What lies ahead for duty free in 2016?

on 29 January, 2016

What does January have going for it? Not much in my experience – a sprinkling of quickly broken New Year’s resolutions, scrimping and saving after the Christmas festivities and, in the UK at least, grey skies and driving rain. 

But January does have one silver lining – it is the perfect time to ponder what trends will shape the global duty free liquor business in the year ahead. 

I suspect many of the concerns that weighed heavily on the business last year will linger on into 2016. Reduced spending among Russian travellers, the strong US dollar, fears over aviation-related terrorism, the destabilising wars in the Middle East and the weak economies of Latin America are just some of retailers’ continuing worries. 

There are some signs that spending among Chinese travellers is starting to recover. The latest data from tax free shopping refund specialist Global Blue shows spending by Chinese travellers in Paris, the world’s most popular tax free shopping destination, grew by almost 25% in October, a month before the city was hit by that terrible terrorist attack. In contrast, spending by Russian travellers plummeted by 44%.  

In terms of trends I predict Japanese whisky will have a strong year in 2016, albeit from a small volume base. On a recent trip to Edinburgh airport to tour World Duty Free’s new World of Whiskies outlet I was surprised to see the travel retail exclusive Hibiki Harmony Master’s Select chosen as the retailer’s Malt of the Month. It was proving highly popular and with Beam Suntory committed to releasing more Japanese whiskies into duty free I can see this fledgling category making big strides this year.

With the Asia Pacific travel retail liquor market still a little soft, I believe single malt whisky will go on to outperform blended scotch in 2016. All the major single malt brands now have widening exclusive ranges and duty free retailers are finally getting behind them like never before. Diageo Global Travel & Middle East is now also flexing its considerable muscle in the single malt sector.

In the last quarter of 2015 Diageo released exclusive expressions, such as Port Ellen 33 Year Old and Cragganmore 43 Year Old, aimed at the collectors’ market, but also unveiled more mainstream offerings such as the three-strong Singleton of Glendullan range, priced £36-£103.

The other category to watch out for is gin, the fastest growing spirit category in duty free, with much growth being driven by market leaders such as Bombay Sapphire and Hendrick’s. Can some of the new craft gins cross over from the domestic sphere and gain listings in the high-cost world of travel retail? 

Finally, I think 2016 will see continued growth for fractional bottles and gift packs containing miniature bottles. Smaller bottle sizes make for great impulse purchases at point of sale, they encourage trial and discovery and can help travellers use up their full duty free allowances. They’re not too heavy to carry and don’t take up too much space either. So at a time when many travellers are tightening their belts, small may well be beautiful for travel retail in 2016.

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