The games: a Carnival for Brazil duty free?

15 September, 2016

I should really know better. It’s the same old story every four years. It’s sunny outside, the lawn needs mowing, the car needs a wash and upstairs in my office I have numerous articles and stories to be getting on with.

The trouble is the Olympics is on. My curtains are drawn and I’m slumped in front of the telly, genning up on the scoring metrics of the parallel bars, appreciating the finer points of rhythmic gymnastics, or admiring the white-water paddling skills of the slalom canoeists.

The wall-to-wall Olympics coverage here in the UK and all those beautiful panoramic shots of Copacabana Beach got me pondering how much of a boost this global sporting event has given South America’s duty free business. It could definitely do with one. The economic problems of key regional economies such as Brazil, Venezuela and Argentina have hit the spending power of local travellers as duty free shops tend to price in US$.

Despite all those pictures of empty seats in the various stadia, some 1m extra visitors were expected to visit Brazil during the games. In anticipation Dufry, the country’s largest duty free retailer, added an extra 30,000sq m of new retail space at airports across the country as part of a massive airport infrastructure upgrade. Duty free space at Rio Galeão Tom Jobim airport, Brazil’s biggest international gateway, for instance, doubled to 8,000sq m.

Duty free drinks executives I’ve contacted hadn’t sounded too upbeat at the prospect of the Olympics, however. “We do not expect any uplift with the Olympic Games in August,” said Sebastien Devallet, Rémy Cointreau Global Travel Retail regional director. “This kind of event, like the previous soccer World Cup [in Brazil], usually doesn’t bring any big boost to our business. We are present with product offers, but our category of products is not the one which benefits most from the extra traffic.”

“The Olympics have come too early to have a positive long-term sustainable effect,” added Robert de Monchy, founder and managing director of the Monarq Group, one of the Americas’ largest duty free drinks distributors and marketers. “Unfortunately, our eyes are on the distant future for this market.”

One spirit brand that did its utmost to benefit from the Olympics coming to Rio was Leblon cachaça, which is now part of the Bacardi stable. Cachaça is, of course, the main ingredient of the Caipirinha cocktail, Brazil’s national drink and, during the month of August, Leblon ran a major promotional campaign at both Rio Galeão and Sao Paolo.

The high-profile activation included sampling opportunities for passengers to try a Leblon Caipirinha for themselves and take away a free leaflet explaining how to make the same cocktail at home or during the holiday, along with a free Leblon-branded cocktail muddler. Leblon’s star ambassador’s trained shop staff intensively for the activation as part of a wider Leblon campaign in the US, Brazil and Europe to make the most of the Olympics. Geoff Biggs, Bacardi Global Travel Retail regional director, Americas, said: “There will be further opportunities as we look to target US and Canadian shoppers and the cruise market where we are launching it on cocktail menus.”

Dufry has yet to spill the beans on what kind of a sales uplift the Olympics generated for its Brazilian airport business, but my educated guess – it’s likely to have been a modest one given the current economic climate there and the damp commercial squibs that other past Olympics have proved for retailers. What the region’s travel retailers need more than anything else right now is for key currencies to strengthen against the dollar.

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