to stay on a par with other international travel retailers by ensuring that merchandise quality and value are constantly improved, and its brand line-up expanded further through the introduction of new and popular global names, particularly in the fashion category.

New listings include Chloe leather goods, the only Coach boutique in the Philippines, Victoria’s Secret, Desigual, Mandarina Duck, fragrances including Roberto Cavalli, Prada, Narciso and Loewe, and Kiehls.

DFP gives back

Corporate Social Responsibility is another fundamental element of DFP’s marketing strategy with its highly successful humanitarian fundraising program – DFP

C.A.R.E.S., which was launched in the wake of the devastation caused by Typhoon Haiyan in November 2013, now entering a new phase.

“In the aftermath of the typhoon, DFP C.A.R.E.S.’ projects were geared towards relief efforts. Now we have shifted our focus to long-term recovery and rehabilitation as we embark on a new mission called ‘Rebuilding Lives One Block at a Time’,” says Formoso.

With thousands of displaced Filipinos still in need of shelter, DFP C.A.R.E.S.’ goal is to help resuscitate communities in Yolanda-devastated areas by raising funds to build a Travel Retail Village for the families who survived and are now trying to rebuild their lives.

“We will be promoting this through a nationwide campaign in all our stores and via social media channels,” Formoso confirms.

“We hope to achieve this by requesting a minimum donation of US$5, which will provide about 10 hollow blocks with US$5,000 needed to construct a single home,” he adds. 

Fiestamall, DFP’s flagship Manila location

38

ASIA DUTY FREE & TRAVEL RETAILING OCTOBER 2014

DFS

CROSSCONTINENTAL CHANGES FOR DFS

Duty free operations are being transformed from North America to Asia with new concepts and regional localization fundamental to satisfying consumer demand for a differentiated retail experience by CLAIRE MALCOLM

San Francisco is the first location for the company’s new Sweetravels concept and a test bed for possible future expansion

I

t’s a wrap for DFS Group this Fall with the conclusion of the 18-month transformation of its North American airport operations, but the Hong Kongheadquartered group is switching its continental focus with Changi Airport the next high profile destination to undergo a travel retail overhaul.

A stalwart at San Francisco airport (SFO) since the 1970s, the company has come virtually full circle with its latest incarnation, as Polly Nelson, Managing Director, North America, DFS, explains: “Since we first arrived in SFO in the 1970s, we have constantly evolved our business to anticipate the changing needs of travelers.

“Many of our customers are from emerging markets – and over the past years, we have seen more and more people traveling internationally as they become more adventurous and are looking to discover new destinations.”

San Francisco served as DFS’ headquarters up until 2004 and the company has welldocumented historical ties to the US, but the

40

ASIA DUTY FREE & TRAVEL RETAILING OCTOBER 2014

decision to relocate to Asia was to leverage on the rising trend of travel retail in Asia’s emerging markets, says Nelson.

North America remains a key market for DFS and with San Francisco one of the country’s main Asia gateways, in addition to Los Angeles, Nelson reports that the company is also seeing growing volumes of Asian arrivals through New York’s JKF T4.

According to the San Francisco Tourism Association, San Francisco recorded approximately 400,000 more visitors in 2013 than 2012, representing a year-on-year visitor increase of 2.4%. Asia represented the second largest overseas visitor market to the city and currently, more than half of the revenue generated from DFS’s SFO concessions comes from Asian visitors to the city.

Local-global balance

While Asian travelers are a growing market for DFS’ North American gateways, the introduction of new stores and brands represent a desire to accommodate global traveler prefer-

ences rather than catering to one specific market, as Nelson explains: “While Asia travelers make up a growing portion of visitors in San Francisco, DFS’s aim is to serve the global traveler.

“Our offerings at SFO are not catered to a specific group – our aim is to make sure we offer a seamless shopping experience for every customer through high-quality products and services.”

“We have also seen that our customers are now looking for ‘something more’ when shopping in airports. It’s not just about a transactional purchase – customers now see airports as a unique platform for retail. They are looking for a differentiated customer experience and to satisfy our customer’s evolving needs, we have therefore worked

Tailored, localized logos pay tribute to the specific destinations in which DFS operates and have been rolled out across its global network

THE CRAFT OF BOURBON

L E A R N A B O U T O U R F I V E S O U R C E S O F F L AV O R

C R A F T C A R E F U L LY. D R I N K R E S P O N S I B LY. Š2014. Woodford Reserve is a registered trademark. All rights reserved.

DFS

The new-look SFO operation

to upgrade our retail space and offerings,” she adds.

DFS’s global focus on destination localization is supporting its physical transformation program, as Nelson explains: “DFS aims to become an integral part of every destination it operates in and we want our customers to feel like DFS is a part of their travels, and that they are able to also experience the destination with us.

“At SFO, for example, we offer a number of local souvenirs and gifts that are special to the region, including the Ghirardelli chocolates, Thatcher’s Gourmet Popcorn and Napa Soap.”

It has also further enhanced its regionspecific destination offering and wine offerings by developing a new upmarket wine store featuring local California wines, and launching the new Sweetravels confectionary store concept, which is also customized to reflect the local culture, offering the city’s iconic chocolate brand Ghirardelli, and a number of other popular confectionaries.

New boutiques added to the retail mix include brands Gucci, Coach, Burberry and Hermés.

With destination theming being translated into DFS branding following the ongoing rollout of its new logo concept, this only adds to the DFS shopping experience, and initial consumer feedback has been positive.

Says Nelson: “The tailored, localized logos pay tribute to the specific destination we are in. We have received positive response with our localization initiative as we look to further enhance the shopping experience for customers.”

San Francisco is the first location for the company’s new Sweetravels concept and a test bed for possible future expansion. “San Francisco seemed like the appropriate destination to introduce our Sweetravels concept, what with it being home of Ghirardelli, one of the most iconic chocolate brands,” says Nelson.

“Sweetravels will be exclusive to SFO for the time being. As with anything at DFS 42

ASIA DUTY FREE & TRAVEL RETAILING OCTOBER 2014

though, we operate as one global company, and may consider introducing the concept to other destinations as appropriate,” she adds.

All change for Changi

With the Changi grand vision renovations due for completion by year-end, the DFS transformational juggernaut is crossing continents. “At Changi, DFS, together with Changi Airport Group (CAG), is developing a sensational multi-storey and visually dramatic design that enhances the spirit, wine and tobacco brand presentations to a level unseen before,” says David Aitken, Managing Director Singapore, DFS. “Changi’s L&T concessions will serve as DFS’ flagship L&T store, and will also set an example for what we strive to offer in other airports,” he adds.

A recognized leader in innovation, Changi will also be the location for the company’s first airport exclusive member’s lounge for VIP customers. Other exciting initiatives include an airport world-first with the launch of the Raffles Long Bar experience at Terminal 3, in partnership with the Raffles Hotel, DFS and CAG. “Creating an entirely unique and exciting experience for travelers, the Long Bar will play host to regular mix-it-bar events, as well as events featuring Raffles doormen and bartenders,” remarks Aitken.

This will be supplemented with exclusive, ready-to-serve products including the Singapore Sling on offer and a Raffles Gift Shop concept for T3.

“At Changi, DFS will also feature Asia’s largest assortment of single malt scotch in an airport, as well as an unrivalled selection of wines from key regions around

The wine store at SFO

the world,” he continues, adding: “DFS’s unique “Reserve” Wine Library concept will feature wine events and appearances from brand ambassadors and winemakers from leading producers, and offer customers top vintage wines through the Cellar Masters Guarantee, a unique concept that allows for DFS to deliver direct from château cellars to DFS stores worldwide, offering customers the opportunity to shop direct from cellar library stock.”

With presence on three continents and operations in 11 countries, DFS’s 200 million world travelers are retail hungry. Says Aitken: “We believe travel retail is a growth engine of the retail industry today, and will be in the future.” c

The DFS management team at SFO

Inside the new doublestorey DFS liquor and tobacco store at T2: a world first for Changi

Changi

WORLD FIRSTS UPPING RETAIL APPEAL OF NEW-LOOK CHANGI

D

ouble-storey beauty and liquor retail destinations, a stand-alone Samsung store and L&T concession recreation of Raffles Hotel’ famed Long Bar are just some of the developments underway at Changi Hotel’s as part of a phased program of development through to 2017.

In the first six months of 2014, Changi Airport handled 26.61 million passengers, 1.4% up on the same period in 2013. With growth driven by travel demand within the Asia Pacific region, the airports highly publicized duty free revamp is benefiting from ongoing growth in the region and positive long-term prospects.

“For the first half of 2014, passenger traffic to Northeast Asia and South Asia

44

ASIA DUTY FREE & TRAVEL RETAILING OCTOBER 2014

It’s all change in Singapore with Changi Airport Group’s multi-terminal revamp heralding a new era of retail across its existing and upcoming duty free locations by CLAIRE MALCOLM passenger traffic in H1 2014 were Indonesia, Malaysia, Australia, China and Thailand.

Jakarta continued to top the list of Changi’s busiest routes, followed by Hong Kong, Kuala Lumpur, Bangkok and Manila.

“In planning ahead for Changi Airport’s long-term future, we are actively working on a number of major infrastructure development projects, including Terminal 4, Project Jewel and Changi East, which will include its brand new Terminal 5, prepared to equip us with the capacity to cater to future traffic growth beyond this decade,” she explains.

Shilla, which took over the P&C concession from long-term incumbent Nuance Watson on October 1, is fronting its new beauty offering with a duplex concept store – the first of its kind in the world.

The flagship store features special product launches, a beauty Double the fun at Changi Airport spa and beauty café, which Wong with the new duplex liquor and tobacco retail destination at T3 says will inject “fresh elements of engagement and interactivity into the shopping experience.”

“With an expanded concession floor plate of nearly 50% for each of the central P&C stores at our existing three terminals, passengers can look forward to a greater variety of brands and product offerings - covering a good mix of both established and new international brands, as well as popular Korean cosmetic brands to cater to the growing fan base of Korean cosmetics globally,” she elaborates.

“These will create more potential

grew 5.1% and 4.1% respectively, but was offset by weaker demand for travel to Thailand, which declined 18% for the half-year,” says Ivy Wong, Senior Vice President, Airside Concessions, Changi Airport Group (CAG).

“We have seen exceptional growth in the last five years, following the 2008/9 financial crisis. Going forward, we expect traffic growth in the near term to taper, as the aviation industry continues to face a cloudy outlook. However, in the longer term, growth prospects continue to be positive overall, driven by economic development and rising affluence within the Asia Pacific region, in particular second-tier cities in China, India and Indonesia,” she adds.

According to CAG data, Changi Airport’s top country markets in terms of

A glamorous new way to shop, Changi Airport delivers on two floors of dedicated beauty brands

and opportunities for up-selling and cross-selling by the operator, thereby driving higher concession sales for the category,” she adds.

With the planned L&T concession transformation across all terminals due for phased delivery through to 2016, work has already begun on the stores located at the departure and arrival wings of the terminals, with an expected completion date of November 2014.

Refurbishment of the central stores began in August with two first-of-theirkind duplex concept stores at the heart of the new duty free master plan. Says Wong: “The Terminal 1 central store and the Terminal 3 duplex store will be completed by end 2014 and the first quarter of 2015 respectively, with works on the Terminal 2 duplex store to follow in 2016.”

Passenger disruption mitigation is being given the kid glove treatment with CAG implementing a strategy to support both its retailers and travelers through the terminals, as Wong elaborates: “Renovation works and the rollout of the outlets have been planned carefully and are being executed in phases to ensure minimal disruption to ongoing operations. CAG is working closely with DFS to ensure that shoppers’ needs continue to be met and the overall retail experience continues to be pleasant.

“Special consideration is being paid in this regard, with measures being taken to mitigate inconvenience. For example, to maximize the product range available to customers within a smaller store area, additional staff strength is deployed to transfer stocks from other outlets when necessary, or on the request of customer. In addition, some product wall bays, which were previously dedicated to specific brands, are being converted for generic use to maximize product capacity during this period.”

The importance of duty free to Changi Airport’s non-aeronautical revenue stream as it moves ahead with its long-term objectives of transforming Changi Airport’s retail landscape into a state-of-the-art space with partner DFS is strategically fundamental.

Says Wong: “The duty free L&T category remains a core part of Changi Airport’s retail business and long-term strategy, both in terms of meeting our passengers’ shopping demands, as well as growing the

The T3 Transit Mall at Changi Airport

overall sales at Changi Airport.”

“The new and bold concepts that DFS and Shilla will be rolling out respectively over the next year will transform Changi’s retail landscape in terms of the passenger experience and terminal ambience, elevating Changi Airport’s overall retail offerings to a new level,” she adds.

CAG’s annual calendar of seasonal and tactical promotions has continued without interruption throughout the year to date, in partnership with Changi’s incumbent duty free operators.

Says Wong: “CAG runs retail promotions at Changi Airport throughout the year to create a more exciting shopping experience for our passengers, as well as generate retail buzz and create upselling opportunities to help our concession partners grow sales.

“Earlier this year, we had the FIFA World Cup shopping promotion with VISA that ended in April, and the fifth run of our anchor ‘Be a Changi Millionaire’ promotion. Coming up in November is our traditionally popular Christmas promotion, which is a mainstay of the year-end travel season.”

This is further leveraged by a duo of key retail programs – the online shopping portal iShopChangi.com and Changi Rewards, both of which Wong says continue to feature special promotions and exclusive deals for shoppers and members throughout the year.

“In addition to airport-wide promotions run by CAG, we collaborate closely with our retail operators and brand partners to anchor iconic shopping events and host exclusive retail launches at Changi Airport. Examples of such partnerships with the incumbent L&T and P&C operators over the past two years include the DFS Masters of Spirits event, and the first-inthe-world launches of SK-II Stempower and Stempower Essence with Nuance Watson,” notes Wong.

The Terminal 4 redevelopment program will take centre stage for CAG at Cannes 2014. “Terminal 4 is expected to commence operations in 2017, and we are currently in the midst of planning for the retail offerings there. Cannes is a good opportunity for us to discuss retail concepts and exchange ideas for the terminal with potential partners,” concludes Wong. c

www.dutyfreemagazine.ca ASIA DUTY FREE & TRAVEL RETAILING

45

Angkasa Pura Airports

Head for

business The commercialization of Angkasa Pura Airports’ operations may be a work in progress but the Indonesian state-owned company is already building on the early successes of its Bali business model by

CLAIRE MALCOLM

Robert Waloni, Director of Marketing & Business Development, Angkasa Pura Airports I

Sultan Hassanuddin Airport, Makassar, Indonesia

46

ASIA DUTY FREE & TRAVEL RETAILING OCTOBER 2014

A

newly elected president with an ambitious economic development agenda, a program of airport capacity enhancement and rising international investor interest are collectively helping Asia’s fifth-largest economy transform its air transportation offering.

“The period 2011 to 2020 really is Indonesia’s aviation decade.

We are developing our airport infrastructure, passenger numbers are soaring and local carriers are investing in new aircraft with Lion, among others, ordering 178 and 234 aircraft from Boeing and Airbus respectively, and Garuda adding up to 88 new planes,” says Robert Waloni, Director, Marketing & Business Development for state-owned Angkasa Pura Airports I. The company, which is split into two regional areas of responsibility covering 27 airports—Angkasa Pura I looking after Central and East Indonesia and Angkasa Pura II operating across Western Indonesia—is working on a number of new airport projects to enhance capacity and drive non-aeronautical revenue.

“In the past, non-aeronautical revenue only accounted for around 20% of the total. Airports were historically infrastructure providers, not service providers, but for us this changed in 2010 when new government legislation led to the formation of an independent non-airport operated air traffic management body,” says Waloni.

“Airport infrastructure revenues were typically generated by its users who would pay all the costs through a concession-type operation, so there was no driving need for airport operators to make money. But with air traffic handled externally, the substantial loss of revenue forced us to take action,” he adds.

Angkasa Pura Airports launched a group-wide transformation program to tackle the critical dual issues of customer satisfaction and the need to increase revenues to mitigate the financial hole left by the loss of air traffic management services.

Waloni and the team reviewed commercial operations at other airports including Dallas/Fort Worth, Incheon, Changi and KLIA, before refining their own strategy, “The next step for us was to plan a total restructuring of our business concept based around non-aeronautical revenue and how we could increase it in tandem with improving service levels. To achieve this, we knew that we had to expand our airports and capacity growth remains an absolute priority.”

Angkasa Pura Airports

Leading by example

seen has been significant, not only in terms key to achieving its mid-to long-term comThe new Bali International Airport has been of revenue growth but also the technology mercial goals.

Makassar, Banjarmasin and Surakarta the template for Angkasa Pura’s future busi- benefits, knowledge sharing etc., and this ness model, with a commercially focused has automatically upped the attraction of are some of the destinations under redevelopment and Waloni is busy spreading the strategy that led to the launch of a new travel the airport and our financial results.”

Its travel retail contracts are five years as word about the opportunities available to retail scheme at the airport in 2013.

“Our future success here and at our other opposed to the previous term of just three international investors. “We are active with airports lies in a methodical and systematic years. “We know when working with big Public-Private Partnerships and also work approach to developing our product, ser- companies that they need to have a degree closely with the government, participating of security and two-to three-year contracts in trade missions and at global forums to vices and overall offering,” notes Waloni.

“We have to be upfront when it comes are simply too short to achieve anything, highlight the opportunities and benefits to our service levels, which is still a work especially when they are investing a lot into of working with us to develop airports in Indonesia.” in progress despite marked improvement, the business,” he comments.

Based on Bali’s early success, Angkasa as with capacity enhancement programs ongoing it is inevitable that service will Pura management is keen to replicate this Competitive edge continue to be impacted to a certain degree.” across its network. “We are doing something However, while the interest is there, transAccording to a recent Airports Coun- similar for Surabaya and Balikpapan with lating it into actionable reality isn’t quite so cil International (ACI) survey, the level international partnerships, and it’s working straightforward. Waloni elaborates: “One is improving at all Angkasa Pura I air- well,” says Waloni. problem that we are facing is regulatory With only two of its airports currently issues. The government is fairly keen to ports, but Waloni accepts that they are not at a regional standard just yet. “It is providing enough capacity and the remain- open up the market to international invesvery important for us to be surveyed by ing eleven over-utilized, Angkasa Pura I’s tors but unclear streamline the process to ACI as this gives us a realistic picture of infrastructure enhancement program is boost investor confidence. where we are and we can track our progress. Plus, Angkasa Pura I’s network covers 14 airports it is equally important located in Central and East Indonesia INDONESIA HAS THE MOST ANGKASA PURA AIRPORTS* for us to be transparUNIQUE OPPORTUNITY TRAFFIC GROWTH ent to our partners and customers.”

2009 2010 ASIA PACIFIC ANNUAL With Bali the model 70 94 TRAFFIC GROWTH 2010–2013 7% for success moving 2011 2012 forward, Waloni says INDONESIA 114 130 that the company is POPULATION extremely happy with 2013 134 the way the international MID CLASS open tender played out.

TRAFFIC GROWTH “We had huge interest CAGR — DOMESTIC from international playGROWTH 2010–2013 ers and in forming a straCAGR — INT’L GROWTH tegic partnership with 2010–2013 GVK, the developer and ine operator of the upgraded us body and sh o tu p lu vo r fo iser Chhatrapati Shivaji rs 3D Volum aisy weaFLEET RAISING NEW HEIGHTS D TRAFFIC ANGKASA PURA I GROWING International Airport SHIFTING BUSINESS BASE (2007–2013) IN INDONESIA in Mumbai. We also benefited greatly from a CSI transfer of knowledge.”

YEAR YEAR 2020 Wit h bi g name s GROWING 2020 FLEET including Dufry and 60% DFS bidding, Angkasa Pura I decided to 2013 approach the tender in PAX a slightly different way, as Waloni explains: “We CSI took the decision to not 2013 2011 stipulate a revenue figure CARGO and were pleasantly sur36% prised by the offers we received. The resulting increase that we have

INDONESIA MARKET OUTLOOK

million

240mil

M

Y

CM

MY

million

million million

56.5%

C

CY

CMY

million million

K

million

2009–2013

12%

18%

9%

*CONSOLIDATED DATA FROM ANGKASA PURA I & ANGKASA PURA II

900

12%

4,83

NON-AERO REVENUE

234

15%

230

7%

3,52

NON-AERO REVENUE

www.dutyfreemagazine.ca ASIA DUTY FREE & TRAVEL RETAILING

47

HAIRMEETWARDROBE.COM

Angkasa Pura Airports

11 9

14 13

8 10 1 2

4 3

5

6 7

12 C

M

AIRPORTS MANAGED BY ANGKASA PURA 1 1. AHMAD YANI - SEMARANG

8. SYAMSUDIN NOOR - BANJARMASIN

2. ADI SUTJIPTO - YOGYAKARTA

9. SEPINGGAN - BALIKPAPAN

3. ADI SUMARMO - SOLO

10. SULTAN HASANUDDIN - MAKASSAR

4. JUANDA - SURABAYA

11. SAM RATULANGI - MANADO

5. NGURAH RAI - DENPASAR

12. EL TARI - KUPANG

6. LOMBOK PRAYA - LOMBOK

13. PATTIMURA - MALUKU

7. SELAPARANG - MATARAM

14. BIAK - PAPUA

“We are confident that the changes with the new government, as well as being timely, will be very positive for the country and for our industry.”

Waloni is also keen to see other initiatives implemented to increase the competitiveness of Angkasa Pura’s airports. “We have to earn money to reinvest to make our airports efficient for airlines and passengers. If we don’t have enough support revenue-wise from the commercial operation then we end up with higher passenger service charges and airport landing charges.

“If you look at Singapore for example, where they have a healthy commercial operation, they were able to stimulate new demand through targeted initiatives such as reduced landing charges. If we could eventually be in a similar position then it would be a win-win for all parties.”

48

ASIA DUTY FREE & TRAVEL RETAILING OCTOBER 2014

Non-aeronautical revenue projections are on an upward trajectory for Angkasa Pura with the airport operator forecasting revenue growth from 36% in 2013 to 60% by 2020

As well as bringing major retailers on board, Angkasa Pura is keen to embrace local partners and promote emerging local brands.

“Depending on the character of each airport, we will fit brands to the destination.

For example, through Angkasa Pura Retail, which is one of our six specialised airport services subsidiaries, we have introduced Tulisan, which is a collection of handcrafted lifestyle products created by an up-and-coming female Indonesian artist,” he explains.

A diversified commercial portfolio is the starting point but Waloni knows that long term success is contingent upon delivering quality at every touch point in the passenger and partner journey. “Whether we work with the world’s best operators or new-to-market brands, we are committed to keeping our finger on the pulse.” 

Y

CM

MY

CY

CMY

K

IT’S NOT SCOTCH. IT’S NOT BOURBON. IT’S JACK.

Interparfums

Legendary LABELS

From Lanvin to Lagerfeld and Balmain to Montblanc, Interparfums’ growing brand portfolio encompasses modern day icons and timeless scents by CLAIRE MALCOLM

A

familiar face is lining P&C concession shelves across Asia Pacific right now with a silhouetted image of a ponytailed gentleman wearing dark glasses and gloves fronting the latest offering from Interparfums.

The most high profile acquisition for the brand in recent years, following the 2012 signing of a global licensing agreement for Karl Lagerfeld, his self-branded fragrance line for men and women is currently one of the company’s most high profile bestsellers.

“While he is recognized globally as an iconic fashion designer, not everyone knows that over the past two to three years he has developed his own brand. It’s still very much luxury, but with a different fashion element,” says Renaud Boisson, Managing Director, Interparfums Singapore.

While the line is high-end, as befits the Lagerfeld name, price-wise it retails slightly lower than other luxury labels.

“It’s a nice positioning, which makes it affordable but with the Karl Lagerfeld touch,” he remarks.

Karl Lagerfeld launched in France and a number of European countries in the second quarter of 2014 with Taiwan, Korea, Australia,

Karl Lagerfeld’s self-branded fragrance line for men and women, one of Interparfum’s most high profile bestsellers

50

ASIA DUTY FREE & TRAVEL RETAILING OCTOBER 2014

Extatic: the latest launch from Balmain

Singapore and Japan plus select South-East Asian markets marking its Asia Pacific unveiling as part of a year-long global rollout.

“The initial results after the first few weeks showed that it was a sell-out for both versions, so it has been very encouraging since day one,” says Boisson.

Social media has also played its part in the activation campaign with a new free app created especially for the launch, as he explains: “The emotiKarl app lets you use a Karl Lagerfeld signature icon, like his logo or glove, as part of a sentence, which you can then post on Facebook for example. It has created a lot of buzz around the brand.”

The use of social media to drive brand interest is proving increasingly appealing to a younger audience but Boisson believes that it has cross-generational potential backed by Lagerfeld’s Chanel pedigree.

Moving mountains

Another iconic brand under the Interparfums umbrella, but one better known for its writing instruments and Karl Lagerfeld’s self-branded fragrance accessories, is Montblanc, line for men and women, one of Interparfum’s most high profile bestsellers which the company took over from P&G three years ago.

“Our first line with Montblanc was Legend and this has been a tremendous success, making the top 10 masculine fragrances rankings almost everywhere in the world where we are usually in the top five and even number one in some markets,” says Boisson.

The decision to acquire Montblanc came with an element of risk, as he explains: “When we took on the brand it hadn’t been a priority for P&G as they had other bigger players to focus on, but thanks to the success of Leg-

Emblem, the second line from Montblanc launched by Interparfums

end this really raised the profile of Montblanc and now it is literally flying.

“We have since launched our second line, Emblem, which also looks to be very promising.

Next we will focus on developing the female franchise as Montblanc is historically very masculine, and in 2015 we have a very exciting women’s launch coming up.”

Thanks to the success of Legend, Interparfums is predicting similar commercial opportunities for Emblem and other new lines as it looks to become a leader in masculine fragrances worldwide.

But it is also looking at raising the brand equity of a ‘vintage classic’. “Another brand we launched last year was Balmain, where we reinterpreted a former line called Ivoire and this year we have launched Extatic, which began its worldwide release in February,” says Boisson.

“As a luxury fashion brand Balmain is becoming very high profile and popular with a lot of celebrities, so while it is still fairly niche, we believe that it really is one to watch.”

Asia expectations

Asia Pacific is a high performing region for Montblanc where it has risen swiftly up the fragrance rankings.

“We have managed to position the brand at a very high level. It’s number two in Korea, was number one in Taiwan for a while, is in sixth spot in Australia and following a launch into China last year is really starting to pick up and is already a top 10 masculine fragrance bestseller,” says Boisson.

Korea is performing particularly well for Interparfums due in part to a successful local partnership arrangement and a general appreciation for the brands in-store. “There is also a strong masculine purchaser profile with lots of businessmen,” he comments.

Lanvin is also strong in Korea, with the Arpège line, and Interparfums recently introduced Me L’Eau for women. Says Boisson: “This was really done with Asia in mind as it’s a very fresh, colourful and

Lanvin Arpège Femme, a popular fragrance with Korean customers

light fragrance, so it works well in this market and we expect to do big numbers in Korea.”

China is another market with huge potential where despite Interparfums’ relative immaturity in the market, its long-term penetration strategy is taking off.

Interparfums’ presence extends from major cities to virtually blanket coverage across Tier II and Tier III destinations, with the company benefiting from a solid distribution network, which still has ample room to grow, and strong in-country partner.

Aggressive targets

Boisson has high expectations for Asia with Montblanc, Lanvin and the Karl Lagerfeld project boosting market share. “The year got off to a slow start and we have aggressive sales targets for 2014 but with 15% year-to-date growth across Asia, the signs are good,” he says.

“Plus the big initiatives are all timetabled in the second semester so we have definitely have scope to develop,” he adds.

Another area where Interparfums is looking to develop a comprehensive strategy is customer loyalty. Says Boisson: “The consumer still very demanding in terms of ‘newness’ and it is becoming increasingly difficult to drive loyalty. We want to differentiate ourselves by working on qualitative product development.

“We really want to give value for money but also deliver on the entire concept from the packaging to the marketing, so that our customers can truly identify with the brand they are purchasing.”

Activations are integral to encouraging trial and loyalty, as he explains: “It’s a question of adapting to specific brand needs, for some we need to work on their awareness and for others it’s more about focusing on the product itself with initiatives like spray campaigns.”

Interparfums’ reach is impressive, with penetration into established as well as emerging markets such as Myanmar, where it was one of the first groups to enter the country.

“There are a lot of people with money in Myanmar who are looking for quality retail and a high percentage of female residents come to Singapore just to shop,” he reports.

Interparfums’ development pipeline will see the company launch in Laos next, and although already present in the country for many years, Boisson also flags Sri Lanka as a location with excellent potential for further development. c www.dutyfreemagazine.ca ASIA DUTY FREE & TRAVEL RETAILING

51

L’Oréal Paris

L’ORÉAL PUTS MALE TRAVELERS IN LINE OF SIGHT

Targeted travel retail exclusive sets and strategic product siting are key to convincing male passengers to purchase while upsizing is adding value to the brand’s make-up palette bestsellers by CLAIRE MALCOLM

M

ale travelers are in L’Oréal Paris’ line of sight this season as the cosmetics and skincare giant looks to increase brand and market penetration with new lines and strategic initiatives.

According to Charles Roullet, Worldwide Marketing Director, Travel Retail, Consumer Division, L’Oréal Travel Retail, the men’s skincare category is an area where direct contact with the consumer is key to securing the sale.

“In local markets, it’s often the wife or girlfriend who purchase skincare products for their male partner, but in travel retail we have an opportunity to deal directly with the end consumer of which around 55% are men,” he says.

“This direct contact is a golden opportunity. A good example is the recent launch of a new dedicated gondola for Men Expert, located in areas where male travelers shop, and thereby increasing visibility of both the men’s skincare category and the brand,” he adds.

L’Oréal is working with its global partners on bringing male products to the forefront, as they are often eclipsed by the female equivalent, as he explains: “If we 52

ASIA DUTY FREE & TRAVEL RETAILING OCTOBER 2014

have men’s brands lost in the middle of women’s skincare then we don’t benefit, but if we are able to regroup different gondolas featuring the various male brands close to tobacco and liquor then we have the opportunity for better penetration.

“It’s more in the male mindset to shop when they are at an airport. Here they can easily see for themselves the range of available products and we can speak to them in a way that they understand.”

To do this, L’Oréal has developed travel retail exclusive sets for men’s skincare, which began with the 2013 launch of a Men Expert Hydra Energetic set. Says Roullet: “This September we launched Men Expert 1,2,3 Hydra Sensitive, which is basically a three-step, three product proposal to clean, shave and moisturize.

“It’s a tactical-meets-educational launch and also comes with a gift including a four-blade disposable razor. In expanding the franchise we recognize the strong consumer insight that men either have, or think they have, sensitive skin and with a set it’s an easy and convenient way to speak to their needs, especially if they forgot to pack their toiletry bag.”

The airport retail experience also highlights two distinctly different male attitudes

L’Oréal Men Expert set gondola display

to shopping. “In duty free you see men who take the time to treat themselves, and this is something unique to the airport versus any other retail environment, so it is very important to have testers available for all our skincare products,” says Roullet.

“Of course there are also the male customers who just want to grab and go, and they really appreciate the convenience of an easy shopping experience, so this is

Charles Roullet, Worldwide Marketing Director, Travel Retail, Consumer Division, L’Oréal Travel Retail

The new L’Oréal Paris Couture Mademoiselle make-up palette

where our travel retail sets like the Men Expert 1,2,3 Hydra Sensitive work really well,” he adds.

Added value upsizing

Recognized for its innovative approach to product development, L’Oréal Paris recently launched its duo of new makeup palettes called Couture Madame and Couture Mademoiselle.

According to Roullet, Couture Madame is more targeted towards the Middle East and Western European female consumer, while Couture Mademoiselle is geared towards Asia with lighter shades and a younger customer profile.

“This is an initiative that we have had under development for a long time and its major point of difference is the inclusion of a full-size mascara. We saw this as a unique opportunity to add value both in terms of increasing the gifting appeal as well as added convenience for our customers for whom make-up palettes are a must-buy,” he says.

The new palette features three lipsticks, four eye shadows and a BB powder plus the mascara and Roullet is hoping to see it listed onboard a number of high profile Asian carriers in the short term.

“Our make-up palettes are selling like hotcakes and this is also due to the fact that we position ourselves as affordable luxury in travel retail. Everything we do has the luxury element, but is a little bit more accessible in terms of pricing.

“The RRP for this palette is below €40 (US$50), which is a very good deal, especially when you have the mascara which already retails for around €12 (US$15) to €14 (US$18), plus you have all the applicators, a panoramic mirror inside and it’s all presented in a trendy pouch,” he elaborates.

Reputation driving penetration

The new L’Oréal Paris Couture Madame make-up palette

The challenge of increasing penetration at airport locations is something that the team is constantly working on, but global awareness of the L’Oréal brand is a major benefit, as Roullet explains: “Compared to other channels we only have 13-14% penetration in airport retail locations as consumers don’t go to P&C shops to buy, they go to the airport to fly and then decide to buy.

“Thankfully, L’Oréal Paris benefits from some of the highest awareness in the beauty and cosmetic industry thanks to sizeable worldwide media investment where, prior to travel, the customer has already been exposed to the brand through television and print advertisements or digital media.”

“So when they see a L’Oréal Paris corner or gondola in travel retail, they know the brand and are attracted to the products that are featured as they have that subconscious

link to the ad campaigns, which is visually reflected in-store in duty free,” he adds.

To cement reputation in different regional markets, the brand ambassador phenomenon gives added credibility to L’Oréal Paris brand message. Says Roullet: “In Asia, for example, we use Fan BingBing as our brand ambassador for Revitalift skincare, and when you enter a duty free store anywhere in the region you immediately see a visual with her on the gondola.”

But there is also a cultural cross-over and a tailored category approach, as he explains: “We also have Bianca Balti, the Italian model, who is very popular with our Asian customers when it comes to make-up lines. For skincare however, we need to reassure consumers that our formula is specifically designed for Asian skin and so our skincare brand ambassadors are always from the region.” c

L’Oréal Paris Revitalift Anti Dark Spots travel exclusive set

www.dutyfreemagazine.ca ASIA DUTY FREE & TRAVEL RETAILING

53

Delsey

DELSEY’S DESIGN REVOLUTION Market differentiation is the buzzword for the leading French luggage brand as it pursues a fashion forward approach to product development by CLAIRE MALCOLM

T

raditional retail and wholesale channels have long been the primary focus for Delsey but the brand is now looking increasingly at development opportunities within travel retail as it goes fashion forward with new designs that hark back to a time when travel was still glamorous versus ultra-modern color palettes that pick up on catwalk trends.

“In particular, for 2015, we are trying to follow fashion but also making sure we deliver on our reputation for quality, plus also set industry trends by changing the way in which people carry their bags and their luggage,” says Barry KM Cheung, President, Sales Operations, Asia for Delsey.

With extensive presence in the Asia Pacific region from Mongolia to Tasmania, Delsey luggage is reaching even the farthest corners of the market.

Says Cheung: “For example, we have three downtown stores in Mon-

golia and have been there for a decade already.

It’s a distant market but more mature than you would expect with the limited number of malls providing a good entry point to the region and where we are able to have our own store build-up.

“Where we are ‘newer’ is in terms of travel retail. We have our own downtown stores in most cities like Beijing, Shanghai, Hong Kong, Singapore and all the South-East Asian countries, however we don’t have any duty free stores at major airport locations, instead we have duty paid areas in places Beijing, Shanghai and Singapore.”

Cheung confirms that dedicated store presence is the ultimate goal, and the perfect setting in which to showcase the brand’s expanding portfolio. As he explains: “With our diverse product assortment this will be very appealing to consumers shopping in a duty free environment, particularly when looking for small items such as carry-on cases and tote bags.

“We understand our customer very well through our downtown experience and the feedback we get is that they would like Delsey retail presence at the airport, so we know that the commercial opportunity is there.”

Several China projects at key airport locations are in the pipeline with the company’s newest location, Haikou in Hainan Province, getting off to a strong start. “We’ve been operational for over six months now and it has been a profitable location since day one,” says Cheung.

Cheung says that while China is on every retailer’s wish list, the Delsey offering has the necessary ‘wow factor’ to appeal to operators.

Differentiation strategy

For the last five years the brand has seen continued year-on-year growth of 30-35%. “The numbers have been fantastic and that has been driving our expansion program for duty free where we have seen a definite acceleration in the last two years,” remarks Cheung.

He names Shanghai and Hong Kong as key markets, which despite being relatively mature still recorded an annual growth rate of close 54

ASIA DUTY FREE & TRAVEL RETAILING OCTOBER 2014

to 100% in 2013.

“Just 10 years ago there was no difference between Delsey and other brands, but part of our development strategy has been to differentiate ourselves and this is helping our growth,” he says.

Its latest neo-classic collection, which incorporates elements of a turn-of-the-century cabin trunk style is lightweight thanks to the use of the latest polycarbonate material but heavy on innovation with a four-wheel design and a unique brake to stop it rolling away.

Consumer demand for lightweight luggage plus improved bag security are the two trends leading Delsey product development.

“Innovation-wise we have a lot going on such as for the zipper, where we have introduced the zip secure intact. You can break into most modern luggage simply using a pen but you can’t do this with Delsey products. We launched this technology five years ago and it combines elegant design with innovation,” says Cheung.

Delsey is also applying its differentiation strategy to the various markets. Says Cheung: “We see some regional differences, for example customers in the North-East of China look for very sturdy products whereas in the South of the country they like it lightweight.

“When it comes to color, the younger Asian consumer like it bright like red and purple, which is the best-selling color in China; and we are seeing a definite move away from a preference for black or dark colors.”

Business smart

Delsey’s business travel collection has also been tailored for the modern traveler with space for a laptop and small-sized pockets for boarding passes etc. as well as a cable lock for secure storage.

“We have designed a business line for duty free called Montmartre. It is a ballistic nylon, lightweight, black and very sturdy with the protection zippers, a document side pocket and padded computer pocket,” says Cheung.

Another neat innovation is a built-in baggage weight indicator, which turns red if more than 20 kilogrammes, plus a separate shoe compartment.

According to Cheung, the focus for 2015 is on the creation of different emotional elements plus the launch of a refreshed store concept.

“This will be a global rollout and what we are trying to do with the airport locations is to present what will be a Parisian design to reflect our retail experience,” he comments.

The first Asia Pacific store will be launched at Hong Kong’s airport express station before year-end. c

Frédérique Constant Frederique Constant Manufacture WorldTimer

A LIBRARY OF

ACHIEVEMENTS

Frédérique Constant’s three-pronged strategy and new library concept shine a light on affordable luxury by FAYE BARTLE

I

t is a milestone year for Frédérique Constant as the brand celebrates the tenth anniversary of its signature Heart Beat Manufacture.

There won’t be a huge amount of time set aside for partying, however, as the company is already working hard to lay the foundations for another decade of success.

At the top of the agenda is strengthening its position as one of the most revered affordable luxury watch brands in the market – something that’s best demonstrated by the shop-in-shop inside the World Duty Free store at the new GBP2.5 billion (US$4 billion) Terminal 2 (the Queen’s Terminal) building at London’s Heathrow Airport, which opened to passengers on 4 June.

Frédérique Constant is featured alongside 30 other brands inside the 1,700-square-foot Harrods Fine Watch Room, which is curated by the iconic store’s fine watch buying team. While having a presence is a coup for the company, it is also just a sign of things to come.

“We have three main objectives,” says Marin Grandjean, Duty Free Sales Manager, Frédérique Constant. “The first is to support our partners by sharing our expertise and key successes in the different markets. Next, we will continue to focus on the performance of our assortment by composing the best selection, from classical temporary watches costing upwards of €700 (US$887) to those featuring manufacture movements made in-house that are priced from €2,000 (US$2,535). The third part of our plan is to highlight the brand’s visibility in the market.”

Frederique Constant CEO Peter Stas with his wife and business partner Aletta

56

ASIA DUTY FREE & TRAVEL RETAILING OCTOBER 2014

This year Frédérique Constant is investing massively in advertising in airports and in-flight magazines. The perfect complement to the glossy print ads is the new library concept, which Ferderique Constant Manufacture Slimline Moonphase offers a 360-degree view of the brand, from its famed manufacture to limited editions and its partnership with the World Hearth Federation. The idea was inspired by the company’s successful company book Live your Passion, which launched in 2012. According to Grandjean, requests from operators and retailers for the concept are already coming through thick and fast. The overriding aim, however, is to optimize collaborations with the duty free partners recording the most impressive growth before building “perimeter” openings around these strongholds. The North American duty free market, where the brand is “over-performing” locally is an obvious target, as is MENA. “The UAE is an especially important location for our brand,” says Grandjean. “In 2013, we achieved 8% of our global turnover from the destination. Over the past five years, we have grown consistently and we still have a growth perspective, which is encouraging. Our local partners are strong and highly motivated, so we pay close attention and try to support them in the best way we can. Besides this, we have noticed that the product and price positioning – from €700 (US$887) to €3,000 (US$3803) – perfectly suits the current demand in duty free.”

Using social media to enhance its efforts helps Frédérique Constant stand out from the crowd. The company’s blog – http://blog.frederique-constant. com – is buzzing with insightful updates and great imagery, which is being well received by fans.

“Social media has become an important communication platform for engaging our consumers,” says Grandjean. “We are really active on all kinds of social media including Facebook, Instagram, YouTube and Google+. Each platform has its unique features and we tend to adapt our communication to suit. We have a dedicated person for social media who is also supporting all our social media managers around the world to provide content and align the brand communication on an international level.”

No doubt retailers and operators will ‘Like’ the sound of that. c

Unilever International

Heads up for

UNILEVER in ASPAC Professional hair care is no longer a solely salon-based experience with TONI&GUY Hair Meet Wardobe products joining top-end cosmetic brands on duty free beauty shelves by CLAIRE MALCOLM

3D Volumizer, part of the Glamour range

U

nilever International is continuing its push into new locations as part of its global vision for the TONI&GUY Hair Meet Wardobe hair care line, originally launched by renowned UK style icon TONI&GUY. An acclaimed name on the professional salon scene, its global network is a plus for the crossover to travel retail as Rosalyn Frayna, Business Manager, Travel Retail, Global, Unilever International, explains: “The great thing about TONI&GUY Hair Meet Wardrobe is that the products may not be available to purchase locally, or else just in selective markets, but with over 420 international salons, the name TONI&GUY resonates everywhere.

“From China and Korea to Indonesia, Pakistan and India, TONI&GUY salons are invariably located in premium shopping areas and so the quality association is already there. They also have academies offering professional training in many key destinations, and their reputation and years of salon experience are very important to create customer confidence in the travel retail side of things.”

As part of its strategy to convert customers, travelers are also being given the opportunity to freshen up their look before boarding.

“We have been trialing the products at certain airport locations, including Bali, so customers are exposed to the different products and styling options,” says Frayna.

Although the brand was launched to the travel retail market just one year ago, TONI&GUY Hair Meet Wardrobe products are currently found in numerous locations including Bangalore, Auckland, Christchurch, Brunei, the Philippines, Stockholm, São

58

ASIA DUTY FREE & TRAVEL RETAILING OCTOBER 2014

Unilever International

Paulo and Rio de Janeiro with Delhi, Qatar, Zurich and Singapore coming soon.

Initial feedback from retailers has been positive and Frayna says that exhibitor presence at major trade shows including TFAP, and now TFWA WE this year, are vital tools in boosting brand awareness.

“We were the first hair care brand to exhibit at both events in a big way with our own booth, and this has enabled us to access travel retail through meeting with the key players in the industry.”

“We have effectively created a new category and what we find is that as operators undertake renovation programs and there is the opportunity for new bids, then we have the possibility to create more awareness and interest,” she says.

“If there is a beauty bar or nail bar then we can also create a hair care bar for trialing,” she adds.

Frayna says that creatively minded retailers are exactly the right fit for TONI&GUY Hair Meet Wardobe with many already recognizing the benefit of offering a holistic product in terms of siting professional hair care together with other complementary beauty experiences.

“Customers looking for beauty products tend to browse and stay longer, and they usually make time to check out what is available, or new, rather than just run in, make a quick purchase and run to the gate,” she says.

The success of the men’s range has come of something as a surprise, as Frayna explains: “It’s very well accepted that men are underrepresented and we have a broad range of products from hard hold to shine and polish.

“Our Casual Salt Spray for women is a global bestseller in all markets and so we created a men’s version — Men Messy Salt Spray — which is selling extremely well and which allows you to create any number of different styles; so it is part of our new product launches for this season.”

Other products selling well include the Tropical Radiating Elixir with its quartet of natural oils and UV filter, which TONI&GUY Hair Meet Wardobe showcased at London Fashion Week, the innovative Wave Memorizer with shape recall technology and 3D Volumizer, which has sugar as its special ingredient to create body and fullness with a touch of shine.

“The TONI&GUY philosophy since the beginning has been about creating your look from the head down, with hair as part of fashion.

A lot of work goes into R&D and we are always aligned with what is onThe popular Men trend,” she concludes. c Messy Salt Spray

60

ASIA DUTY FREE & TRAVEL RETAILING OCTOBER 2014

TONI&GUY Hair Meet Wardrobe airport display

SUBSCRIBE TO ASIA DUTY FREE MAGAZINE

ONE YEAR – 4 ISSUE AND 12 ENEWSLETTERS

Subscribe to Asia Duty Free & Travel Retailing Magazine and its monthly eNewsletter to keep you informed of the latest news.

Simply fill out and return this subscription card to the following address, or fax with your credit card details to +1 905-821-2777

TWO YEARS – 8 ISSUES AND 24 ENEWSLETTERS

US$200.00 US$400.00

SUBSCRIPTION FORM

company name

Please fill out this form and fax to 1-905-821-2777 or email to deepa@globalmarketingcom.ca

date

name

Asia Duty Free & Travel Retailing magazine 26 Pearl Street, Mississauga, ON Canada L5M 1X2 Tel: 1-905-821-3344 Fax: 1-905-821-2777 email: deepa@globalmarketingcom.ca

mailing address

city

province/state

country

postal code/zip

(

) area code

(

phone

) area code

❑

SIGN ME UP! I would like to receive a subscription to magazine ❑ One Year US$200.00 ❑ Two Year US$400.00

fax

❑

Enclosed is a cheque or money order made payable to Global Marketing Company Ltd.

❑

Bill me

email

❑

❑

❑

expiry date

m

m

y

y

credit card number

signature

date Paym ent in U. S. funds m us t ac c om pany this s ubs c ription c ard.

Schaefer

Making a play for

ASIA

A relative newcomer to the travel retail market, toys and gadgets retailer Schaefer is banking on its tailor-made approach to win new business in the region

T

he success of its own in-house construction toy brand, Brixies, has prompted Germanyheadquartered Schaefer Travel Retail to expand its popular duty free and travel retail line to include a new range focusing on destination icons from around the world.

“We originally launched at Cannes last year with an introductory animal range, but from there we have diversified due to the high level of interest shown in the product,” says Chris Winstanley, Sales Director Duty Free, Schaefer.

“We are currently specializing along regional lines. We already we have a collection of Singapore-themed products and this is the way that we will evolve the product with micro-brick buildings representing different country skylines,” he adds.

Launched at TFWA AP in May 2014, Schaefer has high hopes for the range in the Far East due to a natural affinity for products with a strong home country link. The Brixies collection is already on airport shelves and onboard major carriers in Singapore, Hong Kong and mainland China, and Winstanley says that all markets are prospective targets with the range highly affordable.

“In the case of Cathay Pacific, we worked with them to create an exclusive limited edition Junk Boat; this being a good example

62

ASIA DUTY FREE & TRAVEL RETAILING OCTOBER 2014

of the service levels we aspire to,” he notes.

Regional bestsellers for the company also include the perennially popular Plush line of soft toys. Says Winstanley: “These always sell well and we offer a high quality product that can be tailored to particular markets, so if the client has a specific theme in mind we can come up with a design and create a unique item.”

Schaefer is currently onboard around 70 airlines across its varied product portfolio, as Winstanley explains: “We’ve only been in travel retail for around three years and are slowly diversifying into electronic goods as well. We are no longer just a toy company; we want to be a one-stop-shop.

“Toys will always remain an extremely small proportion of the airlines’ catalogue and so it’s a lot easier if you have something more to offer as part of a wider collection.

Also, in building relationships, they will often suggest to you what they think will sell well so there is an opportunity for product development to meet a specific client need.”

The company also has an extensive electronic gadget selection with Winstanley highlighting the Harman/Kardon brand of speakers and earphones as a current hot ticket item.

He also sees opportunity outside of the full service airline segment, as he explains: “Low-cost carriers are keen on branded

The popular Pintoo 3D plane puzzles are a bestseller for Schäfer

Schäfer’s toy box includes uniquely branded airplanes popular with full service and low-cost carriers

items, which is something else we are very keen to develop for them.

“Without question they are looking for lower-end spend but it does not necessarily mean that they are all the same with different airlines obviously having different demographics and therefore different opportunities.”

Exclusivity is an additional selling point for the company when pitching to prospective clients. “Historically, if you want something branded you would be committed to very minimum order quantity, but we come from a slightly different gift and premium background so we can potentially be more flexible when it comes to uniquely branded items and quantities,” he says.

The exclusivity angle goes hand in hand with choice, which is another Schaefer USP according to Winstanley. “There is very little choice, certainly from a toy perspective, so we will always continue to develop our toy offerings, be it puzzle planes in an airline logo, the Brixies city skyline range or the Passporto activity game. Whichever airline or whatever the destination, we can create something tailored for their brand or location.

“And being 100% open to customer feedback we will take the product to exactly where they want it to be.” 

Travalo

The Classic comes with the new express system and yet is inexpensive, allowing the consumer to purchase one for each fragrance. The express system can be removed and placed into a higher-end Milano, if desired

build, and then we make it better.” This is where sales can fall in importance to Okhai.

If a product is not the best it can be, then his focus drifts to R&D. For 18 months, the focus came off sales and onto R&D and growth slowed to 6% while the company concentrated on making the best possible product.

Better product, bigger opportunities

BE THE BEST, THEN

GET BETTER

After four extremely successful years on the market, Travalo has a new development that shoots it into the stratosphere, offering choice for consumers and big opportunities for the company by WENDY MORLEY

F

or Yusuf Okhai, CEO of Travalo, sales are sometimes not the most important goal. Instead, the most important thing is that a product works by serving the needs of its users. “The majority of items that pass my desk are just being shuttled for profit. You can’t become impassioned about them or put real feeling into them because it’s just about numbers. Nobody really cares.”

When the item that came to rest on his desk in 2009 was the one that later became Travalo, however, Okhai took notice.

Travalo was invented by a young woman named Carmit Turjeman in 2004. She patented the concept and took it to perfume, cosmetics and accessories companies, but did not receive a positive response. She persevered, eventually finding a manufacturing and investing partner who turned it into a physical product that worked perfectly.

Until they recruited Okhai, however, there was little commercial interest from fragrance companies. This surprises Okhai. “Research shows people who use the Travalo use on average 40% more fragrance. And I’m not pulling this number out of a hat,” he says.

“This is research done with 800 subjects.”

According to Okhai, it just makes sense. “If you carry your phone around with you, you use it more. Same with your fragrance.”

Okhai partnered directly with retailers on a branded product, and it immediately took

off. Stores sold 10 to 15 times more than they expected. To date, over 12 million have been sold. When British Airways inflight retail took it on, the item immediately shot to number one. That became its position throughout inflight retail. “It’s a mobility product related to fragrance,” Okhai says. “It seemed obvious to go to airlines and airports, because that’s where the two industries collide.”

The product was good, and it worked, but he felt it could improve. “First we build the best we can build, then the best anyone can

The Travalo facebook page has well over 100,000 followers, and the company listens to them. They asked how to clean the product in order to change fragrance; in reality, it isn’t feasible. Travalo’s R&D led to a breakthrough.

This year at Cannes the company is introducing its new high-performance core, allowing the user to take the perfume container from one Travalo and put it into another.

Now that Travalo is the best it can be, the company is making it even better. The Xpress system has made it possible for Travalo to release higher-end products better suited for duty free, and airports are definitely the company’s target.

Their new “Milano,” launching at TFWA WE, looks and feels luxurious. It comes in a presentation box that makes gifting easy.

While the Milano will soon be offered domestically, three exclusive travel-retail colors are on offer: blue, orange and hot pink.

Okhai plans to have another travel retail exclusive on view: the Milano Constellation, encrusted in Swarovski crystals. He’s refused to sell this product until now despite strong interest. “How can you tell a woman who’s purchased a product for $400 dollars that she can’t change the fragrance?” Eighteen months of R&D solved that problem with the new Xpress system. Travalo will launch Milano on stand D37, Yellow Village, in Cannes. c The Milano, Travalo’s higher-end item, will be presented at Cannes.

These Blue, Hot Pink and Orange colors are travel retail exclusive

www.dutyfreemagazine.ca ASIA DUTY FREE & TRAVEL RETAILING

63

Furla

NEW CONCEPT STORE LOCATIONS

IN THE BAG FOR FURLA The 45-square meter personalized concept shop-inshop in Shanghai Pudong Terminal 1 International

Significant travel retail sector growth since 2010 with 175 locations in 44 countries is underpinned by plans for further expansion across Asia Pacific from China to Malaysia by CLAIRE MALCOLM

F

urla is continuing on its travel retail expansion journey following the opening of a new store in Shanghai, representing yet another location in the bag for the company, which has a operational goal of 18 new concept stores and personalized corners before year-end.

“Asia remains a key focal region in Furla’s ‘Silk Route’ business development strategy with China’s key locations Beijing, Shanghai and Hong Kong all seen as vital locations for outlets both on domestic and travel retail markets,” says Gerry Munday, Global Travel Retail Director, Furla.

The 45-square meter personalized concept shop-in-shop is located in Shanghai Pudong Terminal 1 International, in partnership with Sunrise Duty Free. Other timetabled new concept store openings range from 15 square

64

ASIA DUTY FREE & TRAVEL RETAILING OCTOBER 2014

meters in Mumbai to 58 square meters at klia2 and 124 square meters at Haitang Bay in China.

According to Munday, Asia Pacific is a dominant region for the company’s travel retail business and Furla is placing particular emphasis on maximizing commercial opportunities in China, but is also investing in Thailand, Malaysia, Australia and India.

“Furla’s travel retail growth continues to reflect the brands increasing domestic presence globally with turnover increasing by 37% from 2012 to 2013. Since 2010 we have increased the number of doors in travel retail from 33 to 175 in 44 different countries and that number is moving up all the time,” she says.

“It goes without saying that the key to our success is the strength of our collections and I’m delighted to say that Spring/Summer 2015 exceeds all expectations in terms of quality and innovation,” she adds.

Furla is working with a number of different retailers in the region including James Richardson for Perth, Brisbane and Melbourne; Sunrise for Beijing T3 International and Shanghai T1 International; Dufry for Beijing T3 Domestic and Shenzhen T3 International; Nuance Watson for Xiamen Domestic and China DFG for Haitang Bay. “It’s an incredibly busy year for Furla with openings in the Asia Pacific region taking place

just about every month until the end of the year,” Munday remarks.

At this month’s TFWA World Exhibition, Furla will be previewing its Spring/Summer 2015 collection inspired by the synthesis between art and style. An energetic, playful collection with Neo-Pop inspiration – a postmodern vision of Pop-Art - the collection uses urban graphism with splashes of paint on leather or rubber plus resins and cartoon-like color matches in metal accessories and details.

The color palette is also strongly connected to the world of art, with each bag an ultra-modern art form in its own right and combining vibrant primary tones with sweet and playful hues and classic neutrals.

A number of new key items have been added across the basic, fashion, premium, icon and candy collections for increased functionality and to introduce innovative summer silhouettes and color combinations.

According to Furla, totes will continue to be a dominant theme throughout with new drawstring shapes, hand-woven seasonal offers and perforated, foldable styles and easy functionality and sharp price positioning supporting the Furla style proposition.

For 2015, Furla also continues to develop its Uomo offer with a globally focused collection. The SS15 Uomo offer sees a new global assortment with improved branding, improved price positioning, and elevated quality. With every piece ‘made in Italy’ the collection has been created to give more cohesive merchandising, each item featuring a personalized zipper-pull, symbolizing ‘the key to success’. c

The Twiggy Bag from Furla

VISIT US AT TFWA WE K50, GREEN VILLAGE – Contact us for an appointment: travelretail@m-w.de

/houseof4711

ORIGINAL EAU DE COLOGNE SINCE 1792

www.4711.com

Ferrero Travel Market

Travel friendly Nutella jars

Pralines and more for Ferrero in Asia A novel approach in a crowded marketplace is Ferrero’s raison d’être when it comes to travel retail market growth by CLAIRE MALCOLM

A

sia is a key market and focus for Ferrero brands and François Godin, Managing Director, Ferrero Travel Market credits regional success to the strength of its praline brands.

“We push all our categories in parallel and in Asia especially, we always get excellent feedback for our pralines. We are also trying to develop Kinder and Tic Tac in the region with an interesting line-up of products,” he says.

According to Godin, despite a slowdown in travel retail sales growth in 2013, the company maintained its position in the market, driven largely by Ferrero Rocher, Raffaello and Rondnoir.

Earlier this year, Asia was the exclusive launch destination for the limited edition Ferrero Rocher Cube and the red-ribboned Raffaello Coffret.

“But we also saw increased interest from the trade in our extensive Kinder range, our innovative Nutella World novelties and the new design for Tic Tac mints,” notes Godin.

Souvenir packaging is also a feature of its smallest sweet offering. The Tic Tac T100 Travel Collection comprises 15 collectible packs of mints featuring special designs for Singapore, India and Hong Kong in Asia plus other global destination variants.

“Moving forward, our strategy for Asia

remains one of innovation and imagination – fresh new presentations for products of excellent quality, which engage retailers and customers alike,” says Godin.

Its current line-up of Kinder novelties is a prime example of product development with the 2014 collectible version of the brand ambassador Kinder Pilot, which is available in plush toy with chocolate-stuffed backpack or plastic Kinder surprisefilled character versions, being joined by Kinder Sailor in 2015.

Innovative eye-catching in-store displays with aircraft shaped gondolas in the signature white, blue and orange are similarly helping the brand stand out from the crowd.

Nutella is also spreading its wings in Asia with novelties including the travel-friendly Nutella World 350 gram jar with decorated sleeve and a unique ceramic mug proving to be a popular item, as well as the one-a-day 30-gram servings presented in a seven-day pack.

“We have put a lot more focus on Nutella this year, and in 2015 we will continue to promote Nutella as a gift and souvenir purchase, as well as a popular snack item,” confirms Godin.

He also agrees that the Asian consumer

is often swayed by a perceived good deal, as he explains: “Convenience packs are in great demand from Kuala Lumpur to the Philippines and consumers have high expectations when it comes to gifting, looking out for value as well as quality.

“Our packaging therefore is moving more and more towards exclusive travel retail brands, which support the gifting option and also differentiate us from the domestic market.”

Packaging and presentation decisions are also made with adult travelers rather than children in mind, even for Kinder. “It’s the adults and parents who are traveling and buying, so they are the decision makers we need to attract with our packaging and value for money aspect,” he remarks. c

François Godin, Managing Director, Ferrero Travel Market

66

ASIA DUTY FREE & TRAVEL RETAILING OCTOBER 2014

The Tic Tac T100 Travel Collection

Kraft Foods Group, Inc.

On the

growth

path

Kraft Foods Group Inc. takes Americas travel retail by storm and lays plans for future growth in the Gulf and Europe by

HIBAH NOOR

K

raft Foods Group Inc. has taken a focused approach to travel retail, both with regard to regions of concentration and the products it offers.

As befits a channel as unique as duty free, the company is looking at what elements of its strong portfolio—which includes such confectionery favorites as Planters peanuts, Kraft Caramels, Maxwell House International, Jet-Puffed marshmallows, Gevalia coffee and many more—fit best in which stores and then moving aggressively to secure shelf space in key areas of the Americas, particularly in Central and South America.

Martin Caminos, Commercial Director, Kraft Foods Group, Inc., tells Americas Duty Free that while the company's brands are available in some duty free outlets, there is plenty of room to grow: "We are currently developing our brands through local and regional travel retailers, mostly located in Mexico, Central and South America border 68

Planters is a leading snack brand with a portfolio that includes peanuts, cashews, pistachios and nutrition mixes

ASIA DUTY FREE & TRAVEL RETAILING OCTOBER 2014

areas and major airports,” he says. “Our brands are present in some airports and exclusive resorts in the Caribbean region, and we are expanding to Central America, Mexico and North America. Although our brands do not have a significant presence in the Gulf and Asia markets today, both offer potential for brand exposure and growth."

Indeed, Kraft Foods Group Inc. is banking on the significant fame of its brands in the domestic market to help it make inroads in travel retail. Planters is a leading snack brand with a portfolio that includes peanuts, cashews, pistachios and nutrition mixes, while Maxwell House International and Gevalia offer a variety of exclusive, premium and mixed coffee flavors that come in very attractive packaging. Furthermore, Kraft Caramels and Jet-Puffed Marshmallows provide solutions for both personal consumption and gifting opportunities, certainly a key consideration for the duty free channel.

"All of these brands have extensive dis-

tribution in the US retail marketplace and a presence in many retail markets through export from the US," Caminos explains.

"All of our products enjoy incredible brand equity and prestige developed throughout many decades in the retail marketplace in the US and international markets, creating a strong foundation for success in the travel retail segment."

Catching their eyes

As with any other company looking to make its mark in duty free, Kraft Foods Inc. is keenly aware that grabbing consumers' attention from the outset is key for closing the sales. As such, everything from packaging to placement within the stores is up for consideration. Kraft Foods Group Inc. is also looking at dedicated furniture if space permits, as well as seasonal presentations for holidays such as Christmas and Easter.

And with regard to promoting the products, Caminos notes that a collaborative approach works best: "Brands, retailers and

airport operators can work together through developing specific promotions, displays and sampling opportunities whenever possible. Of course, further to this we will also work with retailers to better accommodate their own commercial plans by collaborating to find novel solutions for new or renovated stores."

Staying competitive

Martin Caminos, Commercial Director, Kraft Foods Group, Inc.

Maxwell House International offers a variety of exclusive, premium and mixed coffee flavors

With retailers now coming on board given the strong growth of the confectionery category in recent years and the continued potential that it shows, competition is heating up as more and more confectioners enter travel retail to try to get a piece of the pie.

Fortunately for Kraft Foods Group Inc., while it participates in the sugar confectionery category, it also has a strong collection of brands that fall into other subcategories. For Caminos, this flexibility is one of the keys to competing with other brands.

“Although we participate in the confectionery category with Kraft Caramels, our portfolio also includes snacks, with Planters, and coffee, with Maxwell House and Gevalia in the Americas,” he says. “This positions us very well to compete.”

For Kraft Foods Group Inc., the future is wide open. The company already has a limited presence on airlines and cruise lines as Planters is an obvious fit for both since it offers a snacking opportunity for any time of the day and comes in convenient sizes and flavors. Caminos notes that this as a possible growth area for the future. For the moment, though, with plenty of ground yet to cover in duty free in the Americas, the company hasn't even scratched the surface in terms of growth potential given its strong stable of known and loved brands.

Opportunities abound

And Kraft Foods Group Inc. isn't stopping at the Americas. Caminos tells us that there's plenty of opportunities in other areas of the world as well. The Gulf is another booming emerging market and while Europe has taken a back seat recently to the exciting growth stories in other regions, it is still a large, established aviation market and a key region of concentration for duty free retailers and suppliers.

“Our plans for the rest of 2014 include an aggressive geographic expansion through distributors in the travel retail stores in the Americas, and we are already working to expand the presence of our brands in Europe and the Gulf in 2015,” Caminos concludes.  www.dutyfreemagazine.ca ASIADUTY DUTYFREE FREE&&TRAVEL TRAVELRETAILING RETAILING103 69 www.dutyfreemagazine.ca AMERICAS

Confectionery News The fashionable face of confectionery Fashionistas traveling through Asia’s major gateways are picking up on the latest gourmet offering from LINDT with its LINDT Diva chocolate truffle collection, a stylish gifting option.

Launched at TFAP in May, following its successful debut in Zurich where sales were reportedly three to four times higher than comparable ranges, (Peter Zehnder, Head of Lindt & Sprüngli Global Duty Free Division) is targeting cross-category placement opportunities with P&C and liquor as a complementary vehicle to support sales forecasts.

The range of gold-dusted artisanal truffle pralines comes in four variants: Truffe Irish Cream, Truffe Rosé Marc de Champagne, Truffe Marc de Champagne, and Truffe Chocolat.

With the truffle dubbed the ‘queen of pralines’ and its packaging exuding an ultra-sophisticated Tiffany meets Cartier vibe, Zehnder agrees that the look and feel is a key differentiator. “There is a definite fashion and movie influence with this line and it is proving very popular with women and lifestyle buyers. It’s also a taste of affordable luxury,” he says.

LINDT Diva’s duty free presence will be selectively extended into the

Middle East with special listings in Dubai and Qatar and also in Asia with the company gearing up for a big launch in Hong Kong this Fall.

Lifestyle buyers are a major focus for LINDT as it continues to address market differentiation opportunities as evidenced by the success of its HELLO range, which debuted at Cannes last year.

With a diverse assortment to choose from, the 180-gram HELLO Mini Stick Mix travel retail exclusive, which contains all four flavors – Crunchy Nougat, Strawberry Cheesecake, Cookies & Cream and Caramel Brownie – is selling well alongside the popular HELLO tablet and stick range.

Chocolate aficionados are also queuing up to get their hands on the company’s newly launched second LINDOR Limited Edition Tube, in silver, which is set to reprise the success of its inaugural pink variant released earlier this year.

“We started the year with the global LINDOR promotion and the limited edition pink tube. People were buying anywhere between five and eight tubes at a time, so we are very excited about the prospects for the new silver variant plus there will be a lot of customer involvement with prize draws for example,” says Zehnder The activations calendar is obviously integral when it comes to brand support, as she explains: “Tasting is something we really focus on as it’s the most convincing tool we have.

“We like to run LINDT SWISS Master Chocolatier activities where we can let people see the chocolate being made and then taste. We are also looking to expand our Pick and Mix concept, which we have in Zurich, Milan, Stockholm, São Paulo, Kuala Lumpur and most recently, Qatar.”

In Asia, the obvious focus for widespread expansion is China. “We are carefully researching the market in order to position LINDT in the best way possible for sustainable future growth, and are just in the process of building up a bigger team in Asia in order to focus even more on the dynamic Asian travel retail market.”

KitKat focus for Nestlé Around 150 KitKat bars are consumed worldwide every second, and the iconic chocolate wafer is taking Nestlé further into the region as one of its star products.

According to Alan Brennan, Global Head of Sales, Nestlé International Travel Retail, as one of the biggest brands in the world, with a huge Facebook following, the company is continuing to leverage consumer interest in Asia.

While KitKat in its original milk chocolate format is a guaranteed global favorite, new flavor profiles such as dark orange and cookies and cream are gaining ground, and Brennan says that regional localization is also important.

“We have seen huge demand for KitKat in Japan, for example, notably the Green Tea variety which sits very well with the Asian 70

ASIA DUTY FREE & TRAVEL RETAILING OCTOBER 2014

consumer profile,” he says.

“Historically, Japan has been consuming everything that was produced there but there is opportunity to export, and essentially what is happening is that Chinese shoppers and other nationalities traveling to Japan are ‘destination buying’, which is a growing category in global travel retail for confectionery,” he adds.

Playing on the novelty aspect of a favorite brand is a forward focus for the company with Brennan highlighting product innovation as a key driver for future continued success.

Other touch points that engage Asian nationalities, and the Chinese in particular, are packaging — with communication in Mandarin - and the product format i.e. having the pieces inside visible.

“Whichever market, it’s about making

the offer easy to understand. The execution is as important as the proposition, and the two go handin-hand right through to having bilingual brand ambassadors in store,” remarks Brennan.

Nestlé Swiss, the exclusive global travel retail brand, is the other major focus, and in Cannes the company will unveil its 2015 product renovation program, where, Brennan says, the focus will be on Alan Brennan, Global Head of Sales, a “stronger, more com- Nestlé International Travel Retail pelling reason to buy.”

“We know that KitKat and our other

at TFWA in Cannes

Please visit us at „Bay Village 11B“!

www.haribo.com

KIDS AND GROWN-UPS LOVE IT SO, THE HAPPY WORLD OF HARIBO

Confectionery News brands have a global following so it is about coming up with a product proposition that adds value, meets customer needs better, and has clear differentiation versus the local market,” he says.

Customer research is also crucial to driving Nestlé’s differentiation strategy as Brennan explains: “By getting to the heart of our market, and understanding the motivations of the Chinese specifically, rather than just trying to put a western perspective on it, we are developing a proposition that meets their needs much more effectively and efficiently.

“We also tap into the Nestlé research pool and conduct different research workshops to really understand customer perception.”

Physical office presence in Beijing and Singapore is similarly helping provide clarity in terms of beefing up resources with local hires to gain grassroots cultural insight.

He also hints at innovation in the form

of much stronger added value for lines such as Smarties. “The toy element resonates very well in Asia, particularly in places like Hong Kong where you have Disneyland, and as the licensee for Disney we have a strong campaign for Asia this year and a lot of new product innovation,” he says.

In addition, the company is going out on a non-confectionery specific limb following the summer global travel retail launch of

the Nescafé range, with Asia a key prospective market from Q3 2014, especially for soluble pre-mixes. Says Brennan: “There is significant growth potential for pre-mixes like cappuccino and lattè and it’s something a little bit different for us, but is still about leveraging a number one global brand. Plus the pouch format is a growth area in terms of packaging and is something a little different for the market.”

Global travel retail favorite Nestlé Swiss’ Milk Chocolate with Almonds and Nougatine

Premium all the way

Irish family-owned gourmet chocolate company, Butlers, has been growing its brand presence in Asia for just three years, building on its long-established European base.

“We were previously pretty much unknown in South-East Asia but we now have very strong distribution and are focusing on North Asia with our new product development primarily aimed at the Chinese passenger,” says Karl Marnane, Sales Director, Butlers Chocolates.

Available at major airport locations from Hong Kong and Singapore to Indonesia, the Philippines and Thailand, Butlers has also bagged a premium spot in the new klia2 terminal.

“We have a store-within-a-store concept, which is a first for us in the region,” he says.

With 70% of its range travel retail exclusive, Butlers is constantly working in developing its collection and Marnane points out that this is the first year that the company has introduced limited editions, which are available in select markets.

“This July we launched a new range with packaging aimed at the Chinese market featuring a lovely pearlized box containing our new fruit truffles flavoured with passion fruit, mango, blood orange and raspberry,” he says.

This was followed by a nut variant in September, with Christmas promising a seasonally appropriate Champagne collection.

Tailoring in terms of both flavor and award-winning packaging, as well as developing its limited editions line, is highly responsive to customer feedback, as Marnane explains: “One of the things we’ve learned over the last 12 months, following feedback from airports like Heathrow where we have Chinese-speaking merchandizers, is that our chocolates were too big, so we have reduced their size.”

A revolving door approach to consumer choice is also key. Says Marnane: “If you look across our entire range we have a lot of assortments, and this is one thing that differentiates us from our competitors. We also want to keep on top of market trends, which is why we will feature a certain product for four or five months before moving onto the next one.”

“If a product is a sell-out then we will bring a series of three, and see which works the best,” he adds.

72

ASIA DUTY FREE & TRAVEL RETAILING OCTOBER 2014

Butlers Limited Edition Chocolate Fruit Truffles

China is a key growth market for the company and Marnane would like to see its chocolates on duty free shelves across the region, but with Korea and Japan tough entry markets due to the popularity of local food items, distribution is a work in progress.

“So we are focusing on building distribution where we have Chinese passengers, plus working on developing our range across the existing airport network so wherever you travel there is some form of Butlers exclusive,” he reveals.

Consumer engagement with HPPs and tasting activities are also a big part of the marketing strategy with the goal of awareness building. “We tick lots of boxes as we offer everything from 100-gram bars through to expensive boxes,” says Marnane.

A brand that appeals primarily to female travelers, in Asia it’s also a gifting favorite. “Over the last three years our packaging has become more premium, and that was a conscious global move for the brand,” he comments.

Price points range from as little as US$4 up to US$60 and Marnane says that this has enabled Butlers to introduce people to the brand with a low spend entry point.

BELGIAN CRAFTSMANSHIP

No two Duc d’O truffles are the same.

The reason for this is very simple. The light chocolate mousse is sent on a journey through a large bed of chocolate flakes. Dancing over them, the truffles wrap themselves in the wildness of Belgian chocolate. Only then are they ready to find their way into civilisation. That’s why all Duc d’O truffles are indecently delectable. But each that little bit unique.

Cognac Report

A NEW DAWN

Cognac sales fell in Asia in 2013, but with some creativity, new launches and promotions, some companies are expecting sales to rebound in the coming year by WENDY MORLEY

L

ong considered a region that prefers brown spirits, Asia also has an exploding middle class that tends toward higher-end items. These realities have brought great sales for the Cognac industry in the region. Until 2013 Asia was the top Cognac market in the world, but after many years of growth, the industry in Asia has slowed.

The big driver in Asia is the largest country in the region, which also has the largest population in the world: China. It’s probably safe to say that the country’s austerity campaign has touched all companies selling there, but none more so than those that manufacture or distribute luxury items.

As a higher-end item, Cognac certainly falls under that category. In 2013, sales of Cognac in the country dropped 13.1% over 2012.

As a result, many Cognac companies have struggled in the region.

Expecting improvement

While as with other companies the environment in China has been challenging for Rémy Cointreau, Matthew Hodges, Global Marketing and Business Development Director, GTR, says he expects sales in the region to improve as consumers become accustomed to the new environment. “We may see a switch to different grades; in fact there is already evidence of that,” he says, noting also that some of the less developed areas of the region are becoming more promising.

Despite the environment, Rémy Cointreau has many launches on the table. Earlier this year came Rémy Martin Coupe Shanghai, the first of the company’s Heritage 74

ASIA DUTY FREE & TRAVEL RETAILING OCTOBER 2014

Collection. The company also released its annual limited edition in celebration of its link to the Cannes Film Festival; this year’s was Rémy Martin XO in a special decanter and gift box. According to Hodges, an anniversary edition of Louis XIII is coming soon, “and then next year another limited edition for the Cannes festival in addition to a few other surprises I can’t yet talk about.”

The Cellar Master’s Selection, which launched in the Americas this spring, will roll out in Asia in January, 2015 as part of the New Year’s celebrations. Travel retail exclusives Rémy Martin Cellar No. 16 and Rémy Martin Cellar No. 28, which replace VSOP and XO in duty free, have had a very successful launch in the Americas. Hodges says he is pleased with the Cellar Master’s packaging, with gift boxes that have been well received by customers. That being said, however, “We are starting to move away from special packaging toward new variants of brands – consumers are curious in travel retail and while they appreciate good design and artistic packaging there is a trend back towards discernment that is increasingly evident.”

The company has a number of launches planned for TFWA WE, including new variant of the Cellar Masters Selection, this time from Cellar 21 and known as the Traditional Cellar Selection. “We will also be showing some new travel retail-exclusive variants of Cointreau that I am very excited about,” says Hodges, who will be at the Rémy Cointreau booth in Marine Village Foyer 1A.

Focusing East

South Africa’s largest wine and spirits

Rémy Martin Cellar No. 16 and Rémy Martin Cellar No. 28, which replace VSOP and XO in duty free, will launch in Asia in January 2015, in time for New Year’s celebrations

exporter Distell has come a long way in travel retail since Robyn Bradshaw was appointed General Manager of Duty Free in 2007. But in the past year or so, travel retail has jumped as a priority for the company, especially in Asia. Last year Marius Fouché, past regional head of Asia Pacific, was appointed as Managing Director of Global Duty Free, and then in March 2014, highlighting the importance of the region to the company, Luke Maga was appointed General Manager of Duty Free ASIAPAC. “Luke is making a significant difference in Distell’s presence throughout the region, gaining new listings in key airports and momentum with existing

Among new items in Distell’s Cognac line is Bisquit XO Rose Gold, its travel retail focus for this year

customers. Regional strategies are all lining up, setting up for a strong year for Bisquit in a difficult cognac market,” says Fouché.

Bisquit, the Cognac that Distell acquired in 2009, became a global brand long before most brands even considered the possibility. In the early 19th century its pioneering and charismatic founder, Alexandre Bisquit, brought his magnum opus to the corners of the earth, including to China in 1849. It is therefore appropriate that this Cognac is Distell’s focus this year in travel retail. “The company is very happy with Bisquit’s progress in Asia travel retail,” says Fouché.

Distell currently offers four expressions of its Cognac: Bisquit VS Classique, Bisquit VSOP, Bisquit Prestige and Bisquit XO. The new Bisquit XO Rose Gold Limited Edition is a big launch for the company in travel retail this year, and has begun shipping to customers. Distell is actively developing products with the Asian travel retail consumer in mind, breaking with what has been done in the past. This year at TFWA WE Cannes the company will launch a limited edition version of Bisquit for Chinese New Year, the Year of the Goat, which will be a travel retail exclusive. Alexandre Bisquit was born in 1799, a Year of the Goat, bringing the rich history of Bisquit full circle. View Bisquit’s Year of the Goat limited edition at Distell booth Green Village H44.

Cordon Rouge does well in both domestic and travel retail, showing double digit growth in duty free in the region.

In Asia, the Grand Marnier brand is becoming well known.

Despite the austerity campaign that has haunted many companies, sales of Grand Marnier continue to be strong; the brand shows a growth rate of about 30% in the region. These sales are mainly in China, but also in Singapore.

The company’s focus in Asia is on its core Cordon Rouge brand, with an exclusive duty free packaging that highlights the brand’s Parisian origin and Cognac liqueur blend. The company is also offering its topend cuvées, Grand Marnier Cuvée Speciale Cent Cinquantenaire and its most recent release, Quintessence. Asian customers are well versed in Cognac and recognize that these cuvées are blended with the finest Cognacs available.

The company has just released the new version of Louis Alexander, a distinctive blend of fine aged cognacs. This special cuvée was developed as a tribute to the creator of Grand Marnier, Louis-Alexandre Marnier Lapostolle, who disrupted the status quo by blending premium Cognacs with exotic oranges. This cuvée recalls LouisAlexandre’s tasting ritual, to add a shot of Cognac to his glass of Grand Marnier. An affordable trade-up from Grand Marnier Cordon Rouge, this product targets males who love the brand. Dufry America is introducing the product in October 2014. It will then be extended to other regions.

The biggest trend Delamarre sees is also the biggest opportunity for the brand, and that is the trend toward premium spirits.

“Our goal is to accelerate the development of the higher-end products,” she says, mentioning the company’s most exclusive cuvée, Quintessence. “It is made with the most precious and very rare Cognac from the private reserve of the Marnier-Lapostolle family.

This is combined with unique doubledistilled Citrus Bigaradia orange essence.

Travel retail, with its elegant environment, is the perfect setting for our finest range.”

Grand Marnier has a long history at TFWA WE in Cannes, and will be located at Bay Village, Bay Area 8. c

Cognac plus

Cognac-based Grand Marnier is the epitome of a luxurious sipping liqueur. The brand does exceptionally well in the US and Canada.

While the spirits market in Europe on the whole is on the decline, Grand Marnier

Cuvée Louis Alexander was developed as a tribute to Grand Marnier creator Louis-Alexandre Marnier Lapostolle www.dutyfreemagazine.ca ASIA DUTY FREE & TRAVEL RETAILING

75

Liquor News Filling the gap

World of Patria aims to fill a gap in the travel retail market with its new single-serve Myx Fusions Moscato wine, launching in travel retail at TFWA WE in Cannes. The company believes it will appeal to wine drinkers and non-wine drinkers, while fitting neatly between entrylevel wine, ready-to-drink products and Prosecco/Cava. Presented in a signature cobalt blue bottle with a twist-off cap, this product strikes a unique balance between casual and elegant, perfect for its target market of young, digitally savvy, sociable and on-trend female drinkers aged 22 to 30.

To further target this group of young women, Myx has partnered with American rapper and pop superstar Nicki Minaj. Minaj is part owner of the brand, and will be the representative face in all marketing activity for this new ready-to-drink Moscato. She embodies the qualities the brand wants to express, including spontaneity, style, trendsetting and pushing the boundaries.

This premium, gently sparkling wine comes in three flavors, original, peach and coconut. Original Moscato is enriched with natural fruit juices and hints of apricot, vanilla and honey. Moscato and Peach takes the already peachy qualities of Moscato wine and adds a rich, ripe, summery flavor. Moscato and Coconut adds a tropical flair to the wine’s refreshing fruitiness.

Rob Nichols, World of Patria Managing Director, expresses his delight in launching this new product in Cannes. “We feel that there is a great opportunity for us to fill an obvious gap in the

market with this product and we are excited that we seem to be the first to try. Current drink trends are changing and we have to ensure that we are offering our customers products that stay in line with the trends. With a drive towards more premium fruity flavored alcohol, Myx Fusions Moscato wine is the perfect combination of a premium beverage and fruity flavors.”

Myx Fusions Moscato will be on display in the Blue Village, stand G13.

Part owner of Myx Fusions Moscato, Nicki Minaj embodies the quality the brand wants to represent, including spontaneity, style, trendsetting and pushing the boundaries

Committed and ready

Janneau Grand Armagnac is confirming its commitment to travel retail by exhibiting for the second time at TFWA WE in Cannes. The company had great success during its visit to TFWA AP in Singapore and is looking to continue that on in Cannes this October.

This year Janneau Grand Armagnac redesigned its packaging. It has a new logo and a modern, sleek, contemporary design that fits well with its image as an international brand. The most-awarded Armagnac, its products have won over 80 medals in the last 10 years. The company’s focus is solely on premium positioning, and to that end it offers VSOP, XO Royal and many vintages.

Janneau recently presented a range of vintages as special limited editions. Called the Dragon Vintages, these were a huge success. This year, the company will present its second vintage limited edition in Cannes, a very rare 50-year-old Armagnac vintage 1964, called the Golden Age. Janneau is the leading Armagnac in travel retail in Western Europe, Russia and the Gulf region, and it is rapidly expanding in the Asia Pacific markets. Its new limited edition vintage and its new packaging will be on display in Cannes in the Green Village, booth K62.

Multiple award-winning Janneau will present its sleek, contemporary new designs along with its premium products

76

ASIA DUTY FREE & TRAVEL RETAILING OCTOBER 2014

Liquor News

ELEGANT EXCLUSIVES

Barton & Guestier is introducing Les Charmes de Magnol Médoc as a travel retail exclusive

Barton & Guestier, a company with a rich history spanning nearly three centuries, has recently introduced new wines along with exclusive packaging for the travel retail industry. The new offerings include Les Charmes de Magnol Médoc, Bistro Girls Night Out, Thomas Barton Réserve Privée 2010 and Château Barrail Laussac.

The Les Charmes de Magnol Médoc will be making its debut as a travel retail exclusive. The new beverage will be presented in an elegant canister that’s sure to catch the attention of travelers as it will feature an illustrated skyline of numerous globally known symbols, bridges and towers. It has been aged six months in oak and is comprised of 60% Cabernet Sauvignon and 40% Merlot.

Alongside the new Les Charmes de Magnol Médoc is a new red blend called Bistro Girls Night Out. The blend has been classified Vin de France and consists of 80% Merlot, 10% Grenache and 10% Shiraz.

The Thomas Barton Réserve Privée 2010 wine will be made available in a luxury leather gift pack.

This particular vintage was honored in competitions and by international wine experts.

The Château Barrail Laussac wine will be debuting fresh new red and gold packaging while maintaining the traditional Bordeaux style. It is made of 45% Cabernet Sauvignon, 30% Merlot and 25% Cabernet Franc.

Barton & Guestier is a premium brand that was founded in Bordeaux in 1725 by Ireland’s Thomas Barton. It features wine from Bordeaux, Burgundy, Beaujolais, Languedoc, Loire, Provence, Rhône Valley and Gascony. The company has been part of the Castel Group since July, 2010.

TWO SINGLE MALT EXCLUSIVES

International Beverage Holdings Ltd will be presenting two new travel retail exclusive Scotch whiskies at TFWA WE in Cannes. With these two releases, anCnoc Highland single malt Scotch whisky is celebrating and embracing travel retail.

With the unveiling of Black Hill Reserve, anCnoc is paying tribute to its Highland home. The whisky is crafted at Knockdhu Distillery; the distillery’s name means “black hill” in Gaelic. This bright-gold single malt is matured in first-fill American oak ex-bourbon casks. It is crisp on the nose with notes of citrus and green apples. The taste notes are of ground spices and pear, with a long and intense finish.

The whisky’s packaging is strikingly contemporary, its label and canister a shimmery silver with gold and black lettering and a gold stripe at the top; it features a black illustration of the distillery.

Limited edition “Barrow” the anCnoc’s other travel retail exclusive. This is the company’s first peated expression to be released to travel retail, part of anCnoc’s new collection of peated malts launched in early 2014. Barrow has a fixed production of only 7,500 bottles. This pale gold expression, with a phenol content of 13.5 parts per million, has notes of warm wood and crème brulee on the palate, with a dry finish.

Barrow’s packaging echoes anCnoc’s other designs.

The bottle is dark green, the label and canister black with pale green and white lettering and featuring a pale green illustration of an old-style barrow, traditionally used in the peat-cutting process.

At TFWA WE in Cannes, these two limited edition travel retail exclusives will be featured at the International Beverage booth located at Marine Village S2.

78

ASIA DUTY FREE & TRAVEL RETAILING OCTOBER 2014

The labels and canisters of adCnoc’s travel retail exclusives are strikingly contemporary; each features an illustration related to the creation of the liquid within

Whisky Report

A world of

CHOICE

Asia Duty Free speaks with five spirits companies, each with different offerings but all focused squarely on the goal of bringing travelers something new when it comes to whisky by RYAN WHITE

T

he popularity of the whisky subcategory in travel retail has been steadily increasing around the world, and nowhere is it more in demand than in Asia. As the industry prepares for TFWA WE, the biggest exhibition of travel retail products and services in the world, Asia Duty Free speaks with five companies—some with new and exciting stories to bring to travel retail and some with a rich tradition in the channel—about what they have in store for whisky fans over the coming months. From new expressions and limited editions to experiential activations and new packaging for old favorites, travelers can expect to have a world of choice at their fingertips leading up to the holiday season.

A recent promotion for The Macallan in Hong Kong International Airport

Made for travelers

For Edrington, it’s all about giving travelers high-end spirits that are difficult, or even impossible, to find in other channels. The company’s business so far this year in Asia has of course been affected by the restrictions on conspicuous spending put in place by the Chinese government, but Steven Sleigh, Business Development Director, Global Travel Retail at Edrington, tells us that good business in other Asian countries such as Taiwan and Korea has offset this to some extent.

“The Edrington Scotch whisky brands continue to make good progress across their major markets, with all brands growing both volume and market share last year,” Sleigh says. “In Asia the focus has for some time been on The Macallan, which is the number one malt in the region and last year grew by 36%. Highland Park too offers great potential, building on last year’s global growth of 30%.”

In Asia, Edrington has focused on key expressions such as The Macallan 1824 travel exclusive collection and super-premium expressions such as The Macallan M and, exclusively in Asia, The Macallan Masters of Photography Capsule Edition – Daido Moriyama. Furthermore, Sleigh notes that the Highland Park Warriors series of single malts “is causing great excitement” as it was recently rolled out in Asia. “The brand story is evocative, supported by dramatic promotions with Norse ship displays and sales assistants 80

ASIA DUTY FREE & TRAVEL RETAILING OCTOBER 2014

dressed as Viking warriors,” he says.

And of course, to go along with such special whiskies, Edrington believes strongly in investing in upscale, innovative travel retail promotions, a great example being The Macallan M in its fabulous decanter. The product is a collaboration between The Macallan, famous art director Fabien Baron and Lalique crystal. Sleigh says that it was a show-stopper when it was launched in Singapore and Hong Kong in June 2013.

“It remains an extraordinary testament to the skills of these craftsmen,” Sleigh notes.

The Highland Park Warrior series from Edrington—travelers can expect to see the new King Christian expression on shelves soon

Whisky Report

Lauder’s Ruby Cask and Oloroso Cask, both new to travel retail, will soon be joined by Lauder’s Madiera Cask

and grain whiskies that make up the blend are initially aged in charred bourbon casks. These individual whiskies are combined to form the blend and then returned for a second time to mature further in Ruby Port casks.

The new Lauder’s Oloroso Cask Finish draws its amber hue and sweet palate from its time maturing in seasoned Oloroso Sherry casks. The malt and grain whiskies that make up the blend are initially aged in charred bourbon casks. These individual whiskies are combined to form the blend and then returned for a second time to mature further in Oloroso sherry casks.

And although these new releases should satisfy fans of the brands for the time being, Scott tells us that Macduff has much more in the pipeline: “We’ll be focusing on regionally targeted promotions for these products,” he explains. “We’re also currently developing a third Lauder’s expression, called Madiera, which will be a big focus next year. Finally, we expect to have gift boxes for all three of these new Lauder’s expressions next year as well. Needless to say, it’s a busy time, but well worth it when you see the finished product.”

Opportunity and ambition The Macallan had a high-profile pop-up store outside the Tasa Meng shop in Terminal 2 at Taiwan Taoyuan International Airport at the end of 2013. Sales assistants were on hand to facilitate tastings and iPads were available to tell the brand story.

In the months to come, Edrington will continue to roll out the Highland Park Warrior series across key airports in Asia. Furthermore, The Macallan Oscuro, part of the 1824 collection and boasting new packaging, was the focus of a high-profile promotion in Singapore Changi in the third quarter. The promotion is currently ongoing in Hong Kong and Vietnam.

Finally, attendees to this year’s TFWA WE in Cannes will be able to see a number of new products from Edrington including the new redesign of The Famous Grouse; Macallan Whisky Makers X-ray special edition series; King Christian, the seventh expression in the Highland Park Warrior series; and new packaging for iconic blended whiskey Cutty Sark.

Pulling out all the stops

Ahead of TFWA WE, Macduff has focused on three new releases across two iconic whisky brands, Grand Macnish and Lauder’s. Grand Macnish 6 Cask Edition, Lauder’s Ruby Cask Finish and Lauder’s Oloroso Cask Finish will go a 82

ASIA DUTY FREE & TRAVEL RETAILING OCTOBER 2014

long way toward keeping momentum high on the back of strong sales over the past year.

“Sales have been exceptional,” says Sales Director John Scott. “We’ve seen significant growth in the last year—we’re opening up new markets and performance is improving in existing markets. Furthermore, given these new releases we’re very excited about the opportunities that exist for the rest of this year and into 2014.”

Grand Macnish 6 Cask Edition is an innovative new blended malt whisky which combines malts from the six different whisky producing regions of Scotland—Highland, Speyside, Islay, Campbeltown, Lowland and Islands, giving a taste of “Scotland in a Bottle.”

The resulting blended malt is remarkably well balanced, with a complex but smooth character. Each bottle will come with a neckhanger booklet, explaining the typical characteristics of each of the regions.

Lauder’s, on the other hand, will be present in Cannes with two new releases, Lauder’s Ruby Cask Finish and Lauder’s Oloroso Cask Finish. Ruby Cask Finish is presented in the traditional Lauder’s “4-pinch” bottle with a high-quality gift carton featuring the image of a port wine cellar. The whisky has a slightly reddish hue which it has taken from its time maturing in seasoned Ruby Port casks carefully selected by the master blender. The malt

Bacardi is releasing special packaging for the Aberfeldy brand of Scotch whisky. The company is also releasing a number of whiskies

The 18-year-old expression of Aberfeldy is available exclusively in travel retail

Imperial Collection Super Premium Russian Vodka is available at Selective Venues & Retailers DISTILLED AND BOTTLED IN RUSSIA BY LADOGA GROUP

WWW.LADOGASPB.COM

Whisky Report to the domestic market, and fortunately for travelers some very special expressions are going to make it to the travel retail channel.

Named “Highland Whisky of the Year 2014” by Whisky Magazine, Aberfeldy has, as mentioned, now been repackaged. An 18-year-old is now exclusively available in travel retail. The company plans to launch a 16-year-old sherry finish and a 30-year-old in 2015.

Another whisky in Bacardi’s portfolio is Aultmore, a rare Speyside malt known locally as “a nip of the Buckie Road.” The distillery’s water filters down through the misty, mysterious area called the Foggie Moss. Aultmore is rated top-class and is a dram sought after for its gentle grassy notes. Aultmore will be available from November with a 21-year-old in travel retail.

The Craigellachie distillery stays true to its traditions of whisky-making, including the use of worm tubs—so called for their coiled copper tubing—to cool the spirit. A challenging Speyside whisky, it was described as “old-fashioned” even in 1891 as it makes no concessions to modern-day trends. Single malt fans appreciate Craigellachie for its remarkable sulphuric, savory, meaty character. Craigellachie makes its way from the distillery doors with a travel retail exclusive 19-year-old.

Coming in summer 2015, The Deveron is a new range of 12-, 18- and 25-year-old single malts, made where the River Deveron meets the open seas. Offering “calm from the storm,” it’s the perfect fireside malt. Soft fruity notes combine with an easy drinking style to make The Deveron a favorite with the work force of the distillery. Bacardi hasn’t yet released information on what expressions of the The Deveron, if any, will be released in travel retail.

Finally, there’s Royal Brackla. With a previous limited edition release of a 35-year-old priced at US$15,000 a bottle, Royal Brackla is a truly regal malt. Founded in 1812 in the northern Highlands, it hails from the first distillery bestowed with a royal warrant and has since been lauded as “The King’s Own Whisky.”

Heavily sherried, rich, fruity and full, Royal Brackla is a fine dram to savor as it slowly reveals its complexity. Royal Brackla will be released in March in 12-year-old, 16-year-old and 21-year-old expressions. Bacardi has not yet confirmed whether or not any of these sought-after expressions will make their way into duty free stores.

“We believe we have a massive opportunity for malts—and we have ambition to match— to bring our malts to GTR and create more category differentiation and premiumization,” 84

ASIA DUTY FREE & TRAVEL RETAILING OCTOBER 2014

said Irving Holmes Wong, Regional Director Asia Pacific and Middle East at Bacardi Global Travel Retail. “We’re keen to work with retailers who also share that vision.”

A range like no other

“The response to Bruichladdich has delighted us and exceeded our expectations,” says Rémy Cointreau Global Travel Retail Marketing Director Matthew Hodges. “We are already managing our stock very carefully and have requested a significant increase for next year.”

Hodges cites The Organic expression, with its distinctive aqua color, as a clear standout.

The package immediately attracts consumers, and when they hear the story of the brand and finally taste the liquid within—especially given the popularity of peated malts of late—

instant fans are made.

While the Bruichladdich range, consisting of five expressions, only appeared on shelves over the summer, there have already been some activations in Japan, mostly consisting of tastings. Hodges notes that tastings work best because offering consumers the chance to taste the liquid while at the same time educating them is a powerful tool for conversion.

Larger-scale activations will soon be coming to Taiwan, he says.

In addition to The Organic, the range consists of Black Art, available in a striking black bottle with a six-pointed star; Bere Barley 2006, a limited-edition unpeated single malt presented in a clear bottle with a silver gift box; Port Charlotte PC11, a limited-edition heavily peated scotch whisky presented in a

Named “Highland Whisky of the Year 2014”

by Whisky Magazine, Aberfeldy has now been repackaged; pictured is the 18-year-old expression

Helping brands Helping Helping Helping Helping brands really brands brands brands really really take really really take take off off take take offoff off

* Effective * Effective * *Effective * Effective Effective PR PR PR for for PR PR forfor for the travel thethe travel the the travel retail travel travel retail retail retail retail &&& && duty free duty duty duty free free sector free free sector sector sector sector

SNSEssential COMMUNICATIONS unications Essential Essential Essential Communications Communications Communications *Communications *ESSENTIAL * **

e ding ng ing ng

knowledge “ CLIENT “ “ “ “ understandi MEDIA

Here’s what Here’s Here’s Here’s Here’s our what what what what clients ourour clients our our clients clients clients have to say have have have have to about to say to to say about say about us... about about us...us...us... us... independent Essential Essential Essential Essential Communications Communications Communications Public Communications is anis isindependent an an isindependent independent an independent Public Public Public Public

Understanding Media Media Media Media Knowledge...

Knowledge...

Knowledge...

Knowledge...

Client Client Client Client Understanding Understanding Understanding Understanding

e travel Relations Relations Relations retail/ Relations agency agency agency duty agency specialising specialising specialising specialising in the in in the travel the in travel the travel retail/ travel retail/ retail/ duty retail/ duty duty duty 's afree business free free industry, industry, free industry, industry, both both we both B2B both B2B B2B know andB2B and and B2C. and B2C. B2C. It'sB2C. aIt's It's business aIt's abusiness business a business we we we know we know know “Iknow have been working “I have “I have been “I“Ihave have been with working been been working Essential with working working with Essential with Essential withEssential Essential companies inside inside inside out! inside out! out!

Our Our out!

Our across client client Our client base client base base includes base includes includes includes companies companies companies companies across across across across Communications Communications Communications for Communications Communications six years for six foryears six for for and years six six and years years the and the the and andthe the , but allall with product allproduct product all one product and and and operational thing operational and operational operational in sectors, sectors, sectors, sectors, but but with butwith but with onewith one thing one one thing thing in thing in in in hascompany company been company company company has instrumental has beenhas been has instrumental been been instrumental instrumental instrumental inin in inin common common common common - travel - -travel travel retail/ - travel retail/ retail/ duty retail/ duty duty free. duty free. free.free. achieving higher achieving achieving profile achieving achieving higher higher for profile higher higher profile the forprofile profile the brands for brands the for forbrands the thebrands brands

that I have represented that that I have that Ithat have represented IIhave have represented in represented represented travel in travel in retail.” travel retail.” inintravel travel retail.” retail.” retail.”

companies We We We strive strive strive Wetostrive to raise we toraise raise to theraise the the profile profile profile theofprofile the of of the companies the of companies the companies companies we Gerry we wewe Munday, Gerry Gerry Munday, Gerry Gerry Munday, Munday, Munday, eelvel in travel retail the retail travel retail and and duty and retail duty duty andin duty Essential Communications is an independent Public Relations agency specialising retail represent represent represent and represent associated the ininthe the international ininternational international the international travel travel travel retail travel retail retail and retail and associated andand associated associated associated Global Travel Global Retail Global Global Travel Global Travel Director, Retail Travel Travel Retail Director, Retail Retail Director, Furla Director, Director, Furla Furla Furla Furla in the es anies companies we we represent we represent represent we in represent the in in the the in the free industry.

Established for over ten years, our goal is to raise the profile of the compa blicise media, media, media, their to media, to promote topromote promote product to promote their their their brands, their brands, brands, brands, publicise publicise publicise publicise theirtheir their product their product product product international and regional media. ist them developments, developments, developments, developments, to maximise andand and in so in and indoing so soindoing doing soassist doing assist assist them assist them them to them maximise totomaximise maximise to maximise y, increase favourable favourable favourable favourable exposure sales. exposure exposure exposure and, and, and, ultimately, and, ultimately, ultimately, ultimately, increase increase increase increase sales. sales. sales. sales. wards ds backwards to to putput totogether put together to together put a together aa a At Essential Communications, the client always come first and we will bend over backw

“

““““

I don't know why I don't I don't everyone know I Idon't don't know why know know why everyone why everyone doesn't everyone everyone doesn't doesn't doesn't doesn't

game, you’re fsoyou’re if you’re so looking looking if you’re looking for for a looking for a a for a proposal that meets your needs...and your budget. Flexibility is the name of our game, s use Essential use Communications. use Essential use Essential useEssential Essential Communications.

Communications.

Communications.

Communications. o, our Established Established Established industry Established nearly nearly two nearly two two decades decades two decades decades ago,ago, ago, ourago, our industry ourindustry our industry industrysimple, straightforward press release program or an all singing, all dancing media cam mpaign, ia n, ign, campaign, we’ll we’ll give we’ll give you give we’ll you ayou nogive aa noyou noanearly noFast, efficient,Fast, everything Fast, efficient, Fast, Fast, efficient, efficient, efficient, everything everything is done everything everything is done is done in inisisdone done in inin tacts, knowledge knowledge knowledge and knowledge and excellent and and insight, insight, and insight, insight, superb superb superb contacts, superb contacts, contacts, contacts, andand excellent andand excellent excellent excellent nonsenseway, solution tothe yourright needs.

And..we do a smile. the right and the the is right the way, in right right way, and front way, way, and is itinwith is and and front of in is front is the ofin inthe front front of the ofofthe the

media, relationships relationships relationships gives relationships with us with with the awith the the travel travel travel theretail travel retail retail media, retail media, media, gives media, gives gives usgives aright ususaus a people a in right time right people right right people for in people people time publication. in time for in publication. time time for publication. for forpublication. publication. . unique unique unique position unique position position position within within within the within the the business. business. business. the business.

Essential hasEssential become Essential Essential Essential has has become a vital has become has become become a vital tool a vital tool aa in vital tool in vital our our in tool tool our ininour our

w tow I know don’t why why everyone know why everyone everyone why everyone doesn’t e Row t use Row at Row use at Essential Essential atRow Essential at Essential Communications. cations. unications. tions. Fast, Fast, efficient, Fast, efficient, efficient, Fast, efficient, and sure akes s sure makes that sure that everything that sure everything everything that is everything is is is done ne right the right in way, right way, theway, isright inis front in is way, in front front is in front people tight f people thepeople right and and people inand time in in time and for time for infor time for publication. ation. n.

Row Row has Row has become has Row become become has a become aa a n our ol ital our incommunication tool our communication in communication our communication nd ytrategy we and we are we are and delighted are delighted wedelighted aretodelighted toto to be g with king with working her.” with her.” her.” with her.”

“I have worked with Essential

“Scorpio Worldwide appointed

“I don’t

established in 1996. The company

as part of an upgraded marketing

Commu

communication communication strategy communication communication communication strategy and strategy strategy and strategy weand we are are we and and are we weare are doesn’t Essential Communications in 2006 Communications since it was first delighted to be delighted working delighted delighted delighted to betoworking be with to toworking be with working them." working with them." with them." withthem." them."

Ian Taylor, Global Ian Taylor, Ian Ian Taylor, Ian Marketing Global Taylor, Taylor, Global Marketing Global Global Marketing Manager, Marketing Marketing Manager, Manager, and ma strategy.

They provide usManager, with Manager, has always been the mainstay William Grant William & William Son William Grant William Grant & Grant Grant Son & Son & Son Son done in a friendly, efficient, pro-active of a proven successful marketing

of the ri service and, certainly for Scorpio, strategy for the various companies represent excellent value for publica I have been involved with. In money.” vital too working with Morgan & Oates for In an increasingly In anInincreasingly an In competitive Inincreasingly an anincreasingly increasingly competitive competitive competitive marketcompetitive marketmarketmarketmarketstrategy the last four years, EC has helped Stuart McGuire, Managing place, communication place, place, communication place, place, communication is communication communication key is and key isGroup and key isis we and we key keywe and andwe we be work us to develop and establish a solid Director, Scorpio Worldwide Ltd small, would recommend would would recommend would would EC recommend recommend to recommend EC any to ECany small, to EC EC any small, to tosmall, any any small, brand image within the Travel an Global obal or,Taylor, Global Marketing Marketing Global Marketing Manager, Marketing Manager, Manager, Manager, Ian Taylo independent company independent independent independent independent company seeking company company company seeking seeking toto seeking seeking build build to build totobuild build ‘Essential Communications has Retail sectors. Excellent editorial William ant Grant & Sons & Sons & Grant Sons& Sons William their categorytheir presence." their category their their category category category presence." presence." presence." presence." proved to be a vital part of the coverage, assistance with activities Jonathan Jonathan Jonathan Jonathan Smith, Smith, Smith, Smith, success and growth of Counter at exhibitions,Smith, andJonathan full assistance Head Head Head Retail, ofHead Head Travel of Travel of ofintelligence Retail, Travel Travel Travel Retail, Travel Retail, Retail, Blue Travel Travel Travel BlueBlue Blue Retail inBlue the channel. withof WebTravel site developments has Always quick to respond to our ensured that Morgan & Oates is needs, the reach the company has well respected in the Travel Retail provided us has ensured we’ve arena. I would not hesitate to always had the right amount of recommend their services.”

09 Tel:Tel: +44 Tel:+44 (0) +44 Tel:208 (0) (0) +44 405 208 (0)8109 405 405 2088109 8109 405 8109 Rowena Rowena Holland Rowena Holland Rowena Rowena Holland Holland Holland exposure and the mostCommunications appropriate 784 Mob: Mob: Mob: +44Mob: +44 (0) +44771 (0) (0) +44 021 771 771 (0)9784 021 021 7719784 021 97849784 Essential Communications Essential Essential Essential Communications Communications Communications Jeannie Archer, Managing Director, JA Essential coverage at the right time’. communications.org Email: Email: Email: row@essentialcommunications.org Email: row@essentialcommunications.org row@essentialcommunications.org row@essentialcommunications.org 110 Falconwood 110 Falconwood 110 Falconwood 110 110 Falconwood Falconwood Road RoadRoadRoad Road Associates Ltd CroydonCroydon Croydon Croydon Croydon Garry Stasiulevicuis, Managing Surrey, CRO Surrey, Surrey, 9BD, CRO Surrey, Surrey, CRO 9BD, UK CRO CRO 9BD, UK 9BD, UK 9BD,UK UK mmunications.org www.essentialcommunications.org www.essentialcommunications.org www.essentialcommunications.org www.essentialcommunications.org Director, Counter Intelligence Retail

“

““““

Port Charlotte PC11 is a limited-edition heavily peated scotch whisky; fans will be treated to a new expression next year

Whisky Report clear bottle with a black and orange gift tin; and Octomore 6.2, said to be the most heavily peated malt whisky on the planet.

Coming next year will be three new additions to the range: Octomore 7.2, Port Charlotte 12 and a new expression of Bere Barley.

Attendees to this year’s TFWA WE in Cannes can see the entire Bruichladdich range, as well as Rémy Cointreau’s other offerings across subcategories, at Marine Village, Foyer 1 A.

A taste of Ireland

Illva Saronno, an Italian-based company perhaps most well known for the worldrenowned Disaronno liqueur, sold in over 160 countries, is jumping into the growing Irish whiskey trend with the release of The Irishman Single Malt.

“The Irishman Single Malt has been available in travel retail with Aer Rianta in Ireland through the Irish Whiskey Collection in Dublin Airport,” says Ludovica Reina, Travel Retail Manager EMEA, North America and Caribbean for Illva Saronno. “It is also available in duty free in Shannon, Cork and Belfast Airports. Last year The Irishman whiskeys went through a rebrand and were relaunched in travel retail in Ireland.

The reaction has been phenomenal, with sales almost doubling in the last 12 months” The company is now rolling The Irishman portfolio out across international travel retail, given its strong performance in its home country. This Irishman Single Malt is one of only a handful of Irish triple-distilled single malts on the market. Indeed, it is a classic Irish malt with a twist—it is aged in oak bourbon and Oloroso sherry casks to give exceptional flavor and complexity. Each batch is limited to a maximum of 6,000 bottles. The Irishman Single Malt boasts an impressive medal haul both in Europe and the USA for its outstanding quality, including a Double Gold Medal from The World Spirits Competition in San Francisco. Each bottle carries a batch number and signature as a mark of the highest quality.

“We will focus on The Irishman Single Malt for general release into the travel retail market and then each year we will introduce a new expression to this lineup,” says Reina.

And in terms of promotion, Reina notes that as the unsurpassed taste of The Irishman Single Malt has been the key to its success in Irish travel retail, activations will certainly include sampling where allowed. “We intend to keep things interesting for travelers,” says Reina. “The goal is always to keep current fans of The Irishman Single Malt happy and of course bring new fans into the breach.” c 86

ASIA DUTY FREE & TRAVEL RETAILING OCTOBER 2014

The Irishman range of Irish whiskeys—Illva Saronno intends to concentrate on The Irishman Single Malt to begin its travel retail expansion outside of Ireland

Beluga

The brand has developed some eye-catching activations in destinations such as Tenerife

BELUGA EYES ASIA HUBS The premium Russian vodka brand is making a concerted push into Asia as it looks to replicate domestic sales success in travel retail by CLAIRE MALCOLM

B

eluga’s Asia ambitions follow on the back of strong performance in the motherland as well as the CIS countries and Europe.

According to Victoria Leonova, Head of Travel Retail, Synergy, producer of Beluga and other popular distilled spirits, Dubai was the catalyst for development in Asia with its prominence as a major gateway to the region.

“Last December we launched with Delhi Duty Free and in September we agreed for a listing in Mumbai, so we are beginning to grow very fast. Around 35% of our sales in Dubai come from Indians, and we are absolutely sure of the potential in big Indian hubs,” she says.

“Asia is not such a huge market for vodka with a preference for brown spirits but as an international brand we have be present in travel retail in all international markets,” she adds.

A major coup for the company was its listings in Bali, Busan, Laos and Cambodia, as well as at the newly launched klia2 duty free. Leonova is keen to springboard the brand further into Asia and confirms that discussions are underway with several airport locations including Hong Kong and Singapore.

“We are also looking at Vietnam as we already have a strong domestic presence there,” she reveals.

Cambodia is another destination on the future travel retail

Beluga on display at Zurich Airport

88

ASIA DUTY FREE & TRAVEL RETAILING OCTOBER 2014

map and Leonova says that existing relationships with Dufry and Heinemann are, hopefully, a foot in the door in a number of locations.

Its Beluga Noble line is the main focus for the brand, followed

by Beluga Gold, with two new lines Beluga Transatlantic and Beluga Allure rounding out the portfolio.

“We are already number four in travel retail globally, sitting alongside premium brands like Grey Goose, Belvedere and Cîroc.

Bearing in mind that we are only eight years old as a brand, this shows very positive growth,” she says.

Beluga has 83% market share in its homeland, but with hundreds of brands competing for attention, is investing heavily in its packaging as a key point of differentiation.

Opportunities to jump on the mixology bandwagon are being seized, as Leonova explains: “We haven’t done this yet in a duty free environment, but we are already doing cocktail promotions and tasting events domestically in places like Vietnam and Indonesia.

“Our customers, which represent a wide mix of nationalities, tend to be aged 30-35 years and above, so events like cocktail promotions work well.”

Positioning itself in the upper echelons of the premium category, Beluga price points are generally US$5-15 higher than brands like Grey Goose, according to Leonova.

Airline uplift is also a part of the development blueprint, and with Beluga already served in Lufthansa business class, Leonova confirms that the brand has pitched for a number of tenders.

“It’s the beginning of a huge growth phase for us. Apart from Asia we are looking at other markets with high potential in South America, where we already have domestic business, and have started already with Mexico and Cancun,” she says. c Leather gift box presentation is synonymous with Beluga’s premium positioning

Although distilled in Scotland’s oldest grain distillery, Haig Club single grain whisky is thoroughly modern

Diageo

A QUESTION OF HERITAGE Two of Diageo’s whisky brands are steeped in history but truly part of the modern world by WENDY MORLEY

I

t was not surprising to learn that Diageo had three brands in the top 10 travel retail spirits in the world for sales in 2013, according to International Wine & Spirit Research (IWSR) data released recently.

Even less surprising is that the top brand in the world is Diageo’s Johnnie Walker; this whisky is far and away the world leader, with an estimated 35% of the world’s Scotch whisky market all to its own, and has been in this position for a long time.

In fact Johnnie Walker is such a wellknown brand that it would be very easy for Diageo to rely on history and the brand’s reputation for its sales, but instead the company works very hard to keep it foremost in the public mind. Recently, Diageo has opened two new Johnnie Walker Houses in travel retail in Asia, the first at Chhatrapati Shivaji International Airport, Mumbai, and the second at Taoyuan International Airport, Taipei.

The first Johnnie Walker House opened in Shanghai, China in 2011, the next in Beijing in 2012 and the third in Seoul, South Korea in 2013. These Houses were created as luxurious embassies outside of Scotland where one could learn about the history of Scotch whisky, the Johnnie Walker brand and about

Two Johnnie Walker Houses recently opened in Asia travel retail, one in Taipei and this one in Mumbai

90

ASIA DUTY FREE & TRAVEL RETAILING OCTOBER 2014

the man himself. Anyone can tell a story, but few can tell it well. Johnnie Walker Houses create a multisensory experience that engages customers, helping them not only understand but also feel the heritage of the brand.

Through the years Diageo has made use of different art forms to engage customers and enrich the Johnnie Walker experience. In Mumbai, an exclusive Johnnie Walker House Art Collection - Mumbai Edition has been created. The special limited edition bottle offers an interpretation of Johnnie Walker’s original journey from Scotland to India in 1883 and will be available only at the Mumbai location, in celebration of its opening.

Modern history

While Johnnie Walker may be Diageo’s (and indeed the world’s) best-known whisky brand, it is not the only one. This year brought a very exciting launch, one for which Diageo partnered with two giants of sports and entertainment, trendsetters David Beckham, perhaps the most famous soccer player of all time, and Simon Fuller, creator of the “Idol” franchise and other TV reality shows.

The much-anticipated Haig Club, Diageo’s new single grain Scotch whisky, was

announced this summer, and that announcement was soon followed by the brand’s launch at Changi International Airport in Singapore.

Haig Club was available exclusively at DFS in Changi for its first month on the market, with a huge activation that included the unveiling of marketing material featuring Beckham. The retired soccer star, the central figure in the promotion of the new whisky, made a thrilling appearance at the unveiling in support of the launch.

Though this new whisky, created by Master Distiller Chris Clark and crafted at Scotland’s oldest grain distillery, Cameronbridge, is steeped in tradition and heritage, it is a truly modern brand. This is evident from its unique bottle and marketing campaign to the way it’s been crafted. Beckham and entrepreneur Fuller have both been actively involved in the development, positioning and strategy of Haig Club. Some have gone so far as to state that the partnership and launching of the highly anticipated Haig Club could help reshape the mainstream perception of Scotch whisky for years to come. c

Crowds of thrilled fans greeted David Beckham as he appeared at the Haig Club launch at Changi airport in Singapore

Please visit us at TFWE – Red Village K16

Davidoff

When art meets cigars CEO Hans-Kristian Hoejsgaard feels Davidoff has found its rightful place as a strong member of the global arts community

C

igars and art are a natural pairing, says Oettinger Davidoff CEO Hans-Kristian Hoejsgaard. “Everything about cigars is made by hand —the cigar itself, the humidor,” he says.

And cigar aficionados, he has noticed, have a connection to the art world. “From our database we know that many of our customers are interested in art,” he says. “Some are very big art collectors.”

In 2011, the year Hoejsgaard came on as CEO, the company was reviewing its sponsorships. Oettinger Davidoff had two CEO Hans-Kristian Hoejsgaard has spearheaded the unique relationship between Davidoff, Art Basel and the art world at large

92

ASIA DUTY FREE & TRAVEL RETAILING OCTOBER 2014

by

WENDY MORLEY

major global sponsorships in music and sports that were coming up for review. Since he had realized how much sense the association would make, Hoejsgaard suggested looking at Art Basel. It was a perfect fit, he thought. The two companies have the same home, Basel, Switzerland, they are both global and Hoejsgaard had observed this art-cigar connection.

Art Basel, an organization begun in 1970, stages three art shows annually, in Basel, Hong Kong and Miami. It is now considered the premier international art show in the world, providing a platform for hundreds of artists and galleries each year. The organization’s role, as it states, is to bring together artists, galleries, collectors and public institutions, recognizing the importance of these members of the arts community and their involvement with each other. Over the course of three or four days at each location, Art Basel does just that, and also invites the public at large to experience what art can do.

While money certainly exchanges hands in the art world, art organizations are not businesses and they normally spend a great deal of effort and energy trying to find sponsors. One can only imagine the offices of Art Basel that day in 2011 when the phone call came from Davidoff that the company was interested in a large sponsorship role.

With that, Davidoff became one of Art Basel’s main sponsors, along with Absolut, Audemars Piguet, Axa Art and Netjets.

Thus began Davidoff ’s connection with

Dominican artist Polibio Diaz works with video, performance art and photography, as seen here with his “Entrada a la Ile Saint-Louis”

the art world. But it certainly was just the beginning. Davidoff and its CEO Hoejsgaard were not satisfied with just throwing in money as a sponsor. If the company were to involve itself, it would jump in with both feet.

The Davidoff Art Initiative

Davidoff has a strong relationship with the Caribbean, especially the Dominican Republic. The company’s tobaccos are grown there and its cigars are crafted there. Of the company’s more than 3,500 employees worldwide, 1,800 of them are located in the Dominican Republic and Honduras.

Oettinger Davidoff as a company feels strongly the need to give back to the community. In 2011 it already had a number of social initiatives that address those who live there, and has always enjoyed a positive relationship with the area’s residents.

Meanwhile, Hoejsgaard was well aware that the Caribbean has a vibrant art community often overshadowed by that of bigger countries. Given its new association with Art Basel, the company saw the next logical step in its social responsibility evolution was to found the Davidoff Art Initiative.

Announced during Art Basel Miami in December of 2012, the Davidoff Art Initiative came into being with the help of András Szántó, a lecturer at Columbia University and a consultant in areas of art, business and strategy. He helped define what was possible and helped the company write the strategy.

Davidoff’s Collector’s Lounge at Art Basel in Hong Kong was home to the company’s first two commissioned cigar boxes

The initiative rests on four pillars

The strategy Szántó helped to write was based upon four pillars. The first pillar and nucleus of the initiative is the art residency in the Dominican Republic, where emerging and mid-career artists will be offered an opportunity to spend an extended period of time working in a different social and creative environment from their own. “The Davidoff Art Residency serves as a conduit for professional mobility, cultural immersion and creative exchange,” says Hoejsgaard. The groundbreaking took place in March of this year and the first five visiting guests, chosen from a pool of applicants from around the world, will stay there from January until April, 2015.

The second pillar is to send Caribbean artists to art residencies. As Davidoff brings talented artists from around the world to the Caribbean, it will also be sending Caribbean artists around the world. A total of five artists from the region each year will be sent to residencies abroad, one each to the International Studio & Curatorial Program (ISCP) in Brooklyn, the Künstlerhaus Bethanien in Berlin and Red Gate in Beijing. This program will soon extend to another residency in Europe plus one in South America.

The third pillar is to provide small grants for arts organizations in the Caribbean.

Some recent examples include a grant to an art school, allowing the building of a floor, to an art magazine in St. Vincent that

had been run completely by volunteers, providing enough to hire an employee, and to a photography conference, allowing organizers to invite international exhibitors.

The fourth and final pillar is to commission artworks by Caribbean artists. This year Davidoff commissioned an artist to create cigar boxes for a special limited edition. This limited edition cigar was released during Art Basel Hong Kong this year in the Davidoff lounge.

For Davidoff this is about something beyond corporate daily life. The company has begun holding informational art dialogues for collectors, though Hoejsgaard is quick to point out they are not experts. They have a field of experts—an international advisory panel—who help them choose worthy artists and also suggest to artists that they apply. The hope is that each year Davidoff will be able to assist artists from all over the world who work in many types of visual art.

Hoejsgaard feels that in art the company has found its place of equilibrium between commercial, corporate and corporate responsibility. Davidoff is becoming firmly established as part of the art community and he feels it’s gratifying to help artists.

“You have to take a long-term view with sponsorship,” he says. “Every year Davidoff will help 10 artists to experience the world and learn from others.” 

Jorge Pineda is an artist from the Dominican Republic chosen for Davidoff’s residency program

The centerpiece of the Davidoff Art Initiative is its residency, built at the Altos de Chavón School of Art and Design

www.dutyfreemagazine.ca ASIA DUTY FREE & TRAVEL RETAILING

93

Questionnaire

ALL ABOUT Jaya Singh, President, APTRA Q. Where were you born and raised?

A. I was born in Singapore and raised here as well.

Q. Your favorite drink?

A. A beautiful large single malt whisky, chilled just right.

Q. Which historical figure do you most admire?

A. Nelson Mandela.

Q. If you attended post-secondary school, what did you study?

A. In Singapore once you complete post secondary you have to qualify for pre-university, which they call junior college now. I failed my pre-university exams because I had to focus on the priority, which was enjoying my teenage years! I ultimately did my A-levels again. I went on to do my undergraduate in economics and then post-graduate in business, in the UK. Great years!

Q. Do you have a passion in your life (or more than one)? What?

A. That’s really private but if you must, it’s all about restoring hope, joy and purpose, and I’ll leave it at that!

Q. Where and when were you happiest in your life?

A. Where I am right now.

Q. Are you married? Do you have children?

A. I’ve been married 24 years and still going strong! Yes we have one son. Singapore is too expensive for more!

Q. What is your favorite movie?

A. Forrest Gump. It’s all about simplicity, the virtues of enduring loyalty and faithfulness, and that in the end good always prevails despite the complexities of life.

Q. What is the last book you read?

A. The Good Book.

Q. What would you choose as your last meal?

A. A bit of everything from all parts of the world.

94

ASIA DUTY FREE & TRAVEL RETAILING OCTOBER 2014

Q. Do you have a pet (or more than one)?

If so, what animal and name?

A. Myself and I do believe that it’s called Jaya. Not too sure if it’s an animal or a beast!

Q. Do you prefer country or city?

A. A little bit of both.

Q. What is your favourite place to vacation?

A. Anywhere that offers a great beach, great food and a well-stocked bar of single malts.

Q. What’s the first thing you do in a new place?

A. Make sure the bed is a firm one!

Q. If you could choose any place in the world to live, where would it be?

A. Singapore!

Q. Which living person do you most admire?

A. Jesus Christ.

Q. What in the world would you most like to change?

A. The inequalities that exist everywhere.

Q. What about yourself would you most like to change?

A. My sleeping habits, or lack thereof!

Q. What is the most important piece of advice anyone ever gave you?

A. Don’t wait for the right feeling before you do the right thing. If you do the right thing then the right feeling eventually comes, and not for you alone but for others as well.

Much bigger.

Q. What is something about you that most people would find surprising?

A. You’ll have to ask them, if you can find them! c

advertisement removed for legal reasons