Gulf-Africa Duty Free & Travel Retailing (Nov 2013 Vol. 23 No. 3) by Paramount Publishing Ltd.

NOVEMBER 2013 MEADFA • VOL 23, NO 3

MEADFA 2013

Dubai Duty Free turns 30 p.

Abu Dhabi Airports p. dreams big

Mars leads p.

102

Diageo goes 3D p.

Letter from the Editor

What’s in a name?

s most reading this know by now, the Middle East Duty Free Association has embraced the vibrant continent of Africa officially and changed its name to the Middle East & Africa Duty Free Association (MEADFA). President of MEADFA Sean Staunton tells us that even before this development, 25% of MEADFA’s members were operating in Africa. Furthermore, anyone who’s attended the conference in years past knows that the continent has always played big a role in the discussions taking place both on and off the stage. On the surface, then, the change seems to be more symbolic than anything else, but the power of naming— sometimes stifling, in this case liberating—shouldn’t be underestimated. “What others call you, you become,” says novelist Catherynne M. Valente. “It’s a terrible magic that everyone can do—so do it. Call yourself what you wish to become.” If, indeed, MEADFA has called itself what it wishes to become, we can necessarily look forward to increased participation from African operators, more discussions about duty free as it relates to this vast continent and a greater and better exchange of information to the benefit of everyone involved with the conference as the years progress. Inarguably, this is a move in the right direction. Both Sub-Saharan Africa and North Africa will have their time in the spotlight at this year’s conference, along with plenty of presentations related to the Middle East. Combined with the addition of the new workshop programme this year we will, with any luck, have plenty of timely information to assimilate as we forge a path into 2014. From the infrastructural expansions taking place at numerous Middle Eastern airports at the moment to the continuing challenges of operating in North Africa, many themes will be explored in depth at this year’s conference, but before two days of business begin in Doha, we would do well to follow MEADFA’s lead and ask ourselves what we wish to become, both individually and as a whole. Secure in this knowledge we’ll then be able set this “terrible magic” to work for the betterment of the industry in the region. I invite you browse this issue of Gulf-Africa Duty Free. It is replete with examples of operators and suppliers who have given a lot of thought to who they are and where they’re going. From Dubai Duty Free’s 30th anniversary and the stellar sales the retailer is reporting (p. 16) to Abu Dhabi Airports’ rebranding initiative (p. 36) and Flemingo’s push for US$20 billion in sales by 2020 (p. 44), there’s no shortage of forward thinkers in the pages that follow. On the supplier side, we’re particularly excited about Brown-Forman’s commitment to putting American whiskies on the world stage; you can read about the launch of the new Jack Daniel’s Tennessee Honey at Dubai International in our liquor news section (p. 96). Also on the spirits side, we caught up with David Freeborn, Managing Director of Pernod Ricard Gulf, for news on the company’s business in the region and his take on the impressive growth the Gulf is experiencing (p. 100). In fact, you’ll find plenty of news across categories in this issue, including why Sweets of Oman sees the Middle East as having the greatest growth potential of any region worldwide (p. 82), how companies like Frédérique Constant, Sisley and Thomas Sabo are innovating for consumers in the region (p. 74) and why Imperial Tobacco sees big things in the future for three of its most popular brands (p. 108). And the above is just a taste of what’s inside. I wish you a productive MEADFA 2013 and look forward to seeing you at this year’s conference.

Gulf-Africa Duty Free & Travel Retailing (ISSN 0954-0592) is published four times a year (Spring, Fall and Winter) by Global Marketing Company Ltd., 26 Pearl Street, Mississuaga, Ontario L5M 1X2 Canada. It is distributed to duty free operators and distributors in the following countries: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, UAE, Yemen, Algeria, Azerbaijan, Benin, Cameroon, Cape Verde, Djibouti, Egypt, Ethiopia, Gabon, Ghana, Guinea, Iran, Ivory Coast, Jordan, Kenya, Lebanon, Madagascar, Malawi, Mali, Mauritius, Morocco, Mozambique, Niger, Nigeria, Namibia, Pakistan, Reunion, Senegal, Seychelles, South Africa, Sudan, Syria, Tanzania, Togo, Tunisia, Turkey, Turkmenistan, Uzbekistan and Zaire, as well as to duty free suppliers worldwide. Subscriptions: $200 for one year, $300 for two years and $400 for three years. Art and photographs will not be returned unless accompanied by return postage. The views expressed in this magazine do not necessarily reflect the views and opinions of the publisher or editor. November 2013, Vol. 23, No.3. Printed in Canada. All rights reserved. Nothing may be reprinted in whole or in part without written permission from the publisher. © 2013 Global Marketing Company Ltd.

GULF-AFRICA DUTY FREE & TRAVEL RETAILING 26 Pearl Street Mississauga, Ontario L5M 1X2 Canada Tel: 1 905 821 3344; Fax: 1 905 821 2777 www.dutyfreemagazine.ca PUBLISHER Aijaz Khan aijaz@globalmarketingcom.ca EDITORIAL DEPARTMENT EDITOR Hibah Noor hibah@dutyfreemagazine.ca CONCESSIONS, LIQUOR & TOBACCO EDITOR Ryan White ryan@dutyfreemagazine.ca ASSOCIATE EDITOR Melissa Silva melissa@dutyfreemagazine.ca ART DIRECTOR Jessica Hearn jessica@globalmarketingcom.ca CONTRIBUTORS Andrew Brooks ADVERTISING SALES ADVERTISING & MARKETING MANAGER Kim Carrera kim@dutyfreemagazine.ca CIRCULATION & SUBSCRIPTION MANAGER Deepa J deepa@globalmarketingcom.ca

Kindest Regards, Ryan White Concessions, Liquor and Tobacco Editor ryan@dutyfreemagazine.ca

www.dutyfreemagazine.ca GULF-AFRICA DUTY FREE & TRAVEL RETAILING

NOVEMBER 2013 • VOL 23, NO 3

Contents 12 16

IN BRIEF Turkish Airlines launches cheap fares to North America for GCC travelers n 1,200 Dubai residents test new passenger terminal at DWC n Emirates leads the way in aviation at Gulf Business Industry Awards 2013 n Inflight purchases by Lebanese passengers offset losses from fewer Gulf passengers for MEA Bahrain Duty Free gives away two sports cars n Middle East carriers have the strongest year-over-year traffic growth in August, according to IATA

DUBAI DUTY FREE

What a time it’s been Gulf-Africa Duty Free discusses Dubai Duty Free’s business with Executive Vice Chairman Colm McLoughlin as the operator prepares to celebrate its 30th anniversary

36 Dreaming big

ABU DHABI AIRPORTS

Whether discussing the Midfield Terminal Complex, a new branding initiative, 2013 sales or refurbishments at the existing airport, Abu Dhabi Airports see potential around every corner

44 On top of its game FLEMINGO

Making major strides in the African market with its duty free business, Flemingo has opened the door to further expansion and growth in the region

48 Smooth sailing ALPHA KREOL

By maintaining competitive edge with strategic promotions and renovations, Alpha Kreol is well positioned for future growth

24 Leading with luxury

50 Emerging unscathed

28 Rolling with the punches

54 Regional realm

30 Head of the pack

60 A brand new world

32 Making the best of it

62 Ahead of the pack

MMI

Gulf-Africa Duty Free speaks with General Manager of fine wine and spirits store Le Clos about the business of catering to connoisseurs

BAHRAIN DUTY FREE

Bahrain Duty Free reports US$13.5 million in profits during the first nine months of 2013, showing good results despite tough operating conditions

ATU

A number of renovations and new projects at ATÜ Duty Free’s retail spaces in Ataturk International Airport lead to increased sales and bode well for yearend numbers

CAIRO AIRPORTS DUTY FREE

Cairo Airports Duty Free currently has some tough operating conditions to contend with, but the retailer is pulling out all the stops to ensure that travelers continue to purchase

34 A world of possibilities

RAS AL KHAIMAH INTERNATIONAL AIRPORT

Commercial and Finance Director Mohammed Qazi tells Gulf-Africa Duty Free that a bright future lies ahead for Ras Al Khaimah International Airport

DUFRY

Turnover in Region EMEA & Asia proves to be a bright spot in Dufry’s first nine months amid weaker performance in Americas Regions I and II

BHATIA TRADERS

With a well established presence in the UAE, Bhatia Traders eyes expansion in Africa and farther afield

TFWA WE 2013

Just last month the travel retail industry converged on Cannes for a successful TFWA WE event highlighted by an informative conference program and numerous networking opportunities

IATA

The Middle East continues to lead growth in international passenger traffic

64 Unity of purpose TRAVELLER

Traveller gives Chalhoub Group new travel retail punch

66 A passion for success INTERNATIONAL TRAVEL RETAIL

International Travel Retail’s Mariem Ben Cheikh is out to build her brands into leaders

Wonderful fragrances Collecta able cosmetics Exquisite jewellery One way to have it all

www.duba aidutyfree.com

68 In the fast lane PERFUME HOLDING

Focusing on its lineup of novelties, Perfume Holding is increasing its visibility in the Middle East

70 Timeless appeal CERRUTI 1881

With a lengthy history in fashion, Cerruti 1881 aims to achieve the same record in travel retail by growing its presence in airports and onboard several airlines

72 A fresh face forward SWAROVSKI

With a new campaign and promising airline listings, Swarovski ends 2013 on a strong note

76 Soaring high DESIGUAL

Following an international expansion plan, Desigual is achieving substantial growth with several store openings

78 Creations with a conscience CRISLU

Working towards expanding in travel retail, upscale jewelry company Crislu sets itself apart with environmental initiatives and standout quality

80 Turning a new page CAPI TRADING

With a recent integration and major contract under its belt, Capi Global is entering a new successful phase in its travel retail business

82 Strategically sweet SWEETS OF OMAN

By focusing on a value-for-money approach, Sweets of Oman is attracting retailers and increasing its exposure in the Middle East

84 It pays to be seen

MARS INTERNATIONAL TRAVEL RETAIL

For this market leader, maintaining purchaser involvement is crucial

CONFECTIONERY NEWS

100 The sky’s the limit

Signs indicate that Pernod Ricard Gulf’s business between July and September has been strong, and Managing Director David Freeborn expects continued success as passenger numbers in the region continue to climb

102 Total immersion DIAGEO GTME

Diageo GTME brings a 3D Johnnie Walker art gallery to travelers at major airports throughout the world

104 Celebrating bravery WHYTE & MACKAY

Whyte & Mackay announces the launch of The Dalmore 25 year old and a brave new branding for the range

106 Room to grow BOMMIDALA

Bommidala’s tobacco business thrives as new duty free spaces open up in major Middle Eastern airports

108 Three’s company IMPERIAL TOBACCO

Imperial Tobacco pulls out all the stops in Cannes with three new releases for classic brands, each capitalizing on different trending tastes

109 The spirit of exploration OETTINGER DAVIDOFF GROUP

The new Davidoff Nicaragua Puro Cigar range marks the company’s expansion into new regional taste experiences

110 Getting more of the pie JAPAN TOBACCO INTERNATIONAL

Despite being up against a contracting market in many regions of the world, Japan Tobacco International increases market share and revenue during the first nine months of the year

Storck sees robust growth with the launch of exclusive novelties n Al Nassma Chocolate launches its first retail outlet at Sharjah International Airport

Waldemar Behn launches upgraded Dooley’s Cream Liqueurs as it expands its presence in global travel retail n Edrington FIX Middle East appoints Nick Rees Head of Sales and Marketing n Amarula launches new 200ml bottle n Flor De Caňa launches Centenario 25 ultra premium rum exclusively for duty free, announces new look n Mouton Cadet launches Reserve Mouton Cadet Bordeaux n Absolut takes on a deeper character with Absolut Amber n Jack Daniel’s Tennessee Honey to debut in Dubai Duty Free n Ricard offers a sensorial experience for passengers in Casablanca Airport n Martini celebrates 150 years, release two travel retail exclusives n Patrón rolls out mini four-pack in travel retail, sees potential for Gran Patrón Piedra in the region

PERNOD RICARD GULF

SUPPLIER NEWS Sisley makes advancements in eye care n Neuhaus sees growth after revamping current offerings n Thomas Sabo increases its intensity

LIQUOR NEWS

112

NEW AND NOTABLE Rémy Martin VSOP Cannes Film Festival Limited Edition n The Cybill Bag n Ice-Denim

In Brief

The promotional return airfares for the holidays can be booked until October 31, 2013 for travel to and from the six cities between November 1, 2013 and March 31, 2014

Turkish Airlines launches cheap fares to North America for GCC travelers Turkish Airlines has announced round trip airfares to six cities in North America, offering up to 30% off for passengers traveling from across the Gulf region via Istanbul to Washington, Chicago, Houston, Los Angeles, New York and Toronto. Building on the continued passenger growth achieved by Turkish Airlines from Saudi Arabia, Kuwait, UAE and Qatar, the promotional fares have been launched for advance bookings to North America over the winter months. Murat Bas, Vice President Marketing and Sales for Turkish Airlines in the Middle East & Cyprus, said: “The routes from the Gulf to cities

across North America have proved increasingly popular over the years, particularly for holidaymakers who prefer to use Istanbul as a stop-over. In recognition of this, Turkish Airlines offers passengers a number of added value services to enhance their overall travel experience, with the luxurious facilities of Europe’s largest CIP Lounge, and [the] opportunity to discover the historical and cultural riches of Istanbul with our free city tours.” The promotional return airfares for the holidays can be booked until October 31, 2013 for travel to and from the six cities between November 1, 2013 and March 31, 2014.

1,200 Dubai residents test new passenger terminal at DWC Dubai Airports has conducted an extensive operational trial involving some 1,200 Dubai residents to test the readiness of the passenger terminal building at Al Maktoum International at Dubai World Central (DWC) in advance of its opening later this month. The major trial follows a comprehensive series of preliminary exercises that were carried out at the facility in recent weeks with the participation of employees of the airport and its partners. A collaborative effort between Dubai Airports and Dubai Aviation Engineering Projects, dnata, Dubai Duty Free and control authorities such as Dubai Police, the General Directorate of Residency and Foreign Affairs and Dubai Customs, among others, the trial was designed to evaluate the readiness of staff, systems and processes at the new facility by simulating a typical airport operation. Some 1,200 volunteers including men, women, children, senior citizens and individuals with special needs, played the role of passengers arriving and departing. During their “journeys” volunteers tested way-finding signage and the flow of passenger traffic within the new building. “As was the case with Terminal 3 and Concourse A, it is imperative that we thoroughly test every aspect of the passenger experience

across the new facility before we open,” said Paul Griffiths, CEO of Dubai Airports. “The trial has yielded some very valuable feedback which we will be acting on to ensure we have a seamless opening in two weeks. I would like to thank all the volunteers who took time during their weekend to support to the trial.” Upon opening, the new facility will offer full retail as well as food and beverage amenities. It is serviced by one A380-capable runway and 64 remote aircraft stands, and has capacity for up to 7 million passengers per year. Dubai Airports has thus far confirmed MOUs with three airlines, two of which have identified operational start dates. Wizz Air, which provides low-cost air transport across 30 countries with 16 bases across Europe, will provide non-stop services linking DWC to Central and Eastern Europe effective October 27. Wizz Air has a fleet of 40 Airbus A320 aircraft operating over 1,500 weekly flights to 93 destinations. Jazeera Airways will start serving Al Maktoum International at Dubai World Central with two weekly flights starting October 31, 2013. Jazeera Airways serves 19 popular destinations in the Middle East from Kuwait. The airline operates seven fully-owned Airbus A320s, each fitted with a two-class cabin comprising of a Business Class and an Economy Class.

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

“DWC is Dubai’s airport of the future and a fundamental element of our master plan, which is being designed to accommodate the tremendous passenger growth being projected until 2040 and beyond,” said Griffiths.

Emirates leads the way in aviation at Gulf Business Industry Awards 2013 Emirates demonstrated its industry-leading role recently by picking up Aviation Company of the Year at The Gulf Business Industry Awards 2013. The award comes as Emirates embarks on another wave of route launch announcements, extending its network across six continents. More than 300 guests attended the awards night to recognize the best companies and CEOs across nine industries. The Gulf Business Industry Awards 2013 winners were voted on by a panel of independent, crossindustry judges. Emirates also picked up the award for UAE Company of The Year, voted by readers of Gulf Business and gulfbusiness. com. Tim Clark, President, Emirates Airline, was present to receive both awards.

So far in 2013, Emirates has launched new routes to Warsaw, Algiers, Tokyo Haneda and Stockholm. In the coming weeks and months, flights will begin to Clark International in the Philippines, between Milan and New York, to Conakry in Guinea, Sialkot in Pakistan, Kabul, Kiev, Taipei and Boston. Emirates’ fleet of modern aircraft has now grown to 205, including 37 of the highly popular Airbus A380s. The airline was established in 1985 and has become one of the world’s most successful carriers, winning hundreds of international awards for its products and services. Tim Clark, President, Emirates Airline (left), receives the award for UAE Company of The Year from Ian Fairservice, Motivate Publishing Managing Partner and Group Editor, at The Gulf Business Industry Awards 2013

Inflight purchases by Lebanese passengers offset losses from fewer Gulf passengers for MEA Gulf-Africa Duty Free recently had the opportunity to speak with Mounir Seifeddine, Head of Cabin Purchases at Middle East Airlines (MEA), about recent developments as the carrier heads into the fourth quarter of 2013. He tells us that duty free sales remained essentially flat for the first half of the year as compared to the same period last year, while passenger numbers aboard MEA increased a marginal 6.3% during the same period.

Interestingly, despite the flat sales, MEA’s core passenger demographic—Lebanese, representing about 85% of inflight sales on the airline—are actually spending slightly more than last year. “Syrians, who are traditionally not high spenders when it comes to inflight duty free, were traveling more during the first half of the year and are generally responsible for the rise in MEA’s passenger numbers,” Seifeddine explains. “At the same time, given the sociopolitical issues here, we had fewer passengers from the Gulf, who will certainly

spend if the offer is high-end and geared toward their taste.” As such, MEA essentially gained non-spending passengers and lost higherspending passengers over the first half. In this context, breaking even with last year in terms of inflight duty free sales was a feat in itself. “Our core customers, Lebanese travelers, actually continued spending and offset the losses from the decline in Gulf passengers,” Seifeddine sums up.

Despite the flat sales over the first half, MEA’s core passenger demographic—Lebanese, representing about 85% of inflight sales on the airline—are actually spending slightly more than last year

www.dutyfreemagazine.ca GULF-AFRICA DUTY FREE & TRAVEL RETAILING

In Brief

Middle East carriers have the strongest year-overyear traffic growth in August, according to IATA The International Air Transport Association (IATA) announced global passenger traffic results for August showing a strengthening of the healthy demand trend of the last few months. Total revenue passenger kilometers (RPKs) rose 6.8% compared to August 2012. Capacity increases over the year-ago period lagged demand at 5.6%. This pushed the load factor to match the record high of 83.4% set in July 2011. “August was a positive month for passenger travel. Strong demand and capacity discipline saw load factors match the previous record high of 83.4%. The solid performance was also supported by a stabilization of emerging market weakness and renewed confidence in Europe and North America. Trading conditions are still tough with high oil prices, stiff competition and regulatory hurdles. But demand growth remains a bright spot with most indications pointing towards an accel-

eration in the fourth quarter,” said Tony Tyler, IATA’s Director General and CEO. August international passenger demand was up 7.5% compared to the year-ago period. Capacity rose 5.6% versus August 2012 and load factor climbed 1.5 percentage points to 84.0%. All regions recorded year-over-year increases in demand. Middle East carriers had the strongest yearover-year traffic growth at 15.1%. The result was positively biased from the timing of Ramadan, which occurred a month earlier (in July) in 2013. Capacity expansion was held to 10.8% which pushed up load factor 3.1 percentage points to 82.0%. The strong demand trend is expected to continue, with August data showing solid progress in non-oil producing sectors in countries such as Saudi Arabia and the United Arab Emirates. Africa was the only region to see a decline in the load factor.

“Trading conditions are still tough with high oil prices, stiff competition and regulatory hurdles. But demand growth remains a bright spot with most indications pointing towards an acceleration in the fourth quarter.” TONY TYLER, DIRECTOR GENERAL AND CEO, IATA

Bahrain Duty Free’s recently refurbished Arrivals store; from renovations to exciting promotions, the operator has put a push on ensuring en engaging shopping experience for travelers

Bahrain Duty Free gives away two sports cars Bahrain Duty Free recently announced the winners of two raffles for sports cars—a Maserati and an Audi R8. The first winner, who took home a Maserati Granturismo, was Stefan Ulmstedt with ticket number 585. The Audi R8 sports car, on the other hand, was awarded to Bahraini Mohammed Aikhateeb, who had ticket 1115, purchased online from Bahrain Duty Free. In addition to the car giveaways, Bahrain Duty Free also announced the 18th winner in its ongoing Treasure Hotel promotion. Indian national Allan Lawrence walked away with US$1,000 on October 9. General Manager of Bahrain Duty Free Fadi Allam told Gulf-Africa Duty Free in a recent interview that the operator’s push on promotional 14

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

activities this year has had a significant effect, noting previous successful promotions such as The Vault of Fortune, wherein for every BD50 (US$133) spent at its stores, BDF gave shoppers the opportunity to win prizes of US$20,000, $10,000, $5,000, $2,500 or $1,000 in shopping vouchers instantly. The more travelers spent, the more opportunities they had to win. Each US$133 spent gave them a key to unlock the Vault of Fortune and the possibility of unlocking a truly amazing prize. To date BDF has announced a number of winners from the Vault of Fortune promotion. Another activity that has contributed to sales over the first half of the year, says Allam, is the operator’s Golden Dallah promotion.

Dubai Duty Free

What a time

it’s been by

RYAN WHITE

Gulf-Africa Duty Free discusses Dubai Duty Free’s business with Executive Vice Chairman Colm McLoughlin as the operator prepares to celebrate its 30th anniversary

ulf-Africa Duty Free recently had the pleasure of speaking with Executive Vice Chairman of Dubai Duty Free (DDF) Colm McLoughlin at last month’s TFWA conference and exhibition in Cannes. He had a lot to say about Dubai in general, duty free in the region and DDF specifically, telling us that sales for the world’s single biggest airport retailer have been strong to this point and he expects to reach the decidedly impressive goal of US$1.8 billion in sales for full year 2013. Indeed, DDF is looking to achieve doubledigit sales growth for the year as sales up to the end of October reached an impressive US$1.43 billion, representing an 11% increase over the same period last year. “Up to this moment we’re very happy with our performance,” McLoughlin told Gulf-Africa Duty Free. “Given that to date sales are 11% over those of last year, we’re certainly on target. We have no doubt that we’re going to make our forecast, which

means that we will finish the year with US$1.8 billion in sales. So, quite simply, our year has been good so far!” According to the most recent sales statistics, the Perfumes category retained the number one spot as sales rose to US$229 million, while Gold sales increased by 7% to US$138 million in the ten-month period. “The biggest category we have in the total business is perfumes and cosmetics,” McLoughlin said. “It accounts for 18 or 19% of our business. Other categories are growing as well, like Liquor, Tobacco and Gold.” Other notable increases were seen in Confectionery, which rose by 12% to US$116 million, while the Watches and Clocks category showed a 15% increase to US$97 million. The Cosmetics category was up by 18% and registered sales of US$96 million. Impressive sales figures have been recorded for both departing and arriving passengers: Year to date Terminal 2 has shown an impres-

“We’re a high-quality operation and the only way to sustain this type of business is to have a solid foundation of hardworking staff that has customer service as the top priority. Our people are and always will be the key to Dubai Duty Free’s success.” COLM MCLOUGHLIN, EXECUTIVE VICE CHAIRMAN, DUBAI DUTY FREE Promotions continue to be a big draw for Dubai Duty Free; the retailer’s penetration currently stands at an impressive 49%

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

A WORLD OF SHOPPING Wherever you go with Dufry, you have a world of shopping in your hands. The best brands and the best prices with the largest variety. A world made up of more than 1350 shops, at over 185 airports, seaports and railway stations in over 45 countries around the world. Dufry, we go far to be close to you. www.dufry.com

Dubai Duty Free

P&C is Dubai Duty Free’s best-performing category, with sales rising to US$229 million over the first ten months of the year

According to the most recent sales statistics, Gold sales increased by 7% to US$138 million over the first ten months of the year

Dubai Duty Free’s new dedicated Gucci shop; other brands that have or will soon receive their own dedicated spaces include Chanel, Hermes and Ferragamo

sive 22% increase, while Terminal 3 has seen sales grow by 16%. Arrival sales across all Terminals are up by 13% and Departure sales up by 11%. Given the rapid expansion at Dubai International and the numerous new stores DDF has opened of late, we asked McLoughlin for a breakdown of where the sales are coming from: “The lion’s share of sales for the moment still comes from the older Dubai Duty Free spaces,” McLoughlin explained. “We now have stores in Concourses A, B and C. Concourse B, which handles Emirates flights, is still the biggest in terms of sales. Concourses A and B together make up about 60% of our sales. The remaining 40% of sales come from our duty free operations in Concourse B that cater to the other airlines. We then have Terminal 2, where a lot of low-cost carriers like flydubai are located. That makes up about 5% of our total sales.”

Putting learnings to work

Electronics is fast becoming a very popular category at Dubai Duty Free’s stores

And with regard to DDF’s new stores in Concourse A, Dubai International’s A380-dedicated concourse, McLoughlin said that the retailer was able to take learnings from its other operations and optimize the new stores. “A lot of things have happened this year!” he exclaimed. “For example, the new concourse at Dubai Airport opened. We put 8,000 square meters of duty free space in there, which opened on January 3. It’s been very successful. It’s doing well and people like it. What we tried to do is to take the setup we have and improve on it in the new concourse.” McLoughlin explained that while the new stores in Concourse A deal in the same categories with which DDF has traditionally seen success, the operator took the opportunity to “tweak” the product mix to align it specifically to the passenger demographic passing

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

through Concourse A. “What we’re hearing from travelers at Concourse A is that yes, the product mix is spot-on,” McLoughlin said. “We have some dedicated areas which we did not have before,” McLoughlin explained. “We have a dedicated Ferragamo area and a dedicated Gucci area. We will also have a Chanel area very shortly; it’s in the works right now. We will have a dedicated Hermes space as well. “We had these products before, but not in a dedicated setup,” he continued. “We have started giving more space to different categories that clearly deserve it. Previously we had done this with liquor and tobacco, but now there are many other categories that are performing strongly as well.” And P&C, Liquor, Tobacco and Fashion aren’t the only categories getting more attention at DDF; the operator recently revamped its Electronics showcase in Concourse B to great effect. “We’ve got mobile phones, cameras, computers, iPads and much more,” McLoughlin told us. “It’s a category that has been working out very well for us.”

Trending travelers

While discussing the topic of trending categories, McLoughlin reminded us of the importance of paying attention to traveler demographics, noting that the Chinese traveler is still very much top of mind for DDF. He said that Dubai’s experience with highspending Chinese travelers is very much on par with reports from other airports/operators. Currently, Chinese passengers make up about 4% of travelers passing through Dubai International, but from DDF’s perspective, the demographic accounts for between 12 and 13% of sales. As can be expected, this significant development has resulted in a number of DDF initiatives aimed directly at Chinese travelers.

Dubai Duty Free “We do take notice of statistics like this and we therefore have featured certain products that we know from surveys that Chinese people like—luxury liquor, for example, and certain categories of watches,” McLoughlin says. “In some areas we’ve introduced salespeople that speak Mandarin and signage in the language as well. We have about 500 Chinese staff now, which is significant. Our [Chinese] passengers just like that level of service.” Indeed, DDF prides itself on the customer service that it offers, and the results of the passenger-centric focus can be seen in the retailer’s penetration rate, which McLoughlin asserts currently stands at about 49%. “I think generally in the industry penetration is around 17 or 18%,” he told us. “We have a terrific staff and I think that’s the main reason for this statistic.” Indeed, DDF takes staff training seriously and has an in-house training department to make sure that salespeople are up to date on everything from the latest customer service techniques to the products on offer in the stores. In addition to the above, McLoughlin is a big proponent of ensuring that duty free retains its value proposition, and he considers the value that DDF offers to consumers to be one of the main reasons for the retailer’s success. “I remember many years ago the whole duty free industry lost the perception that it was good value,” he told us. “I remember in some newspaper article at one stage Dubai Duty Free was credited with bringing back the meaning of duty free. It’s extremely important to us that travelers perceive the inherent value in duty free or they won’t even enter the store.”

Ferragamo’s new dedicated space in Concourse A

New digs

Of course, the big news for DDF this quarter came with the announcement in late October of the opening of the new passenger terminal at Al Maktoum International at Dubai World Central (DWC). At the official opening, a large delegation of local dignitaries and aviation officials toured the facility following the unveiling of a commemorative display and welcomed the arrival of the first commercial flight, Wizz Air flight W6 2497 arriving from Budapest, Hungary. Also present were aircraft from Gulf Air and Jazeera Airlines, both of which will commence operations at DWC soon. It is said that Al Maktoum International at DWC will play a vital role in the future development of Dubai as a center for trade, commerce, transport, logistics and tourism. Indeed, the opening of this facility signals the historic beginning of a long-term plan to build the largest airport in the world to accommodate the tremendous passenger growth and contribute to the continued economic and social development of Dubai. Of course, the new passenger terminal offers full retail operated by DDF, as well as food and beverage amenities. It is serviced by one A380-capable runway, 64 remote aircraft stands and has capacity for up to 7 million passengers per year, meaning that for DDF, there is real potential for significant incremental sales. “We have 2,500 square meters of retail space at Al Maktoum International at DWC, and we have all the stock and staff in place,” McLoughlin told us just days before the official

Dubai Duty Free’s luxury watches store in Concourse A

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

opening. “We have a mix across the board because, honestly, we don’t know yet what the predominant passenger profile will be there. Like we did 30 years ago we’ll forget all the computers and get a piece of paper and call it a ‘wants book,’” he quipped. “We’ll roll with the punches and give the customers what they want! We’re proud of our ability to do that.” Dubai Airports has thus far confirmed operations with three airlines. Wizz Air, which provides low-cost air transport across 30 countries with 16 bases across Europe, will provide non-stop services linking DWC to Central and Eastern Europe. Jazeera Airways commenced operations with two weekly flights that started October 31. Most recently, Gulf Air has announced its intention to start daily operations to Bahrain on December 8. Furthermore, Dubai Airports is currently in discussions with a number of other interested carriers. “The plan is that the airport will eventually have a capacity of 160 million people,” McLoughlin said, clearly amazed by the growth that Dubai International has experienced since DDF began operations in 1983. “They’re already talking now about adjusting that to accommodate 200 million. We welcomed 57 million travelers last year at Dubai International, and we’ll have 66 million this year, and there’s a new concourse being built in Dubai International right now, Concourse D, that will be finished in about one year from now where we’ll have 7,200 square meters of retail space. This will bring the capacity of the airport to 95 million, which should be reached by 2020. We reckon we’ll reach US$3 billion

Liquor continues to be a strong performing category for Dubai Duty Free

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Dubai Duty Free in sales by 2018 with 9,000 staff. We currently have 6,000 staff right now.” Indeed, it’s difficult to truly grasp the above numbers to get a real sense of the scope of operations at Dubai International. For DDF’s part, McLoughlin explained that last year the retailer sold 73 million pieces of merchandise in 23.5 million transactions. To put this in perspective, this means that assuming a 24/7 selling schedule, DDF sold an average of 8,328 items and performed 2,681 transactions per hour for the duration of 2012. “It’s amazing, isn’t it!?” McLoughlin exclaimed.

Discussing the issues

We took the opportunity to mention the upcoming Middle East and Africa Duty Free (MEADFA) conference, asking what McLoughlin is looking forward to discussing. “This is the first time that the conference has changed from MEDFA to MEADFA [with the official addition of the continent of Africa to its scope], so it will be interesting to see what difference this brings to the topics for discussion,” he said. “There’s a never-ending discussion about tobacco, for example, and that will have to be looked at in this conference, of course,” he continued. “I think we should also be looking at opportunities and ways to increase spend per head, and to increase the buzzword of ‘penetration.’ “At Dubai Duty Free we have a great relationship with our suppliers, and it’s certainly worth looking at how operators and suppliers can increase cooperation,” McLoughlin added. “With Dubai Duty Free, for example, there are any number of promotions and special prod-

ucts in our stores at any given time. It helps give travelers a reason to enter the stores, and as we know this is very important.”

Where credit is due

Given our discussion with McLoughlin about the heights that Dubai International and DDF have reached over the last 30 years, it’s fitting that just ahead of MEADFA, a spate of awards were announced indicating just how influential DDF, and indeed Mr. McLoughlin himself, have been both inside and out of the duty free channel. Most recently, DDF was awarded the “Most Admired Middle East Retailer of the Year” award at the Images RetailME Awards. The Images RetailME Awards presented winners in twenty six different categories and was attended by over 750 senior delegates from the retail industry across the Middle East. “We thank the organizers of the Images RetailME Awards for recognizing our efforts at Dubai Duty Free and those of the retail sector in the UAE as a whole,” McLoughlin said at the event. “The retail sector continues to be dynamic and innovate here in the UAE and we are delighted to be a part of it.” Dubai Duty Free’s Senior Vice President – Corporate Communications Salah Tahlak received the Images RetailME award on behalf of Dubai Duty Free from Salim MA, Director – Lulu Hypermarkets Group. McLoughlin was also named “CEO of the Year” at the Third Annual Asian Leadership Awards, held recently in Dubai and attended by dignitaries, VIP and industry representatives. Organized by the Asian Confederation of Business, the awards aim to recognize companies that have contributed significantly to the

(from left) HH Sheikh Ahmed bin Saeed Al Maktoum, President of Dubai Civil Aviation Authority and Chairman of Dubai Duty Free, and Colm McLoughlin, Executive Vice Chairman of Dubai Duty Free with the Asian Leadership CEO of the Year Award

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

development of their sectors. McLoughlin was chosen in recognition of his vision, excellent leadership and great contribution to the duty free industry. “I am delighted to accept this award and dedicate it to H.H. Sheikh Ahmed bin Saeed Al Maktoum, President of Dubai Civil Aviation Authority and Chairman of Dubai Duty Free, and to all of our management and staff,” McLoughlin said. “I have been very fortunate to head up an organization that has been at the very heart of the business and aviation community here in Dubai for the past three decades.” Finally, at the 7th International Sports Event Management (ISEM) Awards held in London on November 6, the winning trophy in the Event Marketing category was presented to Dubai Duty Free for the Dubai Duty Free Tennis Championships 2013. The airport retailer, which owns and organizes the WTA and ATP tournament, faced strong competition from other international sporting events to emerge as the winner in this highly competitive field. “We thank the ISEM and the judging panel for recognizing the hard work and dedication that goes into the running of the Dubai Duty Free Tennis Championships, which is a world class event attracting the top tennis players,” McLoughlin said. “This year marked the 21st anniversary of the tournament, which has grown into a much loved sporting event in the UAE and one that attracts visitors from all over the world. The media exposure that the tournament generates is massive and positively highlights the world-class sporting facilities of Dubai.” 

(from left) Michael Davern, K Club; Colm McLoughlin- Executive Vice Chairman of Dubai Duty Free; his wife, Breeda McLoughlin; and Sir Michael Smurfit at the Business Achievement Award ceremony at the 25th Annual American Celtic Ball

Produced under license of Ferrari Spa. FERRARI, the PRANCING HORSE device, all associated logos and distinctive designs are property of Ferrari Spa.ÂŠ Benjamin Henon et Dino Darenzelli.

MMI

Leading with

luxury by

RYAN WHITE

Gulf-Africa Duty Free speaks with General Manager of fine wine and spirits store Le Clos about the business of catering to connoisseurs MMI was the largest single winning bidder at the October 2012 Macallan Chairman’s Collection auction, one of the world’s finest private collections of The Macallan single malt whisky

en Odgers, General Manager of MMI-operated fine wine and spirits store Le Clos, took the time recently to speak with GulfAfrica Duty Free about business at Dubai International. MMI currently has four Le Clos stores at the airport—one Departures stores in Concourse A; another Departures store in Concourse A’s first class lounge; a Departures store in Concourse B between the Emirates first and business class lounges; and another in Concourse B near Gate B8. Odgers asserts that with sales in line with expectations this year, Le Clos has big plans to continue dazzling consumers with its selection of rare luxury wine and spirits offerings. Gulf-Africa Duty Free: How have Le Clos’ sales been over the first eight months of 2013? Can you give us a breakdown among stores? Ben Odgers, General Manager, Le Clos: Overall revenue is in line with expectation with some spectacular sales thrown in. Most recently we sold a Chateau Margaux Balthazar for a world record breaking US$195,000, drawn from the iconic 2009 vintage and standing at 12 liters. We are pleased with sales across all the stores, with our existing stores

still enjoying very healthy double-digit growth and our new stores gaining momentum daily GADF: You’ve had some time now with the new flagship store in Concourse A. Have you made any changes in terms of the offering to target the passenger profile? BO: We have worked really hard on our messaging both in terms of the clarity and extending our reach on a multilingual basis. We sought expert advice in relation to our merchandising and improved the focus and quality of the displays we create in store, with bespoke units having been handcrafted in France. The team has also grown and now covers 20 languages, making it easier for our diverse customer base. The main goal with the new Concourse A outlet was to keep the space warm and inviting whilst adding innovation and excitement for connoisseur and enthusiast alike. I know we have succeeded as everyday people come to have their photo taken with the world’s most expensive bottle of wine or inside our decommissioned whisky still and leave with a smile on their face. GADF: What is spend per pax at both stores? Is this up to expectations? BO: Our average spend per transaction is very

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

healthy, boosted by some of the exceptionally special products we have. We are the exclusive retailer of The Macallan Lalique in the region and we believe ourselves to be the most successful retailer globally for this range. Coupled with frequent sales of first growth Bordeaux and special vertical collections exclusive to Le Clos, this is bound to drive transaction value up. However, we do have bottles ranging from US$28 and our open and friendly environment is helping to attract the enthusiast as well as the collector to the store GADF: The last time we spoke, you had been hosting some wine tasting events in Asia given the importance of high-spending Asian travelers to your business. Have you put on any events in the last few months? BO: This year we have put a high degree of focus into our marketing activations locally, such as being a principal sponsor of Dubai beach polo. The team does an amazing job of networking and growing the customer base globally and we can now boast numerous famous customers from the silver screen to the sport arena. Asia will always be a focus for us and we will return before year’s end to thank several of our ultra-high net worth clientele personally with a special event for them and their friends

THE NEW FLAVOURS OF GENEROSITY

NEW

YOU CAN NEVER BE TOO GENEROUS

MMI featuring rare bottles drawn from the range tailored to a lavish dinner menu. However large Le Clos grows the personal touch will always be at the core. GADF: Have there been any notable new listings to speak of? BO: We have made an effort across the board to keep things fresh with more than 500 new references. It is important to note that particular attention has been made to be inclusive and cast our net wider as fine wine doesn’t mean expensive, it just means quality. We have offered champagne from just 115AED (US$31), a whole new raft of regional Italian

wines at accessible price points and top quality Napa cabernet for less than 130AED (US$35). At the other extreme we do cater for our international collectors and so have focused on the unique. We offered vertical collections of Mouton Rothschild back to 1959 direct from the chateau at 200,000AED (US$55,000), of which two sets have been purchased. Spirits have not been neglected either, with Le Clos boasting one of the world’s largest collections of The Macallan through to Cognac Croizet 1858 having taken pride of place in store priced at 185,000AED (US$50,300). The real coup has been to secure, in partnership with Chateau Margaux, the only 12-liter Balthazar’s they have ever produced, drawn from t he iconic 2 0 0 9 vintage. Priced at US$195,000 each of the three bottles available for retail are exclusive to Le Clos and stand as the world’s most expensive bottles of wine. Included in each purchase are four First Class return tickets

to the famed estate along with dinner with the managing director and chief winemaker Paul Pontallier. GADF: In terms of emerging trends in wine, is there anything that’s gaining in popularity? BO: We were early to recognize the shift towards Burgundy and as such can boast over 20 references of Domaine Romanee Conti estate wines, which still continue to be very much en vogue. Iconic Bordeaux will always be our greatest contributor to revenue and volume, and with our strength in buying and direct relationships with the estates we will continue to be able to offer breadth, depth and value. GADF: What about a store in an Asian airport given your current clientele? Is this a possibility for the future? BO: Le Clos has demonstrated steady progression, opening three new stores in 2013 alone, so there is still a massive level of confidence and excitement around the business. We continue to look at local, regional and international opportunities. Whatever we do next we will ensure we marry something special to the right opportunity where we can really add to the customer experience and deliver the industryleading standards we set for ourselves. 

The original Le Clos store at Dubai International, located at Concourse B near Gate B8.

Le Clos staff occasionally travel to Asia to host highend wine tasting events for ultra-high net worth clientele, a clear sign of the retailer’s commitment to fostering relationships with consumers

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

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

Bahrain Duty Free

While a relatively small space, BDF’s recently renovated 190-squaremeter arrivals shop accounts for 17.5% of the operator’s business

Rolling with the punches Bahrain Duty Free reports US$13.5 million in profits during the first nine months of 2013, showing good results despite tough operating conditions by RYAN WHITE

ahrain Duty Free (BDF) recently reported its financial results for the nine months ended September 2013 from its board of directors meeting, where the company achieved a net profit of US$13,508,439 compared to US$13,544,547 for the same period of last year along with earnings of US$0.13 per share. Commenting on these results, Farouk Al Moayyed, Chairman of BDF, said: “The company’s board of directors has reviewed on Sunday, November 10, 2013 audited financial results for the company for the nine months ended September 30, 2013, which showed that the company achieved a net profit of US$13,508,439, which reflects the outstanding performance of the company. “At the same time I would like to express my thanks and appreciation to the executive management and all the employees for their continuous effective efforts that led us to achieve these positive great results in spite of the difficulties and the challenges,” Al Moayyed continued. “The company is currently working on several development projects in line with the company’s strategy to provide high levels of efficiency and excellent services to travelers,” added Abdullah Buhindi, Managing Director of BDF. “Work has started with the renewal of duty free arrival shops at Bahrain International Airport. The completion of the total renovation and the official opening are scheduled for January next year.” “The company has transferred its previous headquarters, located in Juffair, to the new location adjacent to Bahrain International Airport where the company runs its core

operations,” Buhindi said. “The transition process is now complete and the actual move occurred September 2013.”

Challenging conditions

One of the main challenges with which BDF has had to deal this year is new tobacco regulations, which led to the retailer being unable to sell tobacco products during Q1 2013. Briefly, the Bahraini Ministry of Health required BDF to sell only tobacco products that met GCC regulation 246/2011 standards—the main requirement being new pictorial health warnings—in its stores. Paradoxically, Bahrain was the only country in the GCC that decided to implement GCC regulation 246/2011 in duty free. “Thankfully, with the assistance of tobacco suppliers and the Middle East & Africa Duty Free Association, we have succeeded in postponing the implementation of the regulation in duty free,” General Manager of BDF Fadi Allam told us in September. “However, it will be reviewed at the next GCC Ministers of Health meeting at the end of 2013. BDF has had regular duty free tobacco product back on sale since late April 2013.” Allam also told us that that BDF’s recent promotional activity has had a positive effect on sales and customer engagement. The operator recently ran a large-scale promotion called “The Vault of Fortune,” wherein for every BD50 (US$133) spent at its stores, BDF gave shoppers the opportunity to win prizes of US$20,000, US$10,000, US$5,000, US$2,500 or US$1,000 in shopping vouchers instantly. The more travelers spent, the more opportunities they had to win. Each US$133 spent gave them a key to unlock the Vault of For-

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

tune and the possibility of unlocking a truly amazing prize. To date BDF has announced a number of winners from the Vault of Fortune promotion. Other activities that have contributed to sales over the first half of the year, says Allam, include the operator’s Golden Dallah and Treasure Hotel promotions. 

“The company achieved a net profit of US$13,508,439, which reflects the outstanding performance of the company… in spite of the difficulties and the challenges.” FAROUK AL MOAYYED, CHAIRMAN, BAHRAIN DUTY FREE

ATÜ Duty Free

Head of the pack

A number of renovations and new projects at ATÜ Duty Free’s retail spaces in Ataturk International Airport lead to increased sales and bode well for year-end numbers by

RYAN WHITE

TÜ Duty Free has an impressive 59 stores across Istanbul, Ankara, Tbilisi, Batumi, Enfidha, Skopje and Ohrid, with selling space totaling over 15,000 square meters. Dealing in core duty free categories such as Beauty & Fragrance, Tobacco, Food & Confectionery, Spirits and Fashion & Accessories, and also stocking offerings in the Toys & Games and Souvenir categories, the operator caters largely to Turks, Russians and Middle Easterners. The company’s biggest duty free operation, in Istanbul’s Ataturk International Airport, recently underwent some major changes with the addition of 700 square meters of retail space. Furthermore, the operator’s main store in Departures will also be refurbished, with work starting this month.

“Our new concept shop is located in a strategic location serving customers using the Turkish Airlines lounge and passengers heading to the left pier gates,” says General Manager Ersan Arcan. “Turkish Airlines’ impressive growth has increased the passenger numbers in our Departures terminal, where additional retail space became necessary to maintain our desired service level.” The newly refurbished and expanded retail area has been designed to be a premium space in essentially every regard. Arcan notes that the operator’s Fashion Accessory, Beauty, Spirits, Tobacco and Confectionery spaces specifically are very strong. Moreover, the layout of the store has been designed to foster a relaxed shopping experience as a means of maximizing dwell time. “The new concept doesn’t only consist of this particular new shop,” Arcan explains. “The entire area around the shop was also refurbished with the same attention to detail. We have renovated the boutiques across the hall and introduced stylish coffee shops in the center of the retail offer. This whole area is a new, modern concept that successfully adds value to the terminal as a whole.” Various food and beverage operations previously occupied the 700 square meters that were added to the retail space. The new layout allows for luxury-conscious passengers from the Turkish Airlines lounge to easily access ATÜ Duty Free’s retail space, which boasts an open entrance and high ceilings, hardwood floors, stone elements and a floating backwall system that allows sufficient daylight into the store—all creating a more natural, organic look and feel than traditional duty free retail setups.

“The new concept doesn’t only consist of this particular new shop; we have renovated the boutiques across the hall and introduced stylish coffee shops in the center of the retail offer. This whole area is a new, modern concept that successfully adds value to the terminal as a whole.” ERSAN ARCAN, GENERAL MANAGER, ATÜ DUTY FREE

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

ATÜ Duty Free’s newly refurbished and expanded retail area at Ataturk International Airport’s Departures terminal has been designed to be a premium space in essentially every regard

Given that the refurbished retail area in the Departures terminal is in close proximity to the Turkish Airlines lounge, high-end, popular duty free items are necessarily an area of focus for ATÜ Duty Free

Managing growth

The recent work being done in Departures has also resulted in some new brands being introduced for consumers. ATÜ Duty Free now features products from Victoria’s Secret and Paul & Shark, among others. As Arcan mentioned, the project as a whole was really necessitated by increasing passenger numbers. Specifically, over the first half of this year (latest statistics available), traffic at Ataturk International Airport has increased 19% over the same period last year. ATÜ Duty Free is this month starting renovations on the main Departures store in order to bring it up to speed with the rest of the newly refurbished retail space in the terminal. “Essentially the entire store will be changed,” Arcan tells us. “We’ll be adding some space to make the walkways wider. This is a direct result of the increase in passenger numbers of late.” Product placement at the location will also be reworked with an eye toward ensuring strong categories like Beauty & Fragrance are displayed in state-of-the-art fixtures. Furthermore, good news for cigar aficionados is that a walk-in humidor will be installed. Other changes will include new cash registers, updated flooring, a new ceiling and the addition of new brands, especially in the Perfumes & Cosmetics department. Finally, in terms of new developments at ATÜ Duty Free, the operator recently opened a new diplomatic duty free shop. The location features products from traditionally popular duty free categories such as Spirits, Tobacco, Confectionery and Beauty & Fragrance.

Spirits is a top-performing category for ATÜ Duty Free and is therefore given its fair share of space at the Ataturk operations

A results-driven operator

Of course, the end goal for any project of this scope is to increase revenue, and ATÜ Duty Free’s sales over the first six months of the year have already shown substantial double-digit growth, up 16% over the same period last year. The hope is that these renovations will result in even stronger increases by the end of the year. In terms of ATÜ Duty Free’s most popular categories over H1 2013, Fragrances, Tobacco and Cosmetics currently take the top three spots. Accessories, says Arcan, is also an important up-and-coming category. In an effort to keep on top of ever-changing passenger demographics, ATÜ Duty Free has just recently finished a large-scale customer segmentation project that Arcan says will provide the operator with detailed information on travelers that are (and aren’t) purchasing at the stores. Currently, Russians, Middle Easterners and Asians are the strongest passenger demographics at the airport. Arcan says he expects that the forthcoming results of the customer segmentation project will allow ATÜ Duty Free to tailor its product mix in such a way as to entice non-shoppers to enter the store and, with any luck, increase the ticket for travelers that do purchase, thereby helping to ensure that sales at the retailer’s stores continue to rise heading into 2014. 

www.dutyfreemagazine.ca GULF-AFRICA DUTY FREE & TRAVEL RETAILING

Cairo Airports Duty Free

Making the

best of it

RYAN WHITE

Cairo Airports Duty Free currently has some tough operating conditions to contend with, but the retailer is pulling out all the stops to ensure that travelers continue to purchase

ulf-Africa Duty Free recently sat down with Nadia Rashad, Managing Director at Cairo Airports Duty Free (CADF), and Magued Mounir, General Manager at CADF, to discuss the operator’s business of late at Cairo International Airport in Egypt. She tells us that despite dwindling passenger numbers and a subsequent year-onyear drop in sales, CADF is keeping busy with a number of initiatives aimed and enticing the travelers that are passing through the airport to purchase.

Crunching the numbers

In terms of key airlines for CADF’s business servicing Cairo International Airport Ter-

minal 1, the number of flights over the first six months of the year were down essentially across the board: KLM (-8%); Kuwait Airways (-18%); Korean Air (-67%); Iberia Airlines (-86%); and Olympic Air (-100%) all posted significantly fewer flights. In terms of passenger numbers for the period, the picture wasn’t much brighter, with the following airlines posting negative numbers: British Airways (-20%); Korean Airways (-46%); Kenya Airways (-42%); and Iberia Airlines (-88%). “These passengers have a lot of purchasing power so the effect on our sales in Terminal 1 was significant,” Rashad explains. With regard to Terminal 3, where CADF also has stores, the following airlines posted drops in the total number of flights over the

“For the moment we continue to work with what we have and make every effort to ensure that travelers have an attractive duty free offering at Cairo International Airport to ensure that spend is maximized across categories.” NADIA RASHAD, MANAGING DIRECTOR, CAIRO AIRPORTS DUTY FREE

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

first six months of 2013: Lufthansa (-2%); Swiss International Air Lines (-26%); Polish Airlines (-52%); and BMI (-100%). Despite these significant drops in flight numbers, passenger numbers were down only 4% at Terminal 3 as compared to H1 2012. The average number of passengers per flight into Terminal 1 over the first six months of this year was 126, down 8% from H1 2012’s statistic of 137. Terminal 3 welcomed an average of 101 passengers per flight in H1 2013 compared to 120 during the same period in 2012, representing a decrease of 15.8%. Finally, in terms of total passenger numbers, Terminal 1 welcomed 1,900,000 travelers from January to August 2013 compared to 2,162,000 during the same period last year, representing a decrease in total traffic of 12.1% for the period. In Terminal 3, passenger numbers from January to August 2013 totaled 2,247,000, a 7.8% decrease from the January to August 2012 total passenger statistic of 2,436,000.

Sales take a hit

Needless to say, the drop in passenger traffic at Cairo International Airport has affected sales at CADF’s stores in both terminals. “Sales from January to August of this year decreased by 17.8%,” Rashad explains.

Fragrances continue to be one of CADF’s strongest categories; the operator has completely renovated its Fragrance store in an effort to attract more passengers

The watch shop in Terminal 1 of Cairo International Airport

Average spend per pax at CADF’s Terminal 1 operations stands at US$3.30 for January to August 2013, a decrease of 17.5% from the same period in 2012, when average spend per pax was US$4.00. In Terminal 3, average spend per pax from January to August 2012 was also US$4.00. For January to August of this year the statistics stands at US$3.75, representing a decrease of 6.25% year over year. In terms of the sales that are being made, Rashad says that the most popular categories are duty free staples such as Cigarettes, Confectionery and Spirits (sold from the operator’s Supermarket Shop); Fragrances (found in CADF’s dedicated Perfumery store); and Gifts (with Frey Wille emerging as a standout performer in this segment). In terms of the top-spending passenger profile currently shopping at CADF’s stores, Egyptians, Chinese and Lebanese nationals round out the top three. Rashad notes that the higher average spend exhibited by these nationalities generally has a lot to do with the fact that many purchase cigarettes at the stores in addition to other items.

Cigarettes, Confectionery and Spirits are sold from CADF’s Supermarket Shop in Terminal 3

Damage control

“In an effort to increase purchases from travelers passing through both Terminals 1 and 3 at Cairo International Airport, we’ve introduced a wide range of products across categories at affordable prices,” Mounir tells us. “We’ve also made sure to carefully study the current passenger profile to make sure that any new product introductions align with what the passengers want.” Furthermore, in a move that shows just how strong CADF’s relationship is with suppliers and the solidarity that the industry can show in difficult times, the operator has negotiated with various confectionery and cigarette suppliers for them to ship goods free of charge in an effort to ramp up sales and increase revenue. Also on the topic of cigarettes, CADF is working on 400-stick promotions as a means of bumping up the total basket. In P&C, promotional activity has been centered on GWPs.

Continuing to invest

Far from bemoaning its fate, CADF is taking important steps toward growing the business when things get back on track in Egypt. The operator is currently working on a total renovation of its Perfumery shop. At press time,

Rashad told us that work was scheduled to be completed on November 10, just ahead of this year’s MEADFA conference. While no new stores have been opened recently, CADF is currently exploring options in other parts of Egypt; Rashad notes that some big tenders are currently coming up at Sharm El Sheikh International Airport’s Terminals 1 and 2. A new duty free tender is also currently open at Hurghada International Airport. Despite the sociopolitical issues being faced in Egypt and the resultant effect on the economy, one bright spot may still exist: Rashad tells us that competition for the new tenders is fierce, indicating that travel retail operators have a mid- to long-term view of the region’s troubles and clearly feel that the situation will improve. “For the moment the situation in Egypt can best be described as ‘unstable,’” Rashad says. “From the presidential election, the drafting of a new constitution and a new parliament, many changes are afoot and it’s unclear when things will resolve themselves. For the moment we continue to work with what we have and make every effort to ensure that travelers have an attractive duty free offering at Cairo International Airport so that spend is maximized across categories.” 

www.dutyfreemagazine.ca GULF-AFRICA DUTY FREE & TRAVEL RETAILING

Ras Al Khaimah International Airport RAK Airport expects year-on-year traffic growth of 25% over the next five years given the increasing popularity of the Emirate as a business and leisure destination

A world of

possibilities

Commercial and Finance Director Mohammed Qazi tells Gulf-Africa Duty Free that a bright future lies ahead for Ras Al Khaimah International Airport by RYAN WHITE

ulf-Africa Duty Free recently had the pleasure of sitting down with Mohammed Qazi, Commercial and Finance Director at Ras Al Khaimah (RAK) International Airport, to discuss business over the last couple of years and the airport’s big plans for the future. He told us that RAK Airport is committed to growing sustainably with rising passenger numbers. Qazi sees a world of possibilities for the future—not only for the airport, but also for potential partners committed to contributing to the growth of an Emirate that is fast becoming the UAE’s newest shining star. Gulf-Africa Duty Free: Can you tell us a bit about passenger numbers over the first half of 2013? Mohammed Qazi: Our passengers have grown in line with our expectations. We serviced about a quarter of a million passengers last year versus 100,000 passengers the year before. GADF: What are your forecasts for passenger traffic over the next 5 years? MQ: Our expectation going forward is growth of 25% every year. If you look at UAE airports in general, the growth in traffic has been astonishing. We’ve got a five-year plan which started about 18 months ago. By July of this year we

finished initial expansions at the airport. We will hit half a million passengers this year and as a result of the expansions we are now ready to process a million. GADF: How is RAK Airport committed to improving service for travelers as traffic increases? MQ: We’re currently working on two different strategies by first talking to a number of companies for Build-Operate-Transfer (BOT) opportunities at RAK Airport. Additionally, I have just commissioned the analysis for the master planning of the airport for the next 20 years. By the time the analysis is ready we will have narrowed the selection down to four or five business for the BOT. GADF: Can you tell us about the importance of duty free and F&B to RAK Airport’s overall plan? MQ: Duty free is a very crucial part of our strategy. Currently a third of our revenue actually comes from duty free. As such, it’s a very important part of the airport jigsaw, so to speak. I can tell you that currently there are a number of parties interested in duty free and F&B at RAK Airport. At the moment we operate our own duty free and F&B outlets but in the longer term we’ll have a more strategic focus with a landlord-tenant arrangement.

“Duty free is a very crucial part of our strategy. Currently a third of our revenue actually comes from duty free. As such, it’s a very important part of the airport jigsaw, so to speak.” MOHAMMED QAZI, COMMERCIAL AND FINANCE DIRECTOR, RAS AL KHAIMAH INTERNATIONAL AIRPORT 34

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

GADF: Can you tell us a bit more about the current duty free offer at the airport? MQ: We took control of the duty free at the airport last year. Penetration used to be 35 or 40% and now we’re looking at a penetration rate of around 60%. Spend per PAX tends to change with the season but averages about US$15. We can, however, see this increase by 300% during certain times when we get a lot of Europeans, and especially Russians, in the stores. GADF: In terms of Ras Al Khaimah in general, can you tell me what the Emirate offers business travelers and tourists? MQ: RAK has developed itself as an “affordable luxury.” We are next to Dubai and Abu Dhabi, and we have a number of hotels and resorts ranging from three stars to seven stars. Furthermore, a Turkish brand is opening a resort in the first quarter of 2014 and a number of other local and international hotel brands are due to open in 2014. Finally, RAK is also a very safe place for tourists, and given that we have seas, beaches, desert and mountains, there’s no shortage of things to see and do. The temperature in RAK is generally 6-8 degrees cooler than the rest of the UAE, and the Emirate has a very Middle Eastern flair, perhaps more so than Dubai. GADF: What would you like our readers to take away from this article? MQ: The main message we’re sending out is that RAK itself is a hidden gem. Not many people know about it as a destination, but interest is growing. RAK has a lot to offer both tourists and businesspeople and we cater to both markets. In terms of RAK Airport, we’re looking for interested parties to join us, invest in the airport and manage the part of the supply chain that they know best. Indeed, the entry barriers are low and the government support is there, not to mention support from the airport as landlord. 

Abu Dhabi Airports

MTC’s terminal building will be the largest in the Emirate of Abu Dhabi and one of the region’s most architecturally impressive structures

RYAN WHITE

DREAMING BIG by

Whether discussing the Midfield Terminal Complex, a new branding initiative, 2013 sales or refurbishments at the existing airport, Abu Dhabi Airports see potential around every corner

uring last month’s TFWA WE in Cannes, Gulf-Africa Duty Free sat down with Gavin McKechnie, Vice President – Commercial at Abu Dhabi Airports, to discuss everything from Abu Dhabi Duty Free’s new branding and the impetus behind it to the Midfield Terminal Complex (MTC) and upgrades to the current operations that will help Abu Dhabi Airports deal with steadily increasing passenger numbers to 2017 when MTC opens.

travelers from around the globe a unique and world-class shopping experience. The new logo, which takes its inspiration from the iconic architectural design of MTC, uses colors and a dynamic design to express the welcoming hospitality that Abu Dhabi Duty Free offers to customers, and to create excitement for the unparalleled shopping options available. Its contemporary style aims to convey two concepts to business and leisure travelers—“the spirit of Abu Dhabi” and “the excitement of travel.” “We’re not trying to take away from the brands that are already there,” McKechnie explained during our conversation. “What we’re trying to do is put an umbrella piece

“The excitement of travel”

Just ahead of Cannes, Abu Dhabi Duty Free announced a new branding initiative that is currently live at Abu Dhabi International Airport and will also be implemented in MTC. The brand has been revamped to convey Abu Dhabi Airports’ commitment to offering

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

in place so that we can then use that overall brand to start marketing and doing some B2C promotions and campaigns. As a result, the new branding encompasses food & beverage, duty free and the services. This allows us to put everything under one umbrella.” From a purely practical standpoint, the new branding also aids in wayfinding at Abu Dhabi International Airport. McKechnie gave the example of electronics retailer Sharaf DG. While popular in the UAE, international travelers may not be familiar with it. Signage in the airport has been redesigned with the new Abu Dhabi Duty Free branding, the word “Electronics” below that, and the Sharaf DG logo along with popular electronics brand

“There is any number of [transit] choices. What we need to do is make [MTC] really special. The food & beverage and retail needs to be spot on, and we need to get the airport processes right.” GAVIN MCKECHNIE, VICE PRESIDENT – COMMERCIAL, ABU DHABI AIRPORTS

Abu Dhabi Airports logos below that. The same method is used for essentially all F&B and retail options at the airport. “The hierarchy is basically the category logo, then the brand underneath it,” McKechnie notes. “Up above you can see ‘News and Books,’ or whatever the category may be, and underneath are the brands.” The new branding is also important from a promotional perspective, says McKechnie: “Outside the airport we’ve not advertised or promoted Abu Dhabi Duty Free as a brand for some years now,” he explains. “We’ve got the new airport opening in 2017 so we need to start promoting the airport and being out there. The new branding gives us that vehicle to do so.” The new branding was fully rolled out on October 1 and McKechnie tells us that travelers will begin seeing it a lot more in the months to come in print, on billboards and on lampposts, both in Abu Dhabi and Dubai. “Brand recognition is very important to us so we’ll be leveraging this as we go forward,” McKechnie says.

Changing it up

When discussing MTC, McKechnie pointed out that 2017 is “just around the corner” from a planning perspective, but in another sense Abu Dhabi Airports still has over three years in

its current location to contend with what have generally been strong double-digit passenger increases. As such, the company continues to upgrade the existing airport with the goal of offering passengers top-notch travel, shopping and dining experiences. “About 80% of the food & beverage contracts are about to expire,” McKechnie says. “We’ve re-tendered and will have new businesses starting to come in beginning now. We’ve also got new outlets opening up in our new arrivals hall.” On the operational side, the increase in passenger traffic has necessitated the addition of 20 new bus gates, and McKechnie says that Abu Dhabi Airports will open 400 square meters of new retail space—300 square meters of duty free and 100 square meters of F&B—at the new bus gates. The F&B there will be operated by veteran airport retailer HMSHost. “They’ve got some new concepts that they’re bringing in, so again, we’re refreshing what we’ve already got and bringing some new partners into the mix,” McKechnie explains. The duty free offering at the bus gates will be operated by DFS and will be largely a last-minute concept containing bestsellers from across the big categories. Looking ahead, in April 2014 the retail contracts will expire for Abu Dhabi Airport’s

Terminal 3, and McKechnie promises that travelers will be treated to more new brands. “On the duty free side, to process more passengers quickly through the airport, we have a new transfer facility that will open during Q1 2014,” McKechnie says. “When that happens, DFS will be refurbishing some retail areas of Terminal 3 duty free as well. Some of that will start coming online toward the end of Q1. It will be quite a new look.” The recent opening of a new arrivals hall at the airport is also big news. “Passengers from all terminals will be delivered into this state-of-the-art arrivals hall,” explains McKechnie. A WH Smith store has been opened in the arrivals hall, and passengers using the aforementioned new bus gates will also be treated to a WH Smith store.

Eid boosts travel —and sales

Abu Dhabi Duty Free reported earlier this year that its sales revenues showed significant growth in the first half of 2013, increasing by over AED 108 million (US$29 million) and reaching AED 437.6 million (US$119.1 million), representing a 17.4% increase compared to the first six months of 2012. The published figures revealed that the growth in revenue is largely attributed to the growth

The central space of the Midfield Terminal Complex will be able to hold three fullsized football pitches and will feature a 52-meter-tall ceiling at its highest point.

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

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Abu Dhabi Airports etration, getting travelers interested in what’s happening in stores and upping engagement.

Looking ahead to MTC

Abu Dhabi Airports Chief Commercial Officer Mohammed Al Bulooki (left) and Chief Executive Officer Tony Douglas at the new branding announcement

The new branding is already live on-concourse at Abu Dhabi International Airport

witnessed in the spend per passenger, which went from AED 53.96 (US$14.69) in 2012 to 55.10 (US$15.00) in 2013—a 2.1% increase. This outstanding growth in revenue exceeded the 12.6% growth in passenger traffic that Abu Dhabi International Airport (AUH) registered in the first half of this year. “By the end of the year our objective is to be somewhere in line with passenger growth, which is a tall order when you start getting into the double digits,” McKechnie says. “This is what we’re aiming for, and DFS are going flat out with lots of different ideas on how we can capitalize on this market.” “And just last week [mid-October] we had a record-breaking sales day,” adds McKechnie, “so the duty free sales performance is very good. This had a lot to do with the Eid holidays. It’s been particularly strong this year.” This year’s Eid holiday allowed most people 40

to get a week off from work, making travel a great option for many in the region. Furthermore, McKechnie notes that given that Eid is a particularly joyous time of year, travelers are in the mood to shop when they’re in the airport. Eid essentially represents the start of the holiday season for Abu Dhabi Airports. Given that sales usually see a boost in the last quarter, combined with the strong sales performance over the first half, McKechnie is bullish when it comes to his forecast for full-year sales. “I think we’ll kick last year’s sales records out of the park,” he says. “It’s going to be a good year for us, with the usual ‘barring any unforeseen circumstances’ caveat. We’re quietly confident. Well, maybe not all that quiet!” Abu Dhabi Airports is planning a large promotion for November/December, and while details are still being ironed out, McKechnie says that it should help boost sales and pen-

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

MTC’s terminal building will be the largest in the Emirate of Abu Dhabi and one of the region’s most architecturally impressive structures. It will be 700,000 square meters in size and visible from more than 1.5 km away. The central space of the terminal building will be able to hold three full-sized football pitches and will feature a 52-meter-tall ceiling at its highest point. The complex’s retail outlets will be set around an 8,400-square-meter indoor park—a first for the region—that will host Mediterranean plants at its center and desert landscapes at its edge. Associated support buildings will take up an additional 800,000 square meters, Abu Dhabi Airports reports, and will include access to 16–20 aircraft parking stands dedicated to cargo. In terms of the current duty free offering, it’s worth noting that at the existing airport, Abu Dhabi Airports is obviously somewhat limited in the renovations and refurbishments that can be performed. With MTC, says McKechnie, Abu Dhabi Airports is starting with a clean slate and limited only by its imagination. Indeed, all of the learnings that the company has acquired over the years at Abu Dhabi International Airport will combine to make MTC state-of-art in essentially every regard. “With MTC we can start to think differently and start using new concepts,” McKechnie says. “We will certainly have sufficient space—28 to 30,000 square meters between retail and food & beverage. The challenge will be the building itself. To give you an idea, you can fit the whole of London’s Westfield shopping center in the middle of the building; you could fit the Olympic Stadium in London in it with room to spare. It’s a huge building. “As such, if we don’t put something special into that, people are going to be walking about in awe of the building,” he continues. “What we need to do is wow them with the commercial offer.” McKechnie explains that at MTC, Abu Dhabi Airports will be catering to a relatively high number of transfer passengers. “They’ve been in one airport and seen the offers there, they come to us and then they’ll go somewhere else,” he says. “We want them to choose us every time as their transfer hub of choice. “There is any number of choices for them. What we need to do is make it really special,” McKechnie adds. “The food & beverage and retail needs to be spot on, and we need to get the airport processes right.”

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Abu Dhabi Airports Abu Dhabi Airports expects dwell time for transfer passengers to be 4 to 4.5 hours on average, meaning that there’s plenty of time to engage travelers if the setup is right. “If we don’t get it right, it could be a pretty grim four hours,” McKechnie says. “If we do get it right, it could be an experience that really resonates with the passengers. We want people to say, ‘Hey, I can’t wait to get to Abu Dhabi.’ “We’re really thinking differently about using the space and how we present the offers to travelers,” he continues. “For example, a standard airport may have one giant walkthrough duty free shop with food & beverage on an upper level. This isn’t going to work here. The majority of passengers aren’t coming in through the front door; as transfer passengers they’re coming into the terminal from other areas so we need to think outside the box in this regard.” Abu Dhabi Airports continues to bring in new retailers and F&B outlets as contracts expire at Abu Dhabi International

Abu Dhabi Airports still has three years in the existing location and continues to ensure that passengers are offered something special; pictured is a recently opened WH Smith store

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

Searching for likeminded partners

“Our concentration right now is really on MTC,” McKechnie says. “We’re here in Cannes speaking to interested businesses that want to be a part of what we’re doing in Abu Dhabi.” Abu Dhabi Airports is planning on having a detailed design for the new terminal ready in late February 2014, with the first tenders being announced in April. Large duty free and F&B tenders will be announced first, with smaller specialty shops and services being announced later. “In terms of partners, we’re looking for businesses that think differently,” McKechnie explains. “We want to give them time to think through the process—three, four, five months. We want to have time to open up a dialogue where they know what we’re looking for and have the time to come up with an appropriate offer. It will be a very comprehensive process where we’re very clear on what we want so potential partners can concentrate on the right pieces of the puzzle, as it were. “We’re also inviting companies to start registering their interest now in working with us at the new airport,” McKechnie adds. “Interested parties are invited to email commercialenquiries@adac.ae and we’ll be pleased to send them more information on MTC and the upcoming tenders. We’re thinking big for MTC and we want to work with like-minded companies that see the strong potential that MTC and Abu Dhabi in general have for attracting increasing numbers of leisure and business travelers in the years to come.” 

Global travel retail excellence www.worlddutyfreegroup.com

Flemingo

On top of its game Making major strides in the African market with its duty free business, Flemingo has opened the door to further expansion and growth in the region by MELISSA SILVA

egardless of the Rupee devaluation in India and the resultant effect on Indian spending power causing some setbacks, Dubai-based global travel retail operator Flemingo has arrived exactly where it thought it would be this year in terms of sales. Impressively, year to date the retailer has achieved a turnover of over US$300 million and is well on its way to reaching the lofty goal of US$2 billion in sales by 2020. “Indian consumers purchase everything in dollars and everything in duty free is in dollars, so we’re finding that quite tough,” says Paul Topping, Flemingo Group Independent Director & Board Member. “In some of our other markets like Africa, however, we’re not seeing the world recession-type impact, so these markets are holding up well.” Given the scope of the operator’s business, Flemingo’s top three categories necessarily vary geographically, but Topping has noticed liquor is a strong and growing category in several emerging markets. In addition, the fragrances category has gone from being weak

and under-spaced to one with a potential for growth. “Liquor is our strongest category, but the growing category for us is perfume,” he explains. In terms of promotions, markets like India and Sri Lanka respond very well to special offers. “The motivation spend for Indians and Sri Lankans is predominantly promotional offers,” explains Topping. “So whether the promotion is regarding confectionery, where you ‘buy three get one free’ or liquor where you ‘buy two get one free,’ they’re extremely priceconscious.” In other regions such as Europe, Topping attests it isn’t so much the price, but more the value that influences spend. In the last six to eight months, Flemingo has had several new store openings. “We are about to enter the busiest period of our growth,” says Topping. “This month we open in Tangier, and we have a shop coming shortly to St. Maarten.” Flemingo has also signed in Malaysia, Brazil and will likely increase the number of operations from 130 to 150 this year, bringing the number of countries it operates in from 20 to 40 by early next year.

Flemingo was able to widen the range of watches and luxury goods in the new store, adding brand names such as Tissot

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

“We are about to enter the busiest period of our growth.” PAUL TOPPING, GROUP INDEPENDENT DIRECTOR & BOARD MEMBER, FLEMINGO

Diplomatic measures

A major recent development for Flemingo is its diplomatic business, which is currently growing steadily, specifically in Africa, where it’s located in 13 countries including Mauritius, with a total of 40 operations. “We operate in more locations in travel retail in Africa than anyone else,” says Topping. “A lot of our business is focused on diplomatic communities like Kenya.” Flemingo originally opened a diplomatic store in Pretoria, a city in the northern part of Gauteng Province,

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Flemingo South Africa back in 2010. Towards the end of 2012, the operator realized that the current space proved to be too small considering its rapidly growing customer base. As a result, the company recently moved into a bigger premises, 10 times the size of the old shop, and now offers a wider range of products. Covering 1,700 square meters of retail space, the new store has five floors with a central atrium. The store offers liquor, tobacco, perfume, watches, housewares, toys, African products, electrical products, food, sports equipment and clothes, as well as a coffee shop. The liquor section hosts the Heineken “World of Beer” section, consisting of a vast range of the supplier’s brands. The floor also has a dedicated section for Johnnie Walker whiskies. Out of the 1,700 square meters, the Perfumes & Cosmetics section consists of an entire floor—over 100 square meters of space. The category is gradually becoming a large contributor to the overall turnover of the store. Flemingo was also able to widen the range of watches and luxury goods after moving to the bigger space, and has since added brand names such as Tissot, Longines, Rado, Zeades and Jacques Lemans to further cater to diplomats. Taking advantage of the available space, Flemingo also gave the entire mezzanine level a wider range of consumer electronics ranging from travel and electronic accessories to home theatres and refrigerators. In addition, the groceries category was added to make the store a one-stop shop for the diplomats. Flemingo imports goods directly from Europe specifically to provide customers with a taste of home and a chance to purchase familiar items. The groceries section also hosts an in-house deli for the diplomats to sit, relax and enjoy a hot beverage. Home furnishing was another category that was added after the move to the new store, and includes bedding for different seasons as

well as bath accessories. The section also hosts a wide variety of kitchen accessories such as serving dishes, serving trays, glasses and mugs. The operation offers a children’s section with toys, board games, baby health care and formula, as well as African crafts and luggage. The new shop caters to 128 embassies and 107 international organizations, with the customer base totaling 2,500. The diplomatic community has its own group called the “PDA”—Pretoria Diplomatic Association— that organizes events regularly. Flemingo works very closely with the PDA and supports the group with regard to sponsoring events.

Africa and beyond

In terms of developments in Turkey, Flemingo has developed the IRIS Pre Order Web Shop. Flemingo noticed that Norwegian and Swedish passengers traveling to Turkish destinations were looking for a pre-order service via the internet to use before departing. With this demand in mind, Flemingo joined Iris Ekspres to fulfill this need. Flemingo decided to partner with Pax Port due to its experience with establishing web shops for airlines depending on the individual airline’s request. Pax Port also has a business relationship with the tour operators in Scandinavia. As a result, Iris Ekspres is currently working with suppliers of branded cognacs, vodkas and tobacco products to further suit the Scandinavia passenger profile. Passengers returning home from Turkey to any Scandinavian destination can log in to the IRIS Pre Order Web Shop with their booking reference number, which can be obtained from their tour operator. They can then order from 30 days prior up to two days before their departure date from Turkey. Iris Ekspres/ Flemingo will deliver the goods directly to the seats of the passengers before their flight. At the moment, service is being trialed

The groceries category was added to the new space to make the store a one-stop shop for the diplomats

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

with Sun Express and will soon be extended to Corendon Airlines and Free Bird by this month. Flemingo aims to implement this service with five Turkish airlines by the end of the year. Efforts are currently focused on making the shopping experience simple and easy, as well as making the service available to all passengers traveling from any place within Turkey to elsewhere in the world. Aside from Turkey, Flemingo also recently won a concession to build, operate and maintain the Tanger Med Port, Tangiers in Morocco. Expected to launch this month, Flemingo will operate duty free, food & beverage and convenience stores in the terminal.

Well-rounded operations

Aside from the major strides made in Africa and surrounding areas in terms of its diplomatic business, Flemingo has been putting forth great efforts in its philanthropic initiatives. The operator recently launched the CSR Flemingo Foundation—featuring the slogan “We Care”—and the Sri Lankan “Educate to protect” program as part of its “Passion Night” celebrations held at the TWFA World Exhibition last month in Cannes. Topping conducted an impromptu auction during the celebrations, raising €1,100 (US$1,475) to help 1,000 children. Generous contributors included Peter Lovgren from Pax Port, Kartik Mohindra from Pernod Ricard and Arjun Ahuja of Flemingo. The company started the “Educate to Protect” campaign in September 2013 to help educate Sri Lankan school children to defend themselves against abuse. The program is already on its way to reaching the halfway milestone of helping 5,000 children in less than three months from its inception. 

Covering 1,700 square meters of retail space, the new store offers a wide range of liquor and tobacco among other products

Alpha Kreol

Smooth sailing by

By maintaining a competitive edge with strategic promotions and renovations, Alpha Kreol is well positioned for future growth

Cochin International Airport has a total of 18 airlines flying in and out of its premises

A.S. Lal, Director, Alpha Kreol India Limited

Alpha Kreol India Limited, a joint venture with UAE-based Kreol Trading and World Duty Free Group, manages the duty free operations at Cochin International Airport

nown in maritime circles as the “Queen of the Arabian Sea,” Cochin is the commercial capital of the southern Indian state of Kerala. Provided with a strategically located natural harbor on the global east-west trade route, Cochin is one of the major ports in all of India. Cochin’s maritime history is known for bringing the cultural influences of Arabs, Chinese, Dutch, British 48

MELISSA SILVA

and Portuguese to its shores, who came in search of spices, camphor, sandalwood, gold, silk and other exotic products. With equity participation from the Government of Kerala, industrialists, non-resident Indians, financial institutions, airport service providers and the general public, the Cochin International Airport Limited was established as a model enterprise—an international airport not under complete government control and the first of its kind in the history of civil aviation in India. “I was very impressed with the business model of this project,” says A.S. Lal, Director, Alpha Kreol India Limited. “It was the first one in this field which had both private and government participation.” As the fourth largest airport in India today, Cochin International Airport has a total of 18 airlines flying in and out of its premises including: Air India, Air India Express, Oman Air, Silk Air, Kuwait Airways, Emirates Airlines, Qatar Airways, Saudi Arabian Airlines, Gulf Air, Air Arabia, Etihad Airways, Jet Airways, Air Asia, Tiger Airways, Sri Lankan Airlines, Spice Jet Limited, Malaysian Airlines and Interglobe Aviation. Alpha Kreol India Limited, a joint venture with UAE-based Kreol Trading and World Duty Free Group, has been managing the duty free operations at Cochin International Airport since 2002. It was the first foreign collaboration in the Indian travel retail industry to establish and successfully operate a duty free business in India. “When we signed the contract with the airport, not a single international flight had commenced other than our national carrier, Air India, which had limited operations,” says Lal. “But risk does pay off in business and today we can proudly state that we were the trendsetters.” In terms of the passenger profiles, those generating the most traffic are predominantly from the Middle East. “We are heavily

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

dependent on the Arabian Gulf region which is where most of our passengers are from,” explains Lal. “Keeping in mind the needs of the non-resident Indians returning for holidays, business and family visits, we have to compete with the mega duty free operators of the Arabian Gulf.” In order to stay competitive, Alpha Kreol has focused on promotions, attractive pricing and renovations. “We have attractive promotions and pricing which are appreciated by our customers,” says Lal. Some of Alpha Kreol’s recent promotions, which ended October 31, include the following: Chivas Regal Whisky/ Tin 1L, buy two save US$8.00 and buy one save US$3.00; Chivas Regal Whisky/Chivas Brothers Blend 1L, buy one Whisky and one Chivas Brothers’ Blend and save US$8.00; Chivas Brothers Blend 1L, buy two Chivas Brothers’ Blend and receive a free trolley bag: and Chivas Regal 18YO 75cl, buy two Chivas 18YO 75cl and receive a trolley bag. In addition to focusing on promotions, Alpha Kreol has also prioritized renovations where necessary in order to maintain a competitive edge and ultimately increase traffic. “We are in the process of a makeover of our outlets—the 510 square-meter Arrivals shop is being extended by an additional 186 square meters,” says Lal. The Departures shop remains at 130 square meters for now.” In terms of sales, the Departures shop currently generates 10% of Alpha Kreol’s sales, while the Arrivals shop accounts for 90% of the operator’s sales. With the expected passenger arrival and departure numbers from January to December of this year expected to reach three million, the above sales ratios could drastically change for the better, especially since Alpha Kreol has anticipated total sales to reach US$25 million this year, putting the operator in a prime position to repeat—if not surpass—this growth in 2014. 

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Dufry

In addition to the strong performance of Region EMEA & Asia over the first nine months, Brazil has emerged as a country with great potential for Dufry

Emerging unscathed by

RYAN WHITE

Turnover in Region EMEA & Asia proves to be a bright spot in Dufry’s first nine months amid weaker performance in Americas Regions I and II

ufry has announced that over the first nine months of the year, turnover continued to grow strongly by 14% to CHF 2,688.7 million (US$2.9 billion), with operational performance following the trends seen in the second quarter across most of the regions. The acquired business in Greece, which started to be consolidated from April, achieved a very strong result. EBITDA in the third quarter grew by 20% and EBITDA margin reached 16.4% for the quarter. For the first nine months of 2013, EBITDA amounted to CHF 386.0 million (US$419.8 million) versus CHF 359.9 million (US$391.5 million) in the first nine months of 2012 and EBITDA margin reached 14.4%.

Turnover by Region

Turnover in Region EMEA & Asia grew by 50.9% in the first nine months of 2013 and reached CHF 894.9 million (US$973.9 million) from CHF 592.9 million (US$576.7 million) in the previous year. The business acquired in Greece in April 2013 performed strongly, with the number of international tourists visiting the country increasing by 10% in the year to September. The other operations in Europe continued to perform well, with the strongest growth in France, Switzerland, Serbia and the Czech Republic. As for Middle East and Asia, Dufry’s operations in China and Cambodia continued to outperform. In Africa, operations in Egypt were impacted by the political situation, whereas the performance in Morocco continued to be strong. Turnover in Region America I stood at CHF 569.6 million (US$620 million) in the year to September versus CHF 575.8 million (US$626.8 million) in the same period in 2012. Turnover in Region America II stood at CHF 519.8 million (US%565.7 million) in the first nine months of 2013 compared to CHF 548.3 million (US$596.8 million) in the same period 50

in 2012. Turnover in Region United States & Canada came to CHF 659.0 million (US$717.3 million) in the first nine months of 2013 from CHF 613.9 million (US$668.2 million) in the same period in 2012, a growth of 7.3%. In constant exchange rates (CER), turnover growth was 8% compared to one year earlier.

Accelerating growth mode

Julian Diaz, CEO of Dufry Group, commented: “The third quarter confirms our positive view for the remainder of the year, which is even more important given that the third quarter is the most relevant quarter for Dufry operations. “On the business development side, we have been able to secure a number of projects that will be important growth drivers in the coming years,” Diaz continued. “In Brazil, we have opened the first part of the new retails space in Terminal 2 of Sao Paulo and we signed 10-year contracts at the airports São Paulo Terminal 3, Brasilia, Viracopos and Natal where we will operate duty free and duty paid spaces. “In São Paulo, apart from the general duty free shops that will be designed under a walk-through concept, we will also introduce for the first time 15 stand-alone branded boutiques that will bring some of the most prestigious brands in the world,” he said. “In Brasilia, for instance, we will operate a duty paid retail space of 1,900 square meters with a new walk-through concept. Last but not least, the introduction of the first six Hudson convenience stores will be a major innovation within the Brazilian travel retail space. “Overall, the new expansion projects will be a very strong platform to develop other travel retail channels and segments in the country, such as duty free border shops,” Diaz added. “We are thrilled with this recent achievement and at the same time confident about this challenge. “Finally, I would like to highlight our expansion in Asia, the region that we have

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

“We are convinced that our strategy of profitable growth with a focus on emerging markets and tourist destinations continues to be valid. We will continue to work hard to improve our capabilities and to deliver an even better shopping experience to our customers.” JULIAN DIAZ, CEO, DUFRY GROUP

also been focusing and putting our efforts into developing our presence,” he said. “Dufry considers Eurasia and Asia as one of the regions for strategic development for the group, within its strategy of growth in emerging markets and tourist destinations. With its existing business in the region plus the contracts won since the beginning of this year, Dufry has built a sizeable business which may give rise to economies of scale for further projects. “We also continue developing the Operations side of our business: In October 2013, we implemented an internal reorganization of the Procurement and Logistics functions,” Diaz said. “Going forward, the procurement activities of the most important categories will be coordinated globally by dedicated teams and within each of the teams, specific responsibilities of the brand relationship management are covered. The change is expected to support sales growth and allow for gross margin improvement as well as improvements in the net working capital. “We are convinced that our strategy of profitable growth with a focus on emerging markets and tourist destinations continues to be valid,” Diaz concluded. “The new projects will contribute to the growth going forward and we will continue to work hard to improve our capabilities and to deliver an even better shopping experience to our customers.” 

MEADFA

All eyes on Doha The industry prepares to discuss the issues as this year’s Middle East & Africa Duty Free Association conference takes place in Doha, Qatar by RYAN WHITE

he Middle East & Africa Duty Free Association (MEADAF) Conference, managed by TFWA on behalf of MEADFA, promises to be among the strongest editions yet, with a program that includes many of the most dynamic companies and business leaders in the region. At this year’s TFWA WE in Cannes, President of MEADFA Sean Staunton discussed the 2013 event, what delegates can expect from the programme and the many new developments that are happening with MEADFA as an organization.

Embracing change

“In February of this year, the MEADFA board decided to formally embrace Africa into our association,” Staunton said. “Some of you may not know, but seven of our members [25%] were actually operating in Arica prior to this, so it seemed like a natural progression for this to happen. “Four new members have joined MEADFA recently—Big Five, Groupe Mado, Heinemann and LS travel retail,” he continued. “This now brings the number of MEADFA members to 35, and it means that a third of our members are actually operating in Africa. As a result of this we changed the name to the Middle East & Africa Duty Free Association. It gave us, across the board, an opportunity to reevaluate and rebrand ourselves. We relaunched our logo, and we are also relaunching our website.” Staunton noted that the website, designed to be interactive and smartphone-compatible, should be launched before the end of the year.

Fostering interaction

The 2013 MEADFA Conference will focus on four key themes: the role and importance of commercial activities in new airport design

and infrastructure; geopolitical and economic challenges across the Middle East and North Africa; understanding consumers in the African continent; and defending the duty free and travel retail industry in the region. “We have a very exciting lineup at the conference this year,” Staunton said. “The MEADFA conference has been tremendously successful, but some have commented that there isn’t enough interaction, so now for the first time we’ve introduced workshops.” Workshop A, “Making Airports Special,” will explore how specialty retail can improve both the customer experience and commercial yield, featuring MMI and Emirates Leisure Retail Group CEO Andrew Day; Qatar Duty Free Senior Vice President Keith Hunter; and Brown-Forman Marketing Director – Global Travel Retail, India, Middle East & Africa Tim Young. Workshop B, “Innovation Inflight,” will analyze how the inflight retail offer will evolve in future, with Emirates Airline Vice President Retail Services John Sime; Kenya Airways Head of In-flight Services and Standards Emmy Letting; and Montblanc Managing Director, International Travel Retail Frank Passmann on the panel.

Early registration up

“I’m pleased to announce that 245 delegates have signed up as of [October 23],” Staunton added. “That’s actually an increase of 45 delegates from the same time last year. We had 510 delegates attend our conference in Dubai last year, and we’re very excited that we’ll have a similar number this year. “I’m also delighted to announce that Qatar Duty Free has announced that there will be two tours of the new Hamad International Airport during the conference,” Staunton

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

“We had 510 delegates attend our conference in Dubai last year, and we’re very excited that we’ll have a similar number this year.” SEAN STAUNTON, PRESIDENT, MEADFA

continued. “The first tour will take place before the cocktail on Sunday, November 24. The second one will take place after the conference on Tuesday, November 26.” For the conference portion of the event, speakers will include Akbar al Baker, CEO of Qatar Airways; Paul Griffiths, CEO, Dubai Airports; Kjeld Binger, CEO, Airport International Group (Jordan); former Accenture South Africa Strategy Lead Grant Hatch; Federal Airports Authority of Nigeria CEO George Uriesi; Sherif Toulan, Director, International Duty Free Trading & Agencies; Joachim von Winning, Chief Commercial Officer, Cairo Airport; Philip Eckles, CEO, Aer Rianta International Middle East; Iain Forrest, Deputy COO, Dufry Middle East & India; John Reynolds, General Manager Travel Retail, Chalhoub Group; Changi Airport Group Assistant Vice President – Corporate Communications Robin Goh; Virgin Megastore Middle East President Nisreen Shocair; Colm McLoughlin, Executive Vice-Chairman, Dubai Duty Free; and José María Palencia, CEO, World Duty Free Group; “I would like to take this opportunity to thank Qatar Airways and Qatar Duty Free for the exceptional welcome that they’re shown so far,” Staunton concluded. “I’d also like to thank all of the sponsors for their support.” 

Bhatia Traders

Regional realm With a well established presence in the UAE, Bhatia Traders eyes expansion in Africa and farther afield by

HIBAH NOOR

hatia Traders L.L.C. is an independent arm of House of S.T. Bhatia, a UAE-based trading house established in Sharjah in 1969. S.T. Bhatia has a wide range of business interests in sectors as varied as logistics, hospitality services, diplomatic supplies, management consulting, event management and training. The company was the first of the parent company’s independent arms to be launched. The core business of S.T. Bhatia’s Bhatia Traders arm encompasses the operation of

Suresh T. Bhatia is the Chairman of House of S.T. Bhatia and has taken on an advisory role as the company continues to pursue an aggressive expansion and development agenda

Bhatia Traders’ Managing Director, Rajeev Bhatia is actively looking at business expansion opportunities abroad

duty free shops, bonded warehouses and a chain of seamen’s clubs spanning ports across the northern UAE. The company also supplies ship chandlers, oil rigs, cruise lines, cargo ships and more. Bhatia Traders runs a total of seven duty free shops in the UAE: two at Sharjah’s Port Khalid, one at Sharjah’s Hamariyah Free Zone, and one each at Khorfakkan, Fujairah, Ajman and Ras Al Khaimah. It also runs five seamen’s clubs: one each at Port Khalid, the Hamariyah Free Zone (the scaled-down facility there is described as a Deli/Cafe), Khorfakkan, Fujairah and Ras Al Khaimah’s Saqr Port. There are bonded warehouses in the Jebel Ali Free Zone, the seaports at Sharjah and Fujairah, and also at the Ajman, Khorfakkan and Umm Al Quwain seaports. After the company’s first concession at Sharjah, the operation branched into the seaport business, where the free trade system within the Emirates made them a lucrative business proposition, according to Rajeev Bhatia, Managing Director of Bhatia Traders, and son of S.T. Bhatia Chairman and Founder Suresh T. Bhatia. “Free trade came about because of UAE’s access to the sea,” Bhatia says. “That traditional way of doing business, [the] sea has been the way UAE has traded with the rest of the world or has been used as the hub of central trading. When the seaports started getting organized, my father [S.T. Bhatia Founder and Chairman Suresh T. Bhatia] saw a huge opportunity, that this was a free trade zone like an airport. They also needed similar services.” The first duty free store, at 75 square meters, sold duty free staples such as liquor, perfumes and tobacco, but quickly built out its product range from this starting point. Fujairah’s seaport and airport came next, with Bhatia Traders having the distinction of being the inaugural concession holder at the airport. The seaport was a key win for Bhatia, as it is the largest

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

multipurpose seaport located on the eastern seaboard of the UAE. Indeed, along with Singapore and Rotterdam, it’s one of the largest bunkering ports in the world. “As a home-grown UAE company with a single owner, we had these limitations and we were building our experience,” Bhatia recalls. “The challenge was whether it was an international company coming into play or another company which was going to make a higher financial bid for the concession—and both ways we know exactly what type of business can be sustained in these markets. We chose to do the businesses which made more sense for us.” More recently the company opened a shop at Ras Al Khaimah’s Saqr Port about 18 months ago. The Saqr Port, one of the bulk cargo ports in the Middle East, is an important addition to Bhatia’s network. Ras Al Khaimah is also the fourth largest emirate in the UAE and boasts a highly diversified economy. The duty free store is based on the company’s standard layout, an approach Bhatia understands is important to generate customer familiarity and loyalty. “If you walk into any of our shops we have a grid layout —we work like any other international duty free operator,” he says. All of the company’s duty free stores were renovated in the last seven years, tapping an annual budget for “face lifts” for the facilities. Bhatia says the company employs 15 people in each shop, with the logistics backend employing another 60 to 75 people, a number that includes IT support staff.

Seaside service

Seaports are very unique businesses, says Bhatia. “For us a majority of our sales are made to repeat customers. Our customer base is the crew of the ships, whether they’re container ships, bulk cargo carriers, oil rigs that come in for repairs or cruise liners—and then there are ferries from adjoining countries.”

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Bhatia Traders

All of Bhatia Traders’ duty free stores were renovated in the last seven years

Asians make up 50-60% of the crews so they’re the biggest customer group. Europeans, who fill the managerial roles, make up 10-15%. There’s also a strong contingent from countries in Eastern Europe. And about 10% of the customer base is made up of marines, Bhatia says. All major cruise lines are also listed. “These people aren’t going from point A to point B,” Bhatia says. “These are people that live on the ships on a daily basis. They need to cater to themselves for daily amenities, whether it’s a pair of socks, shoes, some clothes or toiletries. So we offer convenience stores. We also sell high-sea fishing equipment for people who fish. And when people finish their tenure they need gifts for their families like perfume, souvenirs and so on.” The average spend is US$75-$100 and consists of one to three items. The company is also aware of a strong demand for gifts. “When you’re on a ship you can’t go home on festive seasons,” Bhatia says. “We actually courier your gifts to your home. We’ve been doing this for the last four or five years. You pick 10 gift items and we will send a courier to your family. You pack your own box and seal it and we’ll ship it.” Bhatia says it’s very important for the customer to have this one-stop kind of service. Connectivity is also vitally important to seamen, who are frequently isolated and far from terra firma for very long periods of time. Accordingly, Bhatia Traders has developed an operation that provides laptop repair and other computer services with the same one-stop mentality and an emphasis on quick turn-

around. “As we provide services and laptops, we also service these products,” Bhatia says. “This can be arranged by email. We try and service the laptop while the customer is at the port. We have drivers that will take the laptop to a service center that we work with.” The network of seamen’s clubs operated by Bhatia Traders offers a wide range of services for seamen when they’re in port. In addition to audio and video entertainment systems, they offer electronic gaming, pool tables, library services with newspapers and periodicals, international telephone service, a restaurant, a bar and cafeteria amenities, religious facilities and what’s called a “slop chest,” where customers can buy and mail postcards or buy souvenirs and other memorabilia. The seamen’s clubs, while forming a unique and distinctive part of Bhatia Traders’ business, also in fact perform double duty for the company’s other operations, as Bhatia explains. “The seamen’s club at Fujairah Seaport has a bar service from 8am to 11pm and also serves food. It’s more of a social place and it’s used as a marketing tool for our duty free facility. Customers that are using the port facility don’t have to walk away from the port they can stay and utilize the shop facilities.” Bhatia Traders also provides up and down shuttle services between all shipboard berths and the shop. Additionally, the company provides ship chandelling services onboard, where buyers can order goods from the shops and have it delivered directly. Timing is all important in this type of operation, and transactions have to be completed in advance of a

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

vessel’s arrival; Bhatia says it has established a track record of timely delivery, which keeps the company in good stead with existing customers and also helps in acquiring new ones. The product ranges covered include wines and spirits, tobacco, confectionery, frozen meats, canned foods and electronic products. The company’s far-flung diplomatic supply operation covers the entire Middle East and Indian subcontinent, supplying wines and spirits, tobacco, cosmetics, perfumes and fastmoving consumer goods (FMCG), a category that covers products that are sold quickly and at low cost but in relatively high volume, such as soft drinks, toiletries and groceries. Overall, the shops under Bhatia Traders’ purview offer no fewer than 11,000 SKUs in all the major duty free product categories: liquor, tobacco, perfumes and cosmetics, foodstuffs, computers and electronics, healthcare, toiletries, sporting goods, apparel, luggage, home appliances and more. The company maintains an emphasis on consistent product pricing, backed up by continuous evaluation and adjustment in response to market developments. Customer feedback is taken seriously and helps to develop business strategy, says Bhatia.

The strongest links

Vital to Bhatia’s duty free business, the company’s bonded warehouses across the region perform an important logistical role, enabling the storage and rapid shipping of products to seaport and airport retail locations as required. Service is provided 24/7, and the warehousing

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Bhatia Traders and retrieval systems are highly mechanized, which reduces labor time, increases the accuracy of order picking and minimizes the risk of damage. Bhatia Traders also benefits from S.T. Bhatia’s extensive global network of suppliers and manufacturers. The company won the highly coveted ISO 9001:2008 designation for retail and wholesale duty free operations after a detailed operational audit by Bureau Veritas, a global testing, inspection and certification specialist. And in an interesting twist, S.T. Bhatia’s involvement with and knowledge of the premium Scotch whisky category won Rajeev and his father induction into the prestigious “Keepers of the Quaich” fellowship in 2011, in recognition of their service to the category. The Quaich is a traditional Scottish two-handled drinking cup, and the non-profit Keepers of the Quaich fellowship is promoted collectively by the industry to spread the word about

Scotch whisky and develop international awareness and exposure. Founding partners and members include Chivas Brothers Ltd., George Ballantine & Son, Whyte and Mackay and Diageo Plc. While Suresh T. Bhatia has occupied the Chairman position and more of an advisory role lately rather than an active one, the company continues to pursue an aggressive expansion and development agenda. Long term goals include the expansion of seaport operations outside the UAE, particularly into the Far East and further into the African market. “We’re trying to find the right place and the right opportunity, and also where we can do justice to the business,” Bhatia says, promising activity within the next six months to a year. Bhatia’s background as a graduate from UK & Executive programs at the Harvard Business School gives him strong awareness of global markets and opportunities, and of the need to develop a unified, consistent presence across markets

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

and cultures that can differ very widely. “They’re very similar operations, just in a different part of the world,” he adds. “We’re looking at strategic alliances with companies in the same business, and we’d go in as joint venture partners into these businesses, and add our funding and our industry experience. Our strategy is rather than being clients to our brands, we are brand partners, and we understand the brand strategies ands how they see our markets,” Bhatia says. “We know what we’re good at—we don’t try and be overambitious. Our growth in the seaport business today is because the seaports realize we know what we’re doing. It’s a plugand-play operation.” Despite clearly having a firm grasp on the company’s diverse business interests, Bhatia was quick to give credit where credit is due when asked about the reason for S.T Bhatia’s success over the years: “My father is a visionary,” he says. “We owe all our success to him.” 

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TFWA WE 2013

A brand new world

RYAN WHITE

Just last month the travel retail industry converged on Cannes for a successful TFWA WE event highlighted by an informative conference program and numerous networking opportunities

“A

sked by a colleague which single word I would use to describe TFWA World Exhibition 2013, the word ‘dynamic’ came to mind,” commented Erik JuulMortensen, President of TFWA, during the closing press conference last week at the annual show. “Dynamic in that there is a much better sense of working together in the industry; in that passenger numbers are growing; in that exhibitor and visitor numbers keep increasing.” In total 6,303 delegates from 2,917 companies in the global duty free & travel retail industry attended the annual trade show, which took place in the Palais des Festivals, Cannes from Sunday, October 20 to Friday, October 25. This visitor figure compares with 6,074 in 2012, an increase of +4%, with +1% in companies. Of that total 2,110 were duty free & travel retail operators and landlords—up 8%—from 621 companies (+3%). The top ten originating countries of the trade visitors were France, UK, UAE, Germany, Korea, USA, Russia, The Netherlands, Hong Kong and Switzerland. Awaiting them in the exhibition halls were 470 exhibiting companies, including 46 new or returning companies from all categories, between them showcasing a diverse selection of innovative and prestigious products destined for airlines, airports, ferry and cruise lines, downtown and cross-border duty free stores around the world. The week started with a range of leisure pursuits for over 300 participants and a glamorous Welcome Cocktail attended by 1,432 guests on Sunday, October 20.

The conference

The conference portion of TFWA WE kicked off on Monday last week with a word from Moderator Stephen Sackur before Erik JuulMortensen took the stage to discuss current challenges and the opportunities for the travel retail industry. In his summary of the state of the industry, Juul-Mortensen noted the particular importance of Africa to the future growth of travel retail. With the continent’s middle class growing at a staggering rate, Juul-Mortensen said that the continent presents “an exciting and positive challenge.” Juul-Mortensen then went on to note the importance of airlines to the travel retail industry. Quoting CEO and Director General of IATA Tony Tyler, Mortensen noted that margins in the airline industry are “razor 60

thin.” Nonetheless, he said, airlines have large numbers of aircraft on order, which certainly bodes well for airport duty free. On the topic of airlines, Mortensen touched on the negative effects of the one bag rule implemented by some airlines. “The one bag rule continues to blight our industry,” he said. “Indeed, the one-bag rule accounts for millions in lost sales.” Mortensen then talked about airports, noting that understanding why non-shoppers don’t buy in travel retail is likely the biggest opportunity for the industry. He also discussed the road toward abolishing LAG restrictions, explaining that new screening procedures will be put into place in January 2014. While certainly a positive step toward the eventual abolishment of LAG restrictions, Mortensen

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

(from left) Moderator Stephen Sackur; TFWA President Erik Juul-Mortensen; Lord Sebastian Coe, Olympic athlete and Chairman of the British Olympic Association; and Willie Walsh, Chief Executive Officer of International Airlines Group

warned attendees that the new processes may result in increased wait times and more passenger confusion. Mortensen then set his sights on the brands, saying that they need to engage more with retailers to help build footfall by concentrating on the all-important point of differentiation. Notably for the industry worldwide, Mortensen announced the creation of the Duty Free World Council, made up of regional travel retail bodies across the globe. Mortensen said that the Council’s objectives were: to represent, protect and promote the global duty free and travel retail industry; to provide appropriate support to all regional industry associations; and, where relevant and required, provide a voice for the global industry. Mortensen noted that more information on the newly formed

Duty Free World Council will be forthcoming in the weeks ahead. Lord Sebastian Coe, Olympic athlete and Chairman of the British Olympic Association, then took the stage to discuss London’s bid for the Olympic Games: “Your industry does rely heavily on the airlines and London 2012 relied heavily on both the airlines and your industry,” he said. Coe stressed the importance, in any organization, of asking the right questions to ensure success, and in the Q&A session after his talk, he discussed the similarities between London’s bid for the 2012 Olympics and the tender process in travel retail. Willie Walsh, Chief Executive Officer of

International Airlines Group (IAG), then discussed the airline industry, noting that for IAG specifically, Asia and Africa are particularly attractive regions for future growth. In relation to Juul-Mortensen’s comments on the airline industry, Walsh noted that consolidation is an important part of the solution toward making the airline industry more profitable by allowing airlines to strengthen and maintain their brands while still having the security of being a part of a larger entity. He noted that European aviation is very fragmented because many countries feel the need to intervene and give financial aid to airlines that arguably shouldn’t even be in business. As a result of this, Walsh forecasts

that further consolidation of the industry is on the horizon. Walsh concluded by giving the Middle East as an example of the potential that airlines and airports have to positively affect a region’s economy. “This is truly an example of what aviation can do,” he said. John Gerzema, Author, Social Strategist and Consultant, ended the conference portion of the show by talking about the importance of values seen traditionally as feminine when it comes to doing business in the modern world. His research indicates that feminine values drive usage and preference in brands. “Global elites seek an additional layer of meaning in luxury brands,” Gerzema said.

Workshops and networking opportunities

159 early birds attending the Airline & Retailer Workshop on October 22 were treated to informative presentations by the trinity of supplier, concessionaire and airline speakers on the subject of inflight retail. On Wednesday, 92 delegates attended the Market Watch breakfast workshop focusing on the next generation of evolving markets—the CIVETS countries—and specifically on aviation development and the potential for duty free & travel retail in Turkey and Indonesia. The social highlight of the week was Le Premium Evening at Port Canto, at which nearly 880 delegates enjoyed a sumptuous dinner prepared by Michelin-star chefs and a private concert by rock band Texas. Those with energy to spare during the week could be found at The Scene, TFWA’s private late night venue, which welcomed hundreds of guests each evening. 

Le Premium Evening was attended by nearly 900 delegates and was one of many evening networking opportunities at TFWA WE 2013 www.dutyfreemagazine.ca GULF-AFRICA DUTY FREE & TRAVEL RETAILING

Industry News

AHEAD of the PACK

ANDREW BROOKS

The Middle East continues to lead growth in international passenger traffic

he International Air Transport Association (IATA) announced its global passenger traffic breakdown for August at the beginning of October. IATA crunched the numbers in a variety of patterns, and what emerged as the bright spot was a decided strengthening of global passenger traffic demand, continuing a trend that had been observed for a few months prior. Overall airline load factor, which measures airline efficiency based on the percentage of total seats available that have paying passengers in them, was also up, reaching the previous all-time record of 83.4% in August. “Trading conditions are still tough with high oil prices, stiff competition and regulatory hurdles,” said IATA Director General and CEO Tony Tyler. “But demand growth remains a bright spot with most indications pointing towards an acceleration in the fourth quarter.” Middle East carriers had the strongest year-over-year international passenger traffic growth at 15.1% (the domestic number pulled the average down a bit to 14.1%—ICAO figures show the Middle East is one of the weaker domestic-traffic performers globally). The result was positively affected by the timing of Ramadan, which this year took place in July, but year-to-date growth was still strong at 12.1%. Load factor was pushed up 3.1% to hit 82.0% thanks to the fact that airlines held capacity growth to 10.8%.

“

Trading conditions are still tough with high oil prices, stiff competition and regulatory hurdles. But demand growth remains a bright spot with most indications pointing towards an acceleration in the fourth quarter.

”

TONY TYLER, DIRECTOR GENERAL AND CEO, INTERNATIONAL AIR TRANSPORT ASSOCIATION Robust traffic growth in the Middle East stands as a shining example of the importance that aviation can play in a region’s economy; pictured is an Emirates plane, one of the fastest growing airlines in the world

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

IATA expects the growth in demand to continue. August statistics show healthy growth in non-oil sectors in Saudi Arabia and the UAE, among others. “In Saudi Arabia the business sector recorded the strongest pace of growth for four months, and in the UAE export orders continue to expand solidly, according to JP Morgan/Markit surveys of purchasing managers,” IATA announced. IATA says good demand growth like this underscores the importance of global connectivity in today’s economy. Furthermore, things are looking good for next year. After posting an average net profit margin of 1.1% in 2012, airlines can expect that to double to 2.2% in 2014, IATA says. “Cost control, consolidation, joint ventures and product innovations are among the measures that are helping airlines achieve the efficiencies needed to secure their financial futures,” said Tyler. The International Civil Aviation Organization (ICAO) is also bullish on passenger traffic growth. In July the organization released 2012 figures showing that passenger traffic grew 4.9% that year, reaching 5.4 trillion passenger-kilometers performed (PKP). ICAO expects the numbers to grow by 4.8% this year, 5.9% in 2014 and an impressive 6.3% in 2015—almost back to the good old days of 2011, when traffic increased 6.6%. The Middle East, which accounts for 8% of global traffic, is by far the star PKP performer as far as ICAO is concerned (for ICAO, “Middle East” includes the Gulf and Western Mediterranean regions). From 2011 to 2015, the only year that the Middle East growth rate was (or will be) below 10% was 2011, at 9.2%. The preliminary figure for 2012 is 13.7%, and the prediction for 2013 is 10.2%, followed by 11.2% in 2014 and 10.8% in 2015. “This forecast is based on the strong performance of its largest air carriers in gaining market share on international routes outside of the region,” ICAO says. ICAO’s Middle East regional office, located in Cairo, released a regional report in 2011 that featured an interview with H.E Saif Mohammed Al Suwaidi, Director General of the UAE General Civil Aviation Authority (GCAA). In the interview, Al Suwaidi discussed the economic importance of robust civil aviation. “The UAE’s experience is a good example for any country in the world of the tremendous importance of an efficient and effective air transport network in providing much-needed support for economic growth and social development,” Al Suwaidi said. “Dependable air transport services go hand-in-hand with the development of all tourismrelated objectives, robust local and international trade, improved foreign and local investment opportunities, and lastly deeper cultural and political ties with countries around the world.” 

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Traveller

Unity of purpose by

HIBAH NOOR

Traveller gives Chalhoub Group new travel retail punch

n August of this year, Dubai-based Chalhoub Group created a centralized travel retail entity within the parent organization by devolving responsibility for all duty free shop and border store operations to its travel retail service arm Traveller. Hitherto, Traveller had been responsible solely for the inflight duty free work. The decision gave Traveller, which was originally founded two decades ago, responsibility for the full spectrum of Chalhoub Group’s travel retail operations. “It was a strategic management decision,” says Traveller’s General Manager Rami Madi. The travel retail arm of the Chalhoub Group has always existed as a separate entity. That separation, coupled with its new control of the full spectrum of travel retail duties, enables Traveller to approach growth in travel retail in a concentrated, coherent way in the future, and Madi is enthusiastic about the prospects. Madi explains that one of the main motivations for the change was the fact that Traveller was already the partner of choice for a wide and impressive supplier base. This powerful and prestigious network puts Traveller in a better position to negotiate new contracts and agreements, Madi says. “The potential is obviously huge, and we look forward to working very closely with our new partners to our mutual benefit.” Traveller already represents a sizeable number of fashion, beauty & accessories brands at the duty free shop level, Madi says. As things stand now, the major beauty houses are already dealing directly with most duty free shops. However, Madi says, since they already work with Traveller for their inflight business, they know what its market leverage is and are aware of how Traveller can facilitate their overall business, especially on the stock replenishment and logistics side of operations. “Traveller already handles an interesting portfolio of brands that we distribute to airport shops,” Madi says. “For example, on the beauty front we handle Elizabeth Arden,

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

Rami Madi, General Manager, Traveller

Traveller has managed to train more than 2,000 airline cabin crew members in 2013

Lanvin Fragrances and Bond No. 9, while on the fashion front we supply Longchamp, TUMI, Paul Smith, Ralph Lauren, S.T. Dupont and Bell & Ross Watches.” Operating in a very dynamic market, Traveller will certainly be on the lookout for new and interesting brands to offer its business partners, Madi says. “That said, we definitely do not intend on cannibalizing our own basket, especially onboard an airline where space is a constraint.” The Traveller team is going to be expanded to handle the operation’s current and new responsibilities, Madi says. The company will also be fully restructured in order to get the maximum potential from what Madi describes as Traveller’s pool of diverse expertise and talent. For now, the top priority for Traveller is to build its presence in travel retail and to capitalize not only on its own pool of talent

but also on its regional savvy and market leverage to address needs on both the client and supplier sides of the business. “In keeping with Traveller’s motto ‘The sky is the limit,’ we’ll be constantly striving to perfect our service offering,” Madi says. “We hope to build a conglomerate dedicated to the travel retail industry where we become the partner of choice to both clients and suppliers alike.” Madi admits that Traveller, as a new venture, faces a host of challenges and risks, but he’s resolutely optimistic about the prospects. “We’re very excited about this novelty venture, and we’ll share further details on the overall experience in due course.” Within travel retail, sales to date for 2013 have been very good, and a rising tide does indeed seem to be floating all boats; Madi says that Traveller has noticed that all of its suppliers and clients are showing healthy growth figures themselves, a situation which naturally

bodes well for Traveller’s own figures further down the road. Part of that market success undoubtedly stems from the other big piece of news for 2013, Madi says; the launch of novelty fragrances Voile Rosé and Voile Doré. The launch builds on Traveller’s successful debut in fragrance creation with Voile Noir (for women) and Voile Blanc (for men). Voile Rosé and Voile Doré premiered exclusively aboard Saudi Arabian Airlines in March of this year—not the first time that Saudi Arabian has served as Traveller’s launch platform for new fragrances into the Middle Eastern market. The premiere of the latest two iterations under the Voile banner proved to be fully as lucrative and gratifying in terms of sales figures as the first two marques, Madi says. Both were further rolled out to most Middle Eastern airlines in July with excellent results, he adds. “A year after having introduced Voile Noir and Voile Blanc exclusively through our airline partners, we authorized the limited distribution of these two references via our in-house retail boutiques,” Madi says. “Voile Noir and Voile Blanc are currently available at very selective Faces outlets in the UAE, Saudi Arabia Qatar and Kuwait with sales surpassing our initial expectations—by far!” Going forward, Traveller’s plan is to maintain Voile Rosé and Voile Doré in an exclusively onboard positioning up to March 2014, before offering them as a complement to Voile Noir and Voile Blanc. 

The launch of novelty fragrances Voile Rosé and Voile Doré builds on Traveller’s successful debut in fragrance creation with Voile Noir (for women) and Voile Blanc (for men)

www.dutyfreemagazine.ca GULF-AFRICA DUTY FREE & TRAVEL RETAILING

International Travel Retail

A passion

for success by

HIBAH NOOR

International Travel Retail’s Mariem Ben Cheikh is out to build her brands into leaders

s we noted in the NovemberDecember 2012 issue of GulfAfrica Duty Free, Mariem Ben Cheikh, CEO of International Travel Retail (ITR), has high hopes for the “Notes D’Amour” men’s fragrance, launched under the brand name of Lebanese pop music star Ragheb Alama. Over the intervening months Ben Cheikh has been busy working toward the launch of the women’s marque, “Le Grand Amour.” “The name means ‘The Greatest Love,’ and it’s also the name of one of the most popular of Ragheb’s songs,” Ben Cheikh says. “Ragheb is known as a messenger of love—people respond so passionately to his music. Now he’s providing women as well as men with fragrances that match that passion.” Ben Cheikh is approaching the fragrances not as product launches but as a full-fledged

“Notes D’Amour” men’s fragrance, launched under the brand name of Lebanese pop music star Ragheb Alama is distributed by International Travel Retail

branding exercise. Notes D’Amour is listed throughout the MENA and Gulf regions, she says, as well as in Zurich and Geneva airport shops. Next, Ben Cheikh plans to cover all of Europe, starting in France, as well as moving into the US. ITR’s other big name brand is Roberto Cavalli Vodka. Ben Cheikh’s work was cut out for her simply because this space is already packed with powerful competitors, but the name recognition helped. “I can now say that I’m proud to see my Roberto Cavalli Vodka in the top five everywhere,” she says. The vodka is selling strongly in Dubai Duty Free, in Delta Duty Free in Lebanon, through MEA and IDFS and in Jordan Duty Free. “The taste is unique—and the bottle looks like a jewel,” Ben Cheikh says. “It’s going to do really well in duty free as the first Italian vodka, but also because it’s not available in all domestic markets, so buyers can buy it only in duty free.” With brands like these to work with, and given the extensive travel retail experience she brings to bear on the challenge of creating brand buzz and opening new markets, Ben Cheikh is understandably bullish about her company’s prospects. “I realized one of my dreams when I moved to Lebanon, opened my own company and started working with this beautiful Ragheb Alama brand,” she says. “Now I’m focused on moving both of my big brands to the top of the market, where they deserve to be.” In the not too distant future, Ben Cheikh hopes to bring another dream to reality; she’s working on launching her own duty free operation, which she hopes will come into being in a year or two. In the meantime,

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

while the MENA and Gulf regions continue to be the “home turf ” for ITR, Ben Cheikh is ramping up the company’s presence in Europe and the US. Ben Cheikh’s passion for the duty free business shines through when she’s asked what message she tries to bring to retailers and buyers at major events like TFWA WE and MEADFA. “I want everyone to know that I only work with brands I personally love and believe in. For me, it’s about much more than financial reward. I want the brands I carry to succeed. I really look at them the way a mother looks at her child.” 

“I want everyone to know that I only work with brands I personally love and believe in.” MARIEM BEN CHEIKH, CEO, INTERNATIONAL TRAVEL RETAIL

ELIXIR 7.9

Youth Energy Innovation 12 years of research A combination of 7 plants 9 anti-Aging Patents

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Perfume Holding

IN THE FAST LANE

Focusing on its lineup of novelties, Perfume Holding is increasing its visibility in the Middle East by MELISSA SILVA

The personalized Ferrari gondola in T1, Dubai International Airport

erfume Holding has enjoyed a productive year, with strong sales—up 24% on last year— and several store openings, predominantly in the Middle East region. This past July, Perfume Holding opened a shop in Dubai Duty Free in June 2013 in T1, Dubai International Airport, with a personalized gondola for its new brand, Ferrari. Since the opening, Perfume Holding has further expanded in T2 and T3. “We have nice coverage with very good results and thanks to these results we’re extending our presence in their stores,” says Patrick Malek, Sales Director Middle East/Africa/Indian Sub-Continent. Perfume Holding has also expanded with Bahrain Duty Free and recently opened in Oman with Oman Duty Free, furthering its presence in the region, which Malek says is growing. In terms of current consumer trends, Malek feels they are contingent on several factors. “In travel retail it depends,” he says. “For example, 68

Dubai Duty Free is not only a Middle East platform—it’s a worldwide hub, so you have Russian, Chinese and European consumers, so our assortment works well.” Although Perfume Holding has developed tailor-made projects for the domestic market that have transitioned well into travel retail, Malek feels travel retail is more about the global assortment. Part of Perfume Holding’s strategy for 2014 involves further expansion in the Middle East both on the ground and in the air. “We have planned to open new airport duty free accounts with Abu Dhabi, Kuwait, Qatar and Delhi,” says Malek. “We already work with World Duty Free Group in Saudi Arabia, so step by step we are targeting the key doors.” Regarding inflight, Perfume Holding isn’t onboard yet, but is currently having discussions with Emirates Airlines. “We want to be onboard, but we’re taking it step by step,” says Malek. Ferrari, which is currently Perfume Holding’s main global brand, is doing very well for the company, hence the personalized gondola at Dubai Duty Free. “Ferrari is a strong brand worldwide with very strong awareness, which is exactly what is needed in travel retail,” explains Malek. “The customer is attracted to strong brands, but today promotions are part of the business because consumers are looking for added value.” With this in mind, Perfume Holding offers exclusive GWPs in travel retail that differ from those in the domestic market. Ferrari offers two ranges: Cavalino – Red Power, the premium range; and Scuderia – Racing Red, the fan-favorite, affordable range. “Both are ideal for gifting; they’re very nice. Ferrari is working very well,” says Malek. Perfume Holding will add to its Ferrari novelties with the launch of The Essence Collection next year.

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

Perfume Holding will add to its Ferrari novelties with the launch of The Essence Collection next year

In addition to Ferrari, Perfume Holding has also announced novelties from luxury lingerie brand La Perla. The latest, “Just Precious,” is a more premium product, where as “J’aime” is a classic bestseller. “Divina,” another La Perla fragrance, is segmented for a younger consumer. “We’re also planning to enter some accounts in travel retail with La Perla next year that have had a very good response in the domestic market,” says Malek. “In travel retail you need to have a good base in the domestic market. If you don’t it won’t do well in travel retail.” Perfume Holding launched its in-house brand Atkinson’s last month at the TFWA World Exhibition in Cannes, which it’s planning to introduce into travel retail. “It’s one of the oldest brands of perfume, established in 1799 and has a beautiful heritage,” says Malek. “We have completely revamped it with a modern touch.” Atkinson’s first launched at Harrods’s in London in June and in Bloomingdales in Dubai Mall this past September. “Right now we’re establishing Atkinson’s in domestic, but several duty free locations have been very interested because it’s something different—not a brand that everyone is using.” Liu Jo is another novelty Perfume Holding has launched. An Italian brand, Liu Jo is currently present in 350 boutiques worldwide, including in the Middle East where it’s available in 20 boutiques. Perfume Holding plans to launch Liu Jo in travel retail by the end of 2014. As 2013 comes to a close, Perfume Holding’s priority in travel retail will remain the same— increasing activity in the channel and focusing on increasing the visibility of its Ferrari and La Perla novelties. 

www.toscow.com

Enquiry: sales@toscow.com

Cerruti 1881 The Tate black lacquered fountain pen features a unique square shape

Timeless appeal by

MELISSA SILVA

With a lengthy history in fashion, Cerruti 1881 aims to achieve the same record in travel retail by growing its presence in airports and onboard several airlines

ince its beginnings in 1881, when Antonio Cerruti founded his first weaving workshop in Biella, Italy, Cerruti 1881 has maintained its focus on elegance, luxury and quality for over three decades. After Cerruti’s son Nino took over the family business in 1950, a men’s ready-to-wear collection was launched not long after in 1957. Ten years later he opened the first Cerruti 1881 boutique in the Place de la Madeleine in Paris, which became the company’s flagship store. In 1978 Cerruti decided to venture into the fragrance market with the launch of Nino Cerruti pour homme. The first fragrance was followed by Nino Cerruti pour femme in 1987 and an additional fragrance for men called 1881 Nino Cerruti in 1990, which was rechristened as “1881 Cerruti 1881” in the 2000s, and “Cerruti 1881 pour femme” in 1995. An entire range of fragrances were created in the following years. Since April 2011, Cerruti has formed part of the Hong Kong based Trinity Ltd group, which specializes in high-end prêt-à-porter for men. The company operates both directly via its head office in France and through license and distribution agreements for men’s

The newly launched Pauline folding shopper is available in a variety of colors

high-end and luxury brands worldwide. The global network of Cerruti 1881 boutiques now comprises 112 units, including 95 under direct management and 17 under franchise. Today, Cerruti 1881 produces ready-towear lines for men carrying the “Cerruti 1881 Paris” label, which focuses on trends and innovation in fashion; the “Cerruti 1881” label, which features classic, elegant, formal and casual-chic designs; and fragrances, leather goods collections, watches, jewelry, eyewear (sunglasses and corrective eyewear), ties, shoes and writing instruments, as well as a casual wear range and jeans for men and women. Between the end of 2012 and the first half of 2013, Cerruti 1881 opened a shop in Hong Kong International Airport and in Shanghai Hongqiao International Airport. Additionally, new listings were recently secured with several airlines, including TAP Portugal, China Southern, Air China, Kuwait Airways, Hong Kong Airlines, Etihad, Virgin Atlantic, Qatar Airlines, Cyprus Airlines, South Africa Airlines, Eva Air, Hainan Airlines and Qantas. The Cerruti 1881 shop in Shangai Hongqiao International Airport is located in Terminal 2, also known as the “Luxury-Brand Boulevard,” and is presented in an unusual retail format: double-story boutiques with staircases leading the customers from the departures level to the floor overlooking Arrivals. The shop’s black and white interiors—enhanced by mirror-finished dark steel—were designed specifically to evoke the brand’s reputation for sophistication and elegance. The shop in Hong Kong International Airport is located in Terminal 1, currently the third-largest airport passenger terminal

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

The “Dot–and-Tartan Collection” features a collection of 100% silk ties with dot and tartan patterns on colored fabrics

building in the world, with an area measuring 846,000 square meters. The store concept comes from the brand’s “Savoir Faire” and heritage, mixing Italian and French aesthetics. The Parisian atmosphere is subtly injected through the use of limestone, the contrast of white walls and dark lines, as well as the greytextured stone pavement. Cerruti 1881 is also currently available in other main airports in Dubai, Cairo, Abu Dhabi, Amman, Hong Kong, Moscow and Porto. The brand is also onboard additional airlines, including Gulf Air, Fly Dubai, China Eastern, Avianca, Emirates, Drukair International and DFASS USA. At this year’s TFWA World Exhibition in Cannes held last month, Cerruti 1881 launched several new products, including “Pauline,” a folding shopper in a variety of colors; a pair of sunglasses combining vintage inspiration and contemporary design; “Tate,” a black lacquered fountain pen with a unique square shape; the “Dot-and-Tartan Collection,” which features a collection of 100% silk ties with dot and tartan patterns on colored fabrics; and “Firenze Romane,” the new timepiece collection. Aware of the rapid growth currently occurring within the duty free and travel retail industry, Cerruti 1881 plans to continue increasing its presence in airports and aboard airlines in the coming months. 

Swarovski

The Sparkle ring from lola and grace, an opulent statement ring featuring a cluster of glitter balls The Slim Line double drop earrings from lola and grace The Square Solitaire from lola and grace, a classic length pavé necklace

A fresh face forward

MELISSA SILVA

With a new campaign and promising airline listings, Swarovski ends 2013 on a strong note

warovski is ending 2013 with a new face—that of model Miranda Kerr. The crystal connoisseur has begun its new advertising campaign featuring the model. “She is the face of Swarovski,” says Peter Zottl, Vice President Travel Retail. This year has been one of change for Swarovski, especially with regard to promoting the brand in travel retail. “The Swarovski family for the first time this year has begun investing sizably in above-the-line advertising,” says Zottl. “And for our advertising campaign for both print and television, we are very happy about partnering with Miranda Kerr.” Renowned fashion photographer Nick Knight photographed the campaign. “There will be a television campaign in three markets already this year, which will be Hong Kong, France and Italy,” explains Zottl. “And of course for 2014 we will have a global media plan in place in our key markets involving the campaign with Miranda Kerr.” In the campaign, Kerr wears Swarovski’s mainstays and bestsellers, including the “Slake” bracelet and a simple carat pendant called the Solitar. Although the end of the year comes with a fresh new look, Swarovski did encounter some challenges, but remains confident of finishing 2013 in a strong position. “This year has been a challenging year, but we are confident to finish it with single-digit increases,” says Zottl. According to Zottl, some of the challenges encountered include the general economic situation in some European countries and the status of Chinese tourism abroad, which is currently stable or even slightly decreasing.

In spite of these challenges, Zottl believes the net worth of Swarovski’s retail stores worldwide, in conjunction with the new advertising campaign, will drive traffic—and consequently transactions. At this year’s TFWA World Exhibition held last month, Swarovski showed lola and grace, its new fashion jewelry brand. The brand was first launched in 2012 in the UK domestic market. “We launched in Italy in September of this year with a partner boutique in Rome and 40 multi-brand locations throughout the country,” says Zottl. “We are also launching in Kuwait domestically and in the UAE.” Swarovski is only just beginning to introduce lola and grace in travel retail, but already has plans to bring it into the market in Europe, specifically in France, Switzerland and Germany, as well as in Korea. “The target for next year [for lola and grace], involves both travel retail and domestic,” Zottl adds. The core range of the collection is offered at attractive price points, between €20 and €60 (US$27-US$80). The target customer is between the ages of 20 and 30, but the product assortment, design and price range make the brand attractive to a broader range. The collection offers a range of minimal to bold pieces, such as the Sparkle ring, which features a cluster of glitter balls. “It’s really more than fashion jewelry— it’s affordable fashion jewelry,” says Zottl. The crystal used in the lola and grace designs is the same quality used in Swarovski products. Because of the variety in the lola and grace brand, the

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

pieces are ideal for inflight, a channel in which Swarovski is hoping to increase listings. Presently lola and grace is available onboard Qantas—its Sparkle stretch sets—and Cathay Pacific. “We just started with Cathay Pacific and are very proud that it was the world’s first airline to list lola and grace, followed by Qantas and now the addition of JAL for their domestic flights,” says Zottl. Back on land, Swarovski has additional plans in the works for lola and grace. “We want to place a spinning, turning unit in airports,” explains Zottl. “It’s self-service, self-select. It has magnetic openings, so it’s easy to access.” The self-service spinner unit was introduced at the TFWA World Exhibition and features 122 SKUS. As it moves forward with ending the year on a good note, Swarovski remains focused on promoting its new campaign featuring Miranda Kerr and the lola and grace brand. “These two initiatives are the main focus right now,” says Zottl.  The Stacked & Wrapped multi-strand double wrap bracelet from lola and grace

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Supplier News

Sisley’s Supremÿa Yeux La Nuit reduces signs of aging by targeting dark circles, puffiness, wrinkles, fine lines and saggy eyelids

Sisley makes advancements in eye care Following the successful launch of its Supreme Anti-Ageing Skincare, Supremÿa La Nuit four years ago, Sisley has launched Supremÿa Yeux La Nuit. Targeting dark circles, puffiness, wrinkles, fine lines and saggy eyelids, Supremÿa Yeux La Nuit delays the aging process by reducing signs of aging on the eye contour. Similar to Supremÿa La Nuit, Supremÿa Yeux La Nuit acts at night—the key moment for cellular regeneration when skin is sheltered from external aggression and stress. During long periods of immobilization, the natural drainage and blood circulation in the eye contour slows down. Consequently, eyes appear tired and the face appears to lose pigment in the morning. In addition, signs of aging such as dark circles and puffiness caused by changes to elastin and collagen fibers coupled with a decline in blood and lymphatic microcirculation add to an overall tired appearance. To help eradicate these factors, Sisley selected a trio of stimulating, draining and anti-slackening active ingredients, including Asia extract, an organically grown Brazilian berry featuring antioxidants (polyphones)

and vasoprotective properties (flavonoids) to help lighten dark circles; yeast extract, which increases capillary resistance to help the eye contour reoxygenate and detoxify; and caffeine extract, a fat-reducing active ingredient used to help reduce fatty deposits responsible for under eye puffiness. To combat sagging eyelids and crow’s feet wrinkles, Sisley included the following ingredients: Oat kernel extract, a 3D tensor-effect active ingredient composed of a network of complex sugars that create a continuous, elastic and flexible film on the skin’s surface to lift, tighten and smooth; Padina pavonica extract for restoring density to dermal tissues by strengthening the dermal hydric mattress; peptidic Soy extract, which stimulates the synthesis of collagen types I and II and decorin (proteoglycan) to reinforce the dermal structure and combat slackening in the lower eyelids; and Adenosin, which targets crow’s feet, wrinkles and frown lines. At the heart of Supremÿa Yeux La Nuit’s formula is Phyto-Complex LC12, a synergy of botanical active ingredients designed to double the lifespan of cells and considerably boosts their protection and repair.

Neuhaus sees growth after revamping current offerings This year has proven to be another success with strong overall growth for Neuhaus. In addition, the Middle East continues to be the company’s fastest growing region. “We have a lot of new products and upgrades for introduction between now and the end of the year,” says Caroline Vindevogel, Communications Manager. The company recently launched its Haute Pâtisserie Collection, which is performing well, and revamped its Brussels Collection. The Brussels Collection consists of small, informal gifts at an entry level price point in luxury packaging. The refreshed collection consists of Classic Truffles (150g), butter truffles, Marc de Champagne Truffles (150g), Orangettes (150g) and Coeur Pralinés (150g, individually wrapped Coeur Pralinés). Neuhaus sees good growth potential for its biscuit range, which recently underwent a redesign

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

In addition to these developments, Neuhaus plans to launch a larger version of its bestselling range, the Neuhaus Collection. “This larger version answers customer demand for a higher price point and more luxurious gift items,” says Vindevogel. Neuhaus also upgraded its Travellers Collection packaging, which was launched at the TFWA World Exhibition last month in Cannes. According to Vindevogel the brand’s bestsellers in the Middle East mirror those in Europe. “The Neuhaus Collection is number one, followed by our Ballotins,” she adds. As the confectionery category continues to grow, Neuhaus see good growth potential for its biscuit range, which recently underwent a redesign. “We expect that The Middle East and Asia will continue to drive category and our brand growth,” says Vindevogel. “We foresee good brand growth opportunities in the Americas in coming years as well.” Neuhaus’ Brussels Collection, which includes Classic Truffles, was revamped this year

The Haute Pâtisserie Collection from Neuhaus is currently performing very well

Thomas Sabo increases its intensity

www.mwtr.com

In line with its goal to develop the brand in each of its product categories, Thomas Sabo has delivered novelties this season in both jewelry and fragrances. “In the jewelry category, part of Thomas Sabo’s DNA is to provide designs that match current fashion trends, while at the same time create our own statements,” says Janin Schmelzer, Beauty Director. With its Autumn/Winter 2013 Sterling Silver Ladies’ Collection, Thomas Sabo offers a new feminine look of rose goldplated jewelry that can be combined with 925 Sterling Silver or yellow gold-plated pieces. Following the successful launch of Charm Rose Eau de Parfum in 2010/11, Thomas Sabo has added to its fragrance portfolio with its latest fragrance Charm Rose Intense. “Charm Rose Intense is currently rolling out,” says Schmelzer. The new intense version builds on the success of the first Charm Club Fragrance Charm Rose and has been created around a sensual “black rose symphony” with raw materials like natural rose absolue. “It caresses the skin with a velvetysensual aura and is a must have for all lovers of sensual rosy fragrances,” she adds Inspired by passion and seduction, Charm Rose Intense opens with mandarin and freesia notes combined with a hint of white peach. The fragrance builds to a heart of dark red roses, peony and lisylang, while the base note delivers patchouli, rosewood, vanilla and amber.

Charm Rose Intense, Thomas Sabo’s latest fragrance

www.dutyfreemagazine.ca GULF-AFRICA DUTY FREE & TRAVEL RETAILING

Desigual

Soaring

high

Following an international expansion plan, Desigual is achieving substantial growth with several store openings

or fashion company Desigual, 2013 has been a year of substantial growth, largely due to its international expansion plan that was established this year, coupled with the strong positioning the brand has received in several airports and recognition on the part of a number of retailers. As a result, Desigual has doubled its sales this year when compared to figures from the same period in 2012. As part of Desigual’s international expansion strategy for travel retail, the company is expecting to finish this year by exceeding 100 point of sale locations in the best international airports worldwide. Out of all the Desigual store openings this year—which have been plenty—the most important opening for the company has taken place in Milano Malpensa Airport, Terminal 1 this past July. The company reports that the location has since received very good results in terms of sales.

Another reason why 2013 serves as a milestone for the fashion brand is Desigual’s plan to open stores in regions that are most strategic for the company, such as Asia and South America, in addition to reinforcing its presence in North America and Europe. Desigual also plans to target Brazil, Russia, The United Arab Emirates, Thailand and Japan in the coming months. In addition, the brand is preparing 50 new points of sale set for openings in 2014 in various hotels and resorts worldwide. In terms of novelties, Desigual’s accessory collection is currently its most successful, bringing in strong sales in the brand’s travel retail shops. Desigual is strengthening its positioning on board with its travel wallet and its exclusive pashmina pack designed exclusively for inflight. The pack features two Desigual pashminas with ethnic and tropicalinspired prints, making it ideal for gifting or impulse purchasing.

MELISSA SILVA

Of the two pashminas, the first larger style is designed for a variety of uses—it can be worn as a scarf, on the beach as a sarong or even as a dress. The second smaller style is a triangular-cut scarf with eye-catching discshaped tassels. As for consumer trends in the Middle East, Desigual feels they haven’t varied too drastically this year, and seem to follow the same two factors—personal taste or style and value for money. “The trends of the airport consumer haven’t varied too much, they follow the steps of the actual market and clients buy according to their style, personal taste and the economy,” says a Desigual spokesperson. 

Desigual is strengthening its positioning on board with accessories such as its travel wallet

Designed exclusively for inflight, Desigual’s Pashmina pack features two pashminas with ethnic and tropical-inspired prints

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

Of the two pashminas, the first larger style can be worn as a scarf, on the beach as a sarong or even as a dress

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Crislu

Creations with a by

MELISSA SILVA

conscience

Working towards expanding in travel retail, upscale jewelry company Crislu sets itself apart with environmental initiatives and standout quality

ounded in 1961, upscale jewelry company Crislu designs, manufactures and markets classic and contemporary jewelry collections. Predominantly featuring cubic zirconia stones hand set in sterling silver, finished in pure platinum or 18-carat gold, Crislu has recently made the transition from domestic to travel retail and is looking to gain exposure. Domestically, Crislu was launched in the Middle East by Canadex International Trading in 2008. Since then, Crislu has made strong progress in the region with several developments over the last few years. “Our progress in the region is due to the high quality, innovative and amazing collections the company creates and offers,” says Harry Kaprielian, President of Canadex International Trading. Domestically, Crislu is currently present in the United Arab Emirates, the Kingdom of Saudi Arabia, Kuwait, Qatar, Jordan, Oman, Egypt and Bahrain just to name a few. Sold in multi-brand jewelry boutiques, specialty stores and luxury department stores, Crislu also has its own Kiosks in the above locations. The most recent kiosk location opening was at Dubai Mall just last year. Presently, Crislu’s main focus involves expanding into travel retail, specifically inflight and in airports. Just last month Qatar Duty Free began carrying Crislu at Doha International Airport. In addition to focusing on increasing its exposure, Crislu is also committed to crafting its jewelry in ways that are socially and environmentally friendly. “Mining for natural diamonds and gems has caused environmental damage and has also been at the center of political conflict,” says Kaprielian.

The Luxury Collection features pieces made with 925 sterling silver, finished in platinum and cubic zirconia

The Core Collection features pieces made with 925 sterling silver, finished in platinum and cubic zirconia

The Sumptuous Collection features pieces made with 925 sterling silver, finished in platinum and sapphires

As a means of combating both issues, Crislu works only with Cubic Zirconia that is created in a lab, eliminating the environmental damage caused by diamond mining and the everpresent political conflict. “Essentially, the use of cubic zirconia actually helps preserve our environment,” says Kaprielian. Crislu’s cubic zirconia stones are cut into a total of 58 facets, which provides the same reflective qualities as that of a diamond. Kaprielian believes the key to the company’s success in travel retail, and more specifically in the competitive jewelry category, is its approach when it comes to creating each collection. “Our technical mastery is pushed to the ultimate limits,” he says. “It is the quality that sets us apart. Our customers deserve nothing less.” 

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

The Infinity Collection features pieces made with 925 sterling silver, finished in platinum and 18-carat gold vermeil and cubic zirconia

The Emerald Collection features pieces made with 925 sterling silver, finished in platinum and emeralds

30 years of challenges

Capi Global

Thanks to its integration with Sea&Sky, Capi Global enjoyed a 70 squaremeter stand at the TFWA World Exhibition in Cannes last month

Capi Global recently launched the Beats Studio 2.0 headphones by Dr. Dre

TURNING A NEW PAGE by

MELISSA SILVA

With a recent integration and major contract under its belt, Capi Global is entering a new successful phase in its travel retail business

s the end of 2013 nears, electronic company Capi Global is in a good position to embark on the upcoming New Year thanks to several new developments. Notable developments include the company’s recent integration with Sea&Sky Supply and Dufry Global Lifestyle, which formed Capi Global, the company’s new moniker. “This integration has improved synergies with respect to logistics and our trading markets,” says Jaco Vlemingh, General Manager, Capi Global. Equally notable is the five-year contract negotiation parent company Royal-Capi Lux made this past March with Arlanda Stockholm for four shops at Stockholm Arlanda Airport and Göteborg Landvetter Airport. The shops in Sweden have been up and running since May. Additionally, Capi Global’s private brand MiTone has been further developed. The assortment now incorporates the latest electronic devices and accessories in a variety of colors—such as its new Splash-Proof Bluetooth Speaker—as well as new innovative technologies like Bluetooth.

“Bluetooth is becoming a popular technology, as is Near Field Communication, or NFC,” says Vlemingh. “We offer a range of Bluetooth and NFC enabled devices to fit the needs of all travelers.” Another innovation from Capi is its portable power solution—handy back-up batteries for a variety of devices, such as smartphones and tablets. The batteries come fully charged, rendering them ideal for traveling. Capi’s success in terms of developments seems to mirror its sales activity this year, as numbers for the company are currently on the rise. “Capi Global is growing as a dedicated business-to-business partner in consumer electronics in the duty free and travel retail market,” says Vlemingh. As a result, sales of its MiTone brand have been doing very well. Additionally, after exhibiting at several shows this year—IAADFS in Orlando and TFWA Asia Pacific Exhibition in Singapore— the company has been able to expand its customer relations management team. Thanks to its integration with Sea&Sky, Capi Global enjoyed a 70 square-meter stand at the TFWA World Exhibition in Cannes just last month.

Capi’s MiTone assortment now includes the new Splash-proof Bluetooth speakers in various colors

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

Relevant measures

Like many companies in the electronics category, Capi Global has noticed the increasing number of smartphone users and the consequent increased demand for related accessories. “The business we are in is a versatile one,” says Vlemingh. “Changes and developments follow each other in rapid succession. Smartphone development and the growing popularity of accessories such as headphones are case in point.” To maintain relevance, Capi makes it a priority to be trendsetting and innovative when it comes to its retail concept and brand portfolio. Forming strong partnerships with owners of leading A-brands and niche brands, Capi has managed to develop dedicated instore presentations and product launches. “For suppliers of leading consumer electronics brands, we are the ultimate platform,” says Vlemingh. “Because of our close cooperation with brand owners and our expertise in airport retailing, we are able to launch products before they become available to the wider public.” An example of this is Capi’s recent launch of the Beats Studio 2.0 headphones by Dr. Dre. Vlemingh adds that Capi Global’s unique approach of offering retail know-how and marketing experience together with the purchasing power of the Royal Capi-Lux retail division has been key for its success. “B2B customers benefit from this competitive advantage that Capi Global has,” he adds. What’s more, the larger Capi shops now have a dedicated table for gifting items, its latest marketing concept. Although Capi is developing MiTone products specifically designed as gifts and souvenirs, not all of the gifting offers will be electronic. As part of B&S International, Capi has been able to expand into other major airports in the last few months. Looking ahead, it plans to continually make adaptations to its strategies, retail concepts, processes and overall company structure, all with the goal of creating a stronger brand in mind. 

Sweets of Oman

Strategically

sweet By focusing on a value-for-money approach, Sweets of Oman is attracting retailers and increasing its exposure in the Middle East by

MELISSA SILVA Chiko Mint Éclairs featuring chococaramels with creamy mint centers

Chiko Banana Cream Fudge travel retail exclusive pack

Chiko Hazelnut Cream Fudge travel retail exclusive pack

Chiko Rich Milk Cream Fudge travel retail exclusive pack

ince its inception in 1990, Sweets of Oman SAOG has been largely responsible for responding to the Middle East’s demand for chocolate and sugar confectionery products. Situated at Rusayl Industrial Estate in Muscat, Sultanate of Oman, the company’s plant has various production lines for producing a wide range of confectionery such as éclairs, toffees, fudge, caramels and enrobed chocolates. With a high percentage of Asian travelers in the Middle East presently, Sweets of Oman has observed a consequent impact on sales over the past few months. “The Asian expats have used the depreciated currency as an opportunity to send money back home and have also noticeably reduced their spend on luxury items,” says S. Balakrishna, General Manager. Despite the unfavorable situation, Sweets of Oman has reported a 15% sales increase when compared to the same period last year. With the confectionery category steadily growing in the Middle East, the company recently launched the Chiko Cream Fudge travel retail pack, available in Milk, Hazelnut and Banana flavors, and is planning to develop more exclusive offers and flavors. “We are in the process of developing exclusive travel retail packs of Chiko Milk Éclairs and Chocolate Éclairs,” says Balakrishna. Sweets of Oman’s current bestsellers in the region include its Milk Éclairs, Chocolate Éclairs and the Royal Toffees.

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

Chiko Honey Éclairs featuring caramels with sweet honeychocolate centers

As more and more consumers look for value-for-money products, Sweets of Oman has received a positive response from its retailers, since its products have successfully answered this specific demand. “Consumers are looking for quality products that offer great value for money,” says Balakrishna. “Ours is one such range of products which suits all income groups.” As a result, the company has been adding new retailers each year for the last few years, furthering its growth as a business. “They are looking forward to our new exclusive travel retail packs,” he adds. To maintain relevance in the category, Sweets of Oman has a dedicated department that is solely responsible for monitoring the changing trends in the market. “We source our packaging designs from internationally reputed design houses, which helps us keep up with the changing trends,” says Balakrishna. As the New Year approaches, Balakrishna says the company will keep a close eye on the Middle East region, as it provides the greatest growth potential for the company in 2014. To maximize its exposure, the company has invested in signage at various airports along with trolley brandings and merchandising units. The company has also made it a priority to attend duty free shows and events pertaining to the region. For now, Sweets of Oman plans on doing what is done best for the last 23 years: offering quality, value-for-money confectionery products. 

Mars International Travel Retail

It pays

to be seen

he continuing strength of the confectionery category in travel retail is due in large part, as you might expect, to the natural impulse to buy something that can reliably be expected to deliver a pleasurable taste. It’s something everyone can understand on an immediate, intuitive level. And much of the confectionery category’s market strength derives from the impulse nature of the purchase. To put that impulse incentive into terms retail planners would appreciate, “confectionery is the least planned, but most bought category.” The words are those of Craig Sargeant, General Manager of Mars ITR, and he knows whereof he speaks. “73% of those who see confectionery buy some,” Sargeant says. To put that into perspective, Sargeant notes that only 20 out of every 100 travelers become travel retail buyers. As things stand, only five of those 20 buy confectionery. But if all 20 of those travelersturned-buyers can be exposed to confection-

ery messaging, fully 14 of them will buy from the category, a 280% increase. This all makes good fodder for retail analytics. Most travelers fly once or twice a year. Most of those who travel find the experience stressful, and 45% never set foot in a shop. Of those who do venture into a retail environment, 70% say they do it for “entertainment”—they’re looking for an experience that will surprise or divert them. For Sargeant, this means that the key to boosting traffic is to create a sense of theater outside the store by situating strong promotions there and converting those stressed, casual passersby into buyers.

For this market leader, maintaining purchaser involvement is crucial by

HIBAH NOOR

“The high impulse strength of eye-catching displays and good promotions at the entrance will seduce travelers to become shoppers,” Sargeant says. And once those shoppers are in the store, the job is to make purchase as easy and spontaneous as possible. The key here? Strong point of sale presence and promotions. For shoppers, checkout-placed sales not only reduce the strain of lining up to purchase items located deeper inside the store, but they can also reinforce the positive overall impression that the store creates. Sargeant believes that given its impulse nature, confectionery in particular should

A new travel retail exclusive design has been introduced to replace the original M&M’s Car Dispenser

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

Find out more @NestleITR

Insight-driven activations delivering results in mature and emerging markets Always at the â?¤ of the shopper

Mars International Travel Retail

focus on point of sale. “Today only 50% of outlets have such a cash till solution, while half of these outlets aren’t exploiting this solution to its full potential,” he says. If executed well, checkout sales can go up to 10-15% of total store confectionery sales, he adds. Of course brand presence is crucial. M&M’s is the largest chocolate brand in the world, with Snickers as a strong second, Sargeant says. Currently there are eight exclusive M&M’s shops at airports. The number is increasing, and that growth is driven by strong promotions. “The M&M’s Fan is one of the most successful introductions in the M&M’s gifting category,” he says. “In the year of its introduction more than one million customers took home one of these colorful fans.” But even a world-leading brand like M&M’s can derive added benefit from a properly positioned promotion that builds a real sense of theater. Building that sense was top of mind when Mars ITR launched a promotion in cooperation with Qatar Duty Free (QDF) in 2012. “We built a traveling theater to support the M&Ms Speaker Promotion, where customers could buy two Maxi pouches of 430 grams and get an M&M’s Speaker Case,” Sargeant says. The theater promotion launched in Qatar and Sargeant says the results and impact were amazing. The promotion has been nominated for the Frontier Awards “Partnership of the Year.” Mars ITR was looking for an opportunity to showcase the global M&M’s brand, convert shoppers into buyers and promote the campaign, Sargeant says. For its part, QDF wanted to get more use out of its mezzanine floor promotional area for theater, customer engagement and activations, converting travelers into shoppers. “The promotion and its installation had to be attractive and feature an opportunity that engaged with the customer,” Sargeant says. The overall campaign needed to include a promotion that complemented the brands and their values, and it had to generate additional revenue and provide a unique shopping experience. “It’s a continuous challenge for suppliers and retailers to attract travelers and convert them into customers,” Sargeant says. “Being able to offer travelers something that is engaging, fun, exciting, and helps them de-stress before or after a flight, always scores highly in getting customers to stop and get involved in an airport environment.” 

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

Travel retail exclusive Big Sweet is a perfect gift designed to represent a giant gift-wrapped chocolate

Confectionery News

Exclusive to travel retail, the Werther’s Original Caramel Selection Tube is Storck’s first informal adult sugar gift item

Storck sees robust growth with the launch of exclusive novelties Earlier this year, Storck Travel Retail introduced its first informal adult sugar gift item—the award-winning travel retail exclusive Werther’s Original Caramel Selection Tube. “I think the fact that almost 100% of our customers listed this product, as well as the fact that it has served as a door opener in some of the airports where we aren’t yet listed, shows that the industry needs a product like this,” says Søren Terndrup Hansen, Managing Director. Also this year, Storck has successfully widened its distribution, which has led to various new listings in the Americas, Asia, India, the Middle East and Europe. In Singapore, the company also brought onboard its first account manager outside of its UK office, Sam Ho. Storck has also recorded an approximate 10% growth in business this year. “This growth comes predominantly from our airport and ferry business, but also our boarder business,” says Terndrup. While the company is still growing in Europe, its business in non-European regions is rapidly growing, with double-digit growth rates year on year. Of all the brands in its portfolio, Storck’s merci and Toffifee ranges are generating the highest turnover. “I think that the informal chocolate gift appeal that you get from our merci Finest Selection and Toffifee gift boxes is exactly what a lot of buyers are looking for,” Terndrup says. Additionally, the company has seen a strong increase in business for its Mamba fruit chewy sweets from Russia, Eastern Europe, South Europe, the Middle East and India.

Of all the brands in its portfolio, Storck’s merci Finest Selection and Toffifee gift boxes are currently generating the highest turnover worldwide

Terndrup feels Storck will see the highest growth in Asia—predominantly in China and India—in the coming year. “The business has been growing in some airports well above even our wildest expectations, especially with Chinese and Indian consumers who seem to have an enormous appetite for Western-branded items at an affordable price,” he adds.

Al Nassma Chocolate launches its first retail outlet at Sharjah International Airport Camel milk chocolate brand Al Nassma Chocolate LLC has announced the opening of its first point of sale in collaboration with Dufry at Sharjah International Airport. With this new partnership, the UAE-based

high-end chocolate brand consolidates its strong presence at airport duty free outlets in the region. “We are thrilled about this new retail outlet at Sharjah Duty Free,” says Patrick Dorais, Director of Sales. “Our chocolate has been available in various duty free outlets in the region, reaching passengers in transit and offering them a taste of the region. It opens doors to some of the most important airports in the world and is another important milestone for us.” In addition to the new airport outlet, Al Nassma recently announced new partnerships with Kempinski Residence and Suites, West Bay, in Doha; Julius Meinl am Graben,

the leading gourmet house in Vienna; and Galeries Gourmandes in Paris. The brand’s latest venture is the introduction of The Majlis—the first camel milk café. The Majlis Dubai is a five-star cafélounge concept that reflects the Arabianenvironment and cultural habits affined to Arabian coffee culture. The place features a blend of modern Dubai and Middle East culture in its design and products, which evolve around camel milk. The first outlet launched in January of this year at The Dubai Mall. “The Majlis Dubai” is now actively looking into opportunities to target other global metropolises for expansion. “Our vision for Al Nassma is to see people around the globe enjoying Camelccino, Camel Latte and other premium camel milk products as a part of their daily coffee culture,” says Martin van Almsick, General Manager. “Our ultimate goal is to be represented through our sister company The Majlis in all Emirates Airlines destinations all over the world.”

Al Nassma’s first point of sale at Sharjah International Airport consolidates its strong presence at airport duty free outlets in the region

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

Liquor News

Dooley’s Cream Liqueur recently received a facelift; it is the hope of brandowner Waldemar Behn GmbH that the popularity of newly acquired DANZKA Vodka will increase interest in the company’s entire spirits portfolio

Waldemar Behn launches upgraded Dooley’s Cream Liqueurs as it expands its presence in global travel retail Family-owned German liquor company Waldemar Behn GmbH focused on an expanded range of products at the TFWA World Exhibition in Cannes this year, including a new look for Dooley’s Cream Liqueurs. “We are not resting on our laurels. We have been very focused on upgrading our design and presentation on our other very important product range in global duty free/travel retail, Dooley’s Cream Liqueurs,” said Rüdiger Behn, Managing Director of the company, which earlier this year bought premium DANZKA Vodka, a leader in the travel retail channel.

“As Dooley’s Original Toffee Cream Liqueur is certainly the most awarded cream liqueur of the world we have carefully upgraded the design of the bottle, the logo and the entire look of the range and have been very focused on creating a conceptual approach. We are so excited to present the new range on our stand at H52 Green Village,” Behn noted ahead of the Cannes exhibition in October. “Dooley’s Creams is currently mainly a European selling brand but we already have noted increased interest following our acquisition of DANZKA Vodka—clearly we hope for some spin off.”

Jameson launches new City Editions travel retail exclusive Jameson is appealing to the international jet setter with the release of a new special collection called City Editions, which will sell exclusively in travel retail outlets for a limited period. The labels have been designed to capture the urban culture and essence of eight great cities around the world, featuring Amsterdam, Bangkok, Dublin, London, Moscow, Paris, Singapore and Sydney. To further appeal to collectors and highlight the travel theme, each label is finished with postage stamp edges. Each label will be exclusive to the corresponding city’s key international airport, with the Amsterdam edition being the first to hit the shelves in Schiphol Airport from August 2013. To support the launch of the City Editions range, Jameson has created an activation programme that aims to maximize visibility, consumer engagement and sales. Upon purchase, consumers will be invited to enter a City Editions Facebook photo competition for a chance to win a retro-inspired travel trunk, which doubles up as a drinks cabinet, containing all eight limited editions, along with four bottles of Jameson Original.

To enter the competition, consumers will be asked to post a picture of their limited edition bottle or of the city they love on Facebook. Entries can also be submitted in the airport via a smartphone or custom iPads in promotional spaces. The City Editions campaign will be further activated through experiential activities, including a simulated bicycle ride in Amsterdam and a virtual cityscape of Moscow. Daniel Lundberg, Global Brand Director for Jameson, comments: “Jameson has become a worldwide success thanks to its consistent quality and smooth taste, but also for its innate Irish character which continues to inspire whiskey fans all around the world. With the Jameson City Editions, we wanted to celebrate the different cultures and personalities of some of the great cities around the world and we’re delighted with the end results. We are hopeful that this special collection and the marketing activity we are activating to support the launch will capture the imagination of international jetsetters and provide them with a unique memento of their travels for them to enjoy with their friends or keep as collectors’ items.” Jameson’s limited edition City Edition bottles feature the iconic cities of Amsterdam, Bangkok, Dublin, London, Moscow, Paris, Singapore and Sydney.

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

Liquor News

A 750ml bottle of Amarula sits beside “Dinkie,” a new 200ml version that contains two single serves of the popular South African spirit

Amarula launches new 200ml bottle Amarula Cream has announced the birth of Dinkie, a new 200ml size bottle, designed to hold two single serves. “We’ve even named an elephant after Dinkie,” says South Africa brand manager for Amarula Christelle Bester, of the youngest member of an elephant herd under observation by the Elephant Research Programme, funded by the not-for-profit Amarula Trust. “Whether you are sharing or treating yourself, the new 200ml size is all about convenience,” she adds. “It’s the right size for a teeny bit of indulgence to start the evening and may be just the taste you’re after to share over a quick catch-up with friends.”

Absolut takes on a deeper character with Absolut Amber Absolut is challenging the status quo with the new Absolut Amber by taking the essence of Absolut and adding a rich, complex character from gently roasted oak wood. Absolut Amber is a transformative new product that breaks down the traditional boundaries of white and dark spirits. Designed to challenge the convention of any occasion, from a relaxing evening with friends to the warm-up act for a busy night, Absolut Amber elevates an ordinary social moment into something extraordinary. Created by a unique method of exposing Absolut to a variety of different oak types to produce oak barrel-aged spirits, Absolut Amber is blended with oak macerated spirits. Absolut Amber has a natural amber color with a mellow and oaky taste while retaining the quality and smoothness of its original form. The result is an exceptional drinking experience unlike any other. The key factor to the character of Absolut Amber is the carefully selected blend of Swedish, American and Bourbon oak spirits combined with oak macerated spirits. “While experimenting with resting Absolut in oak, we explored various methods of barrelaging, types of oak and ways to use macerations before landing on the perfect blend,” says Master Blender Per Hermansson. Absolut Amber combines the smoothness of the vodka with the rich, complex character of dark spirits. The variant offers up a rich aroma of caramel, vanilla and roasted oak, followed by a touch of smoke.

Absolut Amber combines the smoothness of the vodka with the rich, complex character of dark spirits

Absolut Amber is currently available in Panama travel retail and select on-premise venues. The variant will also be available in North American travel retail from September 1 at JFK, Miami and Dallas International Airports with other markets to be confirmed in the coming months.

Edrington FIX Middle East appoints Nick Rees Head of Sales and Marketing

Nick Rees, newly appointed Head of Sales and Marketing at Edrington FIX Middle East

Edrington FIX Middle East (EFME) Limited has announced the appointment of Nick Rees as Head of Sales and Marketing, a newly created role based in Dubai. His main responsibility will be to drive EFME’s sales and marketing strategy in close partnership with the team and its brand partners. Nick will lead an agile and professional sales and marketing team, providing expertise and guidance with the aim to grow the equity and value of EFME’s brands in the region. “Nick brings a wealth of knowledge and experience acquired over the last 10 years in the drinks industry in the Gulf region, which will no doubt help him understand swiftly our business dynamics. He will also bring us a lot of valuable insights when it comes to understanding better our own customers’ expectations. I’m delighted to welcome Nick on board as I’m confident he’ll blend in nicely with the great team we have in place and will contribute to our future successes,” said Igor Boyadjian, EFME Managing Director. Rees’ appointment effectively strengthens EFME, the newly formed joint venture between FIX and Edrington, which took over all distribution operations of FIX Wines and Spirits Ltd as of August 2013.

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

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Liquor News

The new packaging of the Flor de Caña family, with the recently launched ultra premium Centenario 25 on the far right

Flor De Caña launches Centenario 25 ultra premium rum exclusively for duty free, announces new look Flor de Caña has announced the launch of Centenario 25, an ultra premium rum that will be available exclusively in duty free stores. The new rum, which will retail for US$140, features the elegant new package design that Flor de Caña is introducing across its brand portfolio in response to the growing worldwide popularity of the brand, whose rums have been distilled and traditionally crafted from estate-grown sugar cane by the same family in Nicaragua since 1890. Indeed, Flor de Caña has seen a double-digit growth year over year for the past decade and is now available in 40 countries. The brand is on track to sell more than 1 million cases in 2013. “Flor de Caña’s new Centenario 25 rum is our crown jewel,” said Paul Caffrey, Global Brand Development Manager of Flor de Caña. “It showcases Flor de Caña as unique, modern and ultra premium—exactly what we need to appeal to our growing fan base around the world.” Flor de Caña’s new Centenario 25 ultra-premium rum, an exciting addition to the brand’s Centenario Collection, features unique packaging. The black-and-gold label features an abstraction of the Nicaraguan volcano, while the rum itself seems to float in the bottle that sports sharp, beveled edges and a heavy solid-glass base. The premium cork closure is topped with an embossed Flor de Caña gold medal coin. And as mentioned above, the other variants in the Flor de Caña family will sport a new look at this year’s TFWA WE. While continuing to produce the same high-quality rum that the brand has built a sterling reputation upon, Flor de Caña’s new bottles emphasize the brand’s logo, age and prestigious awards. The quality of the glass has been enhanced and the bottles are etched with stalks of sugar cane. The brand’s origin is evoked by superimposing the logo over a volcano, a reminder that Flor de Caña is the rum of Nicaragua, “the land of lakes and volcanoes.”

Mouton Cadet launches Reserve Mouton Cadet Bordeaux Réserve Mouton Cadet, the premium range of Mouton Cadet, is expanding its offer with the launch of a new AOC Bordeaux red wine: Réserve Mouton Cadet Bordeaux. Produced from selected grapes from the Bordeaux and Côtes de Bordeaux appellations, Réserve Mouton Cadet Bordeaux is a blend of dominating Merlot and Cabernet Sauvignon. The result is a generous and rich wine enhanced with elegant oaky notes. The nose is intense, revealing red and black fruit aromas. The palate is round, powerful and fruit-driven, with supple tannins and a lingering finish. Réserve Mouton Cadet Bordeaux is also available as a white wine, where it is comes primarily from the Semillon grape variety. Réserve Mouton Cadet Bordeaux will be distributed throughout World Duty Free and Biza Tax and Duty Free stores in airports across the UK. It was also featured in the company’s “Wine Festival,” which ran from August 28 to October 16. Produced from selected grapes from the Bordeaux and Côtes de Bordeaux appellations, Réserve Mouton Cadet Bordeaux is a blend of dominating Merlot and Cabernet Sauvignon

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

Liquor News

Jack Daniel’s Tennessee Honey to debut in Dubai Duty Free Jack Daniel’s Tennessee Honey, one of the fastest-growing new spirits in the world, will make its first appearance in the Middle East, launching in Dubai Duty Free on December 1, 2013. First introduced in the United States in April 2011, Jack Daniel’s Tennessee Honey quickly soared in popularity and won an impressive list of accolades, including being named Impact Magazine’s “Hot New Brand” on two occasions and “Best New Spirit” by Marketwatch Magazine in 2012. “We are very pleased that Jack Daniel’s Tennessee Honey is making its appearance in the Middle East, specifically Dubai Duty Free. It has proven to be immensely popular wherever it has been introduced in the world and we feel it will have similar success in Dubai,” explained Tony McIver, Brown-Forman’s Area Director for the Middle East. Jack Daniel’s Tennessee Honey will be available for purchase in the Dubai Duty Free shops and will also be available to

sample in Jack Daniel’s Bar & Grill in Concourse A. Billed as a “little honey and a lot of Jack,” the liqueur is crafted with Jack Daniel’s Old No. 7 Tennessee Whiskey and a proprietary honey liqueur resulting in a unique, smooth offering. “Jack Daniel’s Tennessee Honey has a special appeal to individuals who like to be associated with Jack but aren’t particularly fond of whiskies. In addition, the brand has proven very popular in several European countries, Australia and a number of Asian countries, which should make it appeal to the thousands of travelers from those countries traveling through the airport,” McIver said. Jack Daniel’s Tennessee Honey is the first new addition to the famed whiskey line in over a decade. Bottled at 70 proof, McIver said that most consumers enjoy Tennessee Honey chilled straight or over ice but added that it mixes well with lemonade, tea or ginger ale. Alluding to the bees that produce the honey, the brand’s motto is “Fly Straight, Drink Responsibly.”

Jack Daniel’s Tennessee Honey will be available for purchase in the Dubai Duty Free shops and will also be available to sample in Jack Daniel’s Bar & Grill in Concourse A

Ricard offers a sensorial experience for passengers in Casablanca Airport

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

Pernod Ricard Travel Retail Europe has created engaging and exclusive activations for iconic French brand Ricard throughout Mohammed V International Airport in Casablanca and Marrakesh Menara Airport in Morocco. Celebrating the brand’s heritage and reaching out to key consumers in North Africa, the activation in Casablanca is the first of its kind from a spirits brand and of unprecedented scale for the airport. The installation includes a stand-out sensorial bar showcasing Ricard’s key ingredients—star anise, liquorice and aromatic plants, and essences of Ricard; allowing travelers to identify the individual elements and discover the liqueur alongside bright, eye-catching displays. In both airports, a dedicated promoter will be on hand to educate consumers on the history of the illustrious brand, focusing on the genius of Paul Ricard in developing the famous spirit and his profession of faith which is printed on every bottle: “I vouch for the high quality of my pastis and am proud of its unique flavor. My name is your guarantee of enjoyment.” When purchasing two 1L bottles of Ricard, travelers will be rewarded with a special in-store offer to take home a summer beach bag or Ricard glass with a food-pairing booklet. “It’s exciting to pioneer the first spirit brand activation in Casablanca airport and there couldn’t have been a better fit for this activation than Ricard. We are thrilled with the result and hope that opportunities for Ricard like these continue with Dufry in the near future,” says Adriana Perez, Assistant Brand Manager, Pernod Ricard Travel Retail Europe. The activation will run until October 24 in Mohammed V International Airport and from the October 26 until November 30 in Marrakesh Menara Airport.

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Liquor News

Patrón rolls out mini four-pack in travel retail, sees potential for Gran Patrón Piedra in the region

With the exception of a select number of high-end bars, Bacardi notes that Martini Gran Lusso will be a travel retail exclusive

Martini celebrates 150 years, release two travel retail exclusives Martini, the world’s favorite vermouth and number one Italian sparkling wine, celebrated its 150th Anniversary in spectacular fashion on the shores of Lake Como. The gala to celebrate 150 years of Martini, the ultimate symbol of Italian style and passion, was filled with magical Martini moments from the past, the present and the future, all set against the stunning backdrop of the Italian lakes. International recording artist Lily Allen, Grammy-nominated pianist Chilly Gonzales, DJ and producer Mark Ronson and supermodel and actress Rosie HuntingtonWhiteley were among the guests at the exclusive celebration held in the palatial Villa Erba. Cocktails at the gala were created by some of the world’s top bartenders and included classics first made with Martini, including the Negroni and the Manhattan, and another in the making, the MARTINI Royale, a refreshing cocktail made with equal parts Martini Prosecco and Martini Bianco or Rosato, served over ice with a squeeze of lime and a sprig of mint. A fleet of stunning Martini Racing cars greeted guests as they arrived on the red carpet. Martini has enjoyed a long-standing relationship with motor sports and has always embodied the same courage, creativity and spirit of endeavor found in motor racing. The classic automobiles, valued at more than $6 million (US$8 million), herald a new era of Martini Racing which was announced this year as part of the 150th anniversary celebrations. Indeed, this is a big year for Martini, and in travel retail Bacardi has announced the launch of Martini Gran Lusso. With the exception of a select number of high-end bars, Bacardi notes that Martini Gran Lusso will be a travel retail exclusive. Another release, Martini Riserva Alta Langa, a sparkling wine, will also be a travel retail exclusive, clearly marking the importance that the channel plays for the iconic brand. 98

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

Patrón Spirits International has been busy rolling out a new mini fourpack in travel retail, which effectively gives consumers the opportunity to try four of Patrón’s most popular expressions—Silver, Reposado, Añejo and XO Café—and discover which one they like best. The pack is intended to open up a dialogue between consumers and duty free sales staff, as well as encourage uptrading to one of the brand’s higher-end expressions. “We’re seeing interest from operators with regard to the four-pack,” says Greg Cohen, spokesperson for Patrón. “It’s retailing in travel retail for US$25 and presents a great opportunity to give consumers a taste of four of our most popular tequila variants.” Given the importance of the Middle East to Patrón’s travel retail business, Cohen notes that the company will be supporting the MEADFA conference this year. Dubai is currently a hot spot for Patrón, with sales across expressions up 28% year on year during the first eight months of the year. Tel Aviv is also performing well for Patrón’s brands, with sales up 35% over the same period as compared to 2012. “In terms of new listings, Gran Patrón Piedra will be leading the way in the months to come,” Cohen says. Meticulously aged for more than three years in new American and French oak barrels, Gran Patrón Piedra offers a distinct range of flavors and aromatics to satisfy even the most sophisticated and discerning of palates. In addition to extra añejo aging, Gran Patrón Piedra is also distinguished by its unique “Tahona” production process, an ancient method for creating tequila. “Given that many consumers in the Middle East have an eye for luxury products, we’re very excited about this expression’s potential in the region,” adds Cohen.

Meticulously aged for more than three years in new American and French oak barrels, Gran Patrón Piedra offers a distinct range of flavors and aromatics to satisfy even the most sophisticated and discerning of palates

NEW

CASK COLLECTION

BORN OF OUR PIONEERING SPIRIT A CELEBRATION OF OUR UNRIVALLED SELECTION OF RARE AND AGED SINGLE MALTS AT THE GLENFIDDICH DISTILLERY

Pernod Ricard Gulf

The sky’s the limit Chivas Regal Signs indicate that Pernod Ricard remains a strong Gulf’s business between July seller for Pernod Ricard Gulf, from 12 and September has been strong, year old (pictured) to the more and Managing Director David premium aged expressions like Freeborn expects continued Chivas 18 year old success as passenger numbers in the region continue to climb by RYAN WHITE

ulf-Africa Duty Free caught up with David Freeborn, Managing Director of Pernod Ricard Gulf, during TFWA WE in Cannes this year to discuss the company’s business in the region. With the Middle East currently experiencing the highest growth in the world in terms of passenger numbers (IATA) and Pernod Ricard Gulf ’s business performing strongly so far this year, Freeborn was optimistic for the future of the spirits category in general and Pernod Ricard’s brands specifically. Gulf-Africa Duty Free: You’ve just started your new fiscal year in July, and while I know you can’t give details, how are things generally going in the region? David Freeborn, Managing Director, Pernod Ricard Gulf: We’re three months into what would be our new fiscal year, so it’s the first quarter for us. I think a true understanding of our business comes from the official sales data that the duty free stores give us. What we sell to the duty free is less relevant; what’s being sold to the shopper is the thing that interests us. Generally speaking we’ve got good depletion data coming out of Q1 [July, August and September 2013]. GADF: What brands are performing particularly well? DF: For us, whisky would still remain king when it comes to the Middle East, as you’re aware. What’s interesting is that our standard premium offerings, which would be brands like Ballantine’s Finest and Passport, are doing extremely well. In the more premium area of the business, Chivas Regal 18 for us remains a very attractive brand when it comes to depletions. It’s doing fantastically well. Chivas 18 is doing very well in the domestic markets, which I think is something that we often overlook. If a brand is performing well in the domestic market, in theory you should then see an uplift

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in depletions in the duty free channel as those consumers travel back home or internationally. All in all it’s been a strong first quarter when it comes to depletions, primarily around our whisky portfolio, which is a significant proportion of our overall Gulf duty free sales. GADF: Targeting the non-shopper is a theme we’re hearing a lot about lately. What has Pernod Ricard Gulf been up to lately in this regard? DF: One of the great things about the new terminal space opening up in the region is that it gives us an opportunity to take brand activation and consumer engagement out of the actual shopping area itself. For example, in the new A380 terminal in Dubai International, we have a major activation around The Glenlivet. It’s a recruitment program to get people to sign up to the Glenlivet Guardians program. It’s outside of the shopping area, but we’re capturing people that may be going straight to an F&B outlet or a lounge and avoiding the retail area altogether. So we’re encouraging them or enticing them to consider a brand outside of the retail shop. It’s taking what effectively is new space outside of the retail area but then creating something that allows you to engage and communicate with a consumer that might not be shopping that day. This is important because the busier the airports become, the more cluttered the environment can get. We need something that is a little bit disruptive to stop people from going just from A to B and get them to consider purchasing one of our brands. The Glenlivet Guardians activation is a great example of that philosophy at work. GADF: The growth of the region in general on the back of aviation’s growth was a topic of conversation at the TFWA WE conference this year. Could you tell us about growth in the Gulf over the last ten years or so from a Pernod Ricard perspective?

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

DF: From our perspective there are three key areas of growth over the last ten years or so. From an infrastructural perspective it’s not just Dubai. Airport and airline investment in Qatar and Abu Dhabi is pulling significantly more passengers through these international airports, a significant number of them being transit passengers. So you’ve got a significantly bigger marketplace. The second thing is that if you look over the last ten years at Pernod Ricard, it’s a completely different animal today than it was a decade ago with the Seagrams, Allied Domecq and Absolut acquisitions, so the Pernod Ricard portfolio now is a fantastic portfolio of products. The third key growth driver from a business perspective is that we would look to take market share within our key categories. Now, if you roll these three things together you’ve got a perfect cocktail for growth. And if you look at the aviation and infrastructural plans, you can see that growth continuing, not just in Dubai. The plans in Abu Dhabi and Qatar are extraordinary. It’s an incredible region at the moment in terms of growth, which certainly bodes well for our strong portfolio of brands. 

“For us, whisky would still remain king when it comes to the Middle East. What’s interesting is that our standard premium offerings, which would be brands like Ballantine’s Finest and Passport, are doing extremely well.” DAVID FREEBORN, MANAGING DIRECTOR, PERNOD RICARD GULF

Diageo GTME

For Diageo GTME’s latest activation, Alvin Tan’s 3D art piece brings together the voices of visionaries in an animation sequence that is nothing short of mesmerizing

TOTAL

IMMERSION

The Johnnie Walker Blue Label Gallery will be showcased in the busy thoroughfares of some of the world’s most cosmopolitan airports

Diageo GTME brings a 3D Johnnie Walker art gallery to travelers at major airports throughout the world by RYAN WHITE

iageo Global Travel, in partnership with DFS Group (DFS) and Singapore Changi Airport, has created a truly unique and immersive customer experience in travel retail. The Johnnie Walker Blue Label Gallery is set to host the world’s first 3D art installation in a bottle and will circumnavigate the globe from Singapore to London and beyond. Reflecting the travel credentials of the brand, the Johnnie Walker Blue Label Gallery will be showcased in the busy thoroughfares of some of the world’s most cosmopolitan airports, instead of traditional art galleries. Using the latest in projection technology, it will display a collection of digital artworks showcased within large format Johnnie Walker Blue Label bottles which stand at almost three meters tall. These will be filled with bespoke 3D and CGI graphics created by famous local artists from the host cities, giving the content perspective and depth. The first port of call was the Terminal 1 concourse of Singapore Changi Airport on September 19, 2013. After its stopover in Singapore, the stylish Gallery will then take to the skies and travel to other key destination airports around the world. In each of the vibrant travel retail outlets, Johnnie Walker will collaborate with some of the most celebrated international contemporary artists and fashion designers to showcase their interpretation of “The Rarest Blend”—a homage to Johnnie Walker Blue Label, one of the pinnacle offerings from Johnnie Walker. For the world premiere in Singapore, Johnnie Walker has commissioned three local, leading contemporary artists who embody

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the unique character of both the Lion City and the rare whisky, subtly blending product cues of rare cask, rare craft and rare character into their work to produce a rare creation. Singaporean artists include Priscilla Shunmugam, celebrated fashion designer and creator of the Ong Shunmugam label; Alvin Tan from the award-winning Phunk Studio; and Brandon Tay, a leading multimedia artist who blends technology with art. Each artwork in the Gallery brings to life a key element of both the heritage of Johnnie Walker Blue Label and Singapore. Priscilla Shunmugam tells the story, in CGI video form, behind her “Architectural Couture” artwork. Alvin Tan’s piece brings together the voices of visionaries in an animation sequence that is nothing short of mesmerizing. Brandon Tay examines the beauty within the bottle, inspired by the transformation that takes place in the process of metamorphosis in nature and the resulting fragility of the life it creates. Brooke Supernaw, Vice President, Wines and Spirits, DFS Group, says: “DFS has an award-winning Liquor & Tobacco concession in Terminal 1 and we are constantly searching for truly innovative ways to provide our customers with the ultimate airport experience. We are glad to have found a great partner in the Diageo Global Travel team. The Johnnie Walker Blue Label Gallery is the latest gamechanging activation, and we are pleased to be the first to be part of an exhibition that upholds the same standard of beauty engagement, innovation and technological sophistication that we strive to meet every day with our concessions at Changi Airport.” Doug Bagley, Managing Director, Diageo GTME, adds: “We are delighted to bring the

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

pioneering Johnnie Walker Blue Label Gallery to life in partnership with our customers in key travel retail channels. This is a genuine first for the worlds of art, whisky and the travel retail industry, reflecting our desire to raise and change the game. It shows our commitment to this sector, one of the fastest-growing retail channels worldwide. We are confident that the gallery will surprise and delight voyagers traveling through Singapore Changi Airport and provide them with a unique and completely immersive experience.” 

“We are delighted to bring the pioneering Johnnie Walker Blue Label Gallery to life in partnership with our customers in key travel retail channels.” DOUG BAGLEY, MANAGING DIRECTOR, DIAGEO GTME

Whyte & Mackay

Celebrating bravery by

Whyte & Mackay announces the launch of The Dalmore 25 year old and a brave new branding for the range

L The Dalmore 25 year old will join the 12, 15, 18, Cigar Malt Reserve and King Alexander III variants as a permanent addition to its Principal Collection of award-winning malts

uxury malt The Dalmore used last month’s TFWA WE in Cannes as the showcase for two new major brand launches. As well as launching a new 25 year old malt as an extension to its Principal Collection, The Dalmore also unveiled a new contemporary visual look with the strap line “To the Brave.” The Dalmore 25 year old will join the 12, 15, 18, Cigar Malt Reserve and King Alexander III variants as a permanent addition to its Principal Collection of award-winning malts. Only 3,000 bottles will be produced annually. The Dalmore 25 year old was released for sale at specially selected retail partners globally from October 25 for a RRP of £600(US$960). However, from October 23 passengers visiting

Focusing on the theme of bravery, The Dalmore’s new creative look pays homage to the brave decision made by a member of Clan Mackenzie to save King Alexander III from the fury of a charging stag in 1263

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GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

RYAN WHITE

World Duty Free Group stores in Heathrow’s Terminal 3 and Terminal 5 were able to purchase The Dalmore 25 ahead of any other travel retail locations. As with all of The Dalmore’s prestigious and award-winning whiskies, much of The Dalmore 25’s unique character and quality comes from a passion to use only the finest wood. White oak cask, Palomino Fino sherry butts, bourbon casks and Tawny Port pipes were all used to create the distinctive festive aromas of exotic fruits, marzipan, vanilla pods and fig cake of The Dalmore 25.

To the Brave

The Dalmore’s new creative look—“To the Brave”—was developed by Parisian creative agency Peoplewelike and is a contemporary interpretation of the spirit and heritage of The Dalmore. Focusing on the theme of bravery, it pays homage to the brave decision made by a member of Clan Mackenzie to save King Alexander III from the fury of a charging stag in 1263. The iconic image of this 12 point stag has adorned every bottle of The Dalmore ever since the distillery began producing single malt in 1839. With the image of the stag as its centerpiece, the striking visual is accompanied by a new strapline—“To the Brave”—celebrating The Dalmore as a bold, confident and courageous brand for those who aren’t afraid to make brave decisions. The new creative was launched to trade at TFWA WE and will be rolled out to consumers for the very first time in Heathrow Terminals 3 and 5. “The last two years have been highly exciting for The Dalmore in travel retail, with the release of our Constellation Collection with World Duty Free Group at Heathrow Terminal 5 and the more recent release of our travel retail exclusive, The Dalmore Valour,” says Francesco Scaglione, Head of Travel Retail for The Dalmore brandowner Whyte & Mackay. “Duty free has now become the largest volume market for The Dalmore, with growth of 25% over the past three years,” he continues. “Given its importance as a sales channel, it is only fitting that this year’s TFWA becomes the showcase for launching The Dalmore 25 and our new creative, which will elevate the brand beyond traditional marketing for premium malts.” 

VODKA WITH ATTITUDE E S T .

I N

C O P E N H A G E N

www.danzka.com

FLAVOUR THE WORLD

Bommidala

The duty free side of Bommidala’s business has managed to maintain consistent sales volumes overall throughout the Gulf and Middle East regions, as well as in the African market

Room to grow by

ANDREW BROOKS

Bommidala’s tobacco business thrives as new duty free spaces open up in major Middle Eastern airports

hile BBM B ommidala Group, the highly diversified international tobacco products processor and exporter, is headquartered in Andhra Pradesh, India, it also maintains a thriving Middle Eastern practice. Bommidala Enterprises Middle East (BEME) is based in the Dubai Airport Free Zone in close proximity to Dubai International Airport, with Naveen Natarajan as its Vice President, Business Development. The parent BBM Bommidala Group, which was established in 1962 with tobacco as its core product, has grown quickly over the years and today boasts an annual manufacturing capacity of twelve billion sticks jointly between its Indian and UAE plants. Natarajan notes that the duty free side of the business has managed to maintain pretty consistent sales volumes for BBM overall throughout the Gulf and Middle East regions, as well as in the African market. While duty free doesn’t account for the majority of sales, Natarajan does say that the channel contributes better margin and value for the brands. The rate of growth is naturally quite closely dependent on the percentage increase in passenger traffic rates, which reflect the increase in the tourism trade in the region. The market is looking up right now, Natarajan says. “The Middle East especially is seeing growth in retail space,” he says, “with expansions and newer airports coming up.” Geographically, the market growth in duty free is focused in the Middle East more than Africa, Natarajan says, thanks to the

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added space in airport retail concourses in the region. The number of airport expansion and construction projects underway and projected in the thriving Middle Eastern market is undoubtedly a cause for optimism about the future. Purchasers of Bommidala products are, as you might expect, predominantly male, and the demographic is spread across all age groups over 18. In addition to self-consumption, gifting is also a prime purchase motivator. BEME provides an added incentive for gift-minded purchasers by attaching freebie premiums such as lighters, pens and keychains, Natarajan says. The roll-your-own (RYO) portion of BEME’s business in particular has shown strong year-over-year growth, Natarajan says. He points out that Bommidala prefers to opt for value promotions in the RYO category, offering an extra product with purchases of the 200-gram display carton, which consists of five 40-gram pouches. At Dubai Duty Free, which is the prime sales position for BEME, Bommidala’s “Rolon” RYO brand is priced at US$7.23 for a 200 gm package. Rolon tops the sales list in the rollyour-own category, while the “Dzire Nano” and “Ruby Super Slims” brands are currently turning in the top sales performances in BEME’s cigarettes line. Natarajan notes that the challenge posed by the increasingly onerous health hazard regulations imposed on tobacco products is more of a factor in the duty paid market. On the duty free side the strategy is to maximize the creative use of whatever packaging space

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

The affluent Chinese traveler, registering so heavily in other markets, is having a positive impact on Bommidala’s business in the Middle East and North Africa

The roll-your-own portion of BEME’s business in particular has shown strong year-over-year growth in the Middle East

is left over after the required health warnings have been added. “It’s a matter of emphasizing the brand name as best we can,” he says. “Our main customers in duty free retail constitute Europeans who are looking for ‘good buys’ or for value-for-money brands,” Natarajan says. The affluent Chinese traveler, registering so heavily in other markets, is having an impact here too. Natarajan says these buyers tend to come into duty free shops with a predetermined purchase in mind and show a decided preference for the premium buy. Natarajan is fairly optimistic when he looks ahead to 2014, rating his optimism at seven on a scale of ten. When asked about the potential impact of regional political instability, he says, “Well, it’s hard for me to comment on the totality in general. But Dubai in particular has been more upbeat than ever.” 

Imperial Tobacco

Three’s company Imperial Tobacco pulls out all the stops in Cannes with three new releases for classic brands, each capitalizing on different trending tastes

t last month’s Cannes show, Imperial Tobacco showed attendees that the tobacco category is as relevant and dynamic as ever with a number of new releases—two new additions to the Montecristo flavor range; Cohiba White Mini and Club cigars, made from 100% Cuban tobacco; and Gauloises Duo, a new variant in the popular Gauloises range that allows users to crush a capsule in the filter to release a menthol flavor.

Like the existing Montecristo Mini Red and Blue, the new Aroma (pictured) and Aroma Filter releases are made from 100% Cuban tobacco

Cohiba White Mini and Club cigars are designed to appeal to consumers looking for a premium product with a smoother blend

A trend toward flavor

Following its successful introduction in Cannes in 2012, Imperial Tobacco is adding two new flavor variants to its Montecristo Mini range. Montecristo Mini Aroma and Montecristo Mini Aroma Filter have been introduced to capitalize on the continuing growth in mini cigars and the trend towards flavored products. Like the existing Montecristo Mini Red and Blue, the new Aroma and Aroma Filter versions are made from 100% Cuban tobacco. Both offer a hint of vanilla and are packaged in shades of natural brown to reflect the flavor profile. Presented in modern tins of 20, the new variants effectively reflect the tradition of this famous Habanos brand. “There is an increase in demand among smokers for special tasting cigars, also in duty free,” says Nils Fehren, Category Development Manager Global Duty Free at Imperial Tobacco. “With options both for experienced cigar smokers and those looking for a smooth taste, the hint of vanilla provides a very satisfying taste effect.” Fehren says the mini cigar segment in duty fee continues to grow and the new Montecristo Mini Aroma and Aroma Filter are perfectly placed to meet this growing trend at a very high quality level.

The power of premiumization The Middle East will play a major role in the global rollout of Gauloises Duo; the variant will launch in the GCC (UAE, Qatar and Bahrain), Lebanon, Jordan, Greece, Turkey and Israel from March 2014

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Imperial Tobacco has also introduced the new 100% Cuban tobacco Cohiba White Mini and Club cigars. These new offerings are designed to appeal to consumers looking for a premium product with a smoother blend.

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

RYAN WHITE

The prestigious cigar brand Cohiba was first created in 1966 in La Habana, Cuba as a gift for heads of state and visiting diplomats. Cohiba White joins the existing Cohiba offer in Mini and Club versions, covering both the best-selling and fast growing sector. Available in smart white cartons of 20 pieces, the new offer has been carefully researched and developed by experienced Cuban master blenders. The pack design retains all the brand’s key elements, with the bright white color perfectly reflecting the new product positioning, while silver and black text, logo and design elements give a modern and sophisticated look. The launch is supported by modern, white cubically designed merchandising materials and visuals, along with GWP promotions. “With Cohiba White, we are now offering a complete range of Mini and Club cigars for all travelers’ needs,” says Fehren. “We do believe there is a big opportunity for the Cohiba brand in duty free and with new Cohiba White we will appeal to a wider audience looking for a smoother blend and prestigious brand.”

Getting fresh

Last but certainly not least, to capitalize on the current capsule trend that allows smokers to determine the strength of the menthol flavor in their cigarette, Imperial Tobacco has introduced a new travel retail offer for the key strategic brand Gauloises Blondes called Gauloises Duo. Gauloises Duo incorporates an innovative freshness capsule hidden in the filter that can add additional flavor on demand. Consumers simply press the filter to crack the capsule, releasing a burst of flavor and instantly creating a “fresher” cigarette. “Gauloises Blondes is one of our leading brands within the travel retail sector,” says Christian Drews, Imperial Tobacco Brand Manager, Gauloises & Portfolio Brands. “This new Duo offer takes advantage of one of the main growth opportunities within the marketplace and perfectly aligns with our target group—travelers who like freedom of choice and generally have joie de vivre.” Notably, the Middle East will play a major role in the global rollout, with Gauloises Duo being launched to global duty free markets in the GCC (UAE, Qatar and Bahrain), Lebanon, Jordan, Greece, Turkey, Israel, Hong Kong and Singapore with availability from March 2014. 

Oettinger Davidoff

The Toro variety of Davidoff’s new Nicaragua cigar line; Short Corona and Robusto sizes are also available

THE SPIRIT OF exploration The new Davidoff Nicaragua Puro Cigar range marks the company’s expansion into new regional taste experiences by ryan white

avidoff Cigars recently unveiled its first Nicaraguan cigar line, Davidoff Nicaragua, at a New York City pre-launch event on June 20, 2013. Inspired by Zino Davidoff ’s pioneering spirit, Davidoff Cigars has made it a mission to delight cigar aficionados by bringing them a variety of taste experiences and cigar pleasures. “This is a major step for Davidoff to expand to a new territory,” explains Oettinger Davidoff Group CEO Hans-Kristian Hoejsgaard. “Davidoff ’s mission is to bring aficionados delightful experiences— regardless of territory.” Davidoff master blenders, led by Hendrik “Henke” Kelner, went on an exploration for a new type of blend that would stimulate both the bitter and sweet taste buds. The team embarked on an adventure searching for tobacco across the world’s renowned tobacco regions that would enable the creation of such a cigar. The relentless pursuit for the right blend paid off when they discovered that a blend crafted with the finest leaves from plants grown in the fiery volcanic soil of the Esteli, Condega, Jalapa and Ometepe regions of Nicaragua created just the right balance of sweet and bitter notes to tantalize the palate.

Exploration, adventure and discovery It took time, patience and perseverance to create the perfect conditions in which to craft these fine cigars. Ten years were needed for the preparation, curing and aging to tame the wilder tendencies of the Nicaraguan tobacco, and to deliver an exceptional blend with all the intensity, excitement and refined sophistication aficionados would expect from Davidoff. As with all Davidoff Cigars, and to guarantee its quality and exceptional craftsmanship, the new Nicaragua range is hand-rolled in Davidoff ’s Dominican facilities by expert rollers.

The Nicaragua experience The 100% Puro Nicaraguan blend combines a 10-year-old Habano Seed Nicaragua Rosado wrapper in a beautiful color, with a binder from Jalapa and a filler blend of tobaccos from Esteli, Condega and Ometepe. The range comes in three sizes: Toro (5 ½ inches; 54 RG); Robusto (5 inches; 50 RG) and Short Corona (3 ¾ inches; 46 RG). Davidoff notes that the new range was very well received by aficionados who had a chance to experience it. In a blind taste test conducted at the Art of Smoke in Germany, Davidoff Nicaragua ranked as of the five best cigars ever tested across all tobacco origins and blends. The official launch of Davidoff Nicaragua took place during IPCPR (USA) followed by Inter-tabac (Germany) in September 2013. The three formats—Toro, Robusto and Short Corona—were available at Davidoff-appointed merchants/depositaries in the US from July and worldwide from September. To complement the cigar range, Davidoff will be introducing innovative accessories, including a stylishly crafted new limited edition humidor, Davidoff ’s first jet flame lighter and a punch cutter. Limited to only 250 pieces worldwide, the unique Davidoff Nicaragua Humidor is the central piece of the line. In the shape of a triangle,

“This is a major step for Davidoff to expand to a new territory. Davidoff’s mission is to bring aficionados delightful experiences— regardless of territory.” Hans-Kristian Hoejsgaard, CEO, Oettinger Davidoff Group

inspired by the volcanoes of Nicaragua, this Humidor can flexibly accommodate up to 50 cigars in different formats thanks to its movable separators. It boasts a removable top, which unveils a compartment to host cigar accessories. The Limited Edition Belicoso Puro Cigar, one of the rarest cigars Davidoff has ever produced, will be released with the Humidor and limited to only 12,500 pieces worldwide. The Nicaragua double blade cutter, made entirely of stainless steel, will allow aficionados to fully discover the intensity of the new Davidoff Nicaragua blend, while the Nicaragua Jetflame lighter will allow cigar lovers to light their cigars in even the most extreme conditions. “Davidoff Nicaragua has been crafted to delight today’s adventurous aficionados who are in the mood to discover new and exciting experiences to fill their time beautifully. These superb cigars combine the signature Davidoff refinement with all the intriguing intensity of Nicaraguan tobacco,” notes Charles Awad, Senior Vice President Global Marketing and Innovation at Oettinger Davidoff Group. c

www.dutyfreemagazine.ca GULF-AFRICA DUTY FREE & TRAVEL RETAILING 109 The line also includes a range of accessories consisting of a cigar cutter and the first ever Davidoff Jetflame lighter

Japan Tobacco International

GETTING MORE OF THE PIE Despite being up against a contracting market in many regions of the world, Japan Tobacco International increases market share and revenue during the first nine months of the year by RYAN WHITE

ust ahead of the MEADFA conference, Japan Tobacco International (JTI) announced in its nine-month earnings that year-on-year market share continued to grow in most key markets, including France, Italy, Spain, Taiwan, Turkey and the UK. Furthermore, in Russia, share of value and global flagship brand (GFB) share of market continued to increase. From July to September 2013, JTI reports that core revenue at constant rates of exchange grew 5.7% driven by strong price/mix and compensating for the volume decline. Core revenue on a reported basis grew 3.3%. Nonetheless, the total pie is clearly shrinking and JTI isn’t immune. The company reports that total and GFB shipment volume declined 5.1% and 1.8% respectively due to significant industry contraction in several key markets. A bright spot, however, lies in fine cut tobacco, with volume having grown 23.4% for the period. In terms of the dollar figures for the period, core revenue at constant rates of exchange grew US$175 million, driven by US$262 million (+8.6%) in price/mix improvement, partially offset by negative volume. Adjusted EBITDA at constant rates of exchange increased US$211 million (+18.9%), driven by US$255 million (+22.9%) in price/mix improvement and cost phasing between the second and third quarter. Adjusted EBITDA (at constant rates of exchange) for the period of January to September grew 11.1% driven by solid revenue growth. Core revenue at constant rates of exchange increased 4.6% for the nine months, driven by strong price/mix. Core revenue on a reported basis grew 2.4%, but again total and GFB shipment volume declined (5.1% and 2.1%, respectively). This was mainly due to continued industry contraction and trade inventory adjustments in a number of markets.

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Despite a shrinking market in many regions, JTI has managed to consistently increase market share and revenue; pictured is one of the company’s many category solutions, which have proven successful for travel retailers

Fine cut volume increased 27.6%. Speaking of the first nine months in dollar figures, core revenue at constant rates of exchange increased US$404 million, driven by positive price/mix of US$737 million (+8.5%), more than compensating for a negative volume contribution. Adjusted EBITDA at constant rates of exchange grew US$356 million, driven by US$722 million (+22.6%) in price/mix improvement. The Middle East falls under JTI’s Restof-the-World business segment, where total and GFB shipment volume declined 7.8% and 4.6%, respectively. The company specifically mentions ongoing political instability in the Middle East, combined with general economic conditions, as factors contributing toward the results. The Rest-of-the-World volume decrease was partially offset, though, by positive performance in Canada, Taiwan and Tanzania. Notably, market share grew in Malaysia, Taiwan and Turkey. With regard to the GFBs specifically, JTI reports that Winston shipment volume declined 1.0% due largely to ongoing political instability in the Middle East despite growth in the Caucasus markets, Germany, Italy, Romania, Russia and Taiwan. Camel shipment volume decreased 1.1% due to industry contraction in France, Italy, Spain and the Ukraine. This was partially offset by growth in the Benelux and Caucasus markets, Germany, Poland and Russia. Mevius/Mild Seven shipment volume declined 1.1% mainly due to down-trading from the premium-price segment in Taiwan and industry contraction in Korea. Finally, LD shipment volume growth in the Caucasus markets, the Czech Republic, Hungary, Kazakhstan, Poland and the Ukraine did not fully offset a decline in Russia and Turkey, resulting

GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

in a 2.3% decrease in shipment volume. Compared to the first nine months of 2012, total shipment volume declined 5.1% to 311.2 billion cigarette equivalent units, mainly due to industry contraction and trade inventory adjustments in several markets. Total shipment volume grew in the Benelux and Caucasus markets, the Czech Republic, France, Germany, Hungary and certain Middle East & Africa markets, including the Sudan. GFB shipment volume decreased 2.1% to 198.2 billion cigarette equivalent units due to industry contraction, despite GFB shipment volume growth in Austria, the Benelux and the Caucasus markets, the Czech Republic, Germany, Hungary, Kazakhstan and Romania. At constant rates of exchange, core revenue grew 4.6% to US$9,095 million driven by strong price/mix, more than compensating for a volume decline. Core revenue increased 2.4% to US$9,067 million on a reported basis. “JTI WWDF is enjoying a good trading year so far in 2013, with strong passenger growth noted in Asia and the Middle East and the company’s best performing markets so far emerging as Latin America and the Middle East,” says David Francis, General Manager Worldwide Duty Free and Vice President, JTI. “But Europe has also been good, despite the financial pressures facing many markets which have translated into lower air travel growth rates. While there might be less growth amongst European passenger groups, more Asians are visiting Europe, with the exception of Japanese travelers. This is balanced out by more Chinese travelers coming into the market. So looking to the future, I still see the growth coming in Asia, also Middle East and I see big opportunities obviously, as I’m sure many people would say, with the Chinese travelers.” 

ESSENTIAL COMMUNICATIONS

knowledge CLIENT understanding MEDIA

Essential Communications is an independent Public Relations agency specialising in the travel retail and duty free industry. Established for over ten years, our goal is to raise the profile of the companies we represent in the international and regional media. At Essential Communications, the client always come first and we will bend over backwards to put together a proposal that meets your needs...and your budget. Flexibility is the name of our game, so if you’re looking for a simple, straightforward press release program or an all singing, all dancing media campaign, we’ll give you a nononsense solution to your needs. And..we do it with a smile.

“I have worked with Essential Communications since it was first established in 1996. The company has always been the mainstay of a proven successful marketing strategy for the various companies I have been involved with. In working with Morgan & Oates for the last four years, EC has helped us to develop and establish a solid brand image within the Travel Retail sectors. Excellent editorial coverage, assistance with activities at exhibitions, and full assistance with Web site developments has ensured that Morgan & Oates is well respected in the Travel Retail arena. I would not hesitate to recommend their services.” Jeannie Archer, Managing Director, JA Associates Ltd

“Scorpio Distributors appointed Essential Communications in 2006 as part of an upgraded marketing strategy. They provide us with a friendly, efficient, pro-active service and, certainly for Scorpio, represent excellent value for money.” Stuart McGuire, Group Managing Director, Scorpio Distributors Ltd ‘Essential Communications has proved to be a vital part of the success and growth of Counter intelligence Retail in the channel. Always quick to respond to our needs, the reach the company has provided us has ensured we’ve always had the right amount of exposure and the most appropriate coverage at the right time’.

“I don’t know why everyone doesn’t use Row at Essential Communications. Fast, efficient, and makes sure that everything is done in the right way, is in front of the right people and in time for publication. Row has become a vital tool in our communication strategy and we are delighted to be working with her.” Ian Taylor, Global Marketing Manager, William Grant & Sons

Garry Stasiulevicuis, Managing Director, Counter Intelligence Retail

Rowena Holland Essential Communications 110 Falconwood Road Croydon Surrey, CR0 9BD, UK

Tel: 44 (0) 208 405 8109 Fax: 44 (0) 208 405 0330 Mob: 44 (0) 771 021 9784 Email: row@essentialcommunications.org www.essentialcommunications.org

New & Notable CONFECTIONARY: The Generous Box Company: Toms Confectionery Group Description: Anthon Berg is creating an unexpected experience with the new product line “The Generous Box.” It comes in a 300g premium dark chocolate and a 300g delicious whole milk gift box. Each gift box reveals 40 pieces and is individually wrapped

LIQUOR: Rémy Martin VSOP Cannes Film Festival Limited Edition Company: Rémy Cointreau Description: The Rémy Martin VSOP Cannes Film Festival Limited Edition is available exclusively at major international airports. In this special edition, the Centaur, emblem of Rémy Martin Fine Champagne Cognac, joins the Golden Palm, symbol of the annual Film Festival, ascending the famous steps of the Palais des Festivals

Laplandia Vodka Company: Global Drinks Finland Description: Laplandia Vodka is a premium product inside, with its award winning smoothness, and outside, expressing its delicate snow white Lappish appearance. Its design has been changed to complete snow white with a touch of gold and its content are even smoother than before following a revolutionary update in water filtration

Tic Tac T100 Travel Collection Company: Ferrero Description: The new Tic Tac T100 Travel Collection includes nine collectable 49g packs of the famously cool Tic Tac white mouth freshener mints, each representing a different country. The Tic Tac T100 sleeve designs include Germany, Great Britain, Hong Kong, Singapore, India, Brazil, Canada, USA and the Caribbean

Leonidas Mendiants 200g Company: LEONIDAS SA Description: Disks of milk, white and dark Belgian chocolate studded with nuts and dried fruits, which traditionally represented the four monastic orders. Also in the collection are Orangettes 200g—zesty orange peel in dark chocolate—and Almond Mix 200g—Italian almonds in white, milk and dark chocolate

“World of Chocolates” range – Sticks Company: Rausch Schokoladen GmbH Description: Eight different chocolate sticks of 40g each are presented in a natural wood cylinder which can be used afterwards as a container for pens/pencils, etc.

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New & Notable

EYEWEAR: Ted Baker Company: Mondoticca Description: Ted Baker appeals to the style-conscious men and women who trust Ted to deliver something out of the ordinary

TECH by Travel Blue Company: Travel Blue Description: The new TECH by Travel Blue range has been designed to meet every possible solution to connect and charge travelers’ USB devices worldwide with a product selection that includes adaptors, USB chargers, headphones, speakers and cables The Cybill Bag Company: Aigner Description: The Cybill Bag combines traditional, Italian craftsmanship with the requirements of a modern business handbag. The model stands out thanks to sophisticated design and timeless valency, and is suitable for a businesswoman’s entire schedule

ACCESSORIES:

Christian Lacroix Company: Mondoticca Description: High fashion styling and unique designs reflect the creativity and details that have contributed to giving Christian Lacroix its iconic status

Enchanted Wings Company: Toscow Description: Enchanted Wings is an extensive collection with eight designs to choose from. Two pendants, one in full crystal dome and one in a delightful circle cater for individual taste. There is a necklace as well as bracelet with a sideways positioned butterfly and three earrings from simple studs to long drop earrings. The signature piece of the collection is a large cocktail ring with the butterfly set on a large domed crystal base Carbon Fibre Bracelets Company: Tateossian Description: Tateossian extends its line of unique and fashionable pieces to travel retail. The Carbon Fibre Bracelets combine strong, chunky braided Italian leather in black with a sleek, highly polished carbon fibre pop clasp; these bracelets make a stylish statement

Ice-Denim Company: Ice-Watch Description: Ice-Watch has launched Ice-Denim, its new casual denim watch. Water resistant up to 10 ATM, Ice-Denim is available in two sizes—unisex and oversized—and in both light and dark denim. Both watchbands feature a stitched detail and a dial encased by a white ring

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GULF-AFRICA DUTY FREE & TRAVEL RETAILING NOVEMBER 2013

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