TFWAs Asia Pacific exhibition opens in Singapore this weekend

TFWA's Asia Pacific exhibition opens in Singapore this weekend

Exhibitors and visitors to the Tax Free World Association (TFWA) Asia Pacific show in Singapore, which opens this Sunday (9 May), have good reason to be optimistic. The Asian duty-free business has rebounded quickly from last year’s global economic downturn. Joe Bates considers the current state of the travel retail sector in the region, ahead of next week's show.

So far, Asia has been comparatively unaffected by the fallout from the Icelandic volcanic ash cloud, which shut down much of Europe’s airspace for five days in April, costing travel-retailers in the region an estimated EUR25m (US$31.9m) for every day the planes stood idle. The possible knock-on effects to the Asia region of further disruption to European airspace by the ash cloud shouldn’t be ignored, however - Europe accounts for an average 15% of passenger revenues for Asia/Pacific airlines. Nevertheless, for the moment, the regional traffic forecasts for Asia - always an important barometer of the health of the airport-dominated duty-free industry - paint a bright picture.

According to UK aviation consultancy air4casts, total passenger traffic in Asia Pacific will rise by over 10% in 2010. In contrast, passenger numbers in Europe will increase by only 1.6% and will actually fall back 0.5% in North America. This upswing in traffic has already worked its magic, with regional airport retailers reporting encouraging sales growth over the first quarter of the year.

“Asia Pacific as a region was not as severely affected and has recovered more quickly from the recession than other regions, notably Europe and the USA,” explains Erik Juul-Mortensen, president of Singapore show organiser TFWA. “Half of the best performing countries in duty free and travel retail shopping are in Asia. Sales are picking up and the trend towards premiumisation has been reignited. In those economies such as China and India, where travel is continuing to increase at impressive rates, there is a marked predilection for premium products and major international brands.”

In fact, liquor sales are rising even in the most unlikely of Asian duty-free locations. For example, at Bangkok airport in Thailand, which has been rocked by political unrest this year, duty-free concessionaire King Power reports that sales rose 20% over the first quarter of the year. Meanwhile, sales to Korean passengers, traditionally strong purchasers of premium blended whiskies, were up an astonishing 94.5%.

Bénédictine will launch a limited-edition bottle of its namesake liqueur brand at this year's TFWA Asia Pacific Exhibition

The South Korean duty-free market has been one of Diageo Global Travel and Middle East’s (GTME) brightest regional stars this year, recovering well from a tough 2009. The Australian duty-free business, buoyed by the country’s strong economic performance, has also performed well for the market leader, as have sales to mainland Chinese travellers - 54m of whom are expected to venture overseas during 2010, a 13% increase on 2009.

Alongside stalwarts such as Johhnie Walker Blue Label, Diageo GTME has been targeting Chinese travellers with Shui Jing Fang, its super-premium Chinese spirit brand. “Shui Jing Fang has a beautiful packaging proposition and exceptional gifting potential so we will be giving it a very strong focus,” says Diageo GTME's general manager for travel retail in Asia Pacific, Jay Woo. “Although price is a key purchase motivator for them, Chinese shoppers are also very willing to engage with products that provide them with the quality, prestige and value they demand in super deluxe categories.”

Pernod Ricard's Martell Cognac brand also has Chinese travellers in its sights. In March, the brand collaborated with Hong Kong airport liquor retailer Sky Connection on a new Martell Experience Boutique. The store aims to entertain and educate travellers about the history, heritage, production process and taste profile of Martell, and to showcase some of the brand’s high-end marques, such as L’Or de Jean Martell.

Cognac remains popular with Chinese travellers, but Sky Connection merchandising and buying director Simon Au reveals that fine French wine is currently one of the best-selling sub-categories at the airport.  Hong Kong’s decision to scrap taxes on wine in 2008 should have spelt disaster for the airport retailer’s wine business, with its price advantage being wiped out overnight.

Instead, Sky Connection used its wealthy customer base, supplier contacts and high footfall to take its wine business upmarket. Last November, the company launched an online delivery service to Hong Kong residents offering rare vintages from the likes of Château Margaux, Château Lafite and Château Haut-Brion. Hong Kong airline Cathay Pacific is now offering a similar service.

High-end wine is also a key focus at Sydney airport where Swiss travel-retailer The Nuance Group has just opened what it claims is the largest duty-free shop in the Southern Hemisphere. The 4,000 square-metre shop features a ‘World of Wine’ concept, featuring over 100 fine Australian and New Zealand wines, including exclusives such as Jacob's Creek 35th Anniversary Padthaway 2005 Shiraz, and Orlando Jacaranda Ridge 1998 Cabernet Sauvignon. The selection has been put together by Australian wine expert Phil Reedman.

One of the highest profile liquor launches in the region is set take place next mont at Singapore Changi airport, which remains Asia’s premier hub airport for duty-free liquor launches thanks to the high standards of its long-term concessionaire DFS Group and its mix of both Asian and Western passengers. French liqueur brand Bénédictine is to launch a limited-edition bottle at Changi to celebrate the 500th anniversary of its secret recipe.

This year’s TFWA Asia Pacific exhibition has attracted a strong line up of 42 wine and spirit exhibitors, including big players such as Bacardi, Beam Global, Pernod Ricard, Rémy Cointreau, William Grant & Sons and Campari. Among this list are seven either new or returning exhibitors, most notably Camus Cognac, Heineken, Tequilera Corralejo and Château Desclans wines.

Additional services for attendees include ONE2ONE: a pre-arranged meeting service held in the main exhibition hall, which has alredy signed up 35 airports.  A conference and a number of themed workshops grouped together under the umbrella title, ‘Think Bold, Act Different’, are planned for Monday (May 10). The line up of conference speakers includes Azran Osman-Rani, the CEO of fast-growing Asian low-cost carrier AirAsia X, and Yuwa Hedrick-Wong, Mastercard’s economic advisor.

Says TFWA’s Juul-Mortensen: “We set out to innovate and improve where possible to keep the [exhibition] package fresh and dynamic, but most important of all, effective for our busy colleagues.

Undoubtedly, the unprecedented ash cloud crisis still affecting Europe’s airports will be much discussed this week on exhibitors’ stands and at after-show events, but, for the moment at least, the Asian duty-free liquor business can look forward to a good 2010.