Wine and Spirits Sector Holds Own as Growth Slows in Duty Free and Travel Retail

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Wine and Spirits Sector Holds Own as Growth Slows in Duty Free and Travel Retail

Wine and Spirits Sector Holds Own as Growth Slows in Duty Free and Travel Retail
May 23
10:03 2016

At the 21st TFWA Asia Pacific Exhibition & Conference which took place in Singapore recently, the latest data from two of the industry’s leading research organisations suggested that the wine and spirits sector has much reason for optimism.

TFWA president Erik Juul-Mortensen unveiled new data from travel retail specialists Generation Research which showed that in 2015, for the first time since 2009, global duty free and travel retail sales fell. According to preliminary figures, sales in 2015 totalled US$62 billion, which was 2.3% down on the previous year.

Sales had fallen in all categories except for fragrances and cosmetics, which grew by 2.3%. However, wine and spirits sales fell by 2.7%, making it a relatively strong performer against other categories, such as confectionery and fine food, which saw a 4% downturn, and watches and jewellery which declined by an even more dramatic 13.2%. Moreover, with sales valued at US$10.2 billion in global duty free and travel retail, it is still the second largest category, accounting for 16.5% of sales behind only fragrances and cosmetics which saw sales of US$19.5 billion last year and takes 31.5% of all sales. In Asia Pacific, sales of wine and spirits remained almost level (declining by a negligible 0.1%) at a significant US$3.3 billion.

And there remains room for growth. In the burgeoning off-airport duty free sector, for example, there is considerable scope for expansion. Duty free shopping away from the roar of the jet engine is a phenomenon that is growing at a spectacular rate, and, according to new data from specialist research organisation m1nd-set, now accounts for an impressive 44.6% of duty free sales in Asia Pacific. While sales of fragrances and cosmetics account for a substantial 40% of sales, and the next largest category is fashion and accessories, accounting for 17% of sales, wine and spirits lags behind, representing only 13% of sales. This means that there could be considerable potential to expand in this fast-growing new sector.

In one of the conference workshops, Peter Mohn of mind-set, who is author of a recent report on downtown duty free shoppers in Asia, stated that the appeal of this channel to shoppers was not what one might expect. The first benefits of shopping at downtown duty free compared to the airport was convenience alongside good use of time, which were both cited by 43% of those surveyed. The second and third reasons for choosing to shop downtown were the presence of leading brands and the wide choice, which appealed to 27% and 26% respectively. Attractive prices were however named as an advantage by only 25%, meaning that the quest for a bargain is not central to the proposition.

Commenting on the findings Juul-Mortensen said: “It is clear that while there are a number of challenges facing the duty free and travel retail sector, the wine and spirits category has not been as affected as some, and there are no shortage of opportunities to be had in this important channel.”

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