GTR sees sales collapse in pandemic

Global Travel Retail has seen sales evaporate over the course of the Covid-19 pandemic with retail volumes of wines and spirits down an estimated 60% and not predicted to recover to 2019 levels until at least 2023.

The global reaction to Covid-19 has been particularly marked in the on-trade but one retail channel that has suffered just as badly has been global travel retail and duty free.

With passenger numbers in airports and ferries down hugely, airport operators and major duty free retailers are reporting falls in sales by volume and value of 50% and more.

The situation far outweighs the last great crisis following the 2008 financial crash when sales in 2009 fell a mere 8% and effectively rebounded in 2010 thanks to buoyant markets such as China which was on its first economic boom.

The current predicament is much more serious. Sandra Newman, travel retail research director at IWSR Drinks Market Analysis, said: “Many travel retail stores have reopened now some travel has resumed. About 60% of destinations still have restrictions on international in place, however. The IWSR forecasts that total global travel retail volume may be down by as much as -60% in 2020.”

Furthermore, the sector has taken such a hammering it will likely take years to recover. Newman continued that: “The impact on the travel-retail sector of Covid-19 is likely to be longer-lasting than that of previous downturns,” and while the nature of the business means, “global players, both retailers and suppliers, should be best placed to ride out this crisis, partly due to the geographic spread of their business,” she concluded that the IWSR does not forecast a return in alcohol volume sales to 2019 levels until 2023 – and some reports suggest even a little longer.

Difficult as trading conditions are, however, many big players have reaffirmed their commitment to travel retail and many seem to be taking the opportunity to innovate within this important sector.

In particular it seems that e-commerce will become much more important to what has traditionally been a very physical and visual retail space.

Drinks giant Pernod Ricard, for example, said in a trading statement in July that its travel retail division had seen a decline of 80% between February and June this year.

Nonetheless, Craig Johnson, vice president marketing at Pernod Ricard Global Travel Retail, said: “This unprecedented crisis has been a challenge and will have a long term impact on our industry and consumer behaviour. However, we have taken this as an opportunity to collectively reimagine the future of retail.

“We expect to see strong growth in e-commerce, with click & collect being a key driver, and we’re excited to continue expanding this channel. We will be launching new digitalised retail experiences in the coming months, which will offer new experiences for our partners and consumers.

“We will of course continue to innovate and share new products, such as travel retail exclusives and limited-edition liquids, releasing these in line with consumer travel”.

A full report on the state of Global Travel Retail will be published in the September issue of the drinks business.