Wine volumes being stifled in travel retail

It’s not worth investing in more staff training to try to improve volume sales of wine in travel retail, a prominent duty free purchaser has said.

Saba Tahir of Dubai Duty Free (Photo: DDF)

Saba Tahir, vice president for purchasing at Dubai Duty Free, said that the complicated nature of the wine category means that it receives less attention from retailers than spirits.

“Travel retail operators [would] need to invest in training the staff as this segment is probably the most sophisticated to sell in travel retail shop,” Ms Tahir told the drinks business.

Ms Tahir also said that a “main reason” for wine in travel retail performing nowhere near as well as other off-trade retailers is because of the “lower margins and overall brand awareness.”

Wine was thirteenth out of 25 in a list of the top-selling duty free categories worldwide, with $1.6bn worth of still wine sold in travel retail in 2014, according to figures from market research company Generation.

Its performance was nearly matched by Cognac, in fourteenth place with $1.47bn of value sales in 2014. Wine is also hugely outpaced by Scotch whisky, in fifth place at $3.6bn.

However, Ms Tahir also revealed that while wine’s performance could be improved with more investment in staff training, still wine sales in Dubai Duty Free grew by 10.36% in value in 2014 compared to 2013.

Champagne also increased by 6.47%, sparkling wine by 15.43% and fortified wine by 10.98%. The market share of wines also grew from 12.96% in 2013 it went up to 13.59% in 2014.

Growth such as this points to value rather than volume growth, as volume sales are hampered by technical issues such as baggage allowance restrictions and the customer perception that the saving on duty free wine is often not worth the inconvenience of carrying a bottle on a flight.

“Over the last years we have seen dramatic change on how travel retail operators recognise the importance of wines in the liquor category, although the focus on it still remains lower compared to spirits,” she said.

Breaking down the performance of wine in Dubai Duty free, she revealed that French wines lead the category with 37.54% market share, followed by Australia with 14.60% and Italy with 12.14%.

Major brands driving the category are Jacobs Creek, Penfolds, Louis Jadot, Cloudy Bay, Château Lafite, Montes and Antinori.

The fastest growing countries of origin in DDF are Argentina, which grew in value by 35.66%, followed by New Zealand with 18.72% growth and Italy at 17.31% growth, she said.

For full analysis of wine in the global travel retail sector, see the October issue of the drinks business.