Americas Duty Free & Travel Retailing ASUTIL 2014 by Paramount Publishing Ltd.

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JUNE 2014 ASUTIL • VOL 24, NO 3

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ASUTIL 2014

ASUTIL celebrates 20th anniversary p.

Dufry forges ahead p.

Great expectations p. for Grupo Zaire

Changes for Safilo Americas p.

Letter from the President

Welcome to

ASUTIL

2014!

s many of you know, ASUTIL is about much more than our annual conference. Indeed, the work of the association is year-round and encompasses much more than the industry-leading event we all look forward to each June. A key focus of ASUTIL has always been working with local governments in South America to maximize operational conditions for travel retail operators in the region. Most recently, we have been working with policy-makers on mitigating the threat that increasing restrictions on the sale of tobacco products poses to our members’ bottom lines. Another key area of concentration for ASUTIL is working with local governments to increase allowances for arrivals shops. 2014 has been a challenging year for Latin America in general, and consequently for Latin American travel retail specifically. Regional economies have been dealing with a macroeconomic slowdown, many countries are battling increasing inflation and middle class debt is high. In this type of environment, ASUTIL’s lobbying on behalf on the industry is increasingly important; we need to give ourselves every opportunity we can in order to keep growing. Likewise, the current business environment makes events such as ASUTIL’s yearly conference all the more vital to the continued success of the duty free industry in Latin America. This year, as every year, we aim to offer attendees the best possible information available from the most trusted experts as a means of drawing a roadmap for the year to come—a handbook of sorts for strengthening not only individual businesses, but also relationships and consequently the industry as a whole. And this year’s roster of speakers is an all-star lineup of experienced businesspeople from duty free and other sectors in keeping

with ASUTIL’s promise to give delegates first-rate business intelligence from a wide spectrum of industries. I’m particularly excited to hear from CEO of Dufry Julian Diaz. The company’s influence in Latin America is undeniable and I’m sure we’ll be able to glean some very useful information from his presentation. In addition to the speakers, though, what keeps people coming back to the ASUTIL conference year after year—and indeed what keep the conference growing year in and year out—is the unique opportunity for networking that the event offers. I am very proud that ASUTIL is considered not only an exceptional venue for information sharing, but also a place where face-to-face interaction is a highly valued part of the overall experience. I, like many of you, believe that duty free is in my DNA. It is a very dynamic and energetic industry that I live in a very intense way. I truly think this year’s ASUTIL conference will, as it does every year, effectively capture this elusive quality that makes our industry what it is. For many of us, duty free is a passion as opposed to a job, where we enjoy what we do and are blessed to make a living doing what we love. It is my great pleasure to welcome you to Mexico City for the 2014 ASUTIL conference. I look forward to hearing from you how we can ensure that duty free in the region thrives for years to come. All the best,

Enrique Urioste President, ASUTIL

www.dutyfreemagazine.ca AMERICAS DUTY FREE & TRAVEL RETAILING

Letter from the President

¡Bienvenidos a

ASUTIL

2014!

omo la mayoría de ustedes saben, ASUTIL trasciende el ámbito de una conferencia anual, pues el trabajo de la Asociación se realiza durante todo el año, y abarca mucho más que el principal evento de la industria cuya materialización esperamos cada mes de junio. El trabajo con los gobiernos locales de Suramérica, a fin de maximizar las condiciones operativas para los operadores minoristas de viaje en la región, ha sido siempre un objetivo vital de ASUTIL. Recientemente hemos estado trabajando con formuladores de políticas, para mitigar la amenaza que plantean las crecientes restricciones sobre la venta de productos del tabaco para las ganancias de nuestros miembros. Otro punto clave de enfoque de ASUTIL es la colaboración con los gobiernos locales, para incrementar las asignaciones de las tiendas en las secciones de llegadas de los aeropuertos. El 2014 ha sido un año lleno de desafíos para Latinoamérica en general, y por consiguiente, para el sector minorista de viajes en específico. Las economías regionales han estado enfrentando una desaceleración macroeconómica, muchos países están batallando con una inflación creciente, y la deuda de la clase media es alta. En este tipo de condiciones, la intercesión que ejerce ASUTIL a favor de la industria es cada vez más importante. Tenemos que darnos todas las oportunidades posibles para mantener nuestro crecimiento. Del mismo modo, el entorno actual de negocios hace que eventos como la conferencia anual de ASUTIL sean más y más vitales para el éxito continuo de la industria duty free en Latinoamérica. Este año, como en los anteriores, nos proponemos ofrecerles a los asistentes la mejor información posible suministrada por los expertos más confiables, como medio de trazar una hoja de ruta para el año próximo. Una suerte de guía de referencia para fortalecer no solo los negocios en sí, sino también las relaciones entre los mismos, y en consecuencia, la industria en su conjunto. El grupo de oradores de este año, está compuesto por una selección estelar de comerciantes experimentados de la industria duty

AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2014

free y otros sectores, como cumplimiento de la promesa formulada por ASUTIL de proporcionarles a los delegados inteligencia de primera, proveniente de una amplia gama de industrias. Estoy particularmente entusiasmado con la ponencia de Julián Díaz, Director Ejecutivo de Dufry. La influencia de la compañía en Latinoamérica es innegable, y estoy seguro de que podremos recopilar una información muy útil de su presentación. Además de los ponentes, lo que sigue atrayendo asistentes a la conferencia de ASUTIL año tras año—y que garantizará el crecimiento constante de la misma—es la oportunidad única de contacto que ofrece. Me enorgullece que ASUTIL no solo está considerada como un sitio excepcional para el intercambio de información, sino también como el lugar donde la interacción individual es componente altamente valorado de la experiencia general. Yo, como muchos de ustedes, pienso que el duty free está en mi ADN. Es un sector muy dinámico y pleno de energía que vivo de forma intensa. Creo realmente que la conferencia ASUTIL 2014 captará, como ocurre cada año, esa cualidad elusiva que define a nuestra industria. Para gran parte de nosotros, duty free es pasión, no trabajo, donde la labor que realizamos equivale a disfrute, y nos sentimos bendecidos por ganarnos la vida haciendo lo que amamos. Es un gran placer darles la bienvenida a la Ciudad de México, sede de la conferencia ASUTIL 2014. Espero escuchar sus opiniones, para que podamos garantizar que el sector duty free de la región siga floreciendo en años venideros. Mis mejores deseos,

Enrique Urioste Presidente de ASUTIL

Letter from the Editor

On our own two feet

he theme of the year’s ASUTIL conference is “Strengthening the Future,” and as always, it is aptly titled. Just a few short years ago at the height of the travel retail boom in Latin America, retailers, suppliers and service providers were holding on tight and trying to ride the wave as far as it would take them. This isn’t to say that companies weren’t investing in their future; however, when business is booming it’s only natural to focus one’s energy on the business of selling. Now that the dust has settled and we’ve had time to take stock, given slowing growth in travel and sales, sights are increasingly turning to the future. Despite the slightly less frenetic pace, the big picture indicates that we are still on the upward trajectory and will be for some time. Mindful of this fact, many operators—Dufry, Siñeriz, London Supply, Top Brands and Mannah to name but a few—are preparing for an overall increase in shoppers over the mid to long term with new openings and renovations. In the short term, the FIFA World Cup is taking place concurrently with ASUTIL, and airport duty free operators in Brazil—Dufry no doubt being the most prominent—are sure to receive a boost in sales. Whether the event will spell sales increases for shops along the country’s border is up for debate. Alejandro Sosa Lucas-Calcraft, President of Uruguayan distributor Lucas-Calcraft, recalls in our Latin America report that despite being highly anticipated at the downtown stores in Rivera, the Copa America of a few years back didn’t end up bringing in the spenders as expected. Only time will tell if the considerable might of sports’ biggest event will translate into increased sales in neighboring countries’ border stores. Of course, it’s better to be safe than sorry. Operators and suppliers alike along Brazil’s borders are ensuring that the offer on hand during the event is as enticing as possible. But despite being an important moment for Brazil, the FIFA World Cup, and indeed even the 2016 Olympics, are a blip on the radar of a story that is about far more than any single event. Strengthening our collective future is, in fact, about ensuring that our sales continue to rise and that travelers continue to be pulled in by the magic of the duty free shopping experience regardless of what is happening on the peripheral. ASUTIL certainly knows this, and no doubt the organizers have an insightful conference program planned for delegates. I wish you the best at this year’s conference as you partake in discussions aimed at building up our industry sustainably so that it will continue to shine in its own right. Kindest Regards,

Hibah Noor Editor-in-Chief hibah@dutyfreemagazine.ca

AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2014

The Americas Duty Free & Travel Retailing magazine (ISSN 0962-0699) is published five times a year March, April, June, October and November by Global Marketing Company Ltd. 26 Pearl Street, Mississauga, Ontario L5M 1X2 Canada. It is distributed throughout Central America, South America, the United States, Canada, U.S. Virgin Islands, U.S. Pacific islands, and the islands in the Caribbean. The views expressed in this magazine do not necessarily reflect the views and opinions of the publisher or the editor. June 2014, Vol 24. No. 3 Printed in Canada. All rights reserved. Nothing may be reprinted in whole or in part without written permission from the publisher. © 2014 Global Marketing Company Ltd.

AMERICAS DUTY FREE & TRAVEL RETAILING 26 Pearl Street Mississauga, Ontario L5M 1X2 Canada Tel: 1 905 821 3344; Fax: 1 905 821 2777 www.dutyfreemagazine.ca

PUBLISHER Aijaz Khan aijaz@globalmarketingcom.ca EDITORIAL DEPARTMENT EDITOR-IN-CHIEF Hibah Noor hibah@dutyfreemagazine.ca EDITOR Wendy Morley wendy@dutyfreemagazine.ca ASSOCIATE EDITOR Ryan White ryan@globalmarketingcom.ca ART DIRECTOR Jessica Hearn jessica@globalmarketingcom.ca CONTRIBUTORS David Nusair

ADVERTISING SALES ADVERTISING & MARKETING EXECUTIVE Jacqueline Hammill jacqueline@dutyfreemagazine.ca CIRCULATION & SUBSCRIPTION MANAGER Deepa J deepa@globalmarketingcom.ca

Letter from the Editor

Brillar con luz propia

l tema de la conferencia ASUTIL de este año es “Fortaleciendo el futuro”, y, como siempre, no se podía haber elegido un título mejor. Hace pocos años, en la cúspide del boom del sector minorista de viajes en Latinoamérica, los comerciantes, suministradores y proveedores de servicios se asían firmemente y trataban de cabalgar la ola hasta la mayor distancia posible. Pero esto no quiere decir que las compañías no invertían en el futuro. Sin embargo, cuando el negocio marcha bien, es un hecho natural la concentración de la energía en el negocio de vender. Ahora que se aplacó el temporal y hemos tenido tiempo para reabastecernos, dado el lento crecimiento en los viajes y las ventas, las perspectivas se orientan cada vez más al futuro. A pesar del ritmo ligeramente menos frenético, la visión general indica que vamos en trayectoria ascendente, una situación que se mantendrá durante algún tiempo. Conscientes de esta realidad, numerosos operadores—como Dufry, Siñeriz, London Supply, Top Brands y Mannah, entre otros—se preparan con vistas a un incremento en la cifra de compradores a mediano y largo plazo, con nuevas inauguraciones y renovaciones. A corto plazo, la Copa Mundial de la FIFA coincidirá con ASUTIL, y los operadores duty free de aeropuertos en Brasil— Dufry, sin dudas, como el más prominente—están seguros de recibir un impulso en las ventas. Ahora bien, el hecho de que el evento provoque incrementos para las ventas en la frontera del país queda a debate. Alejandro Sosa Lucas-Calcraft, presidente del distribuidor uruguayo Lucas-Calcraft, recuerda en nuestro informe de Latinoamérica que, a pesar de ser altamente esperada en las tiendas del sector comercial de Rivera, la Copa América celebrada años atrás no logró atraer tantos compradores como se proyectó. Solo el tiempo dirá si el considerable poder del principal evento deportivo se traducirá en un incremento de las ventas en las tiendas de frontera de los países vecinos. Por supuesto, más vale precaver. Los operadores y suministradores de la frontera con Brasil están garantizando que la oferta disponible durante el evento sea lo más atractiva posible. Pero, a pesar de ser un momento importante para Brasil, la Copa Mundial FIFA, y más aun las Olimpiadas 2016, son una huella en el radar de una historia que supera cualquier evento en su individualidad. Fortalecer nuestro futuro colectivo es, de hecho, garantizar que nuestras ventas sigan aumentando, y que los viajeros sigan sintiéndose atraídos por la magia de la experiencia de compras duty free, independientemente de lo que ocurra en la periferia. ASUTIL está bien consciente de esta situación, y, sin dudas, sus organizadores han planificado un programa sustancial para los delegados. Les deseo lo mejor en la conferencia de este año, donde participarán en intercambios con el propósito de edificar sosteniblemente nuestra industria, para que siga brillando con luz propia. Cordialmente,

AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2014

Hibah Noor Jefa de Redacción hibah@dutyfreemagazine.ca

JUNE 2014 • VOL 24, NO 3

Contents

ASUTIL’S 20TH ANNIVERSARY SUPPLEMENT

32 Spreading out HK GLOBAL

US-based HKG is moving into new territories south of the border

19 In the beginning ASUTIL HISTORY

ASUTIL was created to represent the best interests of those in the duty free industry in South America

THE BOARD OF ASUTIL ASUTIL’s board members are elected for two-year terms. Here are the organization’s original board members, elected for 1995-1996, and its current board members, elected for 2014-2015

28 Familiar faces, exotic places ASUTIL VENUES

36 Staying strong

WORLD DUTY FREE GROUP

World Duty Free Group releases its Q1 consolidated revenues just ahead of ASUTIL 2014 with the Americas performing well as the result of US retail acquisitions

40 A common goal

LATIN AMERICA REPORT

Americas Duty Free speaks with Latin American operators service providers as they prepare to convene in Mexico City toward the common goal of strengthening the future

Those lucky enough to attend the annual ASUTIL conference experience some of the most beautiful locations throughout the region

Un propósito común

“HAPPY 20TH ANNIVERSARY!”

Americas Duty Free habla con proveedores de servicios a operadores latinoamericanos, sobre los preparativos para reunirse en Ciudad de México con el objetivo común de fortalecer el futuro

ASUTIL’s longtime supporters congratulate the association on shaping an industry in a dynamic region

advertisement removed for legal reasons

54 Forging ahead

DUFRY REGION AMERICAS I

Dufry’s growth strategy remains centered on emerging markets with a focus on Latin America

58 In a good spot

68 Great expectations GRUPO ZAIRE

The upcoming opening of Grupo Zaire’s 6,000-squaremeter store in Cobija, Bolivia promises to offer travelers a number of products never before seen in the region

DUFRY NORTH AMERICA

With traffic to many North American airports where Dufry operates up in the first couple of months of 2014 and a new walkthrough store in Chicago, the operator is in a good place

62 Endless summer ASUR

International traffic increases across all of ASUR’s airports over the first quarter signal big opportunities for the rest of year—not only for aeronautical revenue but for duty free as well

64 The next level

GUARULHOS INTERNATIONAL AIRPORT

With ever-increasing volume, Guarulhos International Airport’s expansion is right on target

70 Daring to be different LONDON SUPPLY

London Supply’s Commercial Manager Magdalena Ducos tells Americas Duty Free about what’s to come this year from one of the most eclectic travel retailers in the industry

requires 74 Instability adaptability LE ROUGE

Le Rouge knows how to roll with the economic downturn

Asia Pacific 76 TFWA Exhibition and Conference TFWA AP REVIEW

closes on a high note

A total of 2,683 visitors, up 9.4% from last year, visited the show from 1,022 companies (+1.8%)

R dâ&#x20AC;&#x2122; uba

20 Ho n 13 /1 nn 4 e

80 A glittering success ALEX AND ANI

Alex and Ani’s rapid expansion into travel retail has yielded impressive results

changes for 86 Big Safilo Americas SAFILO GROUP

Italian eyewear company Safilo benefits from innovative cross promotions

88 A grand design SHISEIDO

Shiseido swings for the fences with ambitious plans for Nars Cosmetics and bareMinerals

90 The sweet smell of success MÄURER & WIRTZ

Mäurer & Wirtz builds on 4711 brand to expand on a worldwide basis

AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2014

Discover the Duty Free World DUTY Paraguay, Sudamérica

FREE Mannah Duty Free

Aeropuerto Internacional Silvio Pettirossi Asunción - Paraguay Phone: (+595 21) 645 715 / 645 753 Aeropuerto Internacional Guaraní Ciudad del Este - Paraguay Phone: (+595 64) 421 075 dutyfree_asu@mannah.com.py

118

92 Watching growth CROSS

A collaboration between Cross and Torero promises success for both companies

96 Legend becomes reality GLOBEFILL

After years of researching the crystal head legend, two creative icons have produced a product that is equal parts modern and ancient

TEQUILA SUPPLEMENT

99 Moving ahead TEQUILA REPORT

Once a distant thought for travel retailers, tequila and mezcal are forging a place of their own

108 Off to a good start

110 Forging its own path BROWN-FORMAN

Brown-Forman discovers that relying on itself yields the best results

FRATERNITY SPIRITS

Fraternity Spirits enjoys strong single-digit sales increases over the first few months of the year and expects the trend to continue as 2014 progresses

116 Botran takes its time BOTRAN

It takes time to bring Botran aged rums to their rich depth of flavor, and the company is not rushing its expansion into the worldâ&#x20AC;&#x2122;s airports

118 The original premium STOLI

With a long history as the premium vodka, Stoli is reasserting itself in that role

120 A competitive environment WALDEMAR BEHN

New flavors and packaging help Behn combat slowing growth

122

110

TOBACCO NEWS J. Cortes makes crucial move n The debut of Dunhill 1907 n The new Cohiba

asutil 2014

YEARS AND

COUNTING

ASUTIL History p.

Board of ASUTIL p.

ASUTIL venues p.

Wellwishes p.

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ASUTIL History

In the

beginning by

WENDY MORLEY

ASUTIL was created to represent the best interests of those in the duty free industry in South America

ASUTIL’s Secretary General José Luis Donagaray and Treasurer Daniel Pomiés

n Rio de Janeiro in August of 1994, a group of the top people in the duty free industry in South America gathered. They had met many times before, but this time they were meeting for a special purpose: to sign the constitution of the Asociación Sudamericana de Tiendas Libres, known as ASUTIL. The next year, ASUTIL was formalized as an international non-political, non-profit organization. One year later, ASUTIL headquarters opened in the Torre Libertad – Plaza Cagancha 1335 Ofic. 501/502. The association has since moved to the World Trade Center at 1248 Luis Alberto de Herrara tower in Montevideo, the capital city of Uruguay. SIGNING THE CONSTITUTION WERE: Samuel Kauffmann, Brasif Comercial/Cafés Finos Lojas Francas Santos de Araújo Fagundes, Brasif Comercial/Cafés Finos Lojas Francas Sergio Penticoinas, Brasif Comercial/Cafés Finos Lojas Francas Carmen Cecilia de Mayz, Fundación del Niño H. Rubens Horwatitsch, H. Stern Aurelio Barria Jr., Impotaciones Eldorado and Aerolibres Equatoriana Carlos Maris Cabrera, Interbaires Ricardo Spitznagel, Interbaires Victor Hugo A. Bonnet, London Supply Juan Alberto Quartino Cueskes, Neutral José Luiz Falcáo Borja, Rota Consultores Ariel Sanchez Sanchez, Zeinal Hermanos and Bernabel Trading Luis Lapique, Zeinal Hermanos and Bernabel Trading www.dutyfreemagazine.ca AMERICAS DUTY FREE & TRAVEL RETAILING

ASUTIL History Daniel Pomiés, who became the General Manager of Neutral in 1992, was on the board as treasurer for the first few years. He says, “ASUTIL didn’t just happen one day because someone had a shiny idea. In the years prior to the birth of the association, duty free operators would informally hold regular meetings in different places to arrange competition matters in a healthy way.” He explains that Neutral started in airports in 1992, though they had previous experience in border stores. Meanwhile, bigger companies such as Brasif and Interbaires had experience in airports. “We shared information, shared suggested pricing for the consumer,” Pomiés continues. “These discussions created the idea to make an association similar to the association in the northern hemisphere, IAADFS, and similar to the Tax Free World Association in Europe, though with a different style and different objectives.” According to Pomiés, the objective in creating ASUTIL was never to add another trade show to the yearly calendar of events. The objective has always been to create a formal association with the focus of developing the duty free business in South America—now extended to include other parts of Latin America. The association’s purpose is and has always been to create a

specialized forum where those involved in the industry in Latin America can exchange concepts and ideas and discuss issues that pertain to the industry. ASUTIL maintains contact and cooperation with companies and associations that affect the duty free industry in Latin America. The association guides its members with respect to any trends, laws or other activity that is either beneficial or harmful to the industry, and then works on its members’ behalf to improve or take advantage of the situation, as the case may be. ASUTIL takes a proactive approach to the industry in order to help its members better understand and make use of any information that can help improve their businesses. To this end, the association sponsors or conducts research, training, education and investment; provides seminars and conferences, and the board maintains contact, exchanges ideas and discusses relevant circumstances with other related national and international organizations and represents its members’ best interests to governments. ASUTIL works to develop strategies that help its membership as a whole. It is not 20

AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2014

about finding business, but it is about creating a better climate for its members’ businesses. Since Pomiés was located in Montevideo, the city chosen as the location for the headquarters, he took on the responsibility of managing matters. He found the location and the people needed to make the idea a reality, sharing these steps with the board members along the way. Pomiés was a notary public, known in Spanish as an escribano publico. Using his professional expertise, he assessed contracts and curated the development of regulations while following the rules of the association. Though he held different positions over the years, he began as treasurer and was often reelected in that position. Pomiés left ASUTIL in 2008 to start Duty Free Americas in Uruguay, opening the company’s first store in Rivera, on the border with Brazil. He says it was “a welcome challenge.” After that point he started a consultancy company for the industry in Uruguay. But while he left the board of ASUTIL, he has stayed closely connected

with the organization. Not only does he work as a consultant for a number of companies in the industry, he helps his son run a family business that distributes to duty free operators. Pomiés is often at ASUTIL headquarters and he is very much a part of the duty free industry.

The arms’ length role

ASUTIL’s Secretary General position cannot be held by an individual inside the industry, whether operator or distributor, and he or she can have no relationship with an operator or distributor. Whoever holds this position must be at arms’ length from the industry, so he or she can maintain objectivity. The first person in this role at ASUTIL was Enrique Urioste, who was a lawyer. He held this position until the year 2000, when he became the CEO of duty free wholesaler IOSC. José Louis Donagaray, who was the Director of Peugeot for Uruguay, took over the role and has held it ever since. While other board members www.dutyfreemagazine.ca AMERICAS DUTY FREE & TRAVEL RETAILING

ASUTIL History change each year or two, because it’s a unique position the role of Secretary General does not. Donagaray’s first year in his role as Secretary General of ASUTIL (2001), the conference was held in September. The attacks of 9/11 took place during the event, and the conference ended up being canceled. CNN was put on the screens so the delegates could see what was happening. Donagaray has seen many changes since then. His first year, the conference had 80 delegates. In 2013 there were 330. “The conference hasn’t grown only in number of delegates,” he says. “It has also grown in duration, activities and content. It used to take place over two mornings. Now the event lasts 3½ days, with networking time and social activities.” The industry has grown immensely in the last 13 years. The region’s huge economic upswing, though that is now slowing, has meant more people own cars and take flights, often for their first time. Donagaray says, “They travel, and they shop.” But there are more challenges that also come along with a good economy, including ready access to information. When ASUTIL began there was practically no Internet or social media. Now everyone goes online and compares prices. Customers are very knowledgeable, and this creates greater challenge for the industry. The growth in the region’s duty free industry stems largely from the rise of the middle class in high-population countries such as Brazil. As the per-capita GDP of emerging economies increases, so too does the propensity for travel and shopping, duty free is an especially attractive alternative to the domestic market in Latin

AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2014

America, as taxes in the region tend to be very high. With the growth in travelers throughout the region looking to spend their new disposable income, the size of both airport and border stores, as well as their product selection, has grown in proportion. Both local and international traffic within and to the region is increasing in general. It is very common for South Americans to plan duty free shopping as part of their trip. They often purchase online beforehand, and then pick their purchases up at the airport. Duty free shopping is an important aspect of many people’s trips, whether they are flying or driving.

ASUTIL’s challenge

Donagaray believes a big part of ASUTIL’s role is to help foster the relationship between operators and suppliers, and help both to understand the consumer. Shoppers are not the same at border stores and airports, or even from Departures to Arrivals levels. As part of a travel hub, the duty free store has a wider range of customers than most retail operations; they may be from any country, they may speak any language, and they can be from a wide range of income brackets. He says: “Duty free operators in Latin America have been proactive in a lot of areas. The first walkthrough duty free store was developed here. Brands, destination merchandising, product mix and product types—many duty free concepts have been tested and proven here.”

The conference

While the conference is not all that ASUTIL does, it is an important aspect. This conference is unlike any other trade show around the world. While the event does offer a few stands for companies to present their new products, the focus is on learning and support for delegates. Donagaray says the conference has three pillars: thoughtprovoking speakers, networking opportunities and social activities. According to former ASUTIL President (2010-2011) Francisco Heredia, an important distinction between this and other events is that, “at ASUTIL people are representing businesses rather than businesses being represented by people.” This makes a big difference in the way delegates communicate. All the major players in the Latin American duty free industry come together as equals for the benefit of all in the region. José Carlos Rosa, who held office as ASUTIL president in 20122013, says, “Latin America is not homogenous. There are similarities, but each country has its own idiosyncrasies and needs. At the ASUTIL conference, you learn the reality as you deal with individuals. One of the most valuable assets of ASUTIL is the coming together of people from various countries in Latin America and the quality of the discussions that operators from each country bring to the table. Perception and reality can sometimes be two very different things, and the frank conversations that occur at ASUTIL’s yearly conferences help move us along as an industry.”

Rosa says the ASUTIL conference immediately helped him understand the industry in the region, and that the conference does the same thing for any individual or company new to Latin America. He feels the atmosphere lends itself to conversation and that the casual ambiance helps delegates feel comfortable discussing, learning and formulating common goals. “It’s a wonderful thing to be able to learn from other people’s experiences and incorporate this knowledge into your business,” he says. “The contribution of this forum to Latin American travel retail cannot be overstated.” But Donagaray wants to make it clear that as important as the conference is, ASUTIL is not just this yearly event. “The organization works year round to ensure that the Latin American duty free industry is well represented on the world stage.” He cites the example of the illicit trade in alcohol and tobacco. The duty free industry relies on ASUTIL to effectively communicate their members’ stance and let others know the industry is highly regulated. There are always a number of issues facing duty free. ASUTIL helps give a collective voice to the Latin American duty free industry and works together with other industries and organizations to solve problems and correct potential problems. Donagaray adds that improvements are always possible, and that ASUTIL helps these improvements happen.

www.dutyfreemagazine.ca AMERICAS DUTY FREE & TRAVEL RETAILING

ASUTIL History

Continued growth

All eyes have been on Latin America for the past few years. Brazil has been at the center of this focus, with its rapidly improving economy (the seventh-highest GDP in the world) the upcoming high-profile ports events: the World Cup in 2014 and the Olympics in 2016. Duty free is moving forward in this region. Between 2008 and 2011, duty free sales in Latin America increased 40%. Air traffic in Latin America is expected to grow at 5.3% annually over the coming 20 years, above the global average and traffic in the region is forecast to grow at 6% annually. Double-digit increases can’t realistically be sustained forever, but the region is forecast to keep growing until at least 2020. Despite duty free sales generally growing ahead of passenger numbers over the last few years, there’s no doubt that increased travel has been the engine that has driven the travel retail boom to date. As growth in travel slows, the challenge for retailers now becomes understanding clients’ needs on a deeper level and adjusting everything from product mix to promotions and customer service initiatives in order to continue converting travelers into shoppers. Donagary assures ASUTIL’s members that the organization will always look after their best interest. “While it’s impossible to say what changes will take place in years to come, rest assured that ASUTIL will evolve with the industry as Latin America continues to be a top player in the worldwide duty free channel.” 

AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2014

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THE ORIGINAL

The Board of

ASUTIL ASUTIL’s board members are elected for two-year terms. Here are the organization’s original board members, elected for 1995–1996, and its current board members, elected for 2014–2015

1995–1996

2014–2015

President Santos de Araujo, Brasif

President Enrique Urioste, Neutral

Vice President Victor Hugo Bonnet, London Supply

Vice President Marcelo Montico, Grupo Wisa

Secretary Ariel Sanchez, Zeinal Hermanos

Secretary Treasurer Martin Laffitte, Zeinal Hermanos

Directors Cythia Barreto, Bright Star Victor Hugo Bonnet, London Supply Treasurer Daniel Pomiés, Neutral

Pedro Castro, World Duty Free Group Álvaro Neto, Dufry Uruguay Oscar García Pedrosa, Dufry Argentina José Carlos Rosa, Dufry Brasil

Secretary General Enrique Urioste

AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2014

Secretary General José Luis Donagaray

CEDAR ESSENCE THE NEW FRAGRANCE

ASUTIL Venues

Familiar faces, exotic places Those lucky enough to attend the annual ASUTIL conference experience some of the most beautiful locations throughout the region

1998 Alvear Palace, Buenos Aires, Argentina

1997

InterContinental, Rio de Janeiro, Brazil

he offices of ASUTIL may be located in Montevideo, Uruguay, but the organization truly represents its members from all over Latin America. That is evidenced by looking at the locations in which the yearly conference has taken place throughout its history, including locations in east and west South America, Central America, the Latin Caribbean and Mexico. A look at the venues within these locations demonstrates how professional the organization is, and how much its board cares about the membersâ&#x20AC;&#x2122; experience.

2000 Sheraton, Santiago, Chile

1999

Conrad Hilton, Punta del Este, Uruguay

AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2014

2002

Radisson Plaza Hotel, Montevideo, Uruguay

2001

Sheraton, Rio de Janeiro, Brazil

2004

Pestana Bahia Hotel, Salvador, Brazil

2003

Hotel Gran Melia, Cancun, Mexico

2005 Hilton, Buenos Aires, Argentina

2006 Sheraton, Santiago, Chile

2007

2008

InterContinental, Panama City, Panama

JW Marriott Hotel, Lima, Peru

2009

Hyatt Regency, Oranjestad, Aruba

2010 Caribe Hilton, San Juan, Puerto Rico

2012

Iguazú Grand Hotel Iguazu, Argentina

2011

JW Marriott Hotel, Cancun, Mexico

2013

Barceló Bávaro Beach Resort, Punta Cana, Dominican Republic

www.dutyfreemagazine.ca AMERICAS DUTY FREE & TRAVEL RETAILING

Well Wishes

“Happy 20th

ANNIVERSARY!” ASUTIL’s longtime supporters congratulate the association on shaping an industry in a dynamic region

“

At TFWA we are proud of our co-operation with ASUTIL and we convey our congratulations on 20 years of sterling service to the industry.”

“As members of ASUTIL, World Duty Free Group is delighted to extend its sincere congratulations to friends and colleagues at ASUTIL as it celebrates its 20th anniversary. The conference is a unique event in the travel retail and duty free industry calendar and continues to set topical agendas and deliver excellent networking opportunities for everyone who attends. Our organization is proud to be represented on the current ASUTIL board and we wish you continued success as you celebrate this important milestone.”

“

ERIK JUUL-MORTENSEN, PRESIDENT, TFWA

PEDRO CASTRO, DIRECTOR OF INTERNATIONAL OPERATIONS, WORLD DUTY FREE GROUP AND ASUTIL BOARD MEMBER

A very happy anniversary to the ASUTIL association on an excellent 20 years. You’ve done a fantastic job bringing the Latin American and Caribbean travel retail and duty free industry together for informative and concise conferences. I look forward to attending many more of your conferences in the future.” JAVIER LABARTA, CEO, PARBEL

“

Quiero felicitar a ASUTIL por sus 20 años de trabajo y espero que sigamos trabajando muchos años más.” MOHAMED MANNAH, PRESIDENT, MANNAH DUTY FREE

“Essence Corp. congratulates ASUTIL on its 20th Anniversary! This conference has grown in members and expanded geographically throughout the years, making it a success. We always look forward to its unique format of networking time with our customers and suppliers, who are also our friends.” 30

AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2014

ESSENCE CORP. FAMILY

HK Global

SPREADING OUT

US-based HKG is moving into new territories south of the border by

WENDY MORLEY

HKG specializes in watches

rothers Ross and Shahram Khaledi have a successful history in the electronics business in Texas. They not only distributed major brands such as Sony, JVC, Sharp, Panasonic, AIWA and Toshiba, but also developed and began manufacturing their own line, called Gotech. Consequently, itâ&#x20AC;&#x2122;s no surprise that when they decided to enter the duty free market, the Khaledis chose to specialize in electronics. Laredo, one of the largest land border crossings in the US, processes 15 million people each year. The Khaledis recognized the enormous opportunity to serve potential customers entering Mexico. In April 2009, HKG Duty Free opened El Portal, their flagship duty free/duty paid store located in Laredo, Texas. Since opening this flagship store, the Khaledis have expanded operations considerably. HKG Duty Free now has 11 locations operating along the US-Mexico border: three in California (two in San Diego County and one in Calexico);

AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2014

one in Arizona at the Nogales crossing; and seven in Texas, three in Laredo, and one each in Hidalgo, Brownsville, Roma and El Paso). Not surprisingly, HKG Duty Free is a market leader in electronics, but has also been developing its business in fashion watches and accessories. El Portal already retains personalized corners with Lacoste, Guess, and Swarovski. This year, additional personalized corners are scheduled for introduction including Mont Blanc, Tous, Michael Kors, and AX Armani Exchange in the El Portal fashion department. Furthermore, plans are underway to personalize areas for key beauty brands. For years the Khaledis have been involved in other successful business ventures including commercial development in Laredo. Endeavors include building and leasing large-capacity warehouse distribution facilities and developing residential community and other land developments in the Laredo market. In 2012, HK Global Trading Ltd. purchased a high-end retail electronics busi-

ness operating in Montana. This company retains an existing business-to-business division, selling brands including SubZero, Wolf, Kitchenaid, Apple, Samsung and LG among others. Considering the Khaledisâ&#x20AC;&#x2122; knowledge of the electronics industry, this was a logical acquisition. With the growing business portfolio, it eventually made sense for the Khaledis to move their headquarters from Laredo to Fort Lauderdale, Florida.

Moving into airports

The company began to look at other areas of expansion. Because of his years of management experience in travel retail with Dufry, Alan Huxtable was brought on by the Khaledis to help with these plans. Huxtable has extensive history involving airports and destination retail encompassing the US, Caribbean, Mexico, and Latin American territories, and he began searching for potential opportunities. Having stores along the US-Mexico border has given the Khaledis special

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HK Global

“Opening in Querétaro was a logical first step into airports in Mexico. With a rail line linked directly from Laredo, we can easily support this location.” ALAN HUXTABLE, VICE PRESIDENT, BUSINESS DEVELOPMENT & COMMERCIAL DIRECTOR, HK GLOBAL

insight into the Mexican consumer market. Together, Huxtable and the Khaledis developed a business plan and began looking for suitable locations in Mexico. Huxtable’s research eventually led him to Querétaro airport, located just north of Mexico City. Querétaro is the fastest-growing city in Mexico, with the highest per-capita income. The city is also home to a number of highprofile international companies, including Bombardier, Samsung, Kellogg’s and others. The airport has been developing into a major hub for freight carriers and there is a growing air-travel business market. United Airlines has daily connections from Querétaro with Houston, Dallas, Chicago, Denver and Los Angeles, and Volaris operates charter flights. Huxtable says, “Opening in Querétaro was a logical first step into airports in Mexico.” HKG identified long-term growth opportunity in Querétaro, which until now has not included duty free operations, and therefore initiated negotiations with the airport. Eventually, the company came to an agreement with the airport. The opening of a 300-square-meter duty free store located in the main international and domestic departures area is scheduled for July, 2014. The Querétaro Airport HKG Duty Free store will serve both international and domestic passengers. Unlike other existing HKG’s stores, this location will not specialize in the electronics category, but the offering will be similar in other respects: spirits, tobacco, fragrances, watches, fashion accessories, and confectionery. Spirits, tobacco and fragrances will take up most of the merchandising presentation. The Airport and HKG Duty Free have signed an exclusive contract for three years, with the option for two more two-year renewals, for a total of seven years. HKG’s flagship store El Portal in Laredo, Texas

AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2014

Continuing expansion in Querétaro and elsewhere

HKG Duty Free is already looking to expand, both within Querétaro Airport and in other Mexican airports that it has identified as showing similar growth potential. In Querétaro, HKG Duty Free hopes to open a satellite showroom in the Fixed-Base Operation (FBO) Terminal. Huxtable and the Khaledis feel there is an opportunity to service executives and frequent business travelers utilizing private planes in this terminal adjacent to the main airport. For future opportunities, HKG Duty Free is seeking out airports with substantial business traffic in areas with higher revenue capacity and with growing population. HKG Duty Free firmly believes this combination offers the best possibility for long-term success. To this end, Huxtable is researching emerging airports throughout Mexico to find those that match this set of criteria. While HKG Duty Free clearly understands the demographic and is certainly focusing on developing the Mexico portfolio, it is also currently considering the US Airport market, encompassing both duty free and duty paid concession opportunities.

Another border crossing

After years of operating exclusively at the US-Mexico border, HKG Duty Free recently expanded into the southern region located at the three-way border crossing between Belize, Mexico and Guatemala. This business, which goes by the name of HKG Duty Free Belize Ltd., is similar to the stores the company already operates along the southern US border. The two acquisition stores will be remodeled to HKG standards this year.

Moving in every direction

Many years of developing their business acumen, especially in the duty free industry, have combined to make the Khaledi brothers and Alan Huxtable a formidable and winning combination. They have taken duty free and duty paid from the north of Mexico down to its southern borders, and are now expanding from the heart of the country near Mexico City to any number of emerging areas throughout the region. The company has grown from its roots in electronics to a full-range duty free operation offering major brands from every category. The growth of HKG has been rapid since 2009, and it shows no signs of slowing down anytime soon. 

World Duty Free Group

Staying STRONG

World Duty Free Group releases its Q1 consolidated revenues just ahead of ASUTIL 2014 with the Americas performing well as the result of US retail acquisitions

RYAN WHITE

orld Duty Free Group (WDFG) has reported consolidated revenue of €438.5 million (US$601.6 million), +10.2% compared to previous year´s figures of €397.8 million (545.8 million), over the first quarter of 2014. Quarterly passenger traffic volumes increased both in the UK (+2.5%) and Spanish airports (+1.8%). WDFG says traffic trends Spain reflect the fact that Easter happened in the second quarter of 2013. In fact, the month of April recorded a 9.2% increase in traffic—the sixth consecutive month of growth—with revenues from the beginning of the year outperforming the increases in passenger traffic. EBITDA amounted to €35.4 million (US$48.6 million), down 11.6% from €40.0 million (US$54.9 million) in the first quarter of 2013, driven by higher rents in Spain and the dilutive contribution of the US retail business acquired in September 2013. Cash EBITDA was €42.6 million (US$58.4 million), +6.5% compared to €40.0 million (US$54.9 million) in the first quarter of 2013 (+8.1% at constant rates of exchange). Net profit was €2.4 million (US$3.3 million), compared to €12.2 million (16.7 million) recorded in the same period of 2013, mainly driven by lower EBITDA and higher

Tastings are an important part of WDFG’s activations calendar

AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2014

Latin America represents an important region for WDFG

net financial expenses resulting from higher debt compared to the first quarter of the previous year when WDFG partially demerged from Autogrill S.p.A. Cash flow generated from operations was €6.6 million (US$9.1 million). Last year was affected by the advance payment of €278.9 million (US$382.7 million) made to AENA to be offset against future rent payments. The change in working capital and in non-current non-financial assets and liabilities in the first quarter of 2014 fully absorbed the cash flow contributed by the EBITDA. The remaining change in working capital follows the usual pattern that can be expected given the seasonality profile of the business of the Group; the first quarter of the year typically sees the lowest activity while payments to trade partners and concession grantors over activity completed during the prior quarter need to be settled. Over the period, the Group successfully started operations in record time in Helsinki Airport—after winning the tender to operate the stores in November 2013—and in Belem Airport in Brazil. WDFG also continued with its ongoing store upgrade programme in Spain. The Group reports that 51.7% of the refurbishment plan is completed, including the opening of an 1,100-squaremeter walkthrough store in Tenerife South). Other country

operations benefiting from the upgrade program include Germany, Chile and Mexico.

A closer look at revenue

Revenues related to the airport channel amounted to €427.6 million (US$586.7 million), or 97.5% of the total revenues generated in the first quarter of 2014. WDFG also has a hand in commercial and operational services in Panama and Spain, as well as logistic and wholesale commercial services for different categories of customers. This portion of the operation amounted to 2.5% of WDFG’s total revenues, or €10.9 million. Category sales mix movements versus 2013 were impacted by the inclusion of the US retail business given that it features a different category profile from existing operations. Excluding this effect, above average sales growth was seen in the Beauty, Tobacco and Food categories. This is supported by WDFG’s strategic focus on excellence in the Beauty category. In fact, Beauty airport sales stood at €175.7 million (US$241 million, or +4.2% versus 2013) for the period. Sales in the Beauty category represent 44.3% of the Group’s business. WDFG also notes that Liquor sales grew in line with the average.

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World Duty Free Group

WDFG’s operations in Mexico; the company makes a point of including local products in its mix to give travelers the opportunity to bring home a reminder of their vacation

Zeroing in on the Americas

Americas revenues amounted to €95.9 million (US$131.6 million), up +51.9% at constant rates of exchange. The acquisition of the US retail business in September 2013 contributed to first quarter sales of €30.8 million (US$42.3 million). Americas sales growth at constant rates of exchange excluding the US retail acquisition came to +4.9%. North America airports drove this growth, reports WDFG, with Vancouver posting +23.3% growth at constant rates of exchange. The Group attributes much of this success to the robust Luxury and Beauty propositions at the Vancouver stores being particularly attractive for Chinese shoppers. Latin American airport sales saw Peru and Mexico increasing by +6.8% and 6.0% respectively at constant exchange rates, while Chile was down by -15.1%. Chile´s performance was negatively affected by ongoing sociopolitical disruption, the weakness of the local currency and new taxes impacting purchases from normally high-spending nationalities such as Argentinians. “For World Duty Free Group our principle clients in Latin America are locals, along with Brazilians,” says Pedro Castro,

AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2014

International Operations Director at WDFG. “And this is despite the devaluation of local currencies as compared to the US Dollar. It’s very important for us to adjust the offer for these clients to make sure that we have the products that these shoppers want to buy.” Americas Duty Free also took the opportunity to ask Castro about business in Latin America specifically and what the Group is keeping an eye on: “There are really three things that could affect the development of our operations in the region,” he said. “These are the macroeconomic situation in the region, exchange rates, and finally tobacco restrictions.” For the rest of the year and in the short term leading up to the FIFA World Cup, Castro assures us that the Group will be continuing to entice travelers in Latin America specifically to spend at its shops: We’ve got a lot of exciting activities and even some surprises planned for 2014,” he explains, “especially related to an event as important as the FIFA World Cup. Expect to see some great activations coming up, especially in countries participating in the event.” 

Latin America Report

A COMMON GOAL Americas Duty Free speaks with Latin American operators, suppliers and service providers as they prepare to convene in Mexico City toward the common goal of strengthening the future

s the industry prepares to meet in Mexico City for ASUTIL 2014, Americas Duty Free speaks with businesses with a stake in the Latin American travel retail market to find out not only what’s new across the region, but also how they’re working to strengthen their own future and what they’d like to see discussed at this year’s conference.

Going big

Americas Duty Free recently had the opportunity to speak with Hilmi H. Abdullah Neto, Commercial Director at Siñeriz in Uruguay, about the company’s full-year 2013 performance and how the business is doing so far in 2014. Those who read last year’s ASUTIL issue will remember that the operator was just settling into its new store in Rivera, Uruguay as the region’s industry leaders convened in Punta Cana for the 2013 conference. At the time Rafael Parodi, Project Leader at Siñeriz, told us that he expected a boost in sales as the result of the opening of the new store. Neto tells us now that the forecast was accurate, noting that Siñeriz experienced “a considerable growth in sales in 2013.” Indeed, the store, measuring an impressive 13,000 square meters, was something of a sensation when it first opened. While Siñeriz has been plying its trade in Uruguay for the last 25 years with its fair share of loyal customers, the new space certainly didn’t hurt footfall or sales. More important than the new store, however, were the increased options that the retailer could offer cross-border consumers, both in terms of product selection and the overall shopping experience: “In addition to identifying key categories where we felt we could offer something different, we also noticed that many of the stores in Rivera lacked a certain ambiance of elegance,” Parodi told us last year. “The challenge from that point was to create a store that sophisticated shoppers would feel good about being in while at the same time not 40

AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2014

alienating shoppers that traditionally frequent the stores on the main street, which are fairly different in terms of ambiance than the newer, more modern locations that have cropped up in the area.” The original plan has continued to pay dividends into 2014. Neto says that despite currency fluctuations, shoppers are still visiting the store and, more importantly, purchasing: “2014 started even better than last year and we’ve seen an increase in the number of tourists crossing the border and consequently entering our store,” he explains. “We’re also noticing that they tend to purchase more and don’t seem to be as concerned about the exchange rate.” With the multi-year store project now completed, the theme of this year’s ASUTIL conference, “Strengthening the Future,” dovetails well with Siñeriz’s plans for the mid term. “Working toward the next step in the company’s evolution is a top priority,” Neto tells us. “We’ll be focusing on training, adding new brands to the mix to ensure that shoppers find something new every time they enter the store and continuing to invest.” And that investment is taking the form of a complete renovation of Siñeriz’s flagship store in Uruguay, located on the first block of Rivera’s main shopping strip in the middle of the city. Work began in January of this year and Neto says he expects the initiative to be completed this month. “When we re-open the doors of our original store shoppers will be treated to a completely new retail area,” Neto says. “It will be the best and most modern store in the city center, with a very attractive and innovative layout that offers a unique shopping experience as compared to other stores along the avenue.” Looking even farther into the future to 2015, Siñeriz will expand the size of its new store, increasing the

RYAN WHITE

Despite measuring in at 13,000 square meters and boasting ample parking, Siñeriz’s new store in Rivera, Uruguay will be expanded in 2015 with more retail space, a food court and an increased parking area

square footage of the retail area, adding a food court and upping the number of parking spaces. Continuing on the topic of ASUTIL 2014, we concluded the interview by asking Neto what he wanted to hear discussed at this year’s conference: “For us, the most important thing is that duty free shops in the region continue to find ways of working closely with Mercosur governments in an increasingly cohesive and transparent manner,” he said. “This, in my opinion, is the best way to strengthen our collective future.”

Back on track

Alejandro Asturias, General Manager of Guatemalan duty free operator Sociedad Protectora del Niño (SPN), tells us that the company is riding high after a first quarter that saw sales increase 8% year over year. This is a particularly good start to 2014 for the operator as last year’s sales growth was only 2% over 2012 due to rolling closures of its stores in La Aurora Airport while largescale renovations were taking place. With newly refurbished stores and a good baseline sales increase to set the tone for the rest of the year, SPN will focus on customer service with the expectation that sales increases will naturally follow. “We’re expecting full-year growth somewhere in the realm of 10%,” Asturias explains. Given newly renovated stores and a strong start to the year in terms of sales, Sociedad Protectora del Niño is expecting full-year growth somewhere in the realm of 10%

While the strong double-digit sales increases experienced in many Latin American countries just a few short years ago are largely a thing of the past, SPN’s performance so far this year is exemplary of operators in general in the region, who are reporting sales that are still growing well ahead of passenger numbers. At La Aurora Airport specifically, passenger traffic for the first quarter of the year is growing at 4% ahead of the same period in 2013. In this context an 8% sales growth is certainly solid. Asturias says tourism in Guatemala is picking up and he expects passenger increases over the rest of the year to help with sales objectives. “Despite the importance of tourism to our bottom line, Guatemalans continue to be the main sales driver,” Asturias explains. “In second and third place are North Americans and Mexicans respectively. Central American travelers and Europeans—mostly from Spain and France—are fourth and fifth in the hierarchy.” In terms of topics that should be discussed at this year’s ASUTIL conference, Asturias says that the issue of liquids, aeroDAV_ANZ_ASUTIL_188x134_RZ.pdf

sols and gels is something that should still be on everyone’s radar. “This affects sales to passengers who will be transferring through other airports,” he says. “Some solutions have been suggested, such as STEB bags, but the main issue is that they’re not universally accepted across all airports, which is problematic for departures sales.”

Building relationships

Uruguayan distributor Lucas-Calcraft has been in business since 1876 and has been present in the duty free industry across South America for the last 30 years. Alejanrdo Sosa Lucas-Calcraft, President of Lucas-Calcraft, tells Americas Duty Free that sales of its products over the first three months of 2014 weren’t as high as in the same period in 2013. “This was largely due to the weak Real and a lower-than-average tourist season as fewer Argentinians crossed the border because of the measures the Government of Argentina has taken to restrict spending outside the country,” he explains.”We’re hoping for a reprieve from the situation in the coming months with the Real hovering around US$2.25.”

29.04.14

14:55

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I N

C O P E N H A G E N

“Many brands in Europe and Asia Pacific, for example, think that the commercial realities in Latin America are the same as in their regions, and unfortunately this isn’t so.” ALEJANRDO SOSA LUCAS-CALCRAFT, PRESIDENT, LUCAS-CALCRAFT

In terms of how Lucas-Calcraft’s activities so far this year are in parallel with the theme of ASUTIL 2014, “Strengthening the Future,” Sosa tells us that having a presence at the IAADFS trade show in Florida for many years now is one of the main ways the company works to maintain existing relationships and foster new ones. He also tells us that as a distributor, investing in furniture, activations like tastings and

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Latin America Report

Lucas-Calcraft’s base of operations is in Montevideo, a perfect location from which to distribute to duty free operators across South America

point-of-sale material in conjunction with brandowners is of the utmost importance so the products are presented in the best possible light. “Of course, there are other forms of investment that are just as vital,” Sosa says. He cites analyzing client sales and stocks; studying products that are both bestsellers and slow sellers; testing products to see how they sell in store; and looking for new brand partnerships where Lucas-Calcraft can add value through increased distribution as ongoing activities. A significant portion of Lucas-Calcraft’s business comes from duty free, and this means travel is an important part of the job. Sosa makes regular visits to existing clients in well known duty free shopping meccas like Chile (Iquique and Punta Arenas); Paraguay (Cuidad del Este, Asuncion, Salto del Guaira and Pedro Juan Caballero); and to numerous locations in Uruguay and Argentina. Travel is also key to sussing out new potential clients and expanding products’ footprints. Sosa says Peru, Bolivia and Guyana are three new countries where the company has contacts and is considering doing business. Given that Lucas-Calcraft works with both border stores and airports in the region, we asked for a comparison between airport and border traffic in recent months. “In Montevideo’s Carrasco International Airport, there was a small improvement in traffic in the first quarter of this year as compared to the same quarter last year,” Sosa explains. “Furthermore, the mix of passengers has changed in 2014, with more international travelers than regional. The airport authority expects to close the year having serviced 1.6 million passengers as compared to 1.5 million in 2013.” In terms of travel by car, Sosa reiterates that the Real is the primary influencer of cross-border travel, with Brazilian military exercises aimed at cracking down on drug and arms smuggling also making travelers more conservative in their spending. Sosa does tell us, though, that the Easter long weekend resulted in an “explosion” of travelers and excellent sales in Rivera, Uruguay. 42

AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2014

As with our other interviewees, we asked border depending on how the Real performs Sosa what he would like to see discussed and how low prices are in Brazil. “On the other hand, I would expect an at this year’s ASUTIL conference: “Many brands in Europe and Asia Pacific, for increase in cross border and ferry travel on example, think that the commercial realities the part of Uruguayans and Argentinians,” in Latin America are the same as in their he adds. “Of course, the focus will be footregions, and unfortunately this isn’t so,” he ball as opposed to shopping, so this might says. “They tend to get impatient with the neutralize any positive effect we could see time it takes to get products on the shelves as a result of increased travel across the and comparably small volumes. As a result, border. During the Copa America a few many brands decide to go direct, and the years ago, there were big expectations for results we’ve seen are that in the space of a increased sales in Rivera, and the results few months or years the brands disappear were disappointing. Having said this, I’m completely from the region or are very sure duty free in Brazilian airports will see a significant increase in sales.” under-represented. “The solution is choosing a trustworthy distributor that knows the market well and New horizons will work hand in hand with the brand Top Brands’ sales increases over the first to give it the staying power it needs and few months of 2014 have been strong at deserves,” he continues. “This takes patience, 12% in comparison to the same period because as mentioned, the market realities last year, and the company expects to see here are different from other regions in the this performance continue across its El world, but in the end the brand will see Dorado-branded stores in Belize, Salvador, results and the duty free industry in the Panama, Costa Rica, Guatemala, Uruguay, region as a whole will benefit.” Cuba, Colombia, Chile and a host of new Other issues on Sosa’s radar include locations. In fact, as the result of organic governments working harder to facilitate growth combined with new projects the the flow of travelers by taking some of the operator is currently working on, President red tape out of the application process for of Top Brands Danny Yohoros expects to new airlines and processing immigration end the year with an increase in duty free documents on arrival and departure more revenue of 18%. quickly. He would also like to see retailers Indeed, Top Brands has big ambitious for that operate on a global scale take more 2014, with close to 40 new stores expected note of the advantages of listing regional to open across eight countries in Latin products, brands that aren’t available in America. This activity will kick off with other parts of the world and international the impending inauguration of a new brands that are available at a premium in the 400-square-meter store in the port city of domestic market. “These types of products Golfito in Costa Rica. “At this new store, can sell very well in duty free,” he says. we’ll offer our wide range of products to Finally, looking ahead to the FIFA locals and visitors alike,” says Yohoros. 2014 World Cup, Sosa says that Brazil- “Importantly, locals are allowed to spend ians will more than likely be caught up The layout for one of Top Brands’ recent stores in the event, leaving little time for them to cross the border. Given that we spoke at the end of April, however, Sosa says that May could result in some good sales of televisions along the

Latin America Report US$2,000 a year on duty free, which translates into a big opportunity for us.” And new developments are also happening behind the scenes that are in line with ASUTIL 2014’s theme. Top Brands has invested new technology for its logistics departments while at the same time streamlining the processes for dispatching and receiving product. Furthermore, with so many new stores planned for the near future, Top Brands has created an internal architectural department at its head office in Panama to effectively coordinate construction and renovation projects across the company’s geographically diverse operations. “Finally, we also need to make sure that we have the right people in the stores,” says Yohoros. “As such, staff training is a continuous activity here at Top Brands as a means of ensuring that our salespeople are offering consumers the best service and the necessary information about the products we sell. “To the end of continuing to offer the service for which Top Brands has become known, we now have a team of specialists that travel to each of our stores to offer on-site staff training,” Yohoros continues. “We’ve ramped up essentially every aspect of our activities this year, so while 2014 will certainly be busy for us, we’re very much looking forward to offering the El Dorado Duty Free experience to consumers in new locations while also ensuring that our existing stores exemplify the quality and attention to detail that got Top Brands to where it is today.”

In a good place

For Mannah Duty Free, sales in 2013 were good, despite a slightly slow first four months of the year. May to August saw a substantial increase in passenger traffic and the operator closed the books on the year with a 14.3% increase in sales over 2012. Good news for this year is that sales performed better over the first three months than last year, which is perhaps a portent of even better things to come. Passenger traf-

fic at Silvio Pettirossi International Airport increased 6.4% during this time, with Mannah posting year-over-year sales increases ahead of that growth at 9.02%. The passenger increases are largely attributed to new airlines flying to Paraguay and an increase in flights from existing airlines. Adding to the optimism surrounding Mannah Duty Free’s business is the fact that Paraguay is in a particularly good position, with a stable currency and a rising middle class that has taken increasingly to flying. Further good news for Mannah’s border stores is that Brazilians, their main customer demographic, are still crossing the border to purchase, while sales to Paraguayans are on the rise. With a hand in both airport and border retailing, President of Mannah Duty Free Mohamed Mannah is looking forward to this year’s ASUTIL conference and the productive discussions it will foster. “Mannah Duty Free has always been characterized by having a view toward the future and employing effective strategies to ensure our continued growth, so we’re particularly looking forward to the views that will be presented at this year’s ASUTIL conference,” he says. “In line with the theme of the conference, we’re currently in the planning phase for a renovation project that will result in all of our stores being unified in terms of branding, format and a modern furniture design.” Mannah is quick to point out that all of the hard work the company is putting into the renovations would be for naught if Mannah Duty Free’s stores weren’t filled with top-notch brands that are sought after around the globe. As such, an equally important aspect of strengthening the future is in ensuring that the operator is attracting the best brands possible. “We regularly attend fairs to capture the interest of the most prestigious brands in Spirits, Perfumery, Cosmetics and Accessories,” Mannah explains. “This is really where all the hard work we’ve put into the business over the years pays off. Brands

want to work with a company they can trust, and one that has a clear track record of collaborating closely with partners and making the sales.” With the stores and the brands taken care of, Mannah Duty Free then turns to the third pillar of its strategy to ensure future growth: customer service. Mannah tells us that building loyalty is key. He admits that with the exception of the odd exclusive, duty free operators in the region generally offer the same products. “The challenge lies in differentiating oneself,” he explains. “In addition to the atmosphere of the stores, customer service is one of the most effective ways of accomplishing this all-important objective. “We work hard to make sure that we give the consumer the service they deserve,” he adds. “They make a choice to come to our store and it’s up to us to make sure that the next time they want to shop duty free, they’ll think of Mannah first.” In terms of issues he’d like to see discussed at ASUTIL 2014, Mannah tells us that the immediate future is looking bright in Paraguay given a strong local economy and upcoming events in Brazil such as the FIFA World Cup and the Olympics. “One issue, though, that we could see affecting our business is the situation in Argentina,” he says. “They’re a very important demographic for us, and indeed for most duty free retailers in the region. I’m expecting this to be a topic that is brought up at the conference. “The industry is characterized by its ups and downs,” Mannah concluded, “and this brings me back to my previous point of customer service. Treating consumers well so that they return again and again pays dividends for the future. As opposed to saying ‘goodbye’ to our shoppers when they get in their car to drive home or go to their gate to catch their flight, we prefer to see ‘see you soon.’ It’s an attitude that we project in every aspect of our experience with our valued clients.” 

Training is a very important part of Mannah’s commitment to the customer; pictured is a recent training seminar

Mannah Duty Free’s business in Paraguay consists of both border and airport travel retail

AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2014

Latin America Report Despite measuring in at 13,000 square meters and boasting ample parking, Siñeriz’s new store in Rivera, Uruguay will be expanded in 2015 with more retail space, a food court and an increased parking area

UN PROPÓSITO COMÚN Americas Duty Free habla con proveedores de servicios a operadores latinoamericanos, sobre los preparativos para reunirse en Ciudad de México con el objetivo común de fortalecer el futuro

a industria se prepara con vistas a reunirse en Ciudad de México en el marco de ASUTIL 2014, y Americas Duty Free habla con varios negocios vinculados al mercado minorista de viajes latinoamericano, no solo para conocer qué hay de nuevo en la región, sino también qué están haciendo para solidificar su futuro, y los temas que deben ser tratados en la conferencia de este año.

En gran escala

Recientemente, Americas Duty Free tuvo la oportunidad de hablar con Hilmi H. Abdullah Neto, Director Comercial de Siñeriz en Uruguay, sobre el rendimiento de la compañía en el año 2013, y cómo marcha el negocio hasta ahora en el 2014. Todo el que leyó el número que dedicamos el año pasado a ASUTIL recordará que el operador recién inauguraba su nueva tienda en Rivera, Uruguay, mientras los líderes de la región se congregaban en Punta Cana para la conferencia 2013. En esa ocasión, Rafael Parodi, Líder de Proyectos de Siñeriz, nos dijo que esperaba un aumento en las ventas, como resultado de la apertura de la nueva tienda. Neto nos confirma que el pronóstico fue exacto, y destaca que Siñeriz experimentó “un crecimiento considerable de las ventas en el 2013”. La tienda, con una impresionante extensión de 13,000 metros cuadrados, causó sensación cuando fue inaugurada. Aunque Siñeriz ha estado haciendo negocios en Uruguay durante los últimos 25 años con una cantidad respetable de clientes leales, el nuevo espacio no afectó negativamente las operaciones ni las ventas de otras instalaciones. Sin embargo, más importante que la nueva tienda, fue el incremento de opciones 46

AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2014

que el comerciante minorista podía ofrecer a los consumidores que cruzaban la frontera, tanto en términos de selección de productos como en la experiencia general de compras: “Además de identificar categorías claves donde creíamos que podíamos ofrecer algo diferente, también notamos que muchas de las tiendas en Rivera carecían de cierto ambiente de elegancia”, señalaba Parodi el año pasado. “El reto desde ese aspecto era crear una tienda donde se sintieran bien los compradores sofisticados, y que al mismo tiempo no aislara a los compradores que frecuentan tradicionalmente los establecimientos de la calle principal, bastante diferentes en cuanto a ambientes que las instalaciones más modernas que han surgido en esa zona”. El plan original ha seguido rindiendo dividendos en el 2014. Neto afirma que, a pesar de las fluctuaciones en el cambio de moneda, los compradores siguen visitando la tienda, y, más importante aun, comprando: “El 2014 comenzó aun mejor que el año pasado, y hemos visto un incremento en la cantidad de turistas que cruzan la frontera y entran en nuestra tienda”, explica. “También estamos notando que tienden a comprar más y no parecen demasiado preocupados con la tasa de cambio”. Luego de concluir el proyecto de tiendas de varios años, el tema de la conferencia ASUTIL de este año, “Fortaleciendo el futuro” se corresponde a la perfección con los planes a mediano plazo de Siñeriz. “Trabajar hacia el próximo paso en la evolución de la compañía es una prioridad fundamental”, asegura Neto. “Nos concentraremos en el entrenamiento, en la incorporación de nuevas marcas a la mezcla, para garantizar que los compradores encuentren algo nuevo cada vez que entren a la tienda, y en seguir invirtiendo”.

RYAN WHITE

Esa inversión está tomando la forma de la renovación total de la tienda insignia de Siñeriz en Uruguay, ubicada en la primera cuadra de la calle principal de establecimientos en el centro de la ciudad. Los trabajos comenzaron en enero pasado, y Neto afirma que espera que la iniciativa se concluya este mes. “Cuando volvamos a abrir las puertas de nuestra tienda original, los compradores disfrutarán de un área minorista completamente nueva”, explica Neto. “Será la tienda mejor y más moderna en el centro de la ciudad, con una estructura muy atractiva e innovadora que ofrece una experiencia única de compras, en comparación con otras tiendas de esa avenida”. En cuanto a planes futuros para el 2015, Siñeriz ampliará la extensión de su nueva tienda, incrementando los pies cuadrados en el área minorista con la incorporación de un complejo de restaurantes, y el aumento de los espacios de estacionamiento. Continuando el tema de ASUTIL 2014, concluimos la entrevista preguntándole a Neto sobre qué temas desearía que fueran tratados en la conferencia de este año: “Para nosotros, lo más importante es que las tiendas duty free de la región sigan buscando formas de colaborar estrechamente con los gobiernos del Mercosur, de manera cada vez más cohesiva y transparente”, dice. “En mi opinión, es la mejor forma de fortalecer nuestro futuro colectivo”.

En plena recuperación

Alejandro Asturias, Gerente General del operador duty free guatemalteco Sociedad Protectora del Niño (SPN), nos dice que la compañía se está recuperando plenamente después de un primer trimestre con un incremento de ventas del 8% en compara-

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Latin America Report

The spirits section of one of Sociedad Protectora del Niño’s stores in La Aurora Airport

ción con el año pasado. Un comienzo del 2014 particularmente bueno para el operador, pues el crecimiento en las ventas del 2013 fue solo del 2% con relación al 2012, debido al cierre de sus tiendas en el Aeropuerto La Aurora para realizar renovaciones en gran escala. Con tiendas recién remodeladas, y un buen incremento básico de ventas para marcar el tono del resto del año, SPN se enfocará en el servicio al cliente, con la expectativa de que el aumento de las ventas será un resultado natural. “Esperamos un crecimiento para todo el año cercano al 10%”, explica Asturias. Si bien los incrementos de dos dígitos en las ventas que experimentaron numerosas naciones latinoamericanas hace pocos años son cosa del pasado, el rendimiento que ha experimentado SPN en lo que va de año es un ejemplo de los operadores en general de la región, quienes reportan ventas que siguen creciendo y superando con creces las cifras de pasajeros. Específicamente en el Aeropuerto La Aurora, el tráfico de pasajeros durante el primer trimestre del año es del 4% en comparación con el mismo período del 2013. En este contexto, un incremento del 8% en las ventas es realmente sólido. Asturias añade que el turismo en Guatemala se está recuperando, y espera que las cifras de pasajeros se incrementen durante el resto del año para contribuir con los objetivos de ventas. “A pesar de la importancia del turismo para nuestras ganancias, los guatemaltecos siguen siendo el principal factor de estímulo de las ventas”, prosigue Asturias. “En segundo y tercer lugar están los norteamericanos y mexicanos, respectivamente. Los viajeros centroamericanos y los europeos—sobre todo de España y Francia—ocupan el cuarto y quinto lugar en la jerarquía”. Con respecto a los temas que debían tratarse en la conferencia ASUTIL de este año, Asturias opina que la restricción de

AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2014

líquidos, atomizadores y geles es algo que debería estar en la mente de todos. “Esto afecta las ventas a los pasajeros que se estarán transfiriendo por otros aeropuertos”, afirma. “Se han sugerido algunas soluciones como bolsos de seguridad a prueba de manipulación (STEB), pero el problema principal es que los mismos no son aceptados universalmente en todos los aeropuertos, lo cual es conflictivo para las ventas en las secciones de salida”.

Crear relaciones

El distribuidor uruguayo Lucas-Calcraft opera desde 1876, y ha estado presente en el sector duty free suramericano en los últimos 30 años. Alejandro Sosa Lucas-Calcraft, Presidente de Lucas-Calcraft, le afirma a Americas Duty Free que las ventas de sus productos en los tres primeros meses del 2014 no fueron tan altas como las del mismo período del 2013. “Se debe en gran parte a la caída del real y a una temporada turística más baja que el promedio, pues menos argentinos cruzaron la frontera, a causa de las medidas que ha tomado su gobierno para restringir los gastos en el exterior”, detalla. “Esperamos un alivio de esa situación en los próximos meses, pues el real está oscilando por los US$2.25”. En lo tocante a cómo las actividades de Lucas-Calcraft hasta este momento del año se ubican en paralelo con el tema de ASUTIL

2014, “Fortaleciendo el futuro”, Sosa añade que la presencia en la exposición comercial IAADFS en la Florida durante muchos años es una de las formas principales mediante las cuales la compañía se esfuerza por mantener las relaciones existentes y fomentar nuevas. También destaca que, como distribuidor, la inversión en mobiliario, activaciones como degustaciones y material en puntos de venta en conjunción con los dueños de marcas, es de extrema importancia para que los productos sean presentados de la mejor manera posible. “Por supuesto, hay otras formas de inversión igualmente vitales”, agrega Sosa, y cita el análisis de ventas de clientes e inventarios; el estudio de productos con muchas y pocas ventas; pruebas de productos para determinar su nivel de ventas en la tienda; y la búsqueda de nuevas alianzas de marcas con las que Lucas-Calcraft pueda incorporar valor mediante una mayor distribución, como actividades continuas. Por supuesto, una porción significativa del negocio de Lucas-Calcraft procede del sector duty free, y esto equivale con frecuencia a que los viajes son parte importante del trabajo. Sosa hace visitas reculares a clientes existentes en mecas duty free reconocidas como Chile (Iquique y Punta Arenas); Paraguay (Cuidad del Este, Asunción, Salto del Guaira y Pedro Juan Caballero); y a numerosos sitios en Uruguay y Argentina. Los viajes también son vitales para descubrir nuevos clientes potenciales y expandir las huellas de sus productos. Sosa afirma que Perú, Bolivia y Guyana son tres nuevos países en los que la compañía tiene contactos y está considerando el inicio de operaciones. En vista de que Lucas-Calcraft trabaja con tiendas de fronteras y de aeropuertos en la región, le pedimos que haga una comparación entre el tráfico aeroportuario y fronterizo en los últimos. “En el Aeropuerto

Lucas-Calcraft’s booth at the recent IAADFS exhibition; the company sees participation in the show as an important aspect of client relations and business development

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The layouts for two of Top Brand’s recent stores

Internacional Carrasco de Montevideo se reportó una ligera mejoría del tráfico en el primer semestre de este año, en comparación con el mismo trimestre del año pasado”, revela Sosa. “Además, la combinación de pasajeros ha cambiado en el 2014, pues hay más viajeros internacionales que regionales. La autoridad del aeropuerto espera cerrar el año prestándole servicios a 1.6 millones de pasajeros, en comparación con 1.5 millones en el 2013”. En términos de viajes por carretera, Sosa reitera que el real es el principal factor de influencia en los viajes por la frontera, y añade que los ejercicios militares de Brasil con el propósito de combatir el contrabando de drogas y armas también hace que los viajeros sean más conservadores a la hora de gastar. Sin embargo, asegura que el fin de semana “largo” de la Semana Santa dio por resultado una “explosión” de viajeros y excelentes ventas en Rivera, Uruguay. Al igual que hicimos con otros entrevistados, le preguntamos a Sosa qué temas le gustaría que se trataran en la conferencia

AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2014

ASUTIL de este año: “Por ejemplo, muchas marcas en Europa y Asia del Pacífico piensan que las realidades comerciales en Latinoamérica son las mismas que en sus regiones, algo que, lamentablemente, no es así”, dice. “Y tienden a impacientarse por el tiempo que demoran en colocar los productos en los estantes, y por los niveles comparablemente pequeños. Como resultado, muchas marcas deciden vender directamente, y el resultado que hemos visto es la desaparición total o la poca representación de las mismas en la región al cabo de pocos meses o años”. “La solución es seleccionar un distribuidor confiable que conozca bien el mercado, y trabaje mano a mano con la marca, para darle el poder de permanencia que necesita y merece”, continúa. “Esto requiere paciencia, porque, como mencioné, las realidades del mercado aquí son diferentes a otras regiones del mundo, pero al final la marca verá resultados y se beneficiará el sector duty free de la región en general”. Entre otros problemas que preocupan a Sosa está que los gobiernos se esfuercen más para facilitar el flujo de pasajeros, reduciendo los trámites burocráticos en el proceso de solicitud de nuevas aerolíneas, y el procesamiento más rápido de los documentos de inmigración a la llegada y a la salida. También le gustaría que los minoristas que operan a escala global aprovechen más las ventajas de incorporar productos regionales, marcas no disponibles en otras partes del mundo, y marcas internacionales disponibles como de primera calidad en el mercado nacional. “Esos tipos de productos pueden lograr buenas ventas en el sector duty free”, asegura. Finalmente, con respecto a la Copa Mundial FIFA 2014, Sosa afirma que los brasileños estarán bien concentrados en el evento, lo cual les dejará poco tiempo libre para cruzar la frontera. Por otra parte, dado que la entrevista se realiza a finales de abril, Sosa añade que el mes de mayo podría resultar en algunas ventas buenas de televisores en la frontera, en dependencia del comportamiento del real y cuán bajos que estén los precios en Brasil. “Por otro lado, esperaría un incremento en los viajes por la frontera y en trasbordador de uruguayos y argentinos”, agrega. “Por supuesto, como el centro de atención será el futbol y no las compras, esto podría neutralizar cualquier efecto positivo que podríamos ver, como resultado de un incremento en los viajes de frontera. Durante la Copa América hace unos años, tuvimos grandes

expectativas de mayores ventas en Rivera, y los resultados fueron decepcionantes. Dicho esto, estoy seguro que el sector duty free en los aeropuertos brasileños experimentarán incrementos significativos en las ventas”.

Nuevos horizontes

El incremento en las ventas de Top Brands durante los primeros meses del 2014 han sido sólidos con un 12% en comparación con el mismo período del año pasado, y la compañía espera que continúe este comportamiento en sus tiendas de marca El Dorado de Belice, Salvador, Panamá, Costa Rica, Guatemala, Uruguay, Cuba, Colombia, Chile y otros lugares. De hecho, como resultado del crecimiento orgánico, combinado con nuevos proyectos en los que está trabajando el operador actualmente, Danny Yohoros, Presidente de Top Brands, espera terminar el año con un incremento del 18% en ingresos duty free. Top Brands tiene grandes ambiciones en el 2014, con unas 40 tiendas nuevas a inaugurarse en 8 países de Latinoamérica. Esta actividad se iniciará con la inminente inauguración de un nuevo establecimiento de 400 metros cuadrados en la ciudad portuaria de Golfito en Costa Rica. “En esta nueva tienda, ofreceremos una amplia gama de productos a residentes y visitantes por igual”, explica Yohoros. “Pero lo más importante es que los residentes podrán gastar US$2,000 al año en compras duty free, lo cual se traduce en una gran oportunidad para nosotros”. Además, se están llevando a cabo nuevos acontecimientos tras el telón, que se corresponden con el tema de ASUTIL 2014. Top Brands ha invertido en nueva tecnología para sus departamentos de logística, y al mismo tiempo perfecciona los procesos de despacho y recepción de productos. Además, como tendrá tantas tiendas nuevas en un futuro cercano, Top Brands ha creado un departamento arquitectónico interno en su oficina central de Panamá, para coordinar con efectividad los proyectos de construcción y renovación en las operaciones geográficamente diversas de la compañía. “Finalmente, también necesitamos garantizar que tengamos el personal idóneo en las tiendas”, prosigue Yohoros. “Como tal, la capacitación es una actividad continua en Top Brands, como medio de asegurar que nuestro personal de ventas les ofrezca a los consumidores el mejor servicio y la información necesaria sobre los productos que vendemos”.

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Latin America Report “Con la finalidad de seguir ofreciendo el servicio que distingue a Top Brands, contamos actualmente con un equipo de especialistas que visitan cada una de nuestras tiendas para ofrecer sesiones de capacitación”, continúa Yohoros. “Este año hemos incrementado esencialmente cada aspecto de nuestras actividades, por lo que, si bien el 2014 será de mucho trabajo, esperamos ofreceré la experiencia de El Dorado Duty Free a los consumidores en nuevos establecimientos, garantizando a la vez que nuestras tiendas ya existentes ejemplifiquen la calidad y atención al detalle que ha ubicado a Top Brands en el sitio que ocupa hoy”.

Un lugar prominente

En Mannah Duty Free, las ventas del 2013 fueron buenas, a pesar de un ligero descenso en los primeros cuatro meses del año. El período de mayo a agosto reportó un incremento sustancial en el tráfico de pasajeros y el operador concluyó sus operaciones del año con un incremento del 14.3% en las ventas con relación al 2012. La buena noticia para este año es que las ventas se comportaron mejor en los primeros tres meses que el año pasado, lo cual es tal vez una señal de que se avecinan cosas mejores. El tráfico de viajeros en el Aeropuerto Internacional Silvio Pettirossi aumentó en un 6.4% durante ese período, y Mannah reporta un crecimiento de ventas con respecto al año anterior del 9.02%. El aumento en las cifras de pasajeros se debe en gran medida a las nuevas aerolíneas que vuelan a Paraguay, y al incremento en los vuelos de las ya existentes. Y el optimismo con respecto al negocio de Mannah Duty Free se suma el hecho de que Paraguay está en una posición particularmente buena, con una moneda estable y una clase media floreciente que viaja cada vez más por avión. Otra buena noticia para las tiendas de frontera de Mannah es que los brasileños, su

principal segmento demográfico de clientes, siguen cruzando la frontera para comprar, mientras que las ventas a los paraguayos están aumentando. Con operaciones en aeropuertos y tiendas de frontera, Mohamed Mannah, Presidente de Mannah Duty Free aguarda con entusiasmo la conferencia ASUTIL de este año, y las conversaciones productivas que fomentará. “Mannah Duty Free siempre se ha caracterizado por su visión al futuro, y por su empleo de estrategias efectivas para garantizar nuestro crecimiento continuo. Por tanto, esperamos particularmente los puntos de vista que serán presentados en la conferencia ASUTIL de este año”, afirma. “En correspondencia con el tema de la conferencia, estamos actualmente en la fase de planificación de un proyecto de renovación que dará como resultado en la unificación de todas nuestras tiendas, en términos de marca, formato y diseño moderno del mobiliario”. Mannah destaca además que los esfuerzos que está desplegando la compañía en las renovaciones sería inútil si las tiendas Mannah Duty Free no estuvieran llenas de marcas de primera codiciadas en todo el mundo. Para ello, un aspecto igualmente importante del fortalecimiento del futuro está en garantizar que el operador atraiga las mejores marcas que pueda. “Participamos regularmente en ferias que captan el interés de las marcas más prestigiosas en las categorías de espirituosos, perfumería, cosméticos y accesorios”, explica Mannah. “Aquí es donde fructifica el esfuerzo que hemos puesto en el negocio durante todos estos años. Las marcas desean trabajar con una compañía confiable, con una trayectoria limpia de colaborar estrechamente con sus colaboradores, y de hacer las ventas”. Con las tiendas y las marcas cubiertas, Mannah Duty Free recurre al tercer pilar de su estrategia para garantizar su crecimiento

Mannah Duty Free’s business in Paraguay consists of both border and airport travel retail

AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2014

Mannah’s airport duty free sales team

futuro: el servicio al cliente. Mannah añade que la creación de lealtad es vital, y admite que, con la excepción de los raros y exclusivos, los operadores duty free de la región ofrecen generalmente los mismos productos. “El cambio consiste en diferenciarse uno mismo”, asegura. “Además de la atmósfera de las tiendas, el servicio al cliente es una de las formas más efectivas de lograr este objetivo tan importante”. “Nos esforzamos en garantizar que le damos al consumidor el servicio que merece”, agrega. “Ellos toman la decisión de venir a nuestra tienda, y es nuestra responsabilidad garantizar que la próxima vez que vayan a comprar en el sector duty free, piensen primeramente en Mannah”. Con respecto a los temas que desearía se trataran en ASUTIL 2014, Mannah afirma que se avizora un brillante futuro inmediato en Paraguay, debido a su sólida economía local, y a los acontecimientos venideros en Brasil como la Copa Mundial FIFA y las Olimpiadas. “Sin embargo, un problema que podría afectar nuestras operaciones es la situación en Argentina”, añade Mannah. “[Los argentinos] son un sector demográfico muy importante para nosotros, y para la mayoría de los minoristas de la región. Espero que este sea un tema a tratar en la conferencia”. “El sector se caracteriza por sus altas y bajas, y esto me hace volver a mi opinión previa sobre el servicio al cliente. El buen trato a los consumidores para que regresen una y otra vez rinde dividendos para el futuro. En vez de decirles ‘Adiós’ a nuestros clientes cuando se marchan a casa en sus automóviles o se dirigen a la puerta de salida para tomar el avión, preferimos decir ‘Nos vemos pronto’. Es una actitud que proyectamos en cada aspecto de nuestra experiencia con nuestros valiosos clientes”, concluye Mannah. 

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Dufry Region Americas I

Forging ahead

Dufry’s growth strategy remains centered on emerging markets with a focus on Latin America

mericas Duty Free recently had the opportunity to speak with René Riedi, COO of Dufry Region Americas I, to get a sense of the company’s performance across Central America, the Caribbean, Argentina, Ecuador and Uruguay. He tells us that in 2013, turnover in the region was flat in local currencies and in Swiss Francs stood at CHF768.5 million (US$861.8 million) versus CHF778.3 million (US$872.8 million) in 2012. To frame the conversation, Riedi tells us that Dufry is obviously dealing with regional differences when it comes to traffic numbers. In Argentina, for example, he reports that traffic is stable. In Uruguay, on the other hand, traffic through Carrasco Airport has been down. Nonetheless, he says, the airport is in a better situation than this time last year, when Pluna went bankrupt. “In Mexico, the traffic is growing at a pace of approximately 3%,” he says. “We have seen good growth in parts of the Caribbean such as the Dominican Republic, where traffic grew by a rate of approximately 4%. Furthermore, Aruba has seen good growth mainly due to Venezuelans who come over to Aruba to cover their basic needs. All in all, the traffic in Americas Region I has been pretty much stable.

One of Dufry’s stores at Ezeiza Airport in Argentina

AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2014

RYAN WHITE

In Central America, Dufry saw solid performance in Mexico and parts of the Caribbean, while the trends in the British Caribbean remained sluggish. In South America, the company’s operations in Uruguay saw ongoing improvement throughout 2013 as other airlines started to fill in the gap left by Pluna. As for Argentinean operations, growth picked up in the second half of the year and performed solidly. We learned that in Region Americas I the three top categories are Fragrances & Cosmetics, Jewelry & Watches and Spirits & Wines. The Spirits category, nearly always a high seller across regions, is particularly important to the bottom lines of Dufry’s stores in Central America and the Caribbean. Echoing a sentiment that Americas Duty Free has heard from numerous operators, Riedi tells us that up-and-coming categories include Food & Confectionery and Textiles, Leather & Luggage. He notes that the main reason for the increasing popularity of the Jewelry & Watches category in Region Americas I is the demand for Colombian Emerald International products throughout the Caribbean. In terms of popular brands, Dufry customers in the region are particularly fond of Carolina Herrera and MAC (P&C); Victoria’s Secret (Lingerie); John-

Dufry’s operations in Puerto Rico

nie Walker (Spirits); Marlboro (Tobacco); Lindt and Havanna (Confectionery); and Ray Ban (Sunglasses).

The people behind the purchases

Dufry has always made a point of carefully studying passenger demographics as a means of getting a leg up on the competition and better understanding traveling consumers. Riedi tells us that because Dufry’s Region Americas I covers such a vast geographical area, there are necessarily multiple passenger profiles at play. “The consumer really depends on the market,” he explains. “In Argentina and Uruguay for instance, the most important customers are Argentines and Brazilians. In Mexico—but here it also depends on the location—the shopper profile is mostly Mexicans, Americans and Canadians. In the Caribbean, we see predominantly cruise ship passengers, but in Puerto Rico we cater largely to Puerto Ricans and Americans, while in the Dominican Republic, we see Europeans, and specifically a growing number of Eastern Europeans.” Of course, after determining who is shopping at the stores, the question on the tip of

Dufry Region Americas I any retailers’ tongue would be, “What do my consumers want?” While it’s not often possible to generalize across regions, for Dufry P&C is usually a safe bet. Riedi also tells us that in Region Americas I, the operator is noticing a growing trend toward the Fashion & Accessories category. “For this reason we have been increasing our footprint continuously in these categories, including Jewelry & Watches, with our stores Boulevard I and II in Mexico and several single-brand boutiques in Buenos Aires and other locations.”

Gabbana, Burberry, Hugo Boss, Lancôme, Carolina Herrera and Calvin Klein to name but a few. “There are special offers on each of the brands,” Riedi says. “The ‘Premium Collections’ promotion includes multi-unit offers, GWPs and special discounts for Dufry customers.” Launched in February 2014, the initiative ran through May and when we spoke with Riedi at the end of April he told us that he was pleased with the results so far.

An enticing offer

The building blocks of success

As with most operators, Dufry uses promotional activities to entice travelers to enter the store and purchase. Most recently in Region Americas I, the company put on a promotion called “Premium Collections.” Uniquely, the initiative isn’t contained in one category and features a wide variety of top brands such as Chivas Regal, Crown Royal, Tanqueray, Toblerone, Ferrero Rocher, Raffaello, Kinder, C. Frey Chocolates, Dolce &

Given the sheer number of stores that Dufry operates in Latin America, renovations are a regular undertaking for the operator. In Region Americas I specifically, renovations are currently in progress in Argentina where Dufry’s plan is to reinvigorate and expand some of its older stores. Riedi gives Ezeiza Airport as an example: “We are renovating the Arrivals stores to

offer more space and a greater choice to the arriving passengers as shopping at Arrivals is getting more popular in Argentina,” he says. “We are further planning to refurbish the stores at Cordoba and Mendoza. Additionally, we are building a walkthrough store at Puerto Vallarta Airport and we plan to renovate the store in Monterrey. “Last but not least, we are undergoing a complete refurbishment program in Puerto Rico,” he continues. “This renovation and expansion program has been developed in tandem with the airport, which is currently upgrading its terminals.” In the end for Dufry, as for any worldwide travel retailer, performance is largely a mixed bag, with some countries and regions performing better than others. Nonetheless, the company’s overall strategy is still focused squarely on emerging markets, with Latin America playing a significant role in future plans, as is evidenced by the operator’s investments in various stores throughout Americas Region I. 

Dufry’s operations in Mexico

One of Dufry’s stores in Santo Domingo

The main reason for the increasing popularity of the Jewelry & Watches category in Region Americas I is the demand for Colombian Emerald International products throughout the Caribbean

AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2014

Dufry North America

Dufry just held a grand opening for its 770-square-meter shop in Terminal 5 of Chicago O’Hare—the first walkthrough duty free shop in the United States—on April 4

In a good “O

SPOT by

RYAN WHITE

With traffic to many North American airports where Dufry operates up in the first couple of months of 2014 and a new walkthrough store in Chicago, the operator is in a good place 58

AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2014

ur operations in US and Canada have been presenting good performance despite some 30,000 flights canceled at the beginning of this year due to bad weather,” says Michael Lembo, Deputy COO, Duty Free Operations at Dufry. “As far as traffic is concerned, through February it was generally up, from 4% to 11%, depending on the location.” Lembo tells Americas Duty Free that the top three bestselling categories across the operator’s North American stores are Perfumes & Cosmetics, Spirits and Tobacco. He notes that Estée Lauder, Marlboro, Lambert & Butler and Chunghwa are some of the most popular brands currently being sold. Although Marlboro is the overall top seller, tobacco brands are particularly susceptible to regional differences. Chunghwa makes the list because it is the brand of choice in North

American Dufry stores that cater to a large number of Chinese travelers. Conversely, in places where Dufry sees a large number of Canadian travelers, the Players brand of cigarettes is a top seller. British travelers, on the other hand, choose brands such as Benson & Hedges or Lambert & Butler. As can be expected, Lembo tells us that Chinese travelers are Dufry’s highest spending customers in North America, but overall he cites growing interest on the part of shoppers in luxury goods as a development upon which the operator is keeping a close eye. “The most noticeable trend right now is the increasing popularity of luxury goods, both with traditional duty free customers—international passengers—as well as with domestic passengers,” Lembo says. “Just by adding a few more high-end product categories like Luxury Watches, we have significantly grown the business in all of our stores.”

Dufry North America

Spend trends

In fact, in Seattle, Houston and Newark, Dufry’s duty free stores are located in terminals that see more domestic passengers than its stores in Chicago O’Hare and Edmonton, where the passenger mix is primarily international. The operator’s challenge is to remind domestic passengers that with the exception of alcohol and tobacco, they are permitted to shop in the duty free stores in the airport and take advantage of the many exciting products, displays and promotions in other categories such as P&C, Food, Accessories and more. Given the sheer size of Dufry’s operations globally, it sometimes makes sense to run worldwide promotions. Special signage promoting the product—whether it be from the Spirits, P&C or Confectionery category, for example—is provided to all store locations around the world with the aim of encouraging “collectors” of a particular brand to try a new product, as well as attracting newcomers to a brand to try it for the first time.

One of Dufry’s duty free stores in Seattle, which caters to domestic and international travelers alike

AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2014

Other times vendors—usually dealing in the Spirits or Tobacco categories—will sponsor a promotion of one or more products. These promotions are designed to allow travelers to stock up on their favorite brands, although there is still an element of attracting new consumers and collectors. Lembo gives the example of a recent Rémy Cointreau promotion in Seattle that featured a rare Rémy Martin cognac priced at US$24,000. Dufry also engages in mega events, such as product launches with displays and sampling; “two-fer” or buy-one-get-one-free offerings; gift-with-purchase promotions; and contests and sweepstakes. Lembo gives an example: “This summer in Chicago and Houston, Budweiser is promoting the World Cup in Brazil with special interactive displays in the terminals. They will offer for sale special commemorative cans of Bud as souvenirs of the World Cup,” he says. “Interactive games at the storefront will challenge customers to ‘kick’ a soccer ball into a virtual goal. Winners will be drawn and some will

win tickets and airfare to attend the games in Brazil this summer, along with prizes like soccer balls and more.”

A first in the US

The Budweiser promotion in Chicago is doubly exciting because it’s taking place in a brand new store. Dufry just held a grand opening for its 770-square-meter shop in Terminal 5 on April 4. Significantly, the location is the first walkthrough duty free shop in the United States. “Brand boutiques surrounding the entrance to the store include Luxury Watches, Salvatore Ferragamo, Emporio Armani and Michael Kors stores, all of which are duty-free shops,” Lembo explains. With traffic up in the first couple of months this year at many major North American airports where Dufry operates, combined with the new walkthrough in Chicago and a robust calendar of upcoming promotions, we can expect to hear much more from Dufry’s operations in the region as the year continues. 

More than a gift

T R AV E L R E TA I L

E XC LU S I V E

ASUR Travelers often stop at Margaritaville for a taste of Mexico; the country’s rich culture also plays a major role in many WDFG activations

Endless summer International traffic increases across all of ASUR’s airports over the first quarter signal big opportunities for the rest of year—not only for aeronautical revenue but for duty free as well by

RYAN WHITE

AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2014

mericas Duty Free recently had the opportunity to speak with Manuel Gutiérrez Sola, Commercial Director at Mexico’s Aeropuertos del Sureste (ASUR), operator of Cancun International Airport and eight other airports in the country. He tells us that in the midst of respectable increases in international passenger numbers at Cancun Airport, ASUR is undertaking a project to renovate Terminal 2. The project includes an expansion of the security area to avoid bottlenecks, changing out the floors and ceilings, installing new bathrooms and lights, and aesthetically

updating the retail areas. “We’re considering an expansion of Terminal 3 in 2015,” Gutiérrez Sola says. “We’ll also be building a Terminal 4 in 2016 to ensure that capacity stays well ahead of passenger traffic increases.”

The power of partnership

Of course, World Duty Free Group (WDFG) is ASUR’s duty free retail partner in Cancun Airport and Gutiérrez Sola reports a 3.57% increase in duty free sales in the first trimester of this year as compared to the same period last year. While the increase is below that of international passenger traffic, it’s not for lack of trying. In fact, ASUR and WDFG have long been a shining example of

As in most airports around the world, Spirits and Perfumery are big sellers at Cancun Airport, and ASUR has partnered with WDFG to ensure that the categories are highly promoted

just how well airport authorities and duty free retailers can work together. “At the end of every year ASUR and WDFG collaborate on a calendar of promotions—essentially a plan of all promotional activities that we want to undertake for the entire year,” Gutiérrez Sola explains. “In the coming months we’ll be featuring a number of Spirits promotions, exclusive launches across categories and more.” In June, ASUR will be targeting specific nationalities—Russians, among others— with branding campaigns that will include signage on buses and billboards at certain key times. The summer will also see an activation called Summer Fest, with sales and activities aimed at duty free shoppers. Another highlight of the year comes in September, the month of Mexico’s independence, when ASUR and WDFG will launch their yearly Viva Mexico campaign. The initiative will include tastings, traditional dance, music and plenty of color.

To close the year, ASUR and WDFG will be playing to the festive mood of travelers passing through Cancun Airport with a Spirits promotion. Additionally, from May 1 to July 15, WDFG, in cooperation with ASUR, is giving duty free shoppers the chance to win a Harley Davidson motorcycle. Any traveler making a minimum purchase of 500 Mexican Pesos (US$45) across Terminals 1, 2 and 3 will be entered in the raffle. The raffle is being promoted heavily within the terminals, on buses and billboards, and in local newspapers. “We’re also using the same method of communication—namely signs on buses and billboards—to announce the opening of our newest store at the airport, Singlasses Hut,” Gutiérrez Sola adds.

Looking at the numbers

The real story of ASUR’s success over the first three months of 2014 is in international

passenger traffic. In fact, all nine of the company’s Mexican airports posted year-on-year gains for the period. Cancun, far and away ASUR’s largest airport, reports growth of 5% in international traffic, or 228,630 passengers over the same period in 2013. The highest percentage growth during the period for ASUR’s airports came from Minatitlán, which serviced a whopping 62% more passengers in the first quarter of this year than in 2013. While this increase translates to only 21,272 more passengers, it is a clear indication that travel to the city is on the rise in a big way. Other notable increases in passenger traffic for the first three months of this year came from Tapachula (+20%, or 7,552 passengers over 2013); Cozumel (+10%, or 15,841 passengers over 2013); Mérida (+10, or 30,641 passengers over 2013); and Villahermosa (+8%, or 17,866 passengers over 2013). 

www.dutyfreemagazine.ca AMERICAS DUTY FREE & TRAVEL RETAILING

Guarulhos International Airport

The

next level by

Concept drawing of Guarulhos International Airport’s Terminal 3

WENDY MORLEY

With ever-increasing volume, Guarulhos International’s expansion is right on target

ith a metropolitan population of 21 million, Sao Paulo is the largest city in South America and one of the largest cities in the world, so it should come as no surprise that its main airport, Guarulhos International (GRU), is the busiest in Latin America. Traffic has increased at an extraordinary rate, thanks in large part to the booming South American economy over recent years. In 2004, 12.9 million passengers passed through its gates. Just six short years later, in 2010, that number had more than doubled to 26.9 million. And the double-digit growth is showing no signs of dissipating. The number of travelers passing through the airport in 2013 reached 36 million, 10.1% higher than in 2012 when the final tally was 32.7 million. With 9.7 million passengers in the first quarter of 2014, the airport’s passenger numbers were already up 14.8% over Q1 2013, and the FIFA World Cup traffic had not yet begun. This traffic is made up of a healthy mix of international and domestic travelers. Approximately two-thirds of the traffic is domestic and one-third international, though that may change somewhat come June as millions descend on the country for the World Cup, and in 2016, when

The new Terminal 3 under construction

AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2014

Brazil hosts the Olympics. Currently, the airport’s top domestic destinations are Porto Alegre, Salvador and Recife. Miami, Buenos Aires and Santiago de Chile are the main international destinations.

GRU’s incredible growth tangent

The airport, originally called Cumbica Airport, was completed in 1985. It quickly surpassed São Paulo-Congonhas to become the busiest in the region. Named after Governor André Franco Montoro in 2001, the airport is now referred to as GRU because of a conscious rebranding that took place in 2012. The airport was rated to have a maximum capacity of 20.5 million passengers. In 2011, with traffic the previous year of close to 27 million and with the massive growth in passengers that GRU had seen in the previous decade, the managers converted a former cargo terminal for two defunct airlines into a passenger terminal. Since the development of Terminal 3 was already on the table at that point this terminal was named Terminal 4. Because of the increasing airport traffic throughout the country and especially in view of the huge upcoming sports events

in 2014 and 2016, in 2012 the government began granting concession to the main airports in Brazil to improve infrastructure and increase capacity. In GRU, the major part of this concession has been the building of a new terminal, TPS3, or Terminal 3, which is currently set to open. Terminal 3 has the capacity to process 12 million passengers per year. The terminal measures 192,000 square meters, with 34 airport stands, 20 of which have an airport loading bridge.

Completed and coming soon

Once the new terminal is completed and the World Cup is over, a number of other improvements to the airport will commence. Terminals 1 and 2 will be retrofitted and their departure areas will be expanded. Terminal 2 will be expanded, with a new Dufry shop on the Arrivals level and a new food court on the Departures level. The number of restrooms will be increased, while existing restrooms will be renovated.

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Guarulhos International Airport Furthermore, many enhancements are in the works that will improve passenger experience, including enlarged entrances, increased check-in capacity, the self-checkin kiosks, self-bag-drop areas and additional space for passenger circulation. These upgrades not only improve the passenger’s airport experience, but also increase the likelihood that they will shop duty free as a result of reduced stress levels. Some major improvements have already taken place in time for the FIFA World Cup. A new parking building was completed in 2013 with spaces for 2,644 cars. Two new aprons have been built. One is operating already and the other is being commissioned by the regulatory agency. New road accesses were completed earlier this year. The expansion of the Dufry shop on the Terminal 2 Arrivals level has also been completed, doubling its area. More than 40 shops have opened in the existing terminals since Concessionária Aeroporto Internacional de Guarulhos took over airport management from Infraero in 2012. Dufry is the duty Guarulhos International Airport’s new food court

AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2014

free operator throughout the airport. The airport’s contract with the company for Terminals 1, 2 and 4 was extended in 2012, and in September 2013 the contract was signed for Dufry to operate duty free in the new Terminal 3 as well. Once construction is completed, the airport will have 16,600 square meters of retail space.

Future plans

According to Fernando Sellos, Commercial Director of GRU, the master plan for the airport includes a number of property development projects. The concessionaire intends to turn this airport into a convenient and lucrative destination, with business towers and convention centers in addition to hotels, more parking garages and a shopping center. The region has likewise made it a top priority to complete planned train service to and from the airport. This includes an airport express line, linking the airport to downtown Sao Paulo. It also includes a high-speed rail connecting GRU to airports in Rio de Janeiro and Campinas. 

Fernando Sellos, Commercial Director of GRU

Grupo Zaire

GREAT EXPECTATIONS by

RYAN WHITE

Grupo Zaire expects most of the clientele at its new flagship store in Cobija, Bolivia to hail from Acre, Rondonia and Amazonas

The upcoming opening of Grupo Zaire’s 6,000-squaremeter store in Cobija, Bolivia promises to offer travelers a number of products never before seen in the region

“At the flagship store [in Cobija, Bolivia] we’ll have a number of products for sale that aren’t currently available in the area, so we have big expectations, largely because our research is telling us that consumers have an intense interest in these exclusives.” BORIS ZABALA, MARKETING DIRECTOR, GRUPO ZAIRE

AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2014

or Bolivian duty free operator and distributor Grupo Zaire, in business in the country since 1984, this year is about expanding the business. The company is the exclusive distributor of KT&G tobacco products in Bolivia, and in 2010 Grupo Zaire realized that not only was there a huge opportunity for the tobacco category along the Bolivia-Brazil border, but the duty free retail business in general was booming. As such, the company opened a number of small tobacco shops on the Bolivian side of the border that it still operates to this day. In the four years since the stores’ openings, Grupo Zaire has continued updating the locations, having added Spirits and Electronics categories in 2013. The big news this year, however, is the expected opening of the company’s flagship store in Cobija, the largest free zone in Bolivia, in July. A considerably larger project than the company has to date undertaken, the Cobija store will measure 6,000 square meters when finished and offer a cross-category selection of popular travel retail items for cross-border shoppers. “We’re expecting to cater mainly to travelers from Acre, Rondonia and Amazonas in Brazil,” says Boris Zabala, Marketing Director at Grupo Zaire. “We’re also expecting our fair share of travelers from Madre de Dios in Peru.” Given the space that the company will have to work with come July, Zabala is expecting sales to increase over Q2 2013

in the second half of this year. He tells us that full-year sales at Grupo Zaire’s existing operations in 2013 totaled about US$10 million, on par with 2012. “At the flagship store we’ll have a number of products for sale that aren’t currently available in the area, so we have big expectations, largely because our research is telling us that consumers have an intense interest in these exclusives,” Zabala tells us. “Furthermore, the shopping experience itself will be different from what many people may expect from Cobija—the store will be fully air conditioned, feature a supermarket layout and have its own parking lot to accommodate 60 vehicles.” Located on the popular Avenido Cornejo, where the majority of the border shops in Cobija operate, Grupo Zaire’s new store will be a sight indeed, boasting four floors of duty free shopping that will include dedicated spaces for Spirits, P&C, Electronics, Tobacco, Watches, Sunglasses, Toys, Gifts and General Merchandise; Clothing, Sporting Goods and Fishing and Hunting Equipment; and a food court with an entertainment area for children. “The Cobija store is the main project on our radar this year, but we’re not stopping there,” concludes Zabala. “Grupo Zaire intends to open more border shops in Bolivia in the future. We’re planning on opening two more stores in Guayaramerin and San Matias, at the, end of 2015.” 

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London Supply

Daring to be different by

RYAN WHITE

London Supply’s Iguazú store, as much a tourist attraction as the iconic Iguazú Falls

London Supply’s Commercial Manager Magdalena Ducos tells Americas Duty Free about what’s to come this year from one of the most eclectic travel retailers in the industry

A “Shoppers are more likely to return to our stores when they associate the experience with a great memory in addition to a great purchase.” MAGDALENA DUCOS, COMMERCIAL MANAGER, LONDON SUPPLY

AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2014

mericas Duty Free speaks with Magdalena Ducos, London Supply’s Commercial Director, about what it takes to keep your offering unique in the highly competitive duty free industry. Under the direction of forwardthinking travel retailer Teddy Taratuty, London Supply has come to be known not only for pushing the boundaries of the consumer experience, but also for championing the importance of corporate social responsibility. Ducos explains that in both the Iguazú store and the community at large, there will be plenty happening in 2014. Americas Duty Free: How were sales in 2013? Magdalena Ducos, Commercial Manager, London Supply: We closed 2013 with sales about 40% higher than the previous year. This was the result of a number of factors that favorably affected our business and the region in general as a tourist attrac-

tion. Tourists visiting Iguazú—one of the new Seven Wonders of Nature—increased year-over-year in 2013, which certainly helped matters. Furthermore, a number of economic variables in Argentina make buying by Argentines within the country more favorable than buying outside the country. So, with more visitors and an increase in the average ticket over 2012, London Supply, and specifically the Iguazú store, ended 2013 on a particularly high note. ADF: Can you tell us a bit about the most popular categories and brands at your stores during 2013? MD: P&C remains the leader in sales followed by Spirits. We’ve also seen a huge increase in Fashion sales over the last few years, which seems to be a trend across all of travel retail. It’s always difficult to highlight specific brands as we appreciate all of our respected supplier partners, but I can tell you that the

Christmas at London Supply’s Iguazú store

London Supply recently raised US$562,490 for its CSR work through its annual golf tournament (pictured is the 2012 tournament)

well known brands that tend to perform well throughout travel retail are also very successful in our stores. Further to this, London Supply also makes a concerted effort to include a range of brands and prices for essentially every taste—consumers can find the best-known brands in the world here and at the same time find something new and exciting that they didn’t even know existed. Recognized brands and emerging brands all have a place here; it’s part of the appeal of travel retail in general and our shops specifically.

and travel accessories; sports; eyeglasses; wines; and confectionery. Furthermore, as a result of the expansion, consumers will see larger areas for P&C, Spirits and Fashion. We’ll also have exclusive areas for brands like MAC and Tommy Hilfiger, and of course a selection of many new brands never before seen in the store. Indeed, there are so many positive changes happening in the Iguazú store that I think it’s best that your readers visit us in Argentina to truly understand the full scope of the renovations!

ADF: How is the expansion of the Iguazú store going? Is there anything new to report? MD: We’ve been focused on the Iguazú expansion for a year now, which will see the retail space double and the addition of a new parking area with capacity for 600 vehicles in addition to tourist coaches and taxis. The objective of this large-scale renovation is firstly to include new lines and brands in the mix, and secondly to give appropriate space to the brands with which we’re currently working. We’ve been working hard on this project and around the end of March visitors to our store in Iguazú will see dedicated spaces that include a bazaar; luggage

ADF: Can you give us your sense of the current economic situation in South America? MD: The forecast for South America in 2014 is similar to the last couple of years. Our job as a retailer is to concentrate on consumer behavior, which is of course informed by economic factors in certain countries that affect consumption. Our main clients are Brazilians and Argentines, who generally exhibit high levels of consumption. The key is to continue working to make our store and Iguazú as a whole a more and more attractive destination to tourists. ADF: London Supply is known for having

perhaps the most unique store in travel retail. How are you planning to continue differentiating yourself from the competition in 2014? MD: Quite simply, we will keep concentrating on ensuring excellence in execution informed by experience. As I’m sure you’re aware, for London Supply ensuring excellence means giving every potential client an unforgettable shopping experience, which is of course linked to our thematic store departments. This way, clients see each section of the store as distinct and have a highly visual experience. Of course, emotion plays a role in the experience as well, and this is where our various theatrical elements come into play. From flash mobs to Brazilian music and dancers, consumers are encouraged to enjoy themselves. Indeed, they’re more likely to return to our stores when they associate the experience with a great memory in addition to a great purchase. ADF: Is there anything else you’d like to let our readers know about? MD: Whenever you ask this question I’m always excited to speak about the people at London Supply, which for us is equally as

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London Supply

London Supply’s Iguazú store contains themed areas designed to make shopping an experience for consumers

important as the business side of things. It’s sometimes nice to get away from the statistics for a moment and speak about the people that make the business. As always, I want to highlight the employees as they make London Supply the unique entity that it is. Everyone who works here believes in what we do and believes that the impossible can be achieved. Certainly, this stems from the direction of our President Teddy Taratuty and the fact that we’re all like-minded in holding values that go beyond our work and daily responsibilities as important—values such as giving, helping and believing that things won’t be better unless we work to make them better. Of course, our highest expression of

these values takes the form of the London Supply Group Foundation. We ended 2013 having built primary and secondary schools that I’m pleased to say are up and running very smoothly. We’re also constructing our Jardin Maternal, which is a facility that offers help and support to expectant mothers and babies up to 45 days old. We’re expecting to inaugurate the building this year, which will result in a full-service education complex dedicated to helping local children from birth to their 18th birthday when they graduate from secondary school. Currently, we have over 1,200 students attending the primary and secondary schools, a beautiful children’s orchestra and a sports park with teams that compete at a provincial

level, all created with the objective of ensuring that local children in Iguazú grow up with equal opportunities. On a related note, 2014 began with our annual Golf Tournament, where we raised US$562,490, which will be set aside to finish up the construction and outfitting of the Jardin Maternal. Finally, I’d like to thank every single one of our supplier partners who listen to our ideas, support us in our goals and get as excited about our plans as we do. Thank you for taking this journey of differentiation with us. Most of all, thank you for forging forward with us year after year and ensuring we continue working toward a better and more human industry.  A recent Big Pony activation at London Supply’s Iguazú store; the operator makes a point of going the extra mile for supplier partners

AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2014

Le Rouge

instability requires adaptability

yellow house staff

Le Rouge knows how to roll with the economic downturn by wendy morley

yreeta Martina, Marketing Manager of Le Rouge International BV, was kind enough recently to discuss with Americas Duty Free & Travel Retailing their operations on the islands of Curaçao and Bonaire, in the Dutch Caribbean off the coast of Venezuela. Le Rouge International BV operates two different duty free retail operations, with six locations in total.

The Yellow House concentrates on beauty

With two locations, The Yellow House, also known as “La Casa Amarillo,” is a land-based duty free store that retails mostly perfume and cosmetics, with some lifestyle products. One location has been recently relocated from Salinja Galleries to Fokkerweg 64, completely made over and expanded to an area of 310 square meters. The clean, modern-looking store is now a self-service luxury retail location full of top-brand products and with professional beauty advisors standing by to help. The store carries a full range of popular luxury brands of perfumes, cosmetics, skin care and lifestyle products, including watches by Michael Kors, Guess, Fossil, Mulco, and Diesel, handbags by Guess and Michael Kors, sunglasses by Rayban, Carrera and more, and jewelry by Swarovski and TOUS. Director Meena Hemrajani stated: “We have brought world-renowned beauty and fashion brands to our island. Shopping for everything under one roof in this new location is a pleasant experience for our customers.” The Yellow House has just picked up a number of product lines including H2O Plus, Biotherm, OPI, Phyto and L’Oréal, 74

AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2014

the front of the yellow house’s new location

with exclusivity for The Body Shop. In lifestyle they have added Mulco, Ann Klein and Invicta, and have also expanded their Swarovski jewelry line.

Zylo has a full range of lifestyle brands

Zylo offers a great assortment of prestigious and fashion brands of perfume, watches, sunglasses, handbags and jewelry, with exclusivity for Curaçao on a number of brands such as YSL, Sisley and Guerlain. Zylo has four locations: two land-based in Punda and St. Maria, both in Curacao; one in the Curacao airport; and one in the Bonaire airport. This number of operations gives Le Rouge keen insight on the current duty free business climate in the area.

Economic slowdown

So far 2014 has been quiet for Le Rouge. A large percentage of their customers come from nearby Venezuela, which has been experiencing political instability. This has resulted in a decrease of tourists from the country, impacting business in the area directly. But because that decrease in tourism affects the entire economy on Curaçao, both increasing the cost of living and providing general economic uncertainty, this has resulted in cautious local purchasers and lower local sales, which the land-based stores in particular depend upon. The company has found that this economic slowdown disproportionately affects sales of their higher-end products, and so they have reacted by diversifying their

product lines, allowing for some more budget-friendly brands such as The Body Shop, H2O Plus and L’Oréal. Luckily, the stores are seeing a trend toward an increase in European customers. Martina says this is a steady and growing market, and that they can count on consistent sell out of European brands. The Bonaire airport Zylo location has been quiet. It is a small location within a small airport that has had flight cutbacks. The same is not true of its location in the Curaçao airport, where business has been good and, like traffic in the airport itself, steadily increasing. With slower business comes a need for increased promotional activity, and Le Rouge has had two especially good promotions lately. With Phyto hair products, The Yellow House in Fokkerweg held a two-day Hair Scope hair analysis event with Ron Williams, celebrity hair artist. He gave training to staff and helped customers get acquainted with Phyto products. Yellow House staff members were impressed by both the products and the training, and invited their customers to come by for a Hair Scope analysis. Bloggers, press, customers and even models from Miss World Curaçao came by for the event, which surpassed all expectations and resulted in many products selling out. Another recent event was the launch of La Tentación de Nina at the Zylo store in Purda, where customers were invited to play a game in which they smelled four different Nina Ricci fragrances and tried

zylo at the Curacao airport

Celebrity hair artist Ron williams at the yellow house/phyto hair scope event

to name at least two. Martina says that with the success of these and other promotions, the stores will have many more

in the coming months as they find a way to not only to survive but to thrive during this downturn. c

(from left) Dewi Da Costa gomez, marketing assistant, syreeta martina, marketing manager, and promotional spokesmodels at the launch of La tentación de nina

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TFWA AP Review

TFWA Asia Pacific Exhibition and Conference closes on high note

A total of 2,683 visitors, up 9.4% from last year, visited the show from 1,022 companies (+1.8%)

Greeters at the circus-themed Singapore Swing party welcomed guests to the Alkaff Mansion

*ALL PHOTOS COURTESY OF TFWA PRESS PHOTO SERVICE

AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2014

As every year, a relaxed social program aided the networking process

FWA Asia Pacific Exhibition & Conference for the duty free and travel retail industry closed a successful week in Marina Bay Sands Expo & Convention Center. The four-day trade event, held from May 11-15, once again broke records for exhibition space, exhibitors and visitor numbers, an outstanding performance which reflects the dynamism of the duty free and travel retail industry in the Asia Pacific region. A total of 2,683 visitors, up 9.4% from last year, visited the show, from 1,022 companies (+1.8%). Of this total, 982 were duty free and travel retail operators and landlords (key buyers), up 8.7% on 2013, from 255 companies (+6.2%). On the exhibition floors was a wide range of international and local brands from 261 exhibiting companies on 256 stands, compared with 253 last year, of which 61 were new or returning. In total they covered 8,400 square metres of exhibition space on two floors, up 4% on last year. “The feedback we have received during this week has been very positive,” says Erik Juul-Mortensen, President, TFWA, speaking at the closing press conference. “The first year with a new hall is always challenging

but now people have seen it and proved that it works, we are confident that the number of stands will grow on the new floor and that we will see more new and interesting exhibitors there next year.” A total of 330 meetings (+10%) were facilitated by ONE2ONE between various delegates and the 36 airports and 26 airlines present at the show. This in addition to meetings on exhibitors’ stands with airports and airlines. Juul-Mortensen said the service was “going from strength to strength” as more and more people used it to establish new contacts in the region and to have so many airports and airlines present at a regional duty free and travel retail event is a real added-value element of the show. The opening plenary of the Conference on Monday 12, which this year took the theme ‘Asia: Shaping the World’, was attended by 872 people (+22%). The keynote speakers were Julia Gillard, former Prime Minister of Australia; Robert Waloni, Commercial & Business Development Director, Angkasa Pura Airports; author and strategist Parag Khanna; Jaya Singh, President APTRA; and Erik Juul-Mortensen, President TFWA. Four regional focus workshops took place during the day on East Asia, Australia & New Zealand, South East Asia, and India & South Asia. The overall attendance at the conference and workshops was up +21% at 1,185. The closing plenary on ‘Asia 2020’ attracted 337 delegates and explored the shopping behavior of tomorrow’s Asian travelers. The speakers were Jorge Rodri-

The opening plenary of the Conference on Monday 12, which this year took the theme ‘Asia: Shaping the World’, was attended by 872 people

Visitors and exhibitors had the opportunity to continue business after a busy day on the trade floor at the TFWA bar

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TFWA AP Review

The four-day trade event, held from May 11-15, once again broke records for exhibition space, exhibitors and visitor numbers

On the exhibition floors was a wide range of international and local brands from 261 exhibiting companies on 256 stands

AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2014

guez, Director of Brand Alliance, and Shubhodeep Pal, Vice President of SimpliFlying. A convivial and relaxed social program aided the networking process: 63 players competed in the annual Golf Tournament on Sentosa;. 710 people attended the delightful Welcoming Cocktail in Raffles, 511 enjoyed the splendid views from Marina Bay Sands Skypark at the Chill-Out Party and 517 attended the sophisticated Singapore Swing Party at the historic Alkaff Mansion. All these were record attendances. ď&#x201A;¨

Alex and Ani

glittering by

HIBAH NOOR

success Alex and Ani’s rapid expansion into travel retail has yielded impressive results

AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2014

ince Alex and Ani’s inception in 2004, the fastest growing Rhode Island-based lifestyle brand has become a force to be reckoned with in the jewelry industry. In 2013, the company yielded revenue of US$230 million, which is quite an achievement for a brand that started with just five cocktail rings in its catalogue. Founder, Creative Director and CEO, Carolyn Rafaelian, named the company after her two eldest daughters. She eventually expanded her offerings into a full line consisting of necklaces, earrings, and bangles. Alex and Ani’s growing reputation as a first-class purveyor of trend jewelry has resulted in a seamless transition into the world of travel retail, and the company has already experienced a great deal of success in the United States, Europe, and the Caribbean Islands. The latter has proven to be an especially lucrative region

for the growing corporation, as there are currently 51 Alex and Ani point-of-sale outlets in the Caribbean, in addition to shops at Barbados Airport and Montego Bay Jamaica Airport. “While the travel retail and duty free market is rapidly expanding, we see a huge potential for Alex and Ani to broaden its presence in international markets,” says Omar Ajaj, Vice President of International Business Development, Alex and Ani. To that end, the company is in the process of expanding into more travel retail locations than ever before, with Alex and Ani set to open new outlets at airports and aboard cruise ships in the months ahead. In terms of the company’s cruise ship presence, products are currently available on board two Norwegian cruise line’s ships, the Jewel and the Dawn. There are also ongoing talks with an additional four cruise lines for possible collaboration in 2014, says Ajaj. “We continuously look to identify global expansion opportunities for Alex and Ani.” The company is especially enthusiastic about its recent collaboration with leading travel retailer Nuance Group, which will allow the brand to push even further into the

world of travel retail and duty free. Explains Ajaj, “with [Nuance’s] help, we will be able to recreate the Alex and Ani shopping experience and introduce the brand across major airports in Germany, Switzerland, and Sweden, and we look forward to a successful partnership in 2014.” While Alex and Ani continues to move into new territories, the company is looking at broadening its reach into the Dominican Republic, Haiti, St. John, Tortola, St. Croix, Bonaire, and Key West in 2014. Additionally, the company is looking at opening locations at St. Maarten Airport, St. Kitts Airport, and Turks & Caicos Airport, with the current renovations at Antigua’s V.C Bird International Airport paving the way for Alex and Ani’s presence in the existing Sterlings retail outlet. Such initiatives are all part of the company’s ambitious plans to take its name and reputation further and further. “We have secured strong consumer brand loyalty and grown our brand consistently,” says Ajaj. Aside from its various travel retail initiatives, Alex and Ani has taken great strides to promote its products among customers outside of its target

demographic, which it has accomplished by forming a series of partnerships with well-known names in other fields. Alex and Ani’s presence can be felt in a wide variety of philanthropic endeavors. In addition to hosting charity events for non-profit organizations across the United States, the company, which boasts a charity department called Charity by Design, has participated in a profitable campaign that has provided funds to various nonprofit organizations, including the Hasbro Children’s Hospital. Charity by Design has also donated US$1 million each, to both Bryant University and Rhode Island College, with the company’s generous spirit also benefiting more than 135 other organizations. Travel retail is a large initiative for Alex and Ani. “The key driver to travel retail growth for Alex and Ani is to duplicate the same shopping experience and properly communicate our brand concept through our investment in building Alex and Ani shop-in-shop concepts, which mimic our domestic retail locations. “We ensure that the experience replicates that of the Alex and Ani aesthetic,” concludes Ajaj. 

Omar Ajaj, Vice President of International Business Development, Alex and Ani

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Supplier News

Crabtree & Evelyn seeks to expand its reach in travel retail Though it’s already achieved great success in the world of beauty retail, Crabtree & Evelyn is seeking to increase its exposure and presence in channels and markets that have otherwise remained untapped – with travel retail in the Americas and Latin American local markets as specific targets for the beauty supplier. The company’s efforts at expanding its reach are being spearheaded by a team of Miami-based executives, including JuanCarlos Delgado, Managing Director, Latin America and Caribbean, Diego Aleman, Director of Sales and Catherine Habermann, Sales and Marketing. The trio boasts decades of experience among them and they will, in addition to handling Crabtree & Evelyn’s travel retail presence in the Americas, manage the company’s entry to Latin America’s local markets beyond their established market of Mexico, as well as the formulation of the brand’s entry to Brazil. One of the major initiatives for the newly-formed team is the relaunch of two key collections for men, Nomad and Sandalwood. The former is now called Moroccan Myrrh and the latter Indian Sandalwood, with the change serving to highlight the featured ingredient provenance of a third men’s collection, West Indian Lime. All three products are being packaged as bath, body, and grooming collections. Moroccan Myrrh blends high-quality myrrh with notes of bergamot and petitgrain, which is then spiked with black pepper and cardamom, while Indian Sandalwood mixes sandalwood with spicy cypress, bergamot, lavender, and vetiver. The West Indian Lime collection, designed to evoke the rich spices of the British West Indies, combines citrus notes with an aroma of fresh spices and woods. These launches will perpetuate Crabtree & Evelyn’s status as a power player willing to reinvent itself on a regular basis, and with its travel retail plans now emerging from a single Miami-based office, the company is set to bring its decades of expertise to an entirely new market. Delgado estimates that the travel retail division will more than double its sales in the year to come, with the inevitable expansion that’s sure to ensue confirming Crabtree & Evelyn’s place as a force to be reckoned with.

Crabtree & Evelyn’s West Indian Lime collection is just one initiative designed to bolster the company’s travel retail presence

AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2014

Bouton unveils new Daisy collection to the Americas travel retail and duty free markets

Bouton reveals its new line of daisy-themed jewelry Bouton, an up-and-coming sterling-silver brand created by Adrian Buckley of Buckley Jewellery, has just launched its new Daisy Collection, which boasts a cascading-collar necklace, a single daisy pendant with matching earrings and ring, and a petite version of the collar. Represented in the Americas duty free and travel retail by International Brand Builders, Bouton has made tremendous strides in the world of travel retail over the past few years, says Katherine Sleipnes, CEO of International Brand Builders. With Buckley’s name recognition behind it—this Buckley Jewellery outfit is the United Kingdom’s leading costume jewelry manufacturer—Bouton has experienced an impressive and significant growth spurt that shows no signs of slowing. The company offers a range of sterling silver jewelry that’s crafted with simulated crystals in natural gem colors, which are then handset using the company’s micro pavé technique, with the SS14-ready Daisy Collection designed to evoke the beauty of the eponymous flower. The cascading collar necklace is linked with hand-cut simulated stones, while each petal features a single solitaire-cut simulated stone in its center. The collection is currently available in select stores and on the company’s website.

Victorinox launches into the travel retail and duty free markets with its best-selling fragrances With its iconic Swiss Army Knife brand behind it, Victorinox’s recent entry into the world of travel retail has already been met with incredible success. Victorinox made a huge splash at the most recent IAADFS Duty Free Show of the Americas and its products are currently available at eight points of distribution in duty free, with the company planning a series of additional openings in the months to come. Though the company boasts a full catalogue of products, Victorinox is currently focusing on its perfumes and colognes for the travel retail market. Explains Debra Vittone, Vice President of Sales Fragrances, North America, “what’s unique about our products, as opposed to the general men’s fragrance, is that our brand recognition is 100%.” Vittone notes that the company has been receiving “many requests from travel retail” and points to the brand’s global familiarity as the source of this unprecedented interest. Falling under the category of premium lifestyle, Victorinox’s collection of fragrances have been widely embraced by consumers – with Vittone noting that “men have a comfort level wearing and purchasing Victorinox Swiss Army fragrances.” Bolstering this attitude is the company’s recent nomination from the Fragrance Foundation Victorinox’s Unlimited Energy fragrance has earned Consumer Choice the company a nomination from the prestigious Fragrance Foundation Consumer Choice Awards Awards, with Victori-

nox’s Unlimited Energy scent earning a nod for Men’s Fragrance Launched in 2013. Introduced in February of 2013, Unlimited Energy has been designed to hit the senses like a splash of cold Swiss Mountain water and geared towards men with an active lifestyle. Opening with a burst of grapefruit, viola, and mint, Unlimited Energy provides a refined signature that’s finished with cedar, amber, and musk. The Eau de Cologne comes packaged in a new soft-touch bottle that’s both lighter than glass and highly-resistant to breakage, while the on/off locking cap and attached carabiner make it ideal for men on the go. The increased exposure of products like the Unlimited Energy fragrance have made it easier for Victorinox to break through into the competitive travel retail market, with the company ambitiously planning to open approximately 10 more points of sale in 2014. Additionally, says Vittone, Victorinox is “currently in the working stages of opening several duty free accounts. “A few of our new potential opportunities want us to have brand identity,” continues Vittone, explaining that the company is currently working to cement its strategy for exhibiting its wares – which includes the use of backlit display elements. The company is extremely invested in the travel retail sector, which is why it’s going to great lengths to enter the market in the right way with each and every account to ensure success. The world-famous Swiss Army logo has all but assured Victorinox success in the duty free and travel retail arenas, with the company selling one in every five Swiss timepieces in the United States and owning 90% of the global pocket knife trade. “The world knows this brand,” concludes Vittone.

Marr International partners with International Brand Builders Inc. to expand itsdistribution into the Americas Designer eyewear company Marr International has partnered with International Brand Builders Incorporated (IBBI) to expand its distribution of several designer eyewear brands, including Missoni, M Missoni, Moschino, Love Moschino, Loewe, and FILA. IBBI is representing these brands in the duty free and travel retail markets throughout the Americas. “The eyewear business in travel retail is growing and our brands offer a variety of styles and price points that are sought after by today’s traveling consumers,” says Michelle Tiganila, President of Marr International. The company’s goal is to eventually expand to all travel channels, including airports, borders, cruise lines, and airlines, to reach a global contingent of consumers, with IBBI boasting a portfolio that should ideally complement Marr’s offerings. Additionally, IBBI has already started working with retailers in key locations since the partnership began in April of 2014. Katherine Patch Sleipnes, President of IBBI, and Astrid Amoriggi Steinhaeuser, Brand Manager of Marr International, will be presenting the brands and the 2014 collections during the ASUTIL conference.

Marr International offers a host of brand name eyewear

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Safilo Group

Big changes for Safilo Americas Italian eyewear company Safilo benefits from innovative cross promotions by

HIBAH NOOR

Safilo is extremely excited about its recent collaboration with Italian designer Fendi

s one of the world’s leading purveyors of premium eyewear, Safilo Group has certainly earned the right to rest on its laurels. And yet Safilo continues to push forward with innovative partnerships and bold new products, with the company bringing top-quality eyewear to consumers from world-renowned names such as Alexander McQueen, Marc Jacobs, and Tommy Hilfiger. Though successful in all corners of the globe, Safilo has established itself as a leader in Asia due to its success with Gucci and Dior, and the company is looking to repeat

AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2014

that success in other markets. Says Francesco Leccisi, Head of Group Travel Retail, Safilo Group, “we’re trying to import the same technology, the same innovation, the same approach” to other markets, with a new particular emphasis given to the Americas. Armed with a new office in Miami, Safilo will be aggressively expanding its presence in the Americas’ travel retail sector—with the company applying the structure and policies that have worked so well in Asia, Europe and the Middle Eastern region. In particular, Safilo’s decision to encourage cross category promotion with

fragrance and cosmetics has reaped tremendous rewards over the past few years. “We’ve basically invented a new environment where the two categories are co-existing,” says Leccisi. By offering its various products under one roof, in what Leccisi refers to as “a kind of Safilo store,” Safilo is able to expand its reach by appealing to customers of varying interests and tastes. “If you come in to buy a Gucci article, you might not necessarily buy sunglasses but you might buy something else,” explains Leccisi. It’s a concept that results in more choices for the consumer, and Safilo intends to capitalize on this by increasing the expo-

Carrera eyewear recently launched foldable sunglasses that have a great deal of potential for Safilo’s airline-based sales

sure of several of its lines. In particular, the company is looking to push cross category promotions with fragrances and watches over the coming year. “The watch appetite of consumers is quite important,” says Leccisi. To that end, Safilo will be placing a strong emphasis on promotions that include its eyewear with timepieces in the Chinese duty free arena. Such innovations are reflective of Safilo’s commitment to the consumer, with the increased importance on dedicated collections designed to accelerate the company’s reach in underserved markets. This strategy of cross-promotion has already worked exceedingly well in Europe, with Safilo looking to replicate that success in other parts of the world. Safilo’s commitment to expansion is reflected keenly in its recent collaboration with Procter & Gamble, as the two companies have established a cross-partnership that’s proven beneficial to both brands. Explains Leccisi, representatives from both Safilo and Procter & Gamble meet with potential customers and together the two companies are able to “propose the footprints” of a mutually beneficial promotion. From there, Safilo and Procter & Gamble will work with the retailer to assign an appropriate space that will afford the consumer more choices than ever before. It’s an innovative new strategy that was first employed in the summer of 2013 in Turkey and Budapest, with the benefit to both sides making this a viable new option that Safilo

intends to explore further in the future. The company is looking to implement this kind of application in the Americas, with Safilo already garnering serious interest from a “major player” in the world of duty free. In terms of launching new products, Safilo is extremely excited about the potential afforded by its recent collaboration with Fendi. Established in 1925, Fendi has long established itself as one of the most wellknown and successful fashion brands on the planet. This new partnership will see Safilo distribute Fendi-branded sunglasses and optical frames until 2022, and Safilo is “very, very enthusiastic” about the “fresh, very dynamic” new line of eyewear, says Leccisi. The company additionally hopes that the exposure generated by Fendi will empower the other brands in its portfolio. In particular, the company is looking to generate more exposure for its line of Fossil-designated eyewear, with the two companies recently renewing their partnership for an additional four years. Safilo will now be distributing Fossil on a global scale, with the previous agreement covering only the United States and Canada. “Fossil is an extraordinary partner and we are very satisfied with the results we have achieved in North America over the past few years,” says a spokesperson for the company. Safilo is especially looking to grow the brand’s exposure and name value in Europe, Middle East, Africa, and Latin America, with the hope being that Fossil will enjoy the same success in those territories as

it already enjoys within the Asian market. Fossil is an iconic American brand whose potential is virtually limitless. Safilo began distributing Fossil’s products, including a new line of sunglasses in May. Safilo’s growing success on the world stage has allowed it to play with its brands in specific projects. This is especially true of the company’s line of Carrera eyewear, with the recent launch of foldable sunglasses holding a great deal of potential for Safilo’s airline-based sales. “The goal of the foldable is to give an added value on our airlines in terms of minimizing the space of the product,” says Leccisi. In terms of implementing its many corporate strategies and innovations, Safilo appointed a new Area Sales Manager, Rossella Barbizzi. Based out of Miami, Barbizzi will be looking after the central and northern parts of the Americas, including Canada. Barbizzi’s hiring is part of a new structure in the Miami office, with Safilo hoping that this fresh perspective will assist in the continued growth of its various lines. The company is also very excited by the recent hiring of its new Trade Marketing Manager for the Americas, Renata Holmes. With years of experience in the field, Holmes worked in a similar capacity for L’Oréal, and she will be bringing a bold, fresh perspective to Safilo’s marketing efforts. “We have been searching for the best candidate and we have succeeded,” concludes Leccisi. 

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Shiseido

A grand

bareMinerals has created a liquid foundation unlike any other; it contains no unnecessary ingredients, and is applied using the new Perfecting Face Brush, for seamless application

design Shiseido swings for the fences with ambitious plans for Nars Cosmetics and bareMinerals

HIBAH NOOR

ars Cosmetics, founded by make-up artist and photographer François Nars and owned by Japanese hair care and cosmetics giant Shiseido, is readying the release of its new Dual-Intensity Eyeshadow Collection, with the travel retail exclusive joining a lineup that includes everything from lipsticks to bronzers to moisturizers. The Dual-Intensity Eyeshadow Collection marks Shiseido’s newest effort to increase Nars’ presence and reach within the lucrative travel retail market, with Shiseido itself coming off a highly successful 2013 that saw impressive growth in the Americas. Michael Gebrael, Managing Director, Shiseido Travel Retail Americas, says Shiseido has managed to boost its presence in a number of key regions, with this increase credited to a continued willingness to change and adapt with the times. “Given the heritage and the type of corporation we remain true to our mission and values.” With four collections planned for the year, Nars is ripe to build its reputation and name value within the travel retail sector. This includes the impending release of its Dual-Intensity Eyeshadow Collection on July 1 at various travel retail and duty free locations. 2014 looks to be a banner year for 142-year-old Shiseido, with the company preparing to open a series of new spaces throughout the Americas. Although the focus remains on Shiseido’s core products, like its various skincare and make-up lines, Gebrael says that the company will focus more on the emerging brands under its umbrella, including Nars Cosmetics and bareMinerals. bareMinerals, which champions a less-is-more philosophy and makes purity a priority, has long been a detractor of liquid foundation, but its Pure Brightening Serum Foundation is completely different from any liquid foundation seen before. The new foundation

AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2014

delivers across the company’s three pillars: cosmetics, skincare and good-for-you benefits. “We don’t believe in ‘traditional’ liquid foundation; we believe in giving women products with the finest quality ingredients of the highest integrity that don’t compromise their skin,” explains Leslie Blodgett, Creator of bareMinerals. “We achieved something miraculous with bareSkin Foundation by eliminating ingredients that aren’t actually needed in this type of format, illustrating the fundamental difference in the way we formulate products. bareMinerals enthusiasts really represent the voice of a generation of women who care about what they put on their skin.” The resultant liquid foundation contains no oil, silicone, parabens, fragrance or water. It is created using the bare minimum of ingredients including healing and protective vitamin C, lilac plant stem cells and titanium dioxide, with jojoba-coated mineral pigments suspended in a coconut-derived base. This product is also different in that it is applied with bareMinerals’ Perfecting Face Brush, for a seamless application. This new product will be launched in travel retail in September 2014. Despite its massive success in 2013, Shiseido is gearing up for a year that’s almost guaranteed to be the most successful in the company’s history - with Gebrael noting that “the big expansion will be happening in 2014.” It’s clear that travel retail is going to play a key role in Shiseido’s impending triumph in the months ahead, with the company planning a notable expansion for many of the brands in its roster. There’s a particular focus on the company’s growth in the Americas, explains Gebrael, and it’s clear that Shiseido is only just getting started within this burgeoning industry. 

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Mäurer & Wirtz

The sweet smell

of success

Margareta Klein, Senior Area Manager, Mäurer & Wirtz

Mäurer & Wirtz builds on 4711 brand to expand on a worldwide basis by HIBAH NOOR

stablished in 1845, German fragrance house Mäurer & Wirtz is seeking to broaden the appeal of its brands by placing a renewed emphasis on travel retail for 2014. Mäurer & Wirtz is specifically looking to expand the reach of its bestselling 4711 Cologne, with the company embarking on a campaign to introduce the iconic scent to an entirely new generation of consumers. With its long and rich heritage behind it, the Original 4711 Cologne is sold in 51 duty free locations around the world – including border shops, ferries, and the military. But, says Mäurer & Wirtz Senior Area Manager Margareta Klein, the centuries-old product has the capability to appeal to a much broader subset of purchasers. To that end, the company is planning a number of new initiatives geared specifically towards the travel retail market. “We feel there is far more potential for the brand within travel retail globally,” says Klein. Building on the introduction of 4711 Nouveau Cologne in 2011, Mäurer & Wirtz sees a great deal of potential in the relaunch of its 4711 Acqua Colonia bodycare line. The collection consists of five fragrances designed to provide a sensation of wellbeing, with Pink Pepper and Grapefruit

AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2014

joining existing varieties Mandarine and Cardamom, Melissa & Verbena, Lemon & Ginger and Blood Orange & Basil. The 4711 Acqua Colonia line is also available in a miniature collection containing all five scents, with Mäurer & Wirtz already reaping the benefits of this travel retail exclusive. The company is also in the midst of launching a new fragrance for both men and women called 4711 Wunderwasser. Aimed at customers between 20 and 40 years of age, 4711 Wunderwasser is presented in a style that’s completely different from the 4711 Original Eau de Cologne—with the product’s blue-themed appearance designed to conjure up images of the ocean’s depths. The bottles for the two sexes are radically different in appearance—the women’s fragrance is soft and rounded, while the men’s is darker and taller—and both items are presented in a finished box containing either a 50ml or 90ml spray. These initiatives are all part of Mäurer & Wirtz’s ongoing efforts at expanding its travel retail presence beyond Germany and Europe, with the company’s various lines already available at duty free outlets throughout the region—including Frank-

furt, Hamburg, Vienna, Moscow, and Oslo. (This is in addition to the Mäurer & Wirtz’s availability aboard such top local airlines as Germanwings, SunExpress, and Onur Air.) “We are really convinced that Mäurer & Wirtz can be attractive to a wider audience,” says Klein. Klein notes that in addition to the 4711 line of products, Mäurer & Wirtz boasts a wide variety of brands geared towards demographics of all ages—including such globally-recognizable names as Baldessarini and Strellson. The company is focusing on building distribution in both South America and Asia, with a specific emphasis on the travel retail markets of those regions. As one of the top five perfume-producing companies in Germany, Mäurer & Wirtz is poised on the edge of international success. “Mäurer & Wirtz is totally committed to travel retail and we really intend to build our business this year,” says Klein. “We have the infrastructure and resources to support our presence in travel retail with shop-inshops, great display concepts, high profile promotions, incentives, exclusives, etc.”  The 4711 Acqua Colonia line is a travel retail exclusive available in a miniature collection

Cross

Cross showcased its prestigious leather accessories during March’s IAADFS show in Orlando

Watching

hough over 150 years old, writing instruments firm Cross is still looking to break through into new markets and new territories. The company, founded in 1846 in Providence, Rhode Island, has recently entered into a partnership with Torero Corporation, which has been manufacturing leather accessories for more than 50 years. Torero, which is a joint venture between a Spanish and an Indian company, has been responsible for leather products for such heavy hitters as Montblanc, Chanel, DKNY, and Hugo Boss, with the company now ranked as the largest manufacturer of leather accessories in its home base of India. With that in mind, Torero began aggressively pitching itself to Cross as an exclusive manufacturer of its leather accessories— with the corporation going so far as to start 92

AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2014

growth by

A collaboration between Cross and Torero promises success for both companies

HIBAH NOOR

a new company devoted solely to its line of Cross products. Explains Director & CEO of Torero Corporation Yashovardhan Gupta, “unlike many licensees, we do not represent other brands. We’re only focused on Cross globally and we’re really trying to uplift the brand into a different stratosphere.” Noting that “leather accessories is now one of the largest growing markets,” Gupta says that the collaboration with Cross will allow Torero to break through in the lucrative travel retail arena. And although Torero’s products have traditionally been successful in Japan and Europe, the company’s lack of exposure in the Americas is set to change with its newfound association with Cross. “With travel retail you get a lot of integrity, which helps you in the retail market as well,” says Gupta. In terms of its actual

products, Torero proudly uses only the highest-quality leather in all categories— from top-grain to full-grain, with genuine leather a constant. A big issue for Torero and Cross has been the pricing of its line, with both companies seeking to shatter notions of what a top-notch leather accessory should cost. “We did a lot of analysis before we really decided to price these products,” explains Gupta. Torero is aiming its line of Crossbranded products towards consumers that want a high-quality product but can’t afford a steep price, with the company landing on a cost that fulfils this need without sacrificing the quality that its become known for. “We try to remain within a very, very attractive price point.” He continues, “we’re trying to give the consumer far more bang for their buck.”

Cross What this essentially means is that Torero will be offering a line of products that are high in quality but affordable in price, with Gupta already receiving positive feedback from travel retailers. As an example, Gupta points to the Cross entry-level bifold wallet—which is offered at special duty free pricing of around US$39.95. It’s a bargain that’s indicative of Torero’s determination to expand its reach in the travel retail sector; as Gupta notes, “we are really focusing very aggressively on the travel retail market.” He continues, “what we’re trying to pitch to the consumer is top-quality leather accessories.” With that in mind, Torero is relying on its expertise in the industry to propel its Cross line above and beyond its wellestablished competitors. We are basically very high-quality contract manufacturers and our company in India has been doing that for 25 years,” says Gupta, with this standard of excellence evident in Torero’s reputation for only working with the top brands in the industry. Torero’s high level quality begins before a single piece of leather is stitched. “We

consolidate all the material in Spain and we ship it to India, where we manufacturer it under the aegis of Spanish craftsmen, who are always overseeing it,” explains Gupta. Additionally, Torero’s products are completely designed and conceptualized in Spain—which results in a European feel among the company’s various lines. It’s for those reasons that Torero sees so much potential in its collaboration with Cross, as both companies share a similar dedication to quality and timeless craftsmanship. As the exclusive global license holder for Cross’ line of leather accessories, Torero is looking to assertively push its line of products into realms unreached by either company. Explaining that Torero is seeking to take the Cross brand forward by leveraging its vast manufacturing experience, Gupta says that Cross is champing at the bit to make “a very serious foray into leather accessories.” Torero’s familiarity within the realm of leather accessories is sure to play an instrumental role in Cross’ success, as the company has earned a reputation as one of the market leaders in this exceedingly

competitive industry. Gupta notes that Torero’s line of Apple-approved iPhone and iPad cases have been tremendously popular, while the company’s full-leather cases, passport wallets, and laptop bags have been a hit among travelers for years now. “Our self-serve travel retail stand has been much appreciated as well, as within a small revolving floor space, one gets access to a wide variety of men’s, women’s leather accessories,” Gupta explains. The company is also a pioneer in terms of augmenting its products with innovative qualities, with its Tech Collection boasting such forwardthinking elements as RFID protection and GPS accessibility. Such attributes have ensured that the Torero/Cross partnership is virtually guaranteed success in the months and years to come. The two companies’ goals for the assortment of Cross leather accessories couldn’t possibly be loftier, as they’re hoping their continued investment in the line’s development, manufacture, and marketing will transform it into one of the top five brands in the bridge-toluxury segment by 2023. 

In partnership with Torero Corporation, Cross offers high quality leather accessories made in Spain and India

AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2014

The Tastes of Happiness.

Iconic brands. Delicious choices. And new Travel Retail Exclusives such as REESE’S Pieces and REESE’S White Peanut Butter Cups Miniatures. You bring all this and more to your customers with Hershey’s extraordinary portfolio of chocolate and confections.

HERSHEY’S

www.hersheystravelretail.com

HERS HEY’S KISSES

REESE’S

ICE BREAKERS

J OL LY RA N C H E R

B R OOKS I DE

Globefill

Legend

becomes

reality

After years of researching the crystal head legend, two creative icons have produced a product that is equal parts modern and ancient by WENDY MORLEY

premium product, unique packaging and an intriguing story—that is the winning combination for duty free success, and Crystal Head vodka undoubtedly has all three. Launched in 2008, Crystal Head is the brainchild of world-renowned actor, musician and screenwriter Dan Aykroyd and internationally acclaimed American artist John Alexander. Together they envisaged a crystal clear, pure and additive-free vodka nestled in a one-of-a-kind bottle.

Physical and metaphysical As a company, Globefill, the owner of Crystal Head, sees vodka as the ultimate pure spirit. To that end, it uses the clean, clear waters of Newfoundland and ferments the sweetest, highest quality peaches and cream corn, also found in Canada. Because no gluten-containing grain is used in its production, Crystal Head vodka is gluten free. A luxury premium brand, Crystal Head contains no additives, glycerol, citrus oils or sugar. After four distillations, a number the company claims is optimal for achieving its superior flavor, the vodka is filtered seven times, three of those through rare, 500-million-year-old crystals known as Herkimer diamonds. The result is a multi-award96

AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2014

winning product that has won numerous accolades, including a Gold Medal for Excellent Taste at the 2013 Prodexpo Russia, a New Product of the Year award at the 2012 Australia Liquor Industry Awards and a Double-Gold Medal at the 2011 San Francisco World Spirits Competition. The bottle was inspired by the legend of the 13 crystal heads. These heads, polished into shape over hundreds of years and dated between 5,000 and 35,000 years old, have been found throughout the world, from the American southwest to Tibet. While shaped as skulls, these heads are thought to be symbols of life rather than death, offering spiritual enlightenment to those who possess them. Once Aykroyd and Alexander completed the design of this metaphysically powerful vessel, it was produced by Milanbased manufacturer Bruni Glass.

From idea to existence Once the bottle was created and the vodka distilled and filtered, Crystal Head launched in the US. Over the past six years it has spread throughout the world into 40 global markets, and that number is growing. Its journey into travel retail closely followed its domestic trajectory. The company has seen strong travel retail sales first in the Americas, and then in Europe, Australia and New Zealand.

Brian Meret, VP Caribbean & Latin America, says, “Plans are being developed on a market-by-market basis. To date the focus has been on gaining distribution. The quality of the vodka combined with the collectability aspect of the packaging has minimized the need to run traditional programming.” The company’s travel retail experience so far has been very positive. According to Managing Partner Jonathan Hemi, the product has seen an excellent response and this market has been given priority by Globefill. The company has invested significant resources and hired pivotal personnel with extensive experience in travel retail. Hemi states: “We can already see the benefits.” Globefill has identified industry trade events as important; they support its long-term travel retail plans and reinforce the opportunity that Crystal Head vodka represents for its distribution and retail partners. The company expects global travel retail distribution to increase over the coming year throughout the world. Crystal Head, described by Globefill as “pure, smooth, high-quality, luxurious, edgy, distinctive, contemporary, stylish and fashionable,” is currently available in 50 mL, 700 mL, 750 mL and 1.75 L bottles, with a 3L bottle available this summer. 

Moving ahead p.

Tequila news p.

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Off to a good start p.

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Forging its own path p.

109

Tequila Report

Moving

ahead

Once a distant thought for travel retailers, tequila and mezcal are building a place of their own by RYAN WHITE and WENDY MORLEY

nique stories, superior products, recipes, tastings, education and even scorpions—these are some of the ways distilleries and distributors are increasing the footprint of that well-known liquid made from the agave plant.

219 years of history

Jose Cuervo has been in operation since the Cuervo family became the first official distillery in the town of Santiago de Tequila when they were granted license by His Majesty, King of Spain. Jose Cuervo tequila is still produced at that same distillery, the oldest in Latin America, by the Cuervo family’s 10th generation since that day. That long, rich history has given Jose Cuervo tequila a unique place globally, in both domestic and travel retail markets, where it is consistently the largest-selling tequila. In Latin American travel retail, the brand’s biggest market is Brazil, where after years of expansion the sales climate has been uncertain lately. As with many companies, Jose Cuervo’s sales in the region have been affected by the currency devaluation in recent months relative to the US Dollar. The currency devaluation has made it more difficult for Brazilians to travel internationally, and consequently the first quarter’s sales in the region were down relative to Q1 of 2013, says Alex Borbolla, Jose Cuervo’s Regional Director, Latin America and Caribbean. He does not expect this to change greatly in the

For the 1800 Essential Artists series, Jose Cuervo commissions artists to produce original works

coming year. “Sales in duty free are directly impacted by currency adjustment,” he says. “Analysts are not forecasting a favorable currency adjustment in the medium or long term, so we do not expect a significant impact on sales over the coming year.” Borbolla does allow that numerous new terminals along with renovated or reinvigorated shopping areas throughout Brazil may help boost sales as they open over the coming year but, he says, “That is difficult to predict.” In addition, though the FIFA World Cup will undoubtedly increase traffic throughout Brazil and indeed throughout the region, operators and suppliers are not counting those sales before they occur, having learned a lesson when the 2013 FIFA Confederations Cup failed to produce expected sales. Regardless of increased or decreased traffic, sales must be found and Jose Cuervo is continuing to promote its line throughout the region. Currently, the company is choosing to promote its core products, Jose Cuervo Especial Reposado and Silver. Ongoing promotions include Jose Cuervo tequila with valueadded-product Jose Cuervo Margarita Mix, and the annual limited edition of the 1800 Essential Artists series. For this series, Jose Cuervo commissions artists to produce original works, which are recreated on the back of the 1800 bottle. Nothing is printed or etched on the front of the bottle, so the work of art is clearly visible through the clear liquid from the back—a truly original duty free purchase.

www.dutyfreemagazine.ca AMERICAS DUTY FREE & TRAVEL RETAILING

The perfect way to enjoy Patr贸n is responsibly. 漏 2013 Patr贸n Spirits International AG, Schaffhausen, Switzerland. 40% Alc./Vol.

Handcrafted in Mexico. Coveted worldwide. Patr贸n tequila is made in small batches in Jalisco, Mexico, the home of authentic tequila. The fruits of that craftsmanship are cherished worldwide.

Simply Perfect. patronspirits.com

Tequila Report Joe Arellano, Vice President Travel Retail and Latin America/ Caribbean Region

tequila segments are gaining in status with global consumers, making this a legitimate international category. There is some irony that the two products the company is promoting are both darker in color, but Patrón is also capitalizing on some other current market trends. One is the trend toward an aged product, especially one made in a traditional way. This is definitely the case with Gran Patrón Piedra, which is crafted using the “Tahona” process, an ancient and time-consuming method of producing tequila. The highest-quality agave is steamed and then crushed using a giant stone Tahona wheel. The resulting juice is fermented and distilled with the agave fiber, and then the liquid is aged in new oak barrels for over three years. This gives the ultrapremium tequila its rich, deep, burnished color and its smooth, sweet yet complex flavor. Piedra means stone in Spanish, and both the name and the bottle are inspired by the Tahona stone used to crush the agave.

Consistent programs keep sales high for Patrón

Until Patrón, the words “high end” and “tequila” were not used together. Tequila had the reputation as a drink to knock back rather than sip. Patrón was the harbinger of change in the way the world viewed tequila. It’s therefore appropriate that, having led the way with ultra-premium tequila, Patrón is now leading the way with its aged tequilas. By all accounts, this newest tequila journey is going exceptionally well. “Our duty free regional business in Latin America has been healthy over the past year, posting steady growth led by some store sales and some new listings,” says Joe Arellano, Patrón’s Vice President, Travel Retail and Latin America/Caribbean. According to Arellano, Patrón led its category and posted solid growth at DufryBrasil last year. While that is excellent news for the brand, it means Patrón has to work even harder to achieve year-on-year growth. “We were going against strong growth this first quarter versus the same period last year, but consistent in-store programming has helped us demonstrate growth in the channel,” he says. Arellano expects this positive sales trend to continue, because of the company’s unceasing promotional efforts. Patrón consistently offers in-store tastings, staff education and incentives, and highperceived-value gift-with-purchase programs. Over the past year, the company’s focus in travel retail has been their high-end Gran Patrón Piedra in addition to their Patrón XO Café Dark Cocoa liqueur, and thus these two products have been and will continue to be the focus for in-store promotions. Gran Patrón Piedra in particular fits in with two trends the company has been seeing in travel retail. The first is the trend toward premiumization. “Affluent travelers are always seeking aspirational alternatives that go above and beyond their typical purchase patterns,” says Arellano. Another trend he and Patrón are seeing is an increasing number of consumers seeking alternatives in the Ultra-Premium White Spirits (UPWS) segment. “We feel this trend bodes well for brands such as ours,” he continues, adding that the ultra- and super-premium

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Tasting event in Dufry’s Terminal 1 location, Mexico City Wall units help keep the attention on Patrón when tastings are not taking place

Tequila Report Another trend is the expansion of the cocktail culture, already strong in Latin America. This portends strong liqueur sales and reinforces the company’s promotional efforts on behalf of Patrón XO Café Dark Cocoa. For now, Patrón is enjoying the sales generated by its promotion of the liqueur and Patrón Gran Piedra in addition to increased sales of its other products caused by the brand halo effect. In future the company will continue to place emphasis on product innovation including brand extensions of its liqueur line and core tequila variants, which will be released over time. While the region has been especially strong for Patrón, no region is without its complications. “In the economic arena there are always challenges over which we have no control,” says Arellano. “Currency fluctuations and political changes, for example. We choose to focus on things we are able to control, such as producing what we consider to be the best tequila in the world, delivering excellent programming and execution at the retail level, and placing our customers and the end-consumers at the forefront of everything we do.”

Scorpion Mezcal offers new gift pack to duty free, explores Central and South America

For years, Douglas French, Owner and Founder of Scorpion Mezcal, has been educating consumers and even the spirits industry at large about mezcal, one of Mexico’s most famous, but perhaps least understood, exports. That hard work has paid off as the brand is getting more attention from operators in various parts of the Americas.

Instead of a worm, you’ll find a scorpion in the bottom of a bottle of Scorpion Mezcal

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“In Mexico there are about 180 varieties of agave, which is the plant used to make mezcal,” explains French. “Approximately 30 of these variants are able to be fermented and distilled.” One way that Scorpion is tapping into the trend toward learning about and tasting different quality spirits, which is very popular in whisky culture, is to offer a special gift pack for duty free that features four 200mL bottles, each containing mezcal made with a different agave type. “This gives people the opportunity to sit down and note the differing flavor profiles of each,” French explains. “The gift pack is made especially for duty free and select high-end stores. It’s a limited edition and we’re planning on coming out with new packs on a regular basis that feature mezcal made with different agave types. In addition to making a nice gift, it also furthers our agenda of educating people about the quality and heritage of the spirit.” French tells us that the brand is gaining momentum, especially in South and Central America. “We have a lot of new interest from these regions,” he says. “The pace of business is a bit different there, so we’re still waiting to close the purchases, but things are looking good.” When it comes to duty free, Scorpion is currently listed in the Grand Caymen Islands with the Tortuga Rum Company and in Paraguay with Shopping China. French says he’s close to closing deals in Peru and Uruguay, and is also eying the Caribbean—St. Maarten specifically—as a future prospect. “The cruise business has also been good to us,” French says. “We’re currently being poured on Celebrity Cruise Lines and we’re just starting with MSC Cruises out of Miami.” 

Tequila News

Big sales and big launches for Sauza For Beam Global (now Beam Suntory since the giant Japanese spirits firm purchased the iconic American company for US$16 billion earlier this year), 2013 was positive for sales of its tequila brands. Sauza’s sales were up a modest but positive 3% by the year’s end, whereas Hornitos was up 12%. Matt Shattock, president and CEO of Beam, said, “For the full year, we delivered excellent performance in premium whiskey as well as in tequila.” While sales of Sauza itself improved moderately last year, the brand has made a big announcement in the super-premium tequila category. Sauza, one of the oldest and most widely known tequila houses, has teamed up with mega-star Justin Timberlake to launch Sauza 901 super-premium tequila. Named for the time the night begins to get interesting, Sauza 901 also refers to the area code of the world-renowned singer’s hometown of Memphis, Tennessee. This triple distilled, 100-percent agave tequila is a true collaborative effort between Sauza and Timberlake, who was inspired during a trip to Mexico’s tequila heartland of Jalisca. “That trip inspired me to create 901, and I’m thrilled to partner with Sauza,” he says. “Justin Timberlake is a creative powerhouse, and we couldn’t be more excited to join forces for this long-term partnership on Sauza 901,” said Bill Newlands, President North America, Beam Suntory. “We look forward to driving Sauza 901 in the marketplace with the backing of Beam’s powerful marketing, sales and distribution organization. This is amazing liquid, and we believe Sauza 901 will challenge industry norms and transform the way people think about tequila.” This brand will be available in very select locations throughout 2014, opening up to travel retail during the coming year.

3 Amigos won the coveted Platinum SIP award in 2014

3 Amigos tequila offers a certified organic product

106

Justin Timberlake and Sauza have launched Sauza 901, coming soon to travel retail

Laden with medals For the third year, 3 Amigos tequila has brought home honors from the renowned Spirits International Prestige (SIP) Awards, held in Dana Point, California in April. The tequila company’s Organic Blanco Tequila was awarded the highly coveted Platinum Medal and Consumer’s Choice Award. The Consumer’s Choice Award is reserved for brands that place by winning a bronze or better two years in a row, demonstrating the ultimate in quality year after year. In addition, a gold medal was awarded to 3 Amigos for its Reposado tequila. Hundreds of companies compete for SIP medals each year. The 2014 competition saw over 400 brands enter the competition. At the 14th annual San Francisco World Spirits Competition, held in late March, 3 Amigos’ Anejo tequila took home the Best in Show Award and a Double Gold Medal. This year the prestigious competition received the largest number of entries in its history. 1,479 spirits from 63 countries were entered into 89 different classifications. The distillery can add these awards to a long list it has won over the past few years, including a Gold Medal at the Spirits of Mexico, and “Best of the Best” from Tequila.net. “We are honored to receive these outstanding awards from respected competitions such as the SIP Awards and San Francisco World Spirits Competition,” said Santiago Gonzalez, founder and CEO of 3 Amigos Tequila. “It’s equally rewarding to see our handcrafted, premium tequilas recognized by consumers and industry experts alike.” Gonzalez follows a long family tradition of farming, growing the best agave in a manner that is organic and sustainable. In fact, 3 Amigos was one of the first tequilas to become USDA certified organic. While most ultra-premium tequilas are distilled three times, 3 Amigos’ handcrafted tequilas, including Blanco, Reposado and Anejo, are distilled two times, because Gonzalez feels this helps achieve the optimal flavor.

AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2014

Drink Responsibly. y y.

Fraternity Spirits

Off to a

99,000 Hours is Tequilera Corralejo’s special super premium commemorative aged tequila

good start

Fraternity Spirits enjoys strong singledigit sales increases over the first few months of the year and expects the trend to continue as 2014 progresses by

RYAN WHITE

raternity Spirits—makers of the popular Corralejo tequila brand along with El Diezmo tequila cream with chocolate, El Ron Prohibido, Vodka Boker and Quita Penas ready-made margarita mix— have started out the year right, according to Raffaele Berardi, the company’s Managing Director. Berardi tells us that sales over the first few months of this year have grown about 9% ahead of the same period last year. For the full year, he’s expecting between 8% and 10% growth, largely on the back of 99,000 Hours and the newly launched Ron Prohibido, which has effectively picked up on the trend in aged rum that is currently sweeping the travel retail industry in many parts of the Americas. With regard to the most recent additions to the portfolio, El Diezmo Tequila Cream is described as a mixture of two major ingredients in the history of Mexico—tequila and chocolate cocoa. The brand has a unique taste and texture, featuring a creamy consistency and a distinct tequila flavor with notes of chocolate and real cocoa, making it an excellent after-dinner drink. Available in a 750 ml size with 20% ABV, El Diezmo Tequila Cream with Chocolate is presented in a beautiful golden bottle, making it perfect as a gift item in travel retail. Marques De Cuba Habanero rum is also new to the Tequilera Corralejo portfolio. By the year 1700, Spanish ships were arriving in the New World colonies loaded with products from Spain. One popular product was sweet wine stored in barrels, which

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were empty after use. These empty barrels were filled with Chinguirito, which is rum that was produced in Mexico and shipped back to Spain. The resulting rum became very popular in Spain, which local producers saw as a threat to sales of their existing products. Consequently, the King of Spain prohibited production. In addition to the above products, Berardi notes that the response in travel retail to Vodka Boker, a Mexican corn vodka presented in a highly attractive deep blue bottle, and Quita Penas ready-made margarita mix has been very positive. “We engage in a lot of tastings in the Americas region as a means of highlighting the superior quality of our brands,” Berardi says. “For an established brand like Corralejo, it’s really about giving consumers who perhaps haven’t tried tequila before the chance to engage with the brand and learn that it’s a very high-quality product. For a new entrant like El Ron Prohibido, for example, tastings are an extremely important way of converting rum fans to the brand.” New listings for Fraternity Spirits’ brands include UETA in South America and WDFG in selected Latin American locations, the UK and in Europe. Indeed, the new listings, combined with the continuing trend of consumers trading up, gives Berardi the sense that 2014 will be a solid year for his brands. “We’re fortunate in the sense that our portfolio contains a good mix of established and new brands across different subcategories,” he explains. “I’m looking forward to seeing how the year plays out.” 

“El Ron Prohibido,” one of Fraternity Spirits’ newest launches

THE ORIGINAL SUPER-PREMIUM TEQUILA

Today it's part of a renowned tequila legacy. But the rich tradition of Tres Generaciones® Tequila began in 1873 with one visionary, Don Cenobio Sauza, in the agave fields of Tequila, Mexico. He worked tirelessly and passed down his hard-earned wisdom. Then his son and grandson did the very same, resulting in some of the most cherished tequila in Mexico – and the world. Tres Generaciones® Tequila celebrates these three generations of tequila pioneers. Triple distilled using hand-harvested 100% blue agave.

Brown-Forman

Forging its

own path

Woodford Reserve, Brown-Forman’s premium small-batch Kentucky boubon, is often showcased in travel retail

Brown-Forman discovers that relying on itself yields the best results by WENDY MORLEY

rown-Forman has seen extremely good year-over-year results with convincing double-digit growth throughout Latin America. The company has especially strong sales in Brazil and Mexico, in both cases in great part because the company has taken control of distribution. When Brown-Forman acquired Tequila Herradura, which also makes Mexico’s number-one-selling tequila el Jimador, it also acquired the tequila company’s distribution network in Mexico. Having its own distributor meant Brown-Forman could ensure the focus remained firmly on its brands, and the result has been growing sales throughout the country. Being acquired by Brown-Forman was also positive for the distribution of Tequila Herradura, whose worldwide exposure increased overnight from 53 to 136 countries. In Mexico, Tequila Herradura is the aspirational tequila, whereas el Jimador is the most popular tequila brand in the country. BrownForman has seen duty free sales improving for both brands, though the company has chosen to concentrate its efforts on Herradura in the travel retail market by partnering with retailers such as Dufry, World Duty Free Group (WDFG) and Gruppo la Riviera on high-profile promotional activations. At WDFG’s operations in Cancun, for example, Brown-Forman hired bartenders for the shop’s mix-it bar for tastings, created a video, provided staff training and education, and offered discounts and gift with purchases. The company will hold more events like this in the coming year, with each activation lasting from one to two months. Brown-Forman’s goal for its tequila brands is to stay on top and continue to grow. Mexico is the main market for these brands in Latin America, but pockets are also beginning to develop in Brazil, the company’s other distribution stronghold.

The power of supply in creating demand

Brown-Forman has seen firsthand how controlling distribution greatly improves results in Brazil, where the company created its own distribution business. This allows for more concentrated effort and thorough domestic permeation, generating increased popularity that carries over to travel retail. While the tequila market is opening up in Brazil, huge growth is occurring in sales of American whiskey, Brown-Forman’s largest category. Similar to Asia, Brazil is a huge Scotch market. Its younger generation is looking for a spirit with the sophistication of Scotch but with a younger, fresher edge. This is an oft-quoted reason for American whiskey’s soaring popularity throughout the world. As the company with the most popular American whiskey brand in the world, Jack Daniel’s, Brown-Forman is ready and willing to make the most of this surge. 110

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Changing landscape

Monte Wilson, Director of Americas and Global Key Accounts for Brown-Forman Travel Retail, says, “Not long ago we had to beg for two to three feet of space in duty free stores. At the last trade show Latin American retailers were coming to us. We were asked to do a Jack Daniel’s wall unit in Sao Paulo. It’s an exciting time.” The company has wall units and gondolas going into duty free shops throughout Latin America. These displays will make visual and educational use of the barrel, communicating the importance of the barrel in the taste and color of American whiskey. Travel retail is embracing American whiskey, and American whiskey is embracing travel retail right back. The Jack Daniel’s family of whiskeys is now growing to include more exclusive travel retail products such as Gentleman Jack; Jack Daniel’s Sinatra Select, which was created and marketed with the help of Frank Sinatra’s family; and recently Jack Daniel’s No. 27 Gold, which was created for the Asian market and will be exclusive to travel retail for a year. Woodford Reserve, Brown-Forman’s high-end bourbon, is the company’s premier bourbon offering in travel retail throughout the world. While this iconic American whiskey company has not acquired or created distributorship in other Latin American countries, the retail team has been amazed at how well its products have done throughout the entire region. Chile, for example, has proven to be a strong market despite the fact that it doesn’t have a large population. Whether discussing whiskey or tequila, Brown-Forman is in a very good position in Latin America given its robust portfolio of high-quality spirits. But for Wilson, while what’s in the bottle is certainly very important, there’s another part of the equation that is equally as vital. “Our goals for 2014 are not to set our targets too low,” he says. “So much more is possible, not only because of our brands, but also because of our people.” 

Wine & Spirits News Across the ocean With a portfolio that includes some of South Africa’s finest and most well-respected wines, Diverse Flavours is well situated for big success in travel retail. Since the company began promoting its products in this area it has seen many successes indeed, including partnering with Callaway for a promotion for its Ernie Els wine in Lotte Duty Free in Korea, the promotion of its 88 Vineyards Cabernet Sauvignon in border stores between Hong Kong and mainland China, and the serving of its high-end Cederberg Shiraz in Cathay Pacific’s Business Class, two Avondale wines in Japan’s ANA First Class and Cederberg Merlot-Siraz in its Business Class section. Recently Diverse Flavours has been granted two prestigious honors: representing the elegant and very well-respected Champagne Taittinger in Asia duty free, and being selected to represent Groot Constantia, South Africa’s oldest winery. Diverse Flavours’ next move is across the ocean. Managing Director Anthony Budd says, “Brazil offers an enormous opportunity for us, and we are currently looking to speak with distributors and operators in the region.” Champagne Taittinger has been named FIFA’s Official Champagne for the 2014 FIFA World Cup Brazil™

AGWA is gaining popularity on a global level

When AGWA is frozen for more than four hours, it glows

AGWA truly glows The coca leaf has been used for thousands of years by the native population of Bolivia and was employed for the first time to produce a liqueur by the De Medici family in 1820. This tradition is now being carried on in a totally unique drink, AGWA. To make this drink, first the coca leaves are flown from Bolivia to Amsterdam under guard. The cocaine alkaloids are removed from the leaves, and 36 other natural botanicals are added, including green tea, ginseng, lavender, mint, cucumber and guarana. Laura Klingeman, Development Manager for Duty Free and Travel Retail at Seva Group, which distributes AGWA, describes the brand’s essence as a “naturally euphoric glow.” She suggests that the consumer experiences a euphoric effect when drinking AGWA. “The brand experience is all about having fun, igniting the party and keeping it going; celebrating hedonistic nights with friends and discovering.” Meanwhile the glow referred to is not just the traditional glow one feels when drinking a spirit. When frozen down to minus 17 degrees celsius for a minimum of four hours, this unique liquid forms ice crystals that concentrate the flavor and color, intensifying the user experience and also providing a visible glow in the glass. Recently, AGWA released its special carnival edition XO. This edgy product has a long history and heritage that is represented in the male and female masks depicted on the bottle. These masks originate in the heart of Bolivia, where they are worn by the authentic Diablada dancers at the annual Carnaval de Oruro. “AGWA is gaining popularity on a global level because of its history, the quality of the liquid and the excitement it offers along with its flexibility in cocktails,” says Klingeman. “It makes a great AGWA Mojito and is delicious served frozen with lime. It’s the fastestgrowing liqueur in Korea, and is also a big favorite in Australia.”

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Wine & Spirits News

Golden shores

Mix Amarula Gold with ginger ale or sparkling apple juice

Amarula was launched 25 years ago, and took the world by storm shortly thereafter. The cream liqueur is the 36th most purchased spirit in travel retail, and in certain parts of the world is the bestselling cream liqueur. The company has been successful throughout the past 25 years on the strength of one product, but 2014 marks the introduction of a new Amarula: Amarula Gold. It is expected to be a leader in the markets where Amarula already holds large market share, specifically South Africa and South America. Like its counterpart, Amarula Gold is made from the handharvested marula fruit indigenous to sub-Saharan Africa, doubledistilled and aged in oak for 24 months, but this product is not hailed as a relaxing, after-dinner wind-down. This is Amarula’s party drink, and it’s being promoted as the drink you have when you’re out on the town. Marius Fouche, Distell Group’s Managing Director of Global Duty Free, says Amarula Gold is positioned as sophisticated and cosmopolitan, reflecting the thriving urban nightlife of Africa. The sensation is surprisingly spicy and smooth, with a strong flavor of marula fruit. “The strategic intent of Amarula Gold has been to address the needs of the non-cream consumer, enabling him or her to experience this unique marula spirit,” says Fouche. “Our Amarula Cream volumes have not been affected by the launch of Amarula Gold, so early indications are that we have addressed consumer needs. Looking forward from these early indications we expect positive overall sales growth for Amarula.”

A pioneering travel retail exclusive

Smirnoff White’s innovative bottle is reminiscent of Arctic crystals

Diageo recently announced the worldwide launch in July 2014 of its new travel retail exclusive, the innovative new super-premium vodka, Smirnoff White. This new expression has been freeze-filtered at -6°C and then passed through charcoal filters, giving it an exceptionally smooth flavor. Its bottle reflects this unique process, with a design reminiscent of crystals formed in pure arctic ice. According to Diageo, Smirnoff White is inspired by the innovative nature and inventive spirit of Vladimir Smirnoff and his quest for perfection. Neither the nationalization of his successful vodka business nor a revolution made him waiver in his commitment to innovation. He rebuilt his business founded on pioneering principles which, today, have inspired the brand and the creation of Smirnoff White. Matthieu Comard, Vice President Diageo Global Travel and Middle East (GTME), Western, says: “Global travelers deserve unique and bespoke options to augment their journeys and define them as travellers. Smirnoff White does just that. Building on the innovative principles of Vladimir Smirnoff, it sets a new benchmark in the quality standard of super-premium vodka and will create a new center of gravity for Smirnoff in travel retail. The launch of Smirnoff White will raise the bar in the white spirits category in terms of the product, its presentation and the scale and quality of activation.” Diageo has seen enormous success with its travel retail-exclusive Explorers’ Club Collection, and with the announcement of this new travel retail-exclusive product, is underlining its commitment to its focus on premiumization and differentiation. The launch of Smirnoff White will be Diageo’s largest vodka launch to date. “Smirnoff White is an innovation that demonstrates our relentless focus on differentiation and premiumisation,” says Steve White, Marketing Director of Diageo GTME. “It is a major investment by Diageo in the white spirits category and will be supported by bold executions at scale across key travel retail locations globally.” Creative displays and high-impact activations will announce its arrival in July 2014 at prime travel retail locations around the world.

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For information please contact Pablo Serp: Pserp@actium.us

Botran

takes

Botran is focusing on its 15- and 18-yearold rums given the recent boom in aged spirits

its time by

WENDY MORLEY

It takes time to bring Botran aged rums to their rich depth of flavor, and the company is not rushing its expansion into the world’s airports

or nearly a century, the premium rum from Botran was well known in its home country of Guatemala but barely broke past the borders and never out of Central America. In 2010 the company management—aware of the growing reputation of premium aged rums—felt it was the right time to introduce the premium line of Botran, the family reserve, to the rest of the world. Following a clear strategy, Botran is spreading its reach across many key regions in both domestic and travel retail markets. With the plan to continue its development across both oceans next year, the company’s sight this year is set on the Americas with a focus on its 15-year-old and 18-year-old rums. Aged using Botran’s proprietary Solera method, each bottle clearly states the age as a means of attracting notice from discerning aficionados on packed duty free shelves.

Age-old methods

As the company has done all along, it grows its own sugar cane in the rich, volcanic soil of southern Guatemala. So specific is the process that Botran uses a different type of cane for each rum. The cane is pressed into honey, which is fermented, distilled and then aged in the mountains in exbourbon, sherry and port barrels. In the Solera process, part of the contents of the oldest barrels is taken out and bottled, and younger rum is added in order to continue

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the aging process. This cyclical method of aging ensures that every barrel, and hence every bottle, contains rum that is aged to a rich depth. The age on the bottle reflects the oldest rum that is the base of the barrel contents. While Botran rum is highly recognizable in Central America and available throughout the region domestically and in airports, the company is still developing brand awareness outside that area. Frank Quinones, Managing Director of Botran Aged Rums, says, “The challenge for us is to accelerate brand recognition. We’re competing against long-established companies. We’re still growing our distribution network. It takes time to do things properly, just as it does to create our rums.”

Airport focus

Botran is in all airports in Central America and in major airports in South America, including Chile, Peru, Colombia and Ecuador. Throughout these regions growth has slowed somewhat, but that is expected because, as a new product, its year-on-year growth was in the triple digits soon after being introduced to the market. Growth is still in the strong double digits and sales are positive, but to continue with its growth plans the company needs to get into more locations. One current area of concentration is Mexico, where Botran is starting to make inroads. The company’s rums are in World Duty Free Group stores in Cancun, and

Quinones is optimistic about the brand’s potential for Mexico City and other airports in the country while the brand continues to expand its presence and awareness domestically. The company is also looking toward Brazil, which it sees as a great opportunity and proposition for travelers of the region. Quinones says Botran’s promotions are based on elegant simplicity. The rum is a high-quality product, and so his most aggressive tactic is simply to have yearround tastings and education. He wants to focus on the history and extraordinary quality of the rum. Quinones’ goal is for Botran to eventually be a staple product in airports around the world, so aged-rum lovers can find it wherever their journeys may take them.  Frank Quinones, Managing Director of Botran

Stoli

The original

premium With a long history as the premium vodka, Stoli® is reasserting itself in that role by

WENDY MORLEY

The established cocktail culture of the region supports Stoli’s sales

Stoli’s indulgent flavors are especially popular in Latin Americas

hroughout the entire 20th century Stolichnaya®, affectionately known as “Stoli,” was the vodka for those in the know. The best bartenders used Stoli to create cocktails for movie stars and presidents. By the ’80s and ‘90s, Stoli was well established with those who appreciated a superior product. As a well-known premium brand, Stoli is positioned to be a star in travel retail. The owners and managers of the brand at SPI Group, based in Luxembourg, have chosen to place a little more focus on the Americas, with positive results.

Brazil leads the way

Jean-Philippe Aucher, Stolichnaya’s Global Duty Free & Travel Retail Director, says Stoli is now the third-highest imported vodka brand in Latin America. “Sales have been very strong over the past year, with Brazil and Mexico the growth leaders.” Travel retail in these emerging regions is growing, and Stoli is witnessing the benefits to this growth when you compare the company’s year-over-year sales. In Brazil in particular, Stoli is seeing great success, and expects

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these sales to continue in an upward swing in Dufry stores in Brazilian airports and in the border stores. While Brazil is especially strong, Stoli is successfully expanding its assortment of products throughout the region, including with Dufry Group both inside and outside of Brazil, London Supply in Argentina and World Duty Free Group in airports throughout Latin America, though that list continues to grow.

Promotional activity

Latin America’s large and established cocktail culture makes Stoli’s indulgent flavor line especially appealing there. Three of its flavors are the focus for the region: Stoli Chocolat Razberi, Salted Karamel and Chocolat Kokonut. In fact Stoli was the first vodka to introduce flavors in the 1960s, though this has become an extremely popular trend. Stoli holds ongoing promotions worldwide and throughout Latin America with key operators. The company tends to focus its efforts on tasting bars, offering its indulgent flavors in addition to Stoli Premium and its ultra-luxury brand, elit by Stolichnaya.

Taking advantage of positive trends

While Latin America has been especially kind to Stoli, the trends the company has noticed here are similar to what it has witnessed throughout the rest of the world, not just in the vodka category but across the board. Travelers who shop in duty free and other travel retail locations want premium brands and are willing to continue this upward movement. They want items that are exclusive and innovative. Aucher says, “since Stoli is one of the most innovative brands on the market, we see masses of potential moving forward. Vodka continues to be a dynamic category.” With opportunity comes challenges, and Aucher feels the biggest challenge is how to stand out and make the brand’s voice heard when there is little space and many competing brands. The company, however, feels Latin America is a positive growth region. Stoli is an established, iconic premium brand that is accepted and appreciated for its quality by bartenders and vodka drinkers. “Latin America is one of our most promising regions,” says Aucher, “so we will continue to make heavy investments in this area, ensuring that we extend the current growth. We hope to continue to achieve further travel retail listings throughout Latin America, and grow our global presence.” 

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Waldemar Behn

Dooley’s flavors are being presented to operators throughout Latin America

A competitive

ENVIRONMENT New flavors and packaging help Waldemar Behn combat slowing growth by WENDY MORLEY

o stranger to travel retail, family-owned Waldemar Behn is as present throughout Latin America as it is in the rest of the world. Global Sales Director Torben Vedel Andersen is cautiously optimistic about the coming year as he discusses performance in 2013, the company’s focus for the region and the potential for increased sales during the FIFA World Cup.

Slowing growth Torben Vedel Anderson, Global Sales Director, Waldemar Behn

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While sales over the past year in general are up in Latin America, results in the first quarter of 2014 have been mixed. Sales are positive overall in the region, but Andersen

confirms that some pockets are doing better while some have dropped. “After several years of solid growth, the Uruguayan border stores are down a little this year over last,” he says. In general, the company is pleased with its performance, but would of course like to see more robust sales in certain countries, and although the region is still strong economically, growth is slowing. Companies formerly experiencing strong double-digit growth can no longer expect that. Another recent financial challenge has been the volatility of the Brazilian Real. While this currency appears to be stabilizing, it is still unpredictable. Volatility creates instability and uncertainty, and that translates into

decreased consumer confidence, resulting in a drop in sales. On a positive note, the FIFA World Cup is expected to bring hundreds of thousands of international tourists to Brazil. Neighboring countries may also benefit as it is expected that many football fans will take the opportunity to travel around the region. What will this mean for sales of Waldemar Behn’s products? “There will be a lot more traffic in airports. Whether the international air traveler will also take land trips and thus visit border stores is unknown. Border stores are harder to predict, though there will certainly be visitors driving from neighboring countries,” says Andersen. “But no one knows if the soccer-watching crowds will be big spenders.”

DANZKA is promoting its football festival edition in Latin America this year

New flavors, new packaging, new promotion Having recently purchased DANZKA Vodka, the well-known Danish “Vodka with Attitude,” Waldemar Behn is focusing on promoting the product in addition to its Dooley’s range throughout the world, including in Latin America. Dooley’s has just launched a new product design centered on the theme “Beyond Luxury,” in addition to a new website. The company has added a new seasonal flavor, Dooley’s Winter Chocolate. The current line of Dooley’s flavors includes Original Toffee Cream Liqueur, Dooley´s Espresso, and another seasonal flavor called Dooley´s Tropic Summer. The complete line has been presented to operators throughout Latin America, and the company expects to see further listings for the latter half of 2014. The biggest promotion the company will be doing this year in Latin America is the DANZKA football festival limited edition, designed to attract soccer fans, though the complete DANZKA line— DANZKA Original, DANZKA Citrus, DANZKA Cranraz, DANZKA Currant, DANZKA Grapefruit and DANZKA FIFTY—will also be promoted. For Andersen, the overwhelming focus for this year is to keep sales up. “The challenge in the region is sales growth,” he says. “While still positive overall and over the medium term, growth has slowed.” The company’s goal, he says, is to “just fight to keep sales up in a competitive universe.” 

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Tobacco News

The J. Cortes display at Aldeasa Duty Free in Curaçao

J. Cortes makes crucial move The year has been good for J. Cortes in duty free in Latin America. The Belgium-based company has found its sales steadily growing, and it is continuously looking for new partners in the region, to expand its travel retail presence. According to Export Manager & Travel Retail Coordinator Thomas Gryson, J. Cortes’ Neos Mini flavored versions are very popular, and the company is continuing to enlarge its exposure in the Caribbean. Gryson will be at ASUTIL, and will present the company’s new Neos Selection 50 cigars. “This year is very crucial for J. Cortes,” he says. “We are delving deeper into travel retail and duty free. More and more tourists are visiting throughout Latin America, both from the region and from around the world, and they are buying our products at the airports.” Gryson says the company expects a steady flow from its current clients in the region.

The debut of Dunhill 1907

The striking white, silver and black package stands out on the shelf

The new Cohiba

Cohiba cigars were created in 1966 after the Cuban revolution. Originally the brand was owned privately and used exclusively to supply to Fidel Castro and diplomats. Over the years this prestigious brand reached the open market and is now available in over 100 countries. In line with the quality of the Cohiba cigar but with an exceptionally smooth blend and a smaller size has been launched Cohiba White. Highly experienced Cuban master blenders conducted the research and development of this new product, which is from the same leaf source as hand-made Cuban cigars. The package is a striking combination of silver, white and black—very distinct on the shelf. This premium mini cigar is available in two sizes: the standard Mini, 82.00 mm x 7.60 mm, and the larger Club size, which is increasing in popularity, especially in duty free channels, with a size of 96.50 mm x 8.80 mm.

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With the first new full-time Dunhill brand since 2001 and the first box-pressed cigar in the Dunhill portfolio, available in the new “Toro” size, General Cigar announces the launch of 1907 by Dunhill. Handcrafted in Santiago, Dominican Republic, these cigars are a blend of Dominican ligeros and Brazilian Mata Fina, bound with Dominican Olor and wrapped in a Honduran Olancho leaf. An 18-count wooden box with sliding lid contains one of the following four sizes: Rothschild, 4.5” x 48, Robusto, 5” x 52, Churchill, 7” x 49, and Toro box pressed, 6” x 54. Yves Politi, head of British American Tobacco Ltd.’s Dunhill cigar division said, “1907 celebrates the Dunhill brand’s time-honored tradition of tobacco mastery, while incorporating elements that speak to the modern cigar smoker’s passion points: a fuller taste profile, accessible pricing and classic sizing.” This collection of four medium-bodied cigars is coming available in May at premium tobacconists worldwide.

Each wooden box with a sliding lid contains 18 cigars in one of 1907’s four sizes

E st . 1 8 4 6 - U SA

Travel Retail Wor l d Pre s ence in air por t s, air lines, fe r r i e s and border stores

Co n t ac t Dav id Fe rre ira d fe r re ira @ c ross .com