Travel drives tax-free sales recovery

Wine and spirits travel retail sales have surged back into double-digit growth since the global economic crisis.

Speaking to the drinks business last week, Erik Juul-Mortensen, president of the Tax-Free World Association (TFWA), described sales of alcoholic drinks in the sector as “strong”, but reminded that the current increases must be viewed in contrast to the troubled 2008-2009 period.

“The first half of 2011 was very good and wine and spirits saw some of the biggest increases of all categories, but that has been on the back of two difficult years.”

Mortensen said that the sector accounted for US$6.5 billion, (16.6% of the total sales in global travel retail), and was showing a 10.3% rise over 2009.

He ascribed this to an increase in international travel, and while passenger numbers had stabilised during 2008 and 2009 at 4.8bn, Mortensen recorded a 6% increase in travellers during 2010, taking the global total to over 5bn, for the first time.

Over the longer term, he pointed out that sales of wines and spirits had also risen due to improved retailing by airport operators and innovations by brand owners.

However, he stressed that despite the important opportunities for eye-catching point of sale, limited edition labels and product sampling in the airport shopping environment, it is price and value that are among the most important factors for sales success in travel retail.

“While you see that the successful brands are those that have taken travel retail seriously with exclusives and ensuring there is theatre based around the whole travel experience, if there’s one thing we keep forgetting it’s that price is still a very dominant parameter in all of this – we talk a lot about innovation, but you need to make sure the value is always there,” he stated.

For a full preview of the travel retail sector and a preview of the TFWA World Exhibition see next month’s edition of the drinks business