Focus - Travel Retail - Korean Air Steals March with Airborne Duty Free 'Showcase'
The A380 - giving travel retail a wealth of opportunity
This Sunday, the travel retail channel congregates in Cannes for this year's TFWA World Exhibition. Ahead of the six-day event, Simon Warburton looks at how the new 'giants in the sky' are giving airlines the chance to exercise their innovation muscles when it comes to travel retail.
Even in these straitened times, a duty free or travel retail drinks purchase remains a staple feature of overseas travel for the vast majority of passengers. Captive and often bored for a considerable amount of time either on the ground or in the air, travellers - if they can't sleep in a business class lounge – want something to do.
Canny drinks retailers have long known just what a receptive audience they have at their fingertips and use myriad devices to entice would-be purchasers either to the airport shop or to the in-flight duty-free/travel retail catalogue.
The introduction of leviathan aircraft such as the Airbus A380 is now starting to allow airlines the ability – and crucially the space – to offer not just flying bars but the possibility to provide duty free shops as well, with Korean Air leading the way - more of whom later.
After a slow start to orders, the A380 is now becoming an established part of the aviation scene and, with its twin decks, allows carriers to provide dedicated areas for certain cabins – let's be honest it tends to be business class and upwards - where bespoke cocktails and premium brands can be sampled before potential purchase from the duty free catalogue.
Virgin Atlantic as ever, led the way with its on-board bars, giving its products a bit of razzmatazz that distinguishes the carrier from the herd both in the sky and at its airport Clubhouse lounges. It too has ordered the A380 and, although details are not yet available as to how the cabins will be configured, it's a fair bet it will introduce something eye-catching and innovative to continue its reputation for quirky inventiveness. “I can confirm that we have ten A380s on order and we expect the first delivery to be in summer 2015,” a Virgin Atlantic spokeswoman told just-drinks. “They will begin to replace our 747-400 aircraft.”
The other great innovator with its aircraft is, of course, A380 operator Emirates, which features first class and business airborne lounges with dedicated bartenders to prepare drinks, while those lucky enough to be at the front can even take a shower if they wish.
Case study – Korean Air and Absolut
In July, Korean Air stunned the industry by introducing what it insists is a “duty free showcase” and definitely not a shop on its Airbus A380 fleet. Catering to the Korean love of buying duty-free products, the airline has made the shop available to all passengers in all classes on the lower deck of the giant aircraft.
“Reaction from passengers has been huge – greater than we expected,” a Korean Air spokesman told just-drinks. “It is a cultural thing but Korean Air is the world's number one in-flight duty-free retailer by a long way.
“Also culturally, [for] Korean society when visiting friends, it is very important to come bearing gifts, that is why the duty free part of our operation has been so successful. The A380 is the only aircraft that allows us to do it.”
Korean Air has configured its colossal new aircraft with just 407 seats – a theoretical all-economy load could see more than 800 crammed into the double-decker – and, while the duty-free showcase is permanently manned, this changes in case of severe turbulence.
Drinks bottles are magnetised to keep brands tethered to the display in case of turbulence, with top-end products such as Johnnie Walker Blue Label, Veuve Clicquot Grande Dame, Chabot Armagnac and Alexander Grappa just a snapshot of the ultra-premium range available in the airline's duty free catalogue. Passengers can also taste before they buy in certain cases.
Other more readily affordable catalogue products feature Glenfiddich 18-year-old, Grey Goose vodka (1-litre) and Hennessy XO (70cl) and Camus Ile de Rey Cognacs. Specifically Asian brands include Shui Jing Fang Baijiu available on Korea-China routes and Kweichow Moutai. Wines include Beaune 1er Cru Clos des Couchereaux 2002, Grand Vin de Reignac 2005 and Vino Degli Dei Amarone 2008 among many others.
Absolut has sponsored Korean Air's bar, although you wouldn't necessarily know it. There is no blatant brand advertising, rather, more subtle cues of the Swedish vodka bottle in the Korean patterned leaf design that is around the facility.
“Absolut were included in the design process and the bartenders working on board [long-haul services] have been specially trained in Stockholm,” noted the Korean Air spokesman.
Beer producers take duty free seriously
Beer has not traditionally formed a large part of duty free and travel retail, but some producers take it very seriously indeed, with ships clearly better suited to the high volume sector. Heineken, for example, has a dedicated global duty free sales team to market its significantly-increased portfolio of Newcastle Brown Ale, Foster's, Sol, Amstel, Krusovice, Birra Moretti, Strongbow, Desperados, Affligem and others. The company recently started collaborating with World of Beer for travel retail on board Viking Line and has tailored its airport offer to reflect space and weight issues.
“The challenge/opportunity for the beer category in travel retail, and in travel retail at airports specifically, is to be there only with a relevant offer,” a Heineken spokesman told just-drinks. “To take a 24-case of beer bottles on board a plane can hardly be an attractive proposition. To creatively deal with that opportunity, we launched our Heritage Pack at Amsterdam Schiphol Airport recently.
“Important elements for us at airports are the Heineken Lounge, a dedicated bar concept designed specifically for international airports. We first implemented [it] very successfully in Newark [New York] and we are working on the next few Heineken Lounges.
"With KLM, we have a variety of consumer activations, covering their in-flight magazine Holland Herald for instance, but also including business class lounge activities around the UEFA Champions League that Heineken sponsors.”
The Dutch giant is leveraging its sponsorship of the current Rugby World Cup tournament in New Zealand with a dedicated can on board British Airways and Emirates, while its LTD Edition 1873 can is on board KLM. It also has a dedicated Heineken airport lounge concept available for concessionaires, with two slated to open later this year.
“Duty Free has the advantage of duty and tax reductions,” said the Heineken spokesman. “We do not use the price mechanism more than we do in the duty paid market. Our true belief still is we try to deliver more value, and a price-off strategy does not necessarily deliver a long-term position in travel retail.
“For gifting purposes, we believe one should charge the price it is worth, nothing more, nothing less. Therefore, we do not believe that we should be expensive with the objective to be expensive.”
For its part, Carlsberg is looking to separate travel retail items from other drinks operations by selling only in multi-packs, from six to 24 pieces. Carlsberg has worked with specialised packaging such as 24-pack suitcases and 6-packs. Tastings in airports are normally limited to seasonal products such as Tuborg Christmas Brew, while other airport activity includes promotions in airports normally in connection with UEFA/EURO football through Carlsberg sponsorship.
Shipping remains key to the brands with a Carlsberg spokesman telling just-drinks: “We have historically always had extensive business with ferry operators in the Nordic/Baltic region. “Selling units on ferry lines are mainly 24-packs compared with airports, where 6-packs are the most common.
“Price-offs are also a necessity in the travel retail business. Also travel retail is not always offering the same saving as duty free, which makes it a necessity to run price promotions. We also see an increasing interest of speciality beer where we have our Grimbergen brand.”
In the air or on the sea, duty free and its upstart offspring travel retail have defied the odds and survived. Who would have thought the channel would produce such a raft of innovation as it has. Expect more of the same – and new ideas too - as airlines look to maximise return from the extra space, and drinks companies look to take advantage. Even the humble beer continues to ply the seas and make the odd airborne appearance, leveraging the immense power of football sponsorship to jostle for front of mind. Duty free remains stubbornly a fact of drinks life.
just-drinks will be at Cannes for this year's TFWA World Exhibition. To arrange a meeting, email email@example.com.
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