Preview - Tax Free World Association World Exhibition 2012

Next week’s TFWA World Exhibition reverts to its traditional late October time slot after last year’s G20 Summit in Cannes forced the show to set up shop a month earlier in sunny September. Yet the prospect of chillier nights and a shower or two on the Croisette is unlikely to dampen the spirits of the 104 liquor exhibitors attending this year’s event. Indeed, all things considered, Joe Bates believes that the duty-free wine and spirit business is in pretty good shape.

The world is not short of worries. Crises abound, from rising political tensions between China, Taiwan and Japan in Asia and the raging Syrian civil war, to the continuing Eurozone debacle and the slowing Brazilian economy. Yet the 27.5m-case travel retail liquor business appears to be largely untroubled by this gloomy macro-economic outlook, especially in the channel’s two fastest-growing markets of Asia-Pacific and the Americas.

The main reason for the trade’s robust performance is the increased spending by the rising number of travellers from growth market economies, most notably China, Russia, India and Brazil. Latest figures from The IWSR show global travel-retail liquor sales rose by 7% last year. This healthy trend has continued into 2012, with major international airport hubs such as Paris Charles de Gaulle, Dubai International and Los Angeles all benefiting from high-spending growth market travellers. 

The Chinese in particular have become a major force in world tourism. According to the World Tourism Organization (WTO), some 66m Chinese travelled abroad last year, a jump of over 15% on 2010. And, it’s not just about the numbers either. These younger, affluent, tech-savvy Chinese travellers are becoming more adventurous, venturing beyond the traditional destinations of Hong Kong and Macau to visit Europe, the Middle East, South America and the US. 

Travel-retailers are falling over themselves to target this key group of travellers. They are hiring Mandarin-speaking sales staff, installing Chinese credit card systems and, in terms of liquor, beefing up their assortment of XO and Extra Cognacs, super-premium Scotch whiskies, premier cru Bordeaux wines and premium Chinese spirit brands. Their efforts are clearly paying off - duty-free sales of Cognac, China’s favourite foreign spirit, were up by over 15% last year.

Not everything is rosy, of course. The Eurozone crisis has certainly left its mark on sub-categories less in demand from Asian travellers such as liqueurs, lower-value still wines and even Champagne. All have seen either slow or declining travel-retail sales volumes. Sales at regional European airports with a lower percentage of long-haul travellers have also been hit as low-cost airlines enforce their controversial one-bag rules, which discourage passengers from taking extra shopping bags with them as hand luggage.

Yet, even in Europe, there are pockets of growth, especially the further east you go. Turkey and gas-rich Russia are both experiencing strong duty-free sales growth, for instance. Even the Greek travel-retail business remains of interest, despite the country’s tattered economy. Earlier this month, Swiss multi-national travel retailer Dufry acquired a controlling 51% stake in Greece’s largest duty-free operator Hellenic Duty Free Shops, maintaining that the company’s international tourist-dominated customer base made it a good buy. 

The mood among exhibitors, buyers and visitors to Cannes, then, will be upbeat, but what can they expect of the show itself?

After Sunday’s traditional sports activities and 'Opening Cocktail' event, the exhibition gets underway in earnest with the usually well-attended Monday Conference. In previous years, organiser Tax Free World Exhibition (TFWA) has set the bar high in terms of keynote speakers, attracting the likes of Neil Armstrong, Kofi Annan and Bob Geldof. 

Madeleine Albright, the Czechoslovakian-born first female US Secretary of State, is this year’s choice, and another big hitter, whose views on current global political and economic events should certainly be worth hearing. Jean-Charles Decaux, CEO of global advertising giant JC Decaux, is the conference’s other big name. He will be examining how the digital revolution has opened up new opportunities for retailers and brand owners to target travelling consumers.

All the big liquor players will be exhibiting at the show, plus a few smaller newcomers (or returnees) such as Guatemala’s Botran rum and Spain’s Bodegas Osborne. As ever, the Monday and Tuesday nights are the most packed evenings for cocktail and/or launch parties during the show. Monday sees Pernod Ricard throw a joint party to celebrate the Cannes launch of the new Chivas Regal travel-retail exclusive, Chivas Brothers’ Blend, and Absolut Unique, which at 4m differently decorated and numbered bottles perhaps stretches the definition of ‘limited edition’, but is undeniably distinctive. 

Across town, SPI Group is hoping for a suitably heated atmosphere at its Monday night event to mark the launch of Stoli Hot and Stoli Sticki, which are remixed versions of two long-standing flavours first launched by the vodka brand in the 1960s: Pepper and Honey & Herbs. The company is also launching the Cranberry-flavoured Stoli Red and the travel-retail exclusive Stoli Salted Karamel.

On Tuesday, the focus will switch to rum and single-malt whisky. At a lunchtime event at the Majestic Hotel The Edrington Group will be unveiling a new Brugal rum, Papa Andrés, while later on William Grant & Sons will be hosting an evening party onboard its life president Charles Gordon’s private yacht, to celebrate the launch of the new Balvenie 50 Year Old, as well as the first Tullamore Dew travel-retail exclusive, Tullamore Dew 12 Year Old single malt Sherry cask. 

There are plenty of other parties and launches to attend, of course. Heineken, Hubert de Polignac and Diageo Global Travel and Middle East (GTME) are just a few of the drinks exhibitors staging events, making this one of the busiest shows in recent years from a liquor perspective.

Lastly, the already enormous exhibition is getting larger this year. A new exhibition area, the Beach Village, is set to open, taking the total exhibition space to a record 20,000 square feet. Yet finding your way around the multi-level Palais and its ever-increasing outlying ‘villages’ should be a lot easier this year thanks to the introduction of new touch-screen navigation points.

If, like me you have a dreadful sense of direction, these devices may just save some sore feet, red faces and otherwise missed appointments.

just-drinks will be at Cannes for this year's TFWA World Exhibition. To arrange a meeting, email news@just-drinks.com.