Has travel retail bounced back?
As brands prepare to descend on Cannes for the TFWA World Exhibition Conference, Jessica Mason talks to industry insiders about the sector ’s recovery from Covid-19 lockdowns, and their plans for the future.
In recent times the global travel retail (GTR) sector has demonstrated its resilience. As the world was thrown into lockdowns throughout the Covid-19 pandemic, and there were years of reduced contact, global travel suffered hugely. Now past the struggles, the GTR sector is back with a boom. Drinks sales in airports, on cruise ships, and on airlines have been boosted by impulse shopping and giftability.
As international passengers return in force, the global stage is gearing up for this year ’s TFWA World Exhibition & Conference, which takes place from 1 to 5 October in Cannes, France.
The show, which is one of the biggest on the GTR calendar, and one of the most renowned for seeding out new drinksbrand launches before greater market rollouts, is due to be back with a bang this autumn.
The remarkable recovery in cross-border travel has seen the International Air Transport Association (IATA) doubling its 2023 profit forecast for global airlines. The trade body now forecasts airline profits of US$9.8 billion (£7.67bn) this year, up from its previous US$4.7bn estimate in December, thanks to strong results from airlines.
This also echoes positive traffic updates from airports, including Hamad International, Frankfurt and Hong Kong International. The drinks industry knows that not every traveller is necessarily a consumer looking for the latest new drink, but travel retailer revenues are still predicted to rise.
Reflecting this growth, plans are in hand to expand and upgrade this year ’s Cannes show. Last year, the event celebrated a sharp rise in attendance, and the TFWA has revealed that it intends to build on that with a new exhibitor area for 2023 named the Majestic Beach Village.
The hope is also that the significant increase in available networking floor space will help accommodate a rich mix of returning and first-time exhibitors.
Speaking to the drinks business, João Gomes da Silva, chief commercial officer of Sogrape Vinhos, says: “Sogrape always had its more international brands – like Mateus and Sandeman – distributed in travel retail though third-party distributors, but from 2018 the company decided to launch a direct-distribution model for this channel. We recruited travel retail specialists, and are returning to Cannes as an exhibitor. This has allowed the business to grow, and to introduce more wines from our portfolio in Portugal and other places like New Zealand, Spain, Argentina, and Chile.”
He explains: “Our most important markets in the travel retail channel are in Europe and the Middle East, especially countries like Portugal, Spain, Germany, Ireland, the Nordics, Eastern Europe, Israel, and the UAE, among others.” He adds that the company is also “developing the business in Africa and America”.
POTENTIAL FOR WINE
According to Italy’s Santa Margherita, there is still space for wine to grow in GTR, and the potential for that to happen needs to be recognised. Speaking about the sector, export director Giacomo Marzotto says: “Travel retail is an extremely strategic channel for the wine sector, as well as being one that is expanding greatly. For this reason, we will continue to be active in it, widening our distribution with new products and with wineries that are part of Santa Margherita Gruppo Vinicolo’s portfolio.”
Marzotto insists that Santa Margherita holds the channel in high esteem, and describes travel retail as being an integral part of its future.
Barton & Guestier will also be attending the event. General manager Philippe Marion says: “We think that Barton & Guestier ’s Thomas Barton was at the very origin of duty free sales. In 1722, Thomas Barton left Ireland, sailing to the Mediterranean with his ship full of wool and dried sheep meat, which he traded for olive oil and wines. On his way back to Ireland his main worry was to avoid the English, who claimed taxes and duties on all imported goods. So near the end of the 18th century, Daniel Guestier made his ships leave from Arcachon instead of Bordeaux, for the same reasons.”
Carlos Ruiz Vergara, brand manager at Grupo Osborne, says the company “plans to actively search for incremental distribution focused on airport and cruisers around the world”, specifically for its brands 5J, Carlos I, Nordés, Montecillo, and Veterano, as well as its other high-potential brands such as RioFrio Caviar, Gold Gin, and 1866 Brandy.
Ruiz adds: “In the past, Spanish airports have been the stronghold of our business, but we are in the midst of an accelerated internationalisation, growing by more than 30% in 2023.”
This shows how crucial the travel retail marketplace has become to the company’s prosperity.
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Sandra Janetzki, vice-president of Henkell Global Export, says: “Henkell has a historical relationship with Lufthansa airlines, proof of that is a limited-edition Henkell Trocken Piccolo that was produced and commercialised exclusively for the airline between the 1960s and ‘70s.”
Janetzki says that in Cannes this year, the company is “really excited to showcase rebranded offers, and a range of travel-retail exclusives from across the brand portfolio: Mionetto, Henkell, Freixenet, Champagne Alfred Gratien, Bolney Wine Estates, and Segura Viudas”.
It isn’t just wine that is looking attractive to the travelling consumer. Port is also seen as a revered drink that not only appeals to tourists, but also business people, as well as fans of the sector.
João Vasconcelos, Taylor’s market manager for the UK, says: “We believe that there’s never been such a great time for Port to see its presence develop in the travel retail sector, being in key airports, cruises, and airlines, particularly in key European markets but also in areas that are growing visitor numbers to Portugal as well, such as North America, Mexico, Brazil, and key Asian airports.”
Vasconcelos adds: “With Taylor’s leading the Port category in many of these markets, and its parent company Fladgate investing in hospitality in Portugal, such as luxury hotels, the World of Wine cultural district in Porto, and visitor centres”, the business sees GTR as a place where key brands can grow “a strategic presence”.
Vasconcelos says that the company is “dedicating more resources to develop its sales in the travel retail sector”, and is considering “in the short term, the launch of a travel-retail exclusive Port”.
Meanwhile, Jeff Bond, channel sales director EMEA, Accolade Wines, says: “We are on track to achieve our targets for 2023, with a strong performance across the UK ferry sector, the Middle East (most notably with Dubai Duty Free), airline and cruise markets.” He adds that Accolade Wines has “excellent momentum, having reached prepandemic levels of travel retail sales at the end of 2022”. He expects the company to be “around 10% up year on year at the close of 2023”.
For Accolade, cross-Channel routes from the UK are a huge opportunity for the wine company to build its travel retail business this summer. Bond says that “with the duty rates in the UK, adding a minimum of 44p per bottle on 12.5%-ABV wines from August this year”, Accolade is “now in an even stronger position to offer value in duty free, saving more money for the consumer and driving sales in a post-Brexit duty-free environment”.
Worldwide, he says there are opportunities in the Middle East, which he notes is “a very strong market for Accolade Wines, and continues to grow each year through a wide portfolio of brands, from Hardys and Flagstone to Da Luca Prosecco, and Mud House”.
Bond also says Accolade is seeing growth in its Wise Wolf eco-brand of French wines in the Middle East, with listings in key airports. He adds that Africa is also becoming an important region for GTR, saying that the Flagstone brand is “listed at airports in South Africa, Ethiopia, and other locations on the continent”.
In Europe, meanwhile, the wine company is set to focus on its recently launched “Old World portfolio – Wise Wolf, Cupiolo (Italian Pinot Grigio rosé), and Da Luca Prosecco”.
Outside of wines by-the-glass and bottle sales in restaurants, according to Bond, cruises are a big opportunity because there “is potential for sales of exclusive parcels of luxury wines to high-net-worth individuals, something the cruise lines don’t seem to offer at this time”.
He explains: “Having seen what is on offer onboard, from fashion to Rolex watches, there is definitely a good opportunity to offer rare wines. This is an opportunity we are pursuing with the cruise operators and retailers. ” This approach will begin to be incorporated into the wine company’s plans soon.
Accolade is also intent on “changing focus at TFWA Cannes this year”, and will be showcasing its “biggest-growth brands, namely Jam Shed and B. Ink”.
Bond says: “Both wines are on a tremendous growth path in domestic markets in Europe, the US, and Australia, and offer us the opportunity to activate in an impactful way due to their vibrant brand identities and packaging. This is a departure from our previous focus on fine wines.”
It means that Accolade will “bring a new-look stand to Cannes”, that is sure to turn heads. While the drinks sector is adapting to make sure it makes the most of the GTR sector, this year ’s show will indicate how much it has moved on from old patterns to really showcase what travelling consumers want to see – high-quality brands that offer newness and intrigue.
The show will also help drinks brands to stand out in a crowded global market.
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