Funnel Vision

Some companies have said they are "encouraged" by how well volumes are holding up, others talk of the trade taking a "new form".

Perhaps the most particular travel retail market is that of the Nordic ferries.  An industry spawned by a combination of alcohol-loving populations and punitive domestic duties designed to keep their consumption in check, it has been a big factor in many spirits’ overall strategy for years.

Consumers would buy duty-free on the ferry and/or duty-paid at the cheaper port of destination, frequently Tallin in Estonia.  The altered political reality, however, has changed all this.  The Baltic states are now EU member states, so no longer viable for duty-free sales, while the decisions by Finland and Denmark to halve their alcohol duty have lessened the impetus to travel to buy booze.

And with the distorting effect of sky-high duty stripped out, the new prices have started to affect consumption habits.  "It works in favour of vodka and white spirits," says Jaana Heino, liquor product manager for ferry company Silja Line.

"The retail price for them has gone down by a third, and it’s easier to invest €15-20 on a bottle of white spirit than €35-40 on a bottle of Cognac."  No longer able to massively undercut the local land-based monopolies, the ferries have had to learn from their airport cousins.

They have looked to give more "value-added" with exclusive lines, new packaging, information material, etc.  Though Silja Line has also cut it’s prices (20-50% less than the shops, according to Heino) to give it a financial advantage as well.

Nonetheless, these are nervous times on the high seas, with uncertainty among the ferry operators about how to react, and apprehension among suppliers as a result. 

Tallink ferry company has responded to the new reality by increasing its number of crossings from Stockholm to Tallinn, while Silja Line has cut its numbers of listings, preferring to work with the bigger producers who are able to offer POS material and promotional support.

Some companies have said they are "encouraged" by how well volumes are holding up, others talk of the trade taking a "new form".

Uncertainty is the watch word, but, much like intra-EU travel retail did following the end of duty-free, there’s a feeling that it will sort itself out inside the next couple of years.

"Finns will still buy while they’re travelling because it’s something they’ve always done," says Saana Ruohella, Brown Forman’s regional manager for northern Europe.  

"The attraction is can they buy something different or at a better price? I’ve not felt the buyers are reckoning on reduced sales."

Codorniú’s Claudia Philippi is similarly confident. "Norwegians travel to Sweden, Swedes travel to Finland and Finns travel to Estonia," she says.  "Estonia might be in the EU now, but it’s still cheaper and, now there’s no limit, it will be very attractive to the Finns.

You can buy 90 litres of wine and 120 litres of beer per trip.  We’ve been talking to the ferry operators to see what we can do to make their life easier."