Global Travel Retail Magazine ASTUIL June 2023

JUNE

published seven times a year by Paramount Publishing Company Inc. It is distributed digitally worldwide. The views expressed in this magazine do not necessarily reflect the views and opinions of the publisher or the editor. June 2023, Vol 35. No. 4. Printed in Canada. All rights reserved. Nothing may be reprinted in whole or in part without written permission from the publisher. Paramount Publishing Company Inc.

GLOBAL TRAVEL RETAIL MAGAZINE

Tel: 1 905 821 3344 www.gtrmag.com

PUBLISHER

Aijaz Khan aijaz@globalmarketingcom.ca

EDITORIAL DEPARTMENT

EDITOR-IN-CHIEF

Hibah Noor hibah@gtrmag.com

DEPUTY EDITOR

Laura Shirk laura@gtrmag.com

SENIOR WRITER

Alison Farrington alison@gtrmag.com

SENIOR EDITOR

Wendy Morley wendy@gtrmag.com

SENIOR EDITOR Mary Jane Pittilla maryjanepittilla@hotmail.com

ART DIRECTOR Jessica Hearn jessica@globalmarketingcom.ca

potentialHuge

What a sincere pleasure it is to be writing this editor’s note for our edition focused on the upcoming ASUTIL Conference. It would be enough of a celebration to simply be having the first ASUTIL Conference in five years; add that the event comes after what we’ve collectively experienced since 2020, and the celebration becomes exponential.

And it really could not come at a better time, as travel is finally approaching prepandemic levels and revenge buying is strong.

Airlines in LATAM saw a 119% rise in international traffic and 93.3% increase in annual capacity in 2022 compared to full year 2021, and all countries in the world have ended their COVID-related border restrictions.

While the region’s international travel has not yet recovered, domestic is now performing better than 2019 — far ahead of earlier predictions.

In Brazil, business has been “bouncing back strongly,” says Dufry Brazil GM and ASUTIL President Gustavo Fagundes, with the domestic passenger flow already reaching pre-pandemic numbers. Add increased spend per passenger and this means additional revenue for the retailer, over and above.

During the pandemic and since, Dufry has continued to expand, opening new shops and expanding others, and launching a whole new concept, Mind.Body.Soul, based around the consumers’ desire for healthy options and eco-sustainable products that focus on wellbeing.

Jorge Chávez International Airport and Lagardère Travel Retail were together the first to break new ground on a more balanced agreement between airport and retail operator, with risks and rewards to be shared more equally between partners. Just a few months later, three new Aelia stores were opened under this shared vision. Branching into foodservice, Lagardère opened five new F&B outlets in Chile last year, with 12 more to come.

The retailer also opened the new “Fantastico Peru” concept store, which brings together the best of what the Peruvian culture, gastronomy and artisans have to offer. As Cyril Letocart, CEO, Lagardère Travel Retail Peru, told his audience at this year’s Summit of the Americas, "Recovery is here. There is huge potential for Latin America."

CIRCULATION & SUBSCRIPTION MANAGER accounts@globalmarketingcom.ca

The ASUTIL Conference has always been a unique event, one that brings unrivaled networking. The association’s Secretary General José Luis Donagaray says this year’s opportunities, as in the past, will be “excellent.” Add in a stellar line of speakers including Dufry Group CEO Xavier Rossinyol and Corporación América CEO Martin Eurnekian, among many other luminaries, plus the location in Buenos Aires, this year’s event

There is indeed huge potential for Latin America, and we at Global Travel Retail Magazine are proud to join over 200 delegates who will kick off this new era for the region and the world. We look forward to seeing you there, and wish you great success.

Kindest Regards,

HIBAH NOOR Editor-in-Chief hibah@gtrmag.com

WHAT’S INSIDE

14

Top Stories:

FEATURE INTERVIEW

6 Happy reunion

ASUTIL Secretary General José Luis Donagaray provides conference details, an association update and a look at the future

RETAILER NEWS

10 Destination: Brazil

Dufry Brazil’s GM Gustavo Fagundes tells Global Travel Retail Magazine that business is bouncing back strongly and duty paid is the best performing area of the business

14 Brick and mortar

In this article, ARI’s Nuno Amaral zeros in on region-specific operations, a major refurbishment at Larnaca Airport and a positive twist on the pandemic: the global recognition of sustainability

18 Leading in LATAM

Dufry Group President and CEO Latin America, Enrique Urioste, will be responsible for seeking new business opportunities while trying to create synergies across the duty free, duty paid and food and beverage sectors in the region

22 Huge potential for LATAM

Cyril Letocart, CEO, Lagardère Travel Retail Peru, shares an engaging update from the retailer, highlighting quick growth in Latin America

Features:

SPIRITS REPORT

24 Spirit of Commitment

In this interview David Rodiek, VP, Managing Director Global Travel Retail Brown-Forman, says the company is focused on growth in the Americas, EMEAI and APAC in the year ahead with new leadership appointments and plans to push on as a multi-portfolio player

SUMMIT REVIEW

26 Summary of the Summit

GTR Magazine’s coverage of Summit of the Americas 2023; the association welcomed 1,178 attendees to West Palm Beach in April

Happy reunion

ASUTIL SECRETARY GENERAL JOSÉ LUIS DONAGARAY PROVIDES CONFERENCE DETAILS, AN ASSOCIATION UPDATE AND A LOOK AT THE FUTURE

Leading up to the ASUTIL Conference in Buenos Aires, Global Travel Retail Magazine sat down with José Luis Donagaray, Secretary General at ASUTIL (Asociación Sudamericana de Tiendas Libres) for an exclusive interview. In addition to providing conference details, Donagaray discussed the state of travel retail and duty free in Latin America. Last reported to the publication, over 200 delegates are registered to attend the conference.

The big picture

Speaking about the economic situation in Latin America, Donagaray says, “We’re facing a complicated mix of issues: there is a lack of frequency, excessive demand and inflation. The domestic market is performing better than pre-pandemic and while international traffic is recovering, it hasn’t arrived at the same figures because of lack of travel frequency.” The association predicts the region will return to 2019 levels by the end of 2024.

Airlines in the region saw a 119% rise in international traffic and 93.3% increase in annual capacity in 2022 compared to full year 2021; load factor increased 9.7 percentage points to 80.8%, according to data from International Air Transport Association. Donagaray points out because of its size, the importance of Brazil in the region “makes a lot of noise.” Following the election of Luiz Inácio Lula da Silva as President at the end of last year, he adds voters are still waiting on the Brazilian President to announce his new fiscal framework. As reported by Reuters, the framework is seen as crucial to easing fiscal concerns and is expected to combine factors such as the debt trajectory, a budget surplus and spending control. Lula’s position on the Ukraine War and Brazil’s relationship with China are also up for debate.

ASUTIL Conference outline

Managed by ASUTIL and Tax Free Duty Association (TFWA), the two-day event will feature an expert line-up of speakers.

ASUTIL President Gustavo Fagundes will join Donagaray in opening the conference. According to the Secretary General, the overall tone of the line-up will focus on looking ahead to the

future and the format of the conference will provide an exciting amount of information sharing, networking time and socializing.

“It’s been five years and travel retail and duty free is recovering; there are great expectations [among the association and delegates] and the content and the networking opportunities will be excellent,” says Donagaray.

Dufry Group CEO Xavier Rossinyol will deliver the keynote address, outline his future vision of the channel in the region and discuss the potential for tourism across the continent, as part of the New horizons for duty free session. This will be moderated by Dermot Davitt, President, The Moodie Davitt Report. Also, on day one, Dr. Peter Mohn, Owner & CEO at m1nd-set, will detail the findings of a new study conducted exclusively for the association on the behavior of the Latin American traveling consumer. Mohn’s presentation will cover the main travel retail categories, demographic analysis and data-driven statistics.

Snapshots of the ASUTIL Conference over the years

by LAURA SHIRK

Plus, a panel discussion will take place on the importance of border stores and their growing share of the Latin American duty free market. The panel will consist of Neutral CEO, Marcelo Montico, BAH Free Shop CEO, Paulo Pavin, Director of Trade Policy at the Uruguayan Regional Ministry of Economy and Finance, Juan Alfonso Labraga Brea, and Federal Revenue of Brazil Regional Superintendent, Altemir Linhares de Melo, and be moderated by Carlos Loaiza, Secretary General at CEFSU, Chamber of Uruguayan Free Shop Operators.

As previously shared by the association, day two of the conference will explore economic challenges facing the industry, current traffic patterns in the region, the role of travel retail in Latin America’s travel ecosystem, the effective application of technology within the channel and emerging digital trends. Speakers will include top economist and Macroview S.A Vice President, Carlos Melconian, Corporación América CEO, Martin Eurnekian, Latin American and Caribbean Air Transport Association (ALTA) Executive Director & CEO, José Ricardo Botelho, Meta PanLatam Director of Sales, Daniella Valeriano, and Pernod Ricard Travel Retail Americas General Manager, Gregory Ford.

Dufry Latin America CEO and ASUTIL Vice President, Enrique Urioste, will close the event.

Negotiations and achievements

To help maintain spend during the pandemic, Donagaray says the region continued to invest in travel retail and duty free with the opening of new stores and terminals in Argentina, Uruguay, Brazil and Panama. Duty free shops are available in Arrivals and Departures at every airport in Latin America, offering a wide selection that attracts tourists from across the region.

During this time period, ASUTIL negotiated to increase duty free allowances within Latin America. The mission was successful, with Uruguay increasing allowances for air travelers entering the country from US$650 to US$1,000. Post-pandemic it remains at US$850. In Brazil, the allowance for those entering by air is now US$1,000 at airport stores and US$500 at land border stores.

The association also negotiated to allow for delivery of duty free purchases to boost spending. Although most international flights arrive to the Brazilian hub of São Paulo, passengers arriving from international flights and transiting to domestic flights can purchase at duty free shops and receive delivery within 15 days.

Coming up, ASUTIL looks forward to reuniting members of the industry in South America for an event packed with compelling content and exciting activities. The dates and the location of next year’s conference are still to be determined.

DESTINATION: Brazil

During the pandemic, domestic travel was always forecast to revive before international. As Dufry Brazil’s GM Gustavo Fagundes states, Brazil’s domestic market — always strong — has already returned to 2019 levels, and business is good

Business has been “bouncing back strongly” for Dufry Brazil, according to Gustavo Fagundes, Dufry’s General Manager – Brazil and President of ASUTIL, and it will come as no surprise, given the strength of the country’s domestic travel, that Duty Paid is the best performing area of the business. “The domestic passenger flow in the country returned more rapidly than the international pax flow and has already reached the same levels as 2019,” confirms Fagundes.

That being said, Fagundes states that the duty free operation in Guarulhos airport is performing well, as it’s now the most important hub of the region. “Our arrivals business is also strong, with travelers taking advantage of our various services including Reserve & Collect, pre-payment and Home Delivery from the store,” he says.

Spend per passenger is up, and Fagundes says additional revenue has come about because of store expansions with key airport partners. “We are seeing an ongoing positive momentum for travel and travel retail with spend per passenger continuing to be higher than it has been pre-pandemic,” he says.

Mind.Body.Soul

During the pandemic, consumers showed a clear trend toward ecologically sensitive, sustainable products, and an increased perceived importance of one’s own health — physical, yes, but also emotional and spiritual. “In terms of trends, the demand for healthy, relaxing, eco-sustainable and wellbeing products continues,” says Fagundes. “We have responded by launching new

product ranges in the beauty and food categories, as well as new retail concepts such as Mind.Body.Soul. which we have opened now in several locations globally, including Guarulhos International Airport in São Paulo.

Mind.Body.Soul. is a new shop-in-shop retail concept developed by Dufry to meet the increasing customer interest in purchasing healthier and more sustainable products. “The shops offer a range of nutritious, energy-focused foods for healthconscious customers, alongside sustainable products for a better environment, and many relaxing products that help promote a sense of wellbeing,” says Fagundes.

Sustainability — an inherent element

Dufry has committed to conducting business in an environmentally conscious manner. “Sustainability is an inherent element of our new business strategy Destination 2027,” says Fagundes. “For all regions in which we operate, we regularly assess the environmental reach of our commercial activity and work towards minimizing the impacts. Due to the special nature of the travel retail industry in which we operate, Dufry – besides reducing its own emissions and implementing other ESG initiatives – closely collaborates with third parties, in particular with landlords, brand suppliers and logistics providers — towards reducing the environmental impact of its business.” Dufry is fully aligned with the corporate policies regarding sustainability, a good example of which is that 100% of the shopping bags of its stores are biodegradable.

Sustainability is an inherent element of Dufry’s business strategy Destination 2027. At RioGaleão this is not just about the 100% biodegradable shopping bags, but also about ensuring the company improves the community

by HIBAH NOOR

Sustainability is increasingly recognized as being about more than the environment as a whole, but also about the local environment and any impact on the community. Fagundes says, “Locally, for several years now, we have been running a social program to help young adults from the poorer communities close to the Riogaleão Airport to access the labor market, and we have been very successful in achieving our social targets.”

More detail about Dufry’s focus on sustainability can be accessed at www.dufry.com/en/sustainability

What consumers seek

Customers have made it clear that sustainability and health are important to them, but exclusive products, novelties, limited editions and unique promotions continue to be sought after. “We are able to work closely with our brand partners to ensure we keep offering new, exciting and exclusive products,” says Fagundes. “As a general trend, we are also seeing a strong level of interest in luxury and higher price-point products across all the core categories, showing that travelers are looking for moments of self-indulgence or special gifts for others.”

Fortunately for Dufry Brazil, the most relevant characteristic of the customer profile is the willingness of Brazilians to travel, which came back very strongly and quite quickly. The Winter/ Spring Season is important, and the months of July and October enjoy a higher number of travelers than on average. “We predict that Brazilians are going to be keen to travel, to take advantage of the ski season,” he says. “The favorable exchange rates in Argentina. Chile and Uruguay make them very attractive tourist destinations as well.”

And, Fagundes says, “Travelers want to experience each minute of the trip, including buying in our stores, with spend per passenger showing an increase in the large majority of our stores. The omni-channel experience is a very strong trend as well; our websites and apps are being accessed more frequently and by a larger number of passengers day after day. Reserve & Collect and our Home Delivery service from store both feature in the purchasing process of a relevant percentage of our shoppers.”

Business development

The border stores channel was strongly impacted during the COVID crisis, as the land borders of Brazil were closed for an extended period. Now that the land border is fully open, Dufry will be undertaking significant development of its land border stores during the coming year, according to Fagundes. “We expect to refurbish the Uruguaiana operation in the near future. In the meantime, we continue to evaluate possible opportunities to expand.”

The expansion of Dufry’s land border footprint echoes its expansion overall. “We have continued to develop the business and contribute to its ongoing resilience by successfully winning several attractive new concessions and expanding important contracts across all regions of the Americas in 2022,” says Fagundes. “We opened a duty paid operation including Dufry Shopping and Hudson in Terminal 1 in Guarulhos Airport, enlarged our Hudson Operation in Riogaleão airport, expanded the Dufry Shopping footprint in Salvador Bahia airport and also started the duty free and duty paid operations there, we expanded the duty free and duty paid business in Recife International airport, and signed a contract with Vitória airport to open a duty paid store in the first half of 2023.”

Dufry’s expanding channels

Airport stores might form the foundation of Dufry’s business, but the company has made no secret of its strategy to diversify. “We will continue to assess opportunities and further evolve our diversification strategy,” says Fagundes. “This will include considering organic growth as well as any other opportunities which can strategically enhance our footprint and shop portfolio in the region.”

He states that the company offers increased value and attractiveness as a partner with its enhanced service portfolio with respect to F&B, hybrid concepts and an extended array of services to best manage the airports’ commercial spaces. “Consequently, our main focus of diversification is to develop the F&B business in the country as Autogrill is not present here and we see a huge potential in this field. It is very motivating to develop a green field business with so many synergies with our actual operation,” he states.

The company is committed to maximizing any relevant opportunities to deliver, be it on cruise ships, in airports or train stations, in border stores or wherever else people travel, says Fagundes: “Looking forward, when it comes to the travel experience – be it by land, sea or air – customers continue to seek great shopping experiences, as well as exclusive products and novelties and first-class customer service.”

ASUTIL Conference

As the current President of ASUTIL and one who has taken part in many of the association’s events from year to year, Fagundes says it is very rewarding to see the ASUTIL Conference coming back so strongly. “The confirmations are above our forecast, and the level of the keynote speakers is outstanding,” he says. “I am sure the attendees are going to be very pleased with the content of the conference, the value of the social interaction with the most relevant players within the industry, and the amount of business opportunities it will generate. The decision to host it in Buenos Aires was perfect, not just because the beauty of the city itself, but because the country of Argentina is performing well.”

Whether at an airport, land border store or a seaport, as here at La Romana, Dominican Republic, Dufry is committed to providing the great shopping experiences that customers seek

BRICK

and mortar

by HIBAH NOOR

Pleasantly surprised is how you might describe the reaction of Nuno Amaral, Chief Operations and Business Development Officer at ARI, to the company’s sales in 2023. “We’ve bounced back very, very strongly. People were eager to travel. There is plenty of pent-up demand for traveling, and for consumption at airports as well, so our spends are above 2019 in many parts of the world,” he says.

Of course, the pace of recovery is not the same from one city or country to another, but Amaral says that overall,

recovery is leaps ahead of what was forecast in 2020 or 2021. And that recovery began to show its head back in summer of 2022, when numbers in Europe were similar to those of 2019. This year’s numbers are already surpassing 2019’s. “It has been an amazing bounce back. I think we're blessed because we are not seeing the negative effects of inflation as an industry. Recovery is posting solid growth and our numbers are very well forward.”

Standout locations

While Amaral says he has a fondness for all locations, a few places around the world currently stand out from the rest, because they’re new or because they were renewed during COVID. “We have an impressive operation in Bahrain. We are doing very well at the airport’s new terminal,” he says. “We had a major refurbishment in Cyprus, and we have a very good operation in Portugal, where we took over last year in the summer. It has been turning very solid numbers and the team is great. Delhi as well — we are doing very well in India.”

Larnaca International Airport in Cyprus went through a massive refurbishment. “In collaboration with the airport and with the F&B operator, the whole

terminal was reconfigured, including retail and F&B, so the whole passenger journey changed inside the terminal. The passenger journey has been enhanced. It is much better now and we are seeing the results of that. We have an amazing offer there, and a very strong sense of place, as well. This refurbishment was completed during COVID. With all the challenges we faced, and since we've opened or reopened in phases, we have seen very strong spend growth in sales. We are very happy with it.”

In Canada, ARI saw a slower recovery, but things have picked up greatly since the border restrictions have been loosened.

“Our Canadian business recovered at a slower rate because border restrictions stayed in place later than in other places. That being said, we still have higher sales in 2023 compared to 2019, despite the lack of Chinese passengers, who are important to us. With levels already slightly above 2019 even without Chinese travelers, we hope to be in a very strong position when they return.”

The three pillars

If anything positive came out of the pandemic, it was a global recognition of sustainability. ARI launched its own substan-

Among ARI’s line-up of stores, the one in Bahrain International Airport’s new terminal is performing well

People may say retail is dying, but in TR the footprint is growing. In a year when recovery is supposed to be still glimmering on the horizon, in many locations numbers are beyond 2019’s. ARI’s Nuno Amaral tells us he sees a very bright future indeed

Nuno Amaral, Chief Operations and Business Development Officer at ARI

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tial ESG strategy in 2021. “Our strategy is based on the UN sustainable development goals,” says Amaral. “We picked five of them that we thought were appropriate to our business and then, following on from those five objectives/goals, we decided as a company we need to be relevant to partners, to airports, suppliers, to colleagues, to society and to the environment. So we came up with a strategy encompassing all of these. Our strategy has three pillars, ‘The 3 P’s’: the people, the planet and the product. In each of these three pillars, we have internal commitments and objectives and external commitments.”

Amaral explains that for the “People” pillar, internally the focus is on wellbeing, equity, diversity and inclusion. “How can we as a company be relevant and support all our teams around the world in terms of well-being? The framework is how our people enjoy work and then how they strive after work.” Externally, he says, the company looks at what it is able to do within communities, and which CSR activities it will take part in.

The company’s “Planet” pillar is about reducing consumption, working with airports in terms of design and build, and coming up with more sustainable propositions.

“And then in product, it is all around what we sell,” says Amaral. “Externally, it is working with suppliers, including small suppliers, to help them develop and promote their products in our shops. Mainly we are talking about local souvenirs and local food suppliers that are relatively small. We try to showcase them

in our shops and help them succeed. This is particularly important in strong food markets like Cyprus or Portugal. Small local players with local products that we collaborate with to develop those ranges.”

Amaral says the company has achieved a lot since beginning this strategy in 2021, though they are not yet where they would like to be. “There is a constant conflict between moving in the right direction and being cost-conscious or profitconscious, and obviously we launched the strategy during the pandemic when survival was the goal. So should this really be the focus, we asked ourselves? But we thought it was the right time to do it and start having everyone moving in the right direction and we are very happy with the progress that we have made.”

Bidding and ESG

When ARI bids for new businesses, they make sure to come in with a clear ESG strategy, he says. “Airports are valuing this strategy as part of their criteria for selection of partners. It’s very important that we have a structured approach, and we have a strategy and we demonstrate commitment. We are not a listed company as such, so we don’t publish a sustainability report like some companies do, but we do have KPIs and we do show progress, and we sit down with airports and show them what we are doing.”

According to Amaral, ARI is seeing that this approach is being valued in its proposals. “Companies need to be more aware of this now in terms of attracting talent,” he says. “Young people come in

with questions on these themes that are very relevant for younger generations, so we are mindful of the positive impact we can have on them.”

Working with suppliers

The company has a supplier code of conduct, a set of values that Amaral says are “relatively straightforward, and the vast majority of the time they are very aligned with the suppliers’ own code of contact so it’is not a difficult discussion.” But given ARI’s sustainability strategy, the retailer now also works with suppliers to reduce carbon footprint. The retailer asks what suppliers are offering for sustainability products, and tries to work together to facilitate a more sustainable offer.

“Now, the suppliers have a huge say in this because obviously they are the ones who need to drive packaging; they need to drive the sustainable product. We can’t change the packaging for the supplier — we can only recommend, and they are accurately aware of this. Many suppliers are doing some very good work on that front, trying also to eliminate or reduce carbon footprint,” Amaral says.

“We also launched a campaign last year where we work specifically with certain sets of suppliers. In our shops we created some promotional areas and we developed the whole campaign around our ESG proposition, which is more consumer facing. It was called ‘Little changes, big differences.’ It was very well received and in fact has now become a permanent fixture in many stores. We also did an integrated campaign involving social media, focusing on this. With little changes you might be able to make big differences.”

Future so bright

Amaral is very optimistic for the future.

“I think we are in a good place as an industry. We need to be grateful for our sweet spot as bricks and mortar retailers. We are the one type of bricks and mortar retail that is growing. They say traditional retail is dying because you buy everything online, but we are not [dying], and I think that is positive. We are in a growth industry; we are seeing very strong numbers. Recovery has been very good. When you go back to the beginning of COVID and people were saying that travel would never recover, well here we are three years on. We are resilient. We got through it very well and we are much stronger.”

Larnaca International Airport in Cyprus went through a massive refurbishment which changed the whole passenger journey

Leading in LATAM

For Enrique Urioste, new Dufry President and CEO, Latin America (LATAM), the recovery of the industry in LATAM could not have come at a better time.

Urioste is part of the global travel retail superpower’s new 10-strong Global Executive Committee led by CEO Xavier Rossinyol. He is charged with the task of leading the implementation of the company’s Destination 2027 strategy in Latin America and the Caribbean. The aim of the company-wide strategy is to enhance passengers’ experience during their entire journey.

by HIBAH NOOR

He tells Global Travel Retail Magazine, “My main responsibility will be to deliver the best retail practices by focusing on customer centricity, thereby allowing our operations to maximize organic growth. I must also look for new business opportunities.”

Currently living in Miami, where he has resided since 2007, the well-respected Urioste adds, “Other key points will be to introduce food and beverage [across the industry] in the region and create synergies across duty free, duty paid and food and beverage. All this needs to be achieved while ensuring our key values such as Environmental, Social and Governance engagement are implemented across all our operations.”

LATAM recovery

On the recovery in LATAM, it clearly seems to be gathering pace. Dufry boasts a strong presence across the region in countries such as Brazil, Argentina, Colombia and Ecuador and is reaping the rewards.

Dufry said that the rebound in the Americas at the beginning of 2022 was mainly driven by a continuous increase in domestic flights in the US and intra-regional touristic travel to Mexico, Central America, the Caribbean Islands and the Dominican Republic.

New Dufry Group President and CEO Latin America, Enrique Urioste, will be responsible for seeking new business opportunities while trying to create synergies across the duty free, duty paid and food and beverage sectors in the region

Enrique Urioste, Dufry President and CEO, Latin America

Last year, Dufry signed a new concession contract at Recife International Airport in Brazil where this combined Dufry and Hudson store is located

Transatlantic travel and South American destinations began trending upwards, especially in Argentina, Colombia and Ecuador in the third quarter. The wider region has also followed more recently.

Benefitting from more favorable travel environments, the Americas performed strongly for Dufry last year. According to the company’s 2022 Annual Report, which was released in March, the Americas reported a turnover of CHF2,918.3 million (US$3,183.8 million) versus CHF1,728.5 million (US$1,885.7 million) the previous year. This equates to an organic growth of 62.7% versus 2021.

The company’s South American locations made significant progress in 2022, particularly in Mexico, where Dufry signed a new concession contract at Felipe Ángeles International Airport in Santa Lucia. Operations in Dominican Republic and Argentina also performed particularly well.

Elsewhere, the retailer, which is engaging with LATAM airports on combined travel retail and food and beverage offerings, signed a new concession contract at Recife International Airport in Brazil.

Urioste, who describes the recovery as ‘solid,’ remarks, “LATAM and the Caribbean have always been very strong for

A Dufry-operated Rumbar concept at Las Americas International Airport in Santo Domingo, Dominican Republic

Dufry Group is strongly represented at Guarulhos International Airport in São Paulo, where it runs a Mind.Body.Soul. shop-in-shop concept

the duty free industry, therefore our key focus is to continue growing and expanding through the different channels. Some countries have already achieved full recovery and others are on the right track.”

In terms of overall business, the Caribbean and Mexico, for example, have benefitted from strong US and Canadian traffic. “Other countries like Argentina have been positively impacted by different economic factors,” he says, “but in all cases, we are benefitting from excellent retail prices, good stock quantities and fantastic promotions.”

People also seem to be in a more indulgent mode postpandemic, according to Urioste. “They are more open to buying and [open] to different experiences. The training programs and special actions we implemented across the region played a key role and generated the expected results.”

High air ticket prices

Amid the apparent positivity, it is important to point out that the region is still missing some of its pre-COVID-19 routes. The cost of air tickets and availability of connections remain a concern.

“Prices of hotels and car rentals are another challenge. These cost increases compete with the disposable income customers must spend in our shops. This is why it is key for us to continue providing an excellent customer experience.”

Excitement may be building over the prospects of the LATAM duty free and travel retail industry, but it is also ramping up

ahead of the upcoming Asociación Sudamericana de Tiendas Libres (ASUTIL) Conference in Buenos Aires, running June 7 to 8.

Registration is open for ASUTIL 2023, which takes place at the Hilton Hotel in Puerto Madero. ASUTIL is returning as a face-to-face event for the first time since 2017.

Beginning on Wednesday, June 7 with three conference sessions between 09:00 and 12:30, the first day will include a lunch, networking session and cocktail night at the Hilton sponsored by Colonia Express.

Day two (Thursday, June 8), will begin with a networking session in the morning, followed by lunch. In the afternoon there will be four conference sessions between 14:30 and 18:30.

The conference will close with a Gala Dinner and party sponsored by Interbaires and on Friday, June 9, attendees can take part in a full day of social activities and excursions, also sponsored by Colonia Express.

Urioste, who also holds the role of ASUTIL Vice-President, will be part of a strong speaker line-up in Buenos Aires. He comments, “ASUTIL was born with a very specific mission to promote and protect the duty free industry. Since it was created, we have integrated all types of channels (airport, ferry and border) and suppliers.

“We provide economic and political reports to our members on a regular basis to help them better understand the region. In addition, we have a proven track record of very successful lobbying campaigns.”

Los Cabos International Airport in Mexico boasts an impressive Dufry perfumes and cosmetics offer

Wine connoisseurs will no doubt find what they are looking for at this Decanted hybrid wine shop at Dallas Fort Worth International Airport

Huge potential for LATAM

by JANE HOBSON

Gray, Managing Director, Penta Group.

In his presentation, Letocart discussed Lagardère Travel Retail’s "quick growth in Latin America," reminding the audience that the region has seen the strongest traffic recovery of any so far, plus a highlight of the retailer’s plans for the year ahead.

Letocart told the audience, "Recovery is here. There is huge potential for Latin America."

LATAM expansion

Aelia Duty Free stores at Jorge Chávez International Airport (LIM) in Lima in late January 2022. The stores serve both Departures and Arrivals and are part of the retailer’s profit-sharing model, which it announced with Lima Airport Partners (LAP) in the summer of 2021.

At this year’s Summit of the Americas, Cyril Letocart, CEO, Lagardère Travel Retail Peru, shared an engaging update from the retailer with an audience of about 80 attendees during the Regional Recovery, Global Context education session.

The session, moderated by Tax Free World Association (TFWA) Managing Director John Rimmer, focused on the regional challenges and opportunities facing the Americas duty free and travel retail industry and global issues that impact the region. The panel of speakers included Letocart, as well as Tania Lee, Vice President of Sales, Blue Water Bridge Duty Free, and President, Frontier Duty Free Association (FDFA); Barbara Barrett, Executive Director, FDFA; and Cameron

Lagardère Travel Retail had openings in two countries during COVID: Peru and Chile. To underscore the rapid growth of the retailer in these countries, there were only 10 employees in September 2021, but by the end of 2022, there were a total of 400 employees in Peru and Chile. There are now 13 shops and restaurants, and more than 4,000 square meters of duty free and F&B units.

Recalling his travel through the thick of the pandemic, Letocart shared that he spent more than 60 days in hotel stays due to restrictions during contract negotiations and as the stores were opening.

Openings in Peru

Despite the challenges, Lagardère Travel Retail announced the opening of three

The partners signed a long-term, 13-year concession contract for duty free brand Aelia based on profits sharing, a model that came into sharp focus between retailers and airport landlords during the pandemic. The model aims to better balance risks and benefits between the airport and retail operator, to maximize sales potential and to introduce greater balance and new opportunities in the way risks and benefits are shared between parties.

The Aelia Duty Free stores offer all core duty free categories, plus travel accessories, souvenirs and snacks.

In the 2022 press release on the opening, Letocart said, “It has been a great challenge to start operations in just a few months and we are so happy to finally be open to passengers traveling to and from Lima. We are very grateful to our partners at LAP for such a fruitful collaboration and for their support. Our mutual understanding and shared vision delivered value

Fantastico Peru at Jorge Chavez International Airport in Lima

Cyril Letocart, CEO, Lagardère Travel Retail Peru, shares an engaging update from the retailer, highlighting quick growth in Latin America

Cyril Letocart, CEO, Lagardère Travel Retail Peru

far beyond the terms of our contract. We opened our office in Lima four months ago with four staff and we have built a dynamic team of 120 staff ready to provide the highest standards of customer service to passengers. Our focus for the coming months will be to enhance the customer experience and bring the best of Peru to Lima Airport.”

First F&B operations in Chile

Meanwhile, Lagardère Travel Retail, in partnership with Chilean company Global Group Corporation (GGCorp), announced the opening five foodservice outlets at Arturo-Merino Benítez International Airport in Santiago de Chile in March 2022. The food concepts are located at the new international terminal, ideal for travelers who need a meal or quick bite, marking the first F&B operations for Lagardère Travel Retail in Chile.

“The openings have been managed under the very challenging circumstances of the global pandemic and Lagardère Travel Retail is proud to be able to be creating over 380 new jobs locally by 2023 to play a part in the country’s recovery,” said the company in the press release.

During the Summit presentation, Letocart said in the pipeline for 2023 are

12 more F&B units at Chile when the remodeling of the existing terminal is completed, plus 4,000 square meters of additional duty free and duty paid shops in Lima international Airport's new terminal, to come by 2025.

Celebrating one year at LIM

Reflecting on the takeover of duty free operations at LIM a year later, Lagardère Travel Retail said in a January 2023 press release that it brought “significant developments into the stores.” These include a new payment area aligned to the Aelia Duty Free concept, a space dedicated to chocolate with a treats tree inspired by the iconic Peruvian Yunza tree, and a modern sense of place development to reflect the uniqueness of Peruvian culture.

And to mark the first anniversary of the operations, Lagardère Travel Retail Peru unveiled the ‘Fantastico Peru’ concept in January.

Hosted at the revamped 250-squaremeter space, the labeling is entirely designed around local authenticity. If offers travelers an immersive experience into what the best of Peruvian culture has to offer, including local brands and producers.

The product selection offers beverages,

gourmet foods, souvenirs, textiles and cosmetics, plus a large assortment of the regional spirit Pisco. The range includes the exclusive pisco ‘Parras Centenarias’ by Demonio de Tacama, as well as gin, vodka, beers, and the recently awarded “Black Whiskey” from Don Michael Andean Distillery. To enhance travelers’ feeling of being immersed in Peruvian culture, animations were developed for the store including a distillery bar and stands to dispay local art and products. A new space is also dedicated to chocolate to give tablets and pralines better exposure and allow customers to choose their favorites “chocotejas,” a truffled chocolate typical from Peru, in a pick and mix space.

Fantastico Peru also features a space dedicated to healthy foods, where travelers can find 100% locally sourced glutenand sugar-free products as well as superfoods. Lagardère Travel Retail said this innovative space breaks the traditional duty free offering and promotes the idea that people can access healthy options even on a journey.

In the press release about Fantastico Peru, Letocart commented, “We are very proud to be unveiling this new concept, which brings together the best of what the Peruvian culture, gastronomy and artisans have to offer. It is a new step towards creating different duty free experiences for travelers, focused on local authenticity. To materialize this ambition we have worked hand in hand with our partners at Lima Airport Partners, who share the same vision and values. And we must all recognize this has been quite an achievement given the sizeable challenges we have faced along the way, from juggling with multiple technical and suppliers’ constraints in a still-feverish logistic environment to managing the continued impact of the sanitary crisis."

Some challenges ahead

At the end of his Summit presentation, Letocart said that despite expanding in the region since the pandemic, the retailer still faces some issues in LATAM, most with themes surrounding customs, politics and confectionery labelling rules. But he highlighted the factors working in its favor, such as good GDP, low inflation and the return of tourism.

Lagardère Travel Retail, in partnership with Chilean company Global Group Corporation (GGCorp) opened five foodservice outlets at Arturo-Merino-Benítez International Airport in Santiago de Chile in March 2022

The ribbon cutting ceremony of the official inauguration of ‘Fantastico Peru,’ in January 2023 was attended by Cyril Letocart, CEO, Lagardère Travel Retail Peru (left), representatives from the French and German embassies and by delegates from the German and Lima Chambers of Commerce

Spirit of Commitment

In

by JANE HOBSON

Director Global Travel

Brown-Forman kicked off 2023 delivering several pieces of good news. Among them regional leadership appointments for its GTR business, strong yearto-date net sales growth and its second consecutive year being named one of the World’s Most Ethical Companies by Ethisphere.

In this interview Global Travel Retail Magazine (GTR Magazine) speaks with Brown-Forman’s VP, Managing Director Global Travel Retail David Rodiek on these achievements and what is to come in the year ahead.

Regional GTR leadership appointments

A new structure for Brown-Forman’s GTR organization was unveiled in February

with two new appointments and a focus on three geographic areas: Americas; EMEAI (Europe, Middle East, Africa, India); and APAC (Asia, Australia, New Zealand, Pacific Islands).

Rodiek says the aim is to simplify the GTR business structure by consolidating it into three geographies, which will better position the company for future growth.

The GTR Director, EMEAI, the second strongest travel retail region for BrownForman, is now Oscar Camargo, who previously held the position of Director GTR Europe. Camargo has been part of the Brown-Forman GTR team for more than five years.

Dreamy Zhou, who joined BrownForman seven years ago, is the Senior Manager GTR APAC. Zhou previously served as Manager GTR Southeast Asia,

Australia & New Zealand.

The role of GTR Director, Americas, the strongest travel retail region for Brown-Forman, is currently vacant. The previous VP, Director GTR Americas, APAC, and IMENA, Montgomery E. Wilson, retired at the end of last year.

Taking this opportunity to “recalibrate,” Rodiek says the company was guided by prioritizing growth, driving efficiency, encouraging agility and providing talent and capability development opportunities.

Rodiek says Camargo brings a wealth of knowledge across super premium spirits including single malts. The company has enlarged his footprint from exclusively Europe to include the Middle East, Africa and India to focus on growth in these regions.

this interview David Rodiek, VP, Managing

Retail Brown-Forman, says the company is focused on growth in Americas, EMEAI and APAC in the year ahead with new leadership appointments, and plans to push on as a multi-portfolio player

David Rodiek, VP, Managing Director Global Travel Retail Brown-Forman

Dreamy Zhou, Senior Manager GTR APAC

Oscar Camargo, GTR Director, EMEAI

The Brown-Forman portfolio

There will also be a clear focus on the Americas with a new Director for GTR Americas based in South Florida (Miami or Fort Lauderdale area), which represents an ideal location for the GTR business across the Americas and good access to Latin America.

Meanwhile, based in Singapore, Zhou will lead business in Asia Pacific, which Rodiek notes as a somewhat newer exploration for Brown-Forman. He says Asian and Chinese travelers and their emerging middle class with disposable income will be important target demographics in the year ahead.

“We believe that we have a wonderful multi-category and super premium portfolio, especially with our super premium whiskeys including Jack Daniel’s Single Barrel and Woodford Reserve, our Single Malt scotches and the recent two acquisitions Gin Mare and Diplomático rum.”

Growth in the channel

Brown-Forman Corporation celebrated strong year-to-date net sales in its third quarter, which ended January 31. The travel retail channel sustained strong growth with a reported net sales increase of 48% (+52% organic) compared to the same prior-year period, driven by higher volumes across much of the portfolio as travel continued to rebound.

“The Brown-Forman team is doing a tremendous job. We certainly believe that there are bright opportunities ahead for the industry, but also for Brown-Forman to grow its portfolio looking at Asia Pacific. We have done a lot of work to become a multi-portfolio player,” Rodiek tells GTR Magazine.

Brown-Forman Corporation references broad-based reported net sales growth across all geography clusters, with

the travel retail channel driven by strong demand and the continued rebuilding of distributor inventories.

Rodiek says EMEAI has been a key performing region for the GTR portfolio, with Jack Daniel’s Tennessee Whiskey and single malts, as well as gin, such as Mediterranean brand Gin Mare (popular in southern Europe), doing well.

“We have high expectations for GTR to be a key driver for Brown-Forman, both in terms of geographies but also from a super-premium footprint.”

The healthy return of travel in the Americas has also contributed to growth, especially with record bookings in the cruise channel that started in January, Rodiek says.

The focus will continue to be on its flagship Jack Daniel’s, as well as American super premium whiskey and single malt scotches.

Rodiek says Brown-Forman is very confident about the future.

“I know that there's been lots of discussions around recession, but we truly don’t see such a big threat and such a big cloud on the horizon. We see that people are still looking into super premium brands. The luxury market focus is still on premiumization. Playing with a bigger portfolio now and having better structure to highlight it and a better focus on three regions, we will be better and do better.”

World’s Most Ethical

In March, Brown-Forman announced that it has been recognized by Ethisphere, a global leader in defining and advancing the standards of ethical business practices, as one of the 2023 World’s Most Ethical Companies. This marks the second year in a row that the company has received the recognition.

On this accomplishment, Rodiek says as a multi-generational business, the company is guided by three major values linked to ethical behavior: integrity, trust and respect.

“We talk not only about the work and the what but how we do things in the company. We dedicate ourselves to our ESG efforts by living a spirit of commitment every day. Our commitment is held up by a history over 150 years deep and puts our values into action. It focuses on the areas of Alcohol Responsibility, Environmental Sustainability, D&I and Community Relations,” Rodiek says. Brown-Forman believes that having a diverse workforce will help the company move forward with more perspectives and achieve better overall results.

Brown-Forman announced the completion of the purchase of Gin Mare brands in November 2022

Summary of the Summit

by LAURA SHIRK

GTR Magazine’s coverage of Summit of the Americas 2023; the association welcomed 1,178 attendees to West Palm Beach in April

Global Travel Retail Magazine (GTR Magazine) traveled to West Palm Beach, Florida, in April to attend Summit of the Americas 2023 and report live at the conference. As shared by Michael Payne, President & CEO, IAADFS, at the closing press conference, the association welcomed 1,178 attendees, a 34% increase compared to last year’s 878 attendees.

Payne also noted 389 buyers (vs. 269 in 2022), including both members and non-members, made up 33% of total attendees and called this 45% increase in buyers compared to 2022 an “important ratio” for exhibitors. According to him, 77 exhibitors attended the four-day event (vs. 45 in 2022), a 71% increase. There was an uptick in Canadian and South American attendees, as well as Caribbean and Latin American buyers.

Satisfied with the numbers, Payne said the association received positive feedback about the conference including praise for the exhibit hall and meeting space. IAADFS will host the Summit at Palm

Beach County Convention Center again next year April 14 – 17. While there is no official contract, it is holding space for 2025. The location and dates are still to be confirmed.

Conference highlights

Women in Travel Retail kicked off the trade show by hosting an informal networking event where the group announced it would be adding a plus sign to its name and logo (WiTR+) to signal a more inclusive approach. This move will allow non-member guests of other genders to join select meetings, seminars and events organized by the association.

Following welcoming comments from Rene Riedi, Chairman, IAADFS, and a keynote address by Scott Miller, Senior Advisor on Thought Leadership at FranklinCovey, day one’s Airports –Critical Partners for Duty Free and Travel Retail session discussed how airports are an essential component of a profitable and user-friendly travel retail business sector. Speakers Kevin Burke, President, Airports

Council International – North America, and Rafael Echevarne, Director General, Airports Council International – Latin America and the Caribbean, covered the significance of reducing dwell time to create a less stressful and more seamless airport experience, which could ultimately lead to more time shopping. One

IAADFS welcomed

1,178 attendees to Summit of the Americas this year

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major development factoring into reducing dwell time is updated security check technology that scans laptops without the need to remove from carry-on baggage.

Day two’s Regional Recovery, Global Context session, focused on the regional challenges and opportunities facing the Americas duty free and travel retail industry, plus global issues that impact the region and the importance of advocacy work. The panel of speakers consisted of Tania Lee, Vice President of Sales, Blue Water Bridge Duty Free, and President, Frontier Duty Free Association (FDFA), FDFA Executive Director, Barbara Barrett, Lagardère Travel Retail Peru CEO, Cyril Letocart, and Penta Group Managing Director, Cameron Gray.

Barrett’s sharing of FDFA’s “Canadian story” served as a highlight of this session. FDFA formed alliances with larger tourism associations to advocate for the reopening of the Canada-U.S. land borders, which led to the passing of Bill C-2 through the creation of the Coalition of the Hardest Hit Businesses. Bill C-2 specifically named land border duty free stores as one of 20 industry groups to qualify for government support measures. Also worth noting, Letocart’s discussion on Lagardère Travel Retail’s “quick growth in Latin America” and reminder that the region has the strongest traffic recovery. During the pandemic, the retailer opened in Peru and Chile. By the end of 2022, there were a total of 400

employees in the two countries. There are now 13 shops and restaurants and over 4,000 square meters of duty free and F&B units. In the pipeline for 2023 are 12 F&B units in Chile, plus 4,000 square meters of additional duty free and duty free paid shops at Lima International Airport’s new terminal scheduled to open by 2025.

Exhibition clips and snaps

Southern Glazer’s Wine & Spirits has acquired WEBB Banks. The agreement, which was publicized at the show, will expand the distributor’s presence in the Atlantic and travel retail and strengthen its logistical capabilities to deliver products more efficiently to complex markets in the region.

Rene Riedi, Chairman, IAADFS

Women in Travel Retail hosted an informal networking event at the show

As part of its valued partnership with Otis McAllister and the food specialist’s exhibition, Ritter Sport showcased its latest range of travel retail exclusive products. Brand new to the U.S. travel retail market is Ritter Sport’s Mini Tower new flavor mix.

Promoting its mission to bring the art of gifting to life, Lindt Global Travel Retail treated attendees to a variety of samples. The brand has created travel retail exclusive products for gifting in 2023 including its LINDOR Gift Box (287 grams), with the personalized message “FOR YOU,” wrapped in lace embossed-packaging and adorned with a golden bow.

Hershey introduced two new products to its travel retail portfolio at this year’s Summit of the Americas: Reese’s Peanut Butter Cup THiNS in both Milk and White Chocolate, which are 40% thinner than regular Reese’s, with portions containing on average around 40 fewer calories.

Nestlé International Travel Retail presented five focus brands and its ambition to build food into travel retail’s number one category. Alongside core ranges across the key brands, new products on display included new Pistachio and Lotus Biscuit flavors for KitKat Senses Mini Moments; a four-flavor KitKat Mix Sharing Bag and updated flavors (Peanut Butter, Milk and White) in its KitKat Chunky Mix Gift Pack.

Tito’s Handmake Vodka shared news that it has secured a number of new listings in the channel; this includes a listing with Air Canada, as well as Munich, Tokyo and Bangkok.

FlyWithWine highlighted two of its travel solutions for wine and spirits lovers: VinGardeValise Classic and VinXplorer Beverage Backpack. The VinGardeValise Collection is the brand’s flagship line of wine and spirits travel luggage; this product line was a first of its kind when introduced to the market in 2016. Launched late last year, the latter is a multi-functional bag that accommodates up to three liters.

Latin Gin described its timeless gin as true to the Latin way of life. The budding brand is new to duty free and has already earned interest from multiple retailers in the channel. Both its range and packaging attract those interested in finding fresh, flavorful and fun spirits.