What does Trump mean for duty free?

06 March, 2017

By even the soberest of assessments it’s been a crazy few weeks since Donald Trump began his presidency.

His controversial imposition of an entrance ban on travellers from seven Muslim countries threw the country’s unprepared airports into chaos. Thousands of protestors gathered to demonstrate their anger at the ban, while hundreds of travellers hoping to fly to the US were stranded across the globe.

US judges quickly lifted the ban and now a legal battle between Trump and the judiciary looks like it could rumble on for weeks. Yet, even though inbound tourism from the affected countries is tiny, considerable wider damage to the image of the US for overseas visitors already looks to be done. For instance, according to a recent report from the travel search website hopper.com, based on data from 122 countries, weekly international US-bound flight searches decreased 17% after the travel ban was announced.

How long these negative sentiments towards the US are likely to last is anyone’s guess, but the effect of Trump’s policies on US tourism is just one more consideration for attendees at this month’s IAADFS Duty Free Show of the Americas, which will be held in Orlando between March 26 and 29. Even without the Trump factor, 2017 was shaping up to be an unsettled year for the trade as it battles with the US strong dollar and the comparatively weak economic performance of neighbouring countries.

The situation is particularly acute on the US/Mexican border, where the prospect of Trump’s wall is another unsettling factor. “There is a lot of uncertainty about what’s going to happen,” says Irene Rojas, marketing manager at Baja Duty Free, which runs 10 stores along the border in Texas and California. She notes that many US and Mexican citizens have to cross the border each day to go to work and take their kids to school.

Rojas says the weak Mexican peso and heightened security checks are already hitting liquor sales.

But the outlook for the Americas duty free liquor market is not one of complete gloom. Talking to suppliers, retailers and operators of the past few weeks it’s clear the US cruise ship market is a regional highlight, with 25.3m people forecast to take a cruise holiday this year, up 4.5% on 2016.

There are also some welcome signs that the twin engines of the Latin American region – Brazil and Argentina – are showing signs of life. Retailers in the region have reported the number of travellers from both countries shopping in their stores has jumped markedly in recent weeks and, although spending levels are still down on a few years ago, there are signs of a modest turnaround.

I also detect enthusiasm from US-based contacts for the Trump administration’s much vaunted plan to encourage $1tn in private sector investment in the transportation infrastructure over the next decade.

Jeff Orson, commercial manager for North America at William Grant & Sons GTR, says: “Assuming this happens, it should provide duty free concessionaires with the opportunity to open new and more modern retail outlets.”

Whether Trump can keep his promises remains to be seen, but it’s already certain that reporting on this duty free market over the next four years is going to be anything but boring.

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