Trying to gain a foothold in the travel retail channel has always been a tough task for drinks brands. Th ere are high entry costs, narrow margins, steep sales targets and costly promotions to fund for any supplier lucky (or cursed, depending on your point of view) to win a listing. For smaller producers with limited marketing budgets and companies focusing on categories outside the big two of Scotch whisky and cognac, it’s doubly difficult.
Yet times are changing. The barriers to entry remain, of course, but the evolving post-pandemic passenger mix means there are more opportunities for non-traditional travel retail categories. The number of male business travellers has dropped at the same time as leisure passengers and female travellers are on the rise, driving the success of categories such as agave spirits and sparkling wine.
Malts march on but blends hit the buffers
Scotch whisky remains the dominant spirits category in travel retail, but while single malts are fi ring on all cylinders, the larger blended whisky sub-category has run into problems. According to the IWSR Drinks Market Analysis, blended whiskies dropped by 3% in volume in travel retail last year. In comparison, malts roared ahead by 24%, driven by the restart of international travel in Asia, a high level of NPD by leading distilleries and surging consumer interest.
It’s not as if the blended whisky world is bereft of new ideas. This year, Diageo Global Travel has unveiled Johnnie Walker Blue Label Xordinaire, a new £335 sweeter-tasting line extension finished in hand-selected XO cognac casks; it’s the first Blue Label travel retail-exclusive innovation in 30 years. Earlier this year, William Grant & Sons released an entirely new ultra-premium blended whisky range, Wildmoor, which included two expressions exclusively reserved for travellers: Wildmoor Waking Forest 23 Year Old and Wildmoor Tropical Coast 30 Year Old.
Yet, despite launches of this ilk, the more price-sensitive blended whisky category continues to suffer, increasingly passed over by many travellers and affected by the cost of living squeeze in many markets. “The cost of living crisis across areas of Europe is proving to be challenging,” admits Julie Christie, global brand & marketing manager at scotch whisky bottler, distiller and blender MacDuff International, whose blended whisky portfolio includes Grand Macnish, Lauders and Islay Mist.
“MacDuff International has successfully acquired new listings across Europe and the Far East, but volumes in Nordic travel retail are still below pre-pandemic levels,” she adds. “Therefore, our primary focus will be to build on existing listings by supporting the retailers to drive penetration and sales with exciting promotional offers. We also continue to explore new opportunities to expand our presence globally.”
The trend in travel retail towards aged malt whiskies continues to gain momentum. After a period dominated by non-age statement expressions, distilleries are now offering more single malts with age statements, indicating improved inventory management. This year, a wave of high-end single malts has been presented to travel retail buyers, including exclusives from Glenmorangie, The Macallan and Diageo’s The Singleton, to name but a few.
At this year’s TFWA World Exhibition, the stream of new releases will continue. “We are introducing a very special Glengoyne Highland malt whisky single cask which will be exclusive to the channel and the third release in our GTR-exclusive Rosebank Vintage Series,” says William Ovens, GTR director at Ian Macleod Distillers.
Similarly, MacDuff International will showcase the new Rye Law Vintage 2 Cask Strength whisky in Cannes. Unveiled last year, the innovative Rye Law brand is effectively a Scottish rye whisky, although the classification doesn’t legally exist yet in Scotland. It was also the first bottling from MacDuff ’s Inchdairnie Distillery. This latest release is a cask-strength variant exclusively dedicated to travel retail.
Welsh whisky eyes TR expansion
Beyond Scotland, whiskies from other countries have also fared well as travellers’ tastes become more eclectic. For instance, Th e House of Suntory has been flying the flag for Japanese whisky this year, releasing the travel retail-exclusive Yamazaki and Hakushu Kogei Collection and opening a 13.5sq m shop-in-shop with Lotte Duty Free at Singapore Changi Airport Terminal 3 in March this year.
World whiskies are also making an impact, gaining distribution but also premiumising. For example, the Cognac-based family-owned Alfred Giraud French malt whisky brand has expanded its distribution with DFS Group this year at airports in Asia and the US following the brand’s appearance at the retailer’s Masters of Wines & Spirits 2023 exhibition in Macau.
Meanwhile, Welsh whisky is growing its travel retail footprint from a small base outside of its home market. Aber Falls Welsh whisky, part of Halewood Artisan Spirits’ portfolio, launched into UK travel retail with Avolta, the operator of the World Duty Free airport store chain, while The Welsh Whisky Company, the owner of the Penderyn Distillery, has ambitions to grow its travel retail business in Asia.
“In early 2024, we announced our collaboration with [distributor] Co Lab (based in Singapore) to represent our brands in Asia Pacific duty free markets and that is already bearing fruit aft er a successful TFWA Asia Pacific event this year,” reveals Simon Roff e, Welsh Whisky Company business development director. “Our strategy remains to invest in the GTR channel to support the development of our brands across key domestic markets around the world.”
Winemakers eager to grow market share
Wine has traditionally been overshadowed by spirits in travel retailers for a host of reasons, most obviously because it often offers lower profit margins. It’s also a harder-to-maintain category with many wines quick to deteriorate if not stored properly. Equally, wine’s countless varieties, styles, countries of origin and classifications make choosing a small, high-performing range in the cramped confines of a typical airport store a challenging task for retailers that often lack the required product knowledge, both on their buying teams and on the shop floor.
Nonetheless, the shop-window effect of travel retail is becoming increasingly attractive to winemakers despite the channel’s many challenges and drawbacks. The latest IWSR data reveals sparkling wines were the fastest-growing wine sub-category last year with sales rising at double-digit rates.
Henkell Freixenet, the world’s biggest sparkling wine producer, remains bullish on the European travel retail market, particularly for its Mionetto prosecco and Freixenet brands. While Europe is still the primary driver of growth for prosecco, the company is also eyeing significant potential in the Americas and Asia Pacific travel retail markets.
To capitalise on the global trend towards premiumisation, Henkell Freixenet is focusing on the higher-priced wines in its portfolio, including Segura Viudas cavas and the newly launched Freixenet French Sparkling range. In Cannes, the company will major on its flagship cava Freixenet Cordon Negro, which celebrates its 50th anniversary this year with refreshed packaging and a newly designed label that aims to reflect the wine’s quality and craftsmanship.
In the last two months of the year, Henkell Freixenet is gearing up for a special activation to celebrate the Freixenet brand at Barcelona Airport, the international gateway to Catalonia, the largest cava-producing region of Spain. In partnership with Avolta, a 17sq m pop-up store will feature interactive elements, allowing travelling consumers to connect digitally with the winery and learn more about the brand.
A more recent convert to travel retail is The Fladgate Partnership, the family-owned port wine producer of brands such as Taylor’s, Fonseca and Croft , whose history dates to 1678. At the start of the year, the company partnered with specialist travel retail drinks distributor Duty Free Global to kickstart its travel retail business aft er realising commercial opportunities were being lost given Fladgate’s domestic export business to 105 countries worldwide.
“The challenge is to continue to extend distribution of Taylor’s and Fonseca in the world’s leading airports and travel retail concessions, bringing the unparalleled quality of great port to as many global consumers as possible,” says a company spokesperson. “It’s now particularly relevant as the consumer engagement with the category continues to exponentially grow as the number of visitors to Portugal develops very strongly and enjoying port is a key part of their experience of the country.”
In Cannes, Fladgate will highlight some of its most celebrated ports, including Taylor’s flagship Vintage and Tawny versions, as well as Fonseca Bin 27. In addition, another highlight for buyers will be Taylor’s City Edition, a travel retail exclusive inspired by the port wine-associated city of Porto.
The company will also be introducing its recently released still and sparkling wines, including the 100% Alvarinho Graça da Pedra (£15), the Colinas Sparkling (£25), and the iconic Portuguese red Principal (£120).
Finally, leading French wine producer Advini, perhaps best known for its Chablis label Laroche and Languedoc’s Cazes, will launch a wide range of new wines for buyers in Cannes, including The FMC 2023, a new cuvee from South Africa’s Ken Forrester Vineyards, best known for growing international appreciation of the Chenin Blanc variety; Les Chorégies 2022, an acclaimed Châteauneuf-du-Pape white wine; and a new range of Gassier craft wines from Provence.
Asia rebound brightens cognac’s fortunes
In 2023, the cognac category was one of the best-performing spirits sectors in travel retail, growing double digits, according to IWSR figures, propelled by the reopening of Chinese international travel at the start of the year aft er nearly three years of Covid restrictions. Th e positive picture for the category has continued into 2024 with Chinese travellers once again purchasing cognacs in markets such as Thailand and especially Japan, where the exchange rate is currently favourable.
Back in Europe, this summer’s Olympic Games in Paris gave cognac brands the perfect opportunity to promote their ranges to visiting international travellers. Cognac houses Rémy Cointreau and Martell were among those seizing this opportunity, the former launching a limited-edition XO cognac, the Rémy Martin 300th Anniversary Limited Edition XO, priced at $230, as well as offering a virtual reality experience at Paris CDG Airport that transported visitors through the brand’s history.
Pernod Ricard-owned Martell introduced a Paris-themed edition of its Cordon Bleu City series, featuring packaging inspired by the capital city’s landmarks. This limited edition was available exclusively at Paris airports and the brand’s home in Cognac. The Martell Paris Exclusive Edition was the latest addition to the Martell Cordon Bleu City series, which has already unveiled destination-themed editions inspired by Singapore and Hainan.
Family-owned Cognac Maison Audry will make its debut appearance at the TFWA World Exhibition this month. Under the leadership of its new managing director Mathieu Vanhalst, travel retail has become a key strategic market, leading the company to partner with travel retail expert Jean Philippe Aucher.
At the show, Maison Audry will showcase two signature collections: Collection 78, a rare, single-cask 1978 vintage grande champagne cognac, bottled at 49.4% abv and limited to 288 decanters. The second new release is Art Audry VSOP, a blend of six to seven-year-old eaux-de-vie presented in a bottle designed by French artist Anne Lesca.
Tequila leads the white spirits pack
Agave-based spirits were the shining stars among white spirits in travel retail last year, albeit from a low base. Value growth for the category soared 56% last year, streets ahead of vodka and gin at 5% and white rum at 10%. “More consumers are becoming aware of and discerning about the quality of tequila and mezcal,” explains IWSR senior insights manager for GTR Charlotte Reid, citing the category’s high 56% and 229% value growth rates for the premium-plus and prestige-plus price brackets last year. “Innovation and increased GTR activation in the super-premium-and-above segment is driving premiumisation for this category.”
One of the most high-profile travel retail tequila launches this year was Teremana, US actor and former wrestler Dwayne Johnson’s highly successful tequila brand, co-owned and distributed globally by Mast-Jägermeister. In March, the brand launched at eight international hub airports – New York JFK, Los Angeles, London Heathrow, Munich, Berlin, Frankfurt, Istanbul and Atlanta. In July, the full Teremana range, which features blanco, reposado and añejo expressions, also went live at Sydney Airport.
Gin crashes back to earth
After a stellar travel retail performance in 2022, gin came back down to earth with a bang last year, recording a fall in volumes, according to the IWSR. Challenging economic headwinds in Europe and gin’s declining popularity in key domestic markets such as the UK and Spain were the likely culprits for this reversal of fortunes. Gin’s travel retail prospects look brighter in other regions, such as Latin America and Asia.
Despite these challenges, gin brands continue to invest in the channel. In July this year, Ian Macleod Distillers expanded its retail footprint with the opening of a new Edinburgh Gin boutique at Edinburgh airport; the 20sq m store showcases the brand’s full product range and includes a tasting bar. Similarly, the French spirits group La Martiniquaise launched its recently acquired super-premium Generous Gin brand with a summer pop-up activation at Lyon-Saint Exupéry airport this year following promotions at Paris Orly and CDG airports.
Like gin, vodka, another Europe-skewed spirit, also suffered a fall in travel retail volumes last year and the IWSR only forecasts a modest 3% CAGR for the category over the next four years. Notable launches in 2024 for what remains the second-largest spirits category in travel retail after scotch whisky have included Absolut Warhol, a limited-edition bottle inspired by a long-lost Andy Warhol painting from the 1980s, and Smirnoff Tamarind, an on-trend flavoured line extension for one of the bestselling vodkas in travel retail.
Rum’s fortunes for growth in travel retail remain in the balance. The IWSR forecasts the category will enjoy a modest value CAGR of 4% between now and 2028, although the outlook for premium-plus rums is brighter. For premium brands that are prepared to invest time and money in the channel, especially when it comes to funding high-cost activations and travel retail expressions, there are rewards to be had.
Rodrigo Bazan, GTR manager at Nicaraguan rum brand Flor de Caña, reveals the company launched two travel retail exclusive expressions over the first half of the year: Flor de Caña 19 Year Old Rum with its high 45% abv, and Flor de Caña Volcanic Bourbon Cask, aged at the bottom of an active volcano, offering complex flavours of smoked dry fruits and toffee.
“We’re excited about Flor de Caña’s strong presence in the global travel retail market, which we believe is driven by our quality and sustainability credentials,” says Bazan. “For example, our portfolio recently received Double Gold Medals at the San Francisco World Spirits Competition 2024, the highest distinction reserved exclusively for products that demonstrate outstanding levels of quality and excellence.”
