TFWA Asia Pacific: Challenges remain but future’s bright for Asia Pacific

30 May, 2023

The message to emerge loud and clear from the busy TFWA Asia Pacific Exhibition is that travel retail’s most important market is on the road to recovery.

Last month’s TFWA Asia Pacific Exhibition in Singapore was an upbeat affair. After three years of Covid-19-related disruption, the travel retail industry was understandably anxious to make up for lost time, ensuring the show, the 26th in its history, was a busy, well-attended and positive event for suppliers, retailers and visitors alike.

“We have every reason to be optimistic about the current state and outlook for our industry in Asia Pacific,” said TFWA president Erik Juul-Mortensen in his opening address to the show’s conference, summing up the mood perfectly. “Traveller numbers are rising, the region’s retailers are ambitious to expand, Hainan will continue to prosper, and potential powerhouses such as India are coming to the fore. It may take a year or two, but I am sure the region will regain its position as the global leader in sales to travellers.”

Juul-Mortensen did caution that it would take time for China’s aviation and tourism sectors to fire on all cylinders. “First, international airline seat capacity from China stood at just 45% of its 2019 level in the second quarter of this year, according to [aviation consultancy] ForwardKeys, he revealed. That’s an improvement on 21% in quarter one, but still a long way from full recovery. It will take time for airlines to repair their finances and gear up to meet growing passenger demand. “

Second, air fares are high, especially in long haul,” he added. “They remain subject to volatility. Third, health-related barriers to inbound travellers persist at some destinations. And fourth, there is a limited list of countries authorised for Chinese group travel.”

Spending on the rise

On a brighter note, Juul-Mortensen reported anecdotal evidence from travel retailers in the Middle East that spending per head among some travelling nationalities had now risen to the point where it was outweighing lower passenger numbers, pushing turnover back above pre-Covid levels. He also highlighted India’s growing importance to the duty free industry, noting that the country’s population was now larger than that of China’s.

“The Airports Authority of India lists 144 airports in use, 29 of them international,” said Juul-Mortensen. “Press reports mention plans to add a further 50 airports and heliports during the 2023-24 tax year. A rising middle class, combined with a strong duty free purchasing reflex, bode well for the future.

Delhi Duty Free and Mumbai Travel Retail, operating at the country's two busiest airports, achieved record monthly sales in November and December respectively.

“Large infrastructure developments are underway at Bengaluru and Hyderabad international airports, too. India is evidently a major duty free and travel retail market in the making,” he concluded.

In terms of major product launches, the TFWA Asia Pacific Exhibition felt like a return to pre-pandemic levels of activity. For instance, The Edrington Group unveiled a new range of travel retail exclusive The Macallan whiskies. The Macallan Colour Collection features five age-statement, sherry-cask whiskies which are set to launch in the brand’s own boutiques and other duty free stores from September.

Similarly, Ian Macleod Distillers released three new whiskies at the show. The trio comprised Rosebank Vintage Series Second Edition, a 32-year-old-malt and the second release in the distillery’s Lowland Single Malt Vintage Series; King Robert II Sherry Cask Finish, a new expression from a blended whisky which sells particularly well in the Middle East travel retail market, and a new travel retail version of As We Get It, a Highland single malt that is cask strength, non-chill filtered and free from colourings.

Companies re-engage

With Asia roaring back into life, companies with a traditionally strong duty free presence in Europe and the Americas, such as gin-centric Quintessential Brands, are understandably keen to re-engage with travel retail in the region. Ahead of the Singapore show, the company signed a regional travel retail distribution deal with Hong Kong-based firm Global Drinks (GDL). The new agreement will include a focus on airports as well as border stores and cruise ships; GDL will distribute Opihr, Greenall’s, Bloom and Thomas Dakin gins, as well as Irish whiskeys The Dead Rabbit, Dubliner and The Dublin Liberties.

“The global travel retail industry in Asia offers great potential for the spirits category, particularly gin, which only holds 3% of the market share in the region,” commented Quintessential Brands GTR regional sales director Oliver Storrie. “By entering into a distribution deal with Global Drinks, Quintessential Brands Group is in a positive position to introduce its brand portfolio in a market where gin and Irish whiskey have an opportunity to make significant strides.”

Moving away from Asia Pacific, last month also saw the departure of Mohit Lal as the chairman and chief executive of Pernod Ricard Global Travel Retail (GTR). Lal was the top man at the French multinational’s travel retail division for seven years but spent a total of 23 years at Pernod Ricard. A strong believer in premiumisation and digitisation, Lal steered Pernod Ricard GTR through the turbulent period of Covid-19 and was much-liked and respected by the trade.

His replacement, Laurent Pillet, currently managing director Pernod Ricard Eastern Europe, will have big shoes to fill.

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