Insight - Glimmers of hope at TFWA Cannes
Having expected to fly into a resolutely downbeat mood at this year's Tax Free World Association expo in Cannes, just-drinks discovered that many drinks companies are nurturing a growing sense of optimism on duty-free.
As the recession has bitten into flight passenger numbers, grounding business travellers and persuading holidaymakers to indulge in 'staycations', duty-free sales have felt the pinch in the last 12 months.
Official TFWA figures, released at the beginning of this week, revealed a 10-15% drop in airport duty-free sales so far in 2009.
Given this backdrop, it was almost a surprise for just-drinks to find the annual TFWA expo still open for business this week, and even more so to discover a growing sense of optimism within the Cannes exhibition hall walls.
But, optimism there was, despite most drinks companies conceding to us that it has been "a very tough year".
French drinks group Belvédère has seen duty-free sales fall 15% for the year so far, but Wojtek Wydro, managing director of the group's duty-free business, told just-drinks: "Some companies are saying that they believe October this year will be better than October last year, and we think it should be."
Campari's deputy managing director of international business, Pietro Logaldo, agreed: "Heineman [Germany's major airport operator] have told us that they are starting to see a little bit of light at the end of the tunnel. They are putting together marketing plans for next year."
Some companies appear to have sailed on through. Andrew Torrance, outgoing regional sales manager for Europe at Scotch whisky distiller Morrison Bowmore, told just-drinks the group has seen "growth with all the main airport operators" in 2009 - albeit from a low base.
"There are still opportunities. People are still buying in duty-free, but they are just buying different," said Torrance, who added that he has seen some trading down on Bowmore's single malt, aged whiskies.
"The market is showing some signs it might be going in the right direction, but I think it's still too early to tell," he said. Bowmore is a subsidiary of Japan's Suntory Holdings.
Of the larger players, Diageo's global director for customer marketing, Mike Greggs, told just-drinks that the drinks giant still believes there is an extra US$6bn to be squeezed out of duty-free drinks sales.
Last year, Diageo launched a five-year plan to capitalise on this. Although the group had been "expecting to be looking at significant growth this year", prior to the financial markets collapse last autumn, Greggs said that the firm's assessment of the market's long-term potential "hasn't changed".
Elsewhere in the drinks industry, Pernod Ricard lifted spirits this week by reporting better-than-expected third quarter sales.
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