Travelux

What’s new in duty-free?

We’ve been duty-free shopping since the late 1940s but, as Joe Bates writes, the business is now keen to update its last-century image

- Words: Joe Bates

In an age when we shop with our mobiles, travel-retail shopping might seem old fashioned. After all, buying heavy bottles from airport shops, on board ferries and from in-flight shopping carts and transporti­ng them hundreds of miles to your destinatio­n isn’t the greenest way to shop. Yet it remains popular. Duty-free sales of spirits totalled £7.5 billion in 2018 and are expected to grow to £8.5 billion by 2023.

As the number of internatio­nal travellers continues to grow worldwide – 4.3 billion people took a flight last year – the range and quality of airport shops has grown too. Some stunning new airport terminals are scheduled to open their doors in 2019, including the 1.4 million square metre Jewel Changi Airport complex with its indoor waterfall, which opened in April, to Beijing Daxing, the Chinese capital’s new internatio­nal hub, which was due in September and will eventually be able to handle 100 million passengers a year.

These enormous structures often contain shopping complexes selling the designer brands. The new Istanbul Airport, which opened in 2018, boasts the world’s largest airport shopping mall, covering 54,000 square metres and housing over 1,000 Turkish and internatio­nal luxury brands. The Whiskey

House concept at Singapore airport has one of the best single malt selections in Asia, while Aer Rianta Internatio­nal’s liquor store at Dublin airport Terminal 2 sells over 80 gins.

Scotch remains our favourite duty-free tipple – Johnnie Walker has been the top selling spirit in duty-free for over 30 years and is growing, up 8 per cent in volume in 2018. However, the next generation of travellers’ preference­s are making an impact on the sales. Jack Daniel’s has risen to become the second best-selling spirit brand in duty-free, while Japanese whisky was the fastest growing spirit category last year, up almost 20 per cent over 2017.

Gin has become a key duty-free choice – sales rose 15 per cent in 2018 and distillers have responded duly. In contrast, vodka declined 2 per cent last year, while rum and tequila haven't taken off outside the Americas.

In the heyday of duty-free in the 1970s and 80s travellers would buy duty-free for the price saving over the High Street. Yet the level of saving has declined in many locations, especially inside the European Union where true duty-free shopping is prohibited. If finding a bargain is your motivator, it’s worth checking before you travel. Many airports and duty-free retailers have websites and apps where you can access prices and availabili­ty, but the Chinese shopping app Jessica’s Secret is a good onestop duty-free price benchmarki­ng solution.

The issue of Brexit is worth touching on as it will impact the European travel-retail business. If the UK crashes out of the EU at the end of October with no deal, then duty-free shopping between the UK and the EU will be reintroduc­ed very quickly. This will mean cheaper prices, but the allowance for a UK traveller returning from the EU will be one-litre rather than today's 10-litre duty-paid limit.

Travel retail is increasing­ly becoming fertile territory for spirits collectors. While rare and vintage spirits are often sold without much fanfare at auctions around the world, showcasing a bottle at a major airport dutyfree shop gives a distillery fantastic exposure to customers for as long as the product stays unsold. Retailers call it the ‘halo effect’ which can give a substantia­l boost to sales of the distillery’s less expensive expression­s.

Travel retail remains dominated by multinatio­nal-owned brands, which occupy the shelves with a range of expression­s, many exclusive to duty-free. A handful of the biggest and most in-demand names have now gone a step further and opened their own standalone stores – Diageo has opened Johnnie Walker Houses at Taoyuan Internatio­nal (Taiwan), Mumbai Interation­al, Singapore Changi and Schiphol Amsterdam airports, for instance, while The Macallan has opened boutiques at Dubai and London Heathrow airports.

Sustainabi­lity has become an issue. The cost and environmen­tal impact of maintainin­g inflight shopping was the reason cited by Scandinavi­an Airlines’ decision to scrap its onboard retail offer. The need to reduce emissions is a force behind many airports’ move to offer reserve-and-collect services and, as in the cases of Russia, South Korea and Japan, agree to allow airport arrivals shops.

Duty-free is never going to be green, but the industry is doing its bit. In the future, less fancy packaging and smaller bottles are on the cards as the sector looks to modernise its image.

“Duty-free is never going to be green, but the industry is doing its bit”

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