LATIN AMERICA REPORT 2019
DUTYFREEMAG.COM JUNE 2019 · LATIN AMERICA REPORT VOL 29 · NO 2
Dufry holds strong in
Latin America p. 10
HKG Duty Free expands presence in Mexico p. 14 DFA to boost restaurant roster p. 16 Argentina and a tale of ups and downs p. 22
Letter from the Editor
A challenging
future I
n this issue, we discover that although there are a lot of challenges in South America, positive developments abound. The duty free business is set to expand in the region despite ongoing economic uncertainty. Brazil captured our attention when it was announced that the Brazilian authorities had approved the opening of the first land duty free stores in the country. But in Argentina, the continuing downward spiral of Argentina’s economy and its effect on the travel retail and duty free business are causes for concern. A law passed in Brazil six years ago to allow duty free stores to do business on the Brazilian side of the border finally became a reality with the announcement in early June that stores could open in Urugaiana and Jaguarão, with more stores to follow. These first stores are being opened by small operators, but companies with a larger footprint in the area, like Dufry and DFA, are expected to be part of the mix in the near future. Rather than being worried by the pending arrival of competitors across the border, established land duty free operators in Uruguay are buoyed by the news. Their collective sense is that the existence of duty free stores on both sides of the border at numerous locations will bring more customers to the border area which will create more business for everyone. A company well versed in thriving under pressure, Dufry holds strong in Latin America while continuing with substantial growth throughout the rest of the world, including the cruise channel. Rene Riedi, Dufry’s Divisional Chief Executive Officer Central and South America, has witnessed a number of crises since his tenure in the region began. He says while Dufry is seeing the effects of the situation in Latin America, the company is still growing reasonably well. “Things could be much worse. Will we get out of it? Yes. When? That’s a bit tricky. But for Dufry, we should probably see a recovery, because the comparable is going to be better.” However, Dufry has been investing heavily in Argentina, where it has opened one of its first New Generation stores in Buenos Aires. These stores use exciting digital technology to create a highly personalized experience for its customers. While South America may be a challenging region for the company, it is doing especially well in the Caribbean and North America. The regional duty free and travel retail industry has therefore been looking at Argentina with trepidation because the country’s flagging economy has kept Argentines at home and out of land border and airport duty free shops. According to experts, changes that will be unpopular with the Argentine electorate – who will be going to the polls to elect a new President in October – are expected to include more belt-tightening measures. At Americas Duty Free, we share the concerns of operators in our industry but are hopeful. The results of Argentina’s elections will set a path for the country’s economic prospects and we are optimistic that the outlook will improve. Kindest Regards,
Hibah Noor Editor-in-Chief hibah@dutyfreemagazine.ca 4 THE AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2019
JUNE 2019 · LATIN AMERICA REPORT VOL 29 · NO 2 The Americas Duty Free & Travel Retailing magazine (ISSN 0962-0699) is published four times a year 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 2019, Vol 29. No. 2. Printed in Canada. All rights reserved. Nothing may be reprinted in whole or in part without written permission from the publisher. © 2019 Global Marketing Company Ltd. .
THE 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 DEPUTY EDITOR Jas Ryat jas@dutyfreemagazine.ca SENIOR EDITOR Mary Jane Pittilla maryjanepittilla@hotmail.com SENIOR WRITER Rebecca Byrne rebeccabyrne10@yahoo.com.sg ASIA CORRESPONDENT Elena Owyong owyongelena@gmail.com AMERICAS CORRESPONDENT Ronnie Lovler ronnie@dutyfreemagazine.ca ART DIRECTOR Jessica Hearn jessica@globalmarketingcom.ca CIRCULATION & SUBSCRIPTION MANAGER accounts@globalmarketingcom.ca
The best shopping destination Dufry keeps evolving to sustain its position as the world’s leading travel retail expert. We are now bigger than ever, more global, and more strategic. We go above and beyond, offering a large variety of brands and an unparalleled understanding of our customers. And all‌ in the best airports, in 65 countries, and at 2,300 stores on five continents.
Letter from the Editor
Un futuro
complejo E
n este número, descubrimos que, a pesar de la existencia de numerosos retos en Suramérica, abundan los acontecimientos positivos. El negocio duty free está en vías de expansión en la región, a pesar de la continua incertidumbre económica. Brasil captó nuestra atención, cuando se anunció que las autoridades de esa nación habían aprobado la apertura de las primeras tiendas duty free terrestres del país. Sin embargo, en Argentina, la progresión de la espiral descendente de la economía, y sus efectos en los negocios minoristas de viaje y duty free, son causa de preocupación. Una ley promulgada hace seis años en Brasil, que permite a las tiendas duty free hacer negocios en el lado brasileño de la frontera, se ha hecho realidad finalmente con el anuncio de que a principios de junio se inaugurarían establecimientos de ese tipo en Urugaiana y Jaguarão, seguidas por otros más. Aunque estas primeras tiendas están siendo creadas por pequeños operadores, se espera que compañías con una mayor representación en la zona, como Dufry y DFA, también se incorporen a la operación en un futuro cercano. En vez de estar preocupados por la llegada inminente de competidores al otro lado de la frontera, los operadores de tiendas duty free terrestres de Uruguay se sienten estimulados por las noticias. Su sentir colectivo es que la existencia de tiendas duty free a ambos lados de la frontera y en diversos lugares de la misma, atraerá a más compradores a la zona fronteriza, lo cual creará más negocios para todos. Dufry, una compañía experta en prosperar bajo presión, mantiene operaciones sólidas en Latinoamérica y prosigue con un crecimiento sustancial en el resto del mundo, incluyendo el canal de cruceros. Rene Riedi, Director Ejecutivo de Dufry para la División de Centro y Suramérica, quien ha sido testigo de varias
6 THE AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2019
crisis desde el inicio de su trabajo en la región, afirma que, si bien la compañía está viendo los efectos de la situación en Latinoamérica, sigue creciendo razonablemente bien. “Las cosas podrían ser mucho peores. ¿Saldremos de esta situación? Claro que sí. ¿Cuándo? Es difícil de predecir, porque podríamos estar ante un problema a largo plazo”, explica. No obstante, Dufry ha estado invirtiendo sustancialmente en Argentina, donde inauguró en Buenos Aires una de sus primeras tiendas New Generation. Estos establecimientos usan una atractiva tecnología digital para crearles una experiencia altamente personalizada a sus clientes. Si bien Suramérica podría ser una región compleja para la compañía, está obteniendo excelentes resultados especialmente en otras como el Caribe y Norteamérica. La industria regional duty free y minorista de viajes ha estado observando con inquietud a Argentina, debido a que la débil economía de la nación ha propiciado que los argentinos no viajen, y por tanto, no visiten las tiendas duty free de fronteras terrestres y aeropuertos. Según los expertos, se espera que los cambios impopulares para el electorado argentino– que irá a las urnas en octubre para elegir un nuevo presidente– incluirán más medidas restrictivas. Americas Duty Free se hace eco de las preocupaciones de los operadores de nuestra industria, pero no pierde las esperanzas. Los resultados de las elecciones en Argentina sentarán una pauta para las perspectivas económicas del país, y nos sentimos optimistas de que habrá mejorías en esa situación. Cordialmente,
Hibah Noor Editora en Jefe hibah@dutyfreemagazine.ca
Dutyfreeamericaslatam
Contents
What’s inside Lead Stories
10 Dufry Americas
Constant advancement
10
A company well versed in thriving under pressure, Dufry holds strong in Latin America while continuing with substantial growth throughout the rest of the world, including the all-important burgeoning cruise channel
14 HKG Duty Free
Growing presence With a long history at the Mexico-US border, HKG Duty Free is expanding its presence both on the land border and in Mexican airports
16 Duty Free Americas/ SSP New partnership
SSP and DFA to boost restaurant roster at Salvador Bahia Airport
24
18 Brazil Update
Brazil and Argentina create pivot in regional duty free world Duty free business set to expand in the region in spite of ongoing economic uncertainty
20 Motta International Driving duty free growth in Panama
Motta International is seizing the opportunities offered by the expansion of Tocumen International Airport
22 Argentina Update Argentina and a tale of ups and downs
Argentina prepares for October presidential elections amidst ‘same old, same old’ scenario: economic downturns and rising inflation
28 Essilor/Luxottica
Costa and Bolon Eyewear star in new showcase Essilor opens showroom at the crossroads of the Americas travel retail market
26 Features Siñeriz ready for another store 24 Puerto Rico cruise market is back 26 M&Co launches Crystal Collection 30 Cloetta follows the trends 31
Travel Blue offers solutions DFD engineers a triple win Monarq: Ahead of the curve Questionnaire: Antoine Bona
32 34 36 38
Dufry Americas
Dufry recently opened the refurbished main store in Argentina, Buenos Aires
Constant advancement A company well versed in thriving under pressure, Dufry holds strong in Latin America while continuing with substantial growth throughout the rest of the world, including the all-important burgeoning cruise channel by HIBAH NOOR
M
ore than most industries, travel is strongly affected by socio-political realities, and if travel is affected by anything, travel retail will be affected even more. It’s no secret that South America is an economically volatile part of the world, but Dufry has had operations there for a long time. This company is one that knows how to thrive in a rainstorm, and you’d be hard pressed to find someone under the Dufry banner who doesn’t express a sense of thoughtful positivity.
Always unsettled
Rene Riedi, Dufry’s Divisional Chief Executive Officer Central and South America, has been witness to a number of crises since his tenure in the region began. “I have been in Americas for the past seven years,” he says. “I remember when I started in 2012, the first thing that happened was the collapse of Pluna airline, the flag carrier of Uruguay that had flights between Brazil, Uruguay and Argentina. In one day we had a 50% drop in traffic in Uruguay. This was my first challenge in the Americas.”
He says while, as with everyone, Dufry is seeing the affects of the situation in Latin America, the company is still growing reasonably well. “Things could be much worse. Will we get out of it? Yes. When? That’s a bit tricky. But for Dufry, we should probably see recovery, because the comparable is going to be better.” Riedi reminds us that since 2014 this industry and others have been in constant crisis in South America, first with Brazil, then Argentina. “This is something you have to learn when you are invested in South America – you never have stability,” he says. “This is not like operating in Switzerland and Singapore. External factors are always playing a role in our considerations.” As Brazil’s election was a focus of the LATAM business community in 2018, so is Argentina’s election this year. “The consequence of the elections is that they impact currencies,” he says. “We sell in US dollars. If you sell in dollars and the local currency devaluates, our prices become more expensive in comparison to the local market. That is a risk. The upswing can be very steep again. This is the reality. We are
10 THE AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2019
used to this pattern; we know what needs to be done to mitigate these issues. We have to have products, offer promotions, and we have to make sure that the staff is motivated and incentivized.” While South America may be a challenging region for the company, it is doing especially well in the Caribbean and North America. “The economy of the US brings tourists into the Caribbean. The situation in Mexico is stable and business is going along as normal. We are happy about what’s happening on the northern side. In the end you have a mixed bag,” says Riedi.
Rene Reidi, Dufry’s Divisional Chief Exectutive Officer Central and South America with Hibah Noor, Editor-inChief, Americas Duty Free, met earlier this month for an extensive interview
Dufry Americas
Thriving under pressure
During the difficult times in South America, Dufry made substantial investments and this is currently the case in Argentina. “We recently opened the refurbished main store in Argentina, Buenos Aires,” says Riedi. “This is remarkable because if you look at the economic situation in Argentina we have made an effort to invest and upgrade the store in uncertain times, and it has been received very well. We have created an international feel combined with a real sense of place, giving good space to local items like wine or alfajores, the local delicate cookies made with cornstarch.” The Argentina location is one of the company’s New Generation Stores, which use digital technology to create a highly personalized experience for its customers. “Not every location qualifies to be NGS,” says Riedi.
Holland America and Cruise business
The cruise channel continues to grow internationally, and it is an important focus for Dufry. According to the Cruise Lines International Association, the industry is expected to grow +6% in 2019,
with an estimated 30 million travelers. “We are going to try to grow this channel,” says Riedi. “We started three years ago from a base of nine ships and now we have 38. This has been in many ways a major effort and we’ve invested quite a bit.” Recently the company signed a contract to operate duty free shops onboard six new Holland America Line ships. Dufry will now be present on all 15 ships of Holland America’s fleet, with more than 3,500 square meters of retail space. This includes the Nieuw Statendam, the cruise line’s most recent ship, launched last December. The company has developed and implemented an operational IT system that allows for communication with other logistics platform around the world to be able to serve the ships better and more efficiently no matter where they are.” says Riedi. “This simplifies our work by helping with the flow of information and goods.”
Upward swing
Dufry Group saw a slight improvement in Q1 sales 2019 vs Q4 2018, with organic growth at 2% vs 1.8%. The growth is led by Asia-Pacific, Middle East and
North America. As Riedi has noted, the northern part of the Americas has helped buoy the region as a whole. Europe has begun to show improvement, seeing positive growth along with Central America and Africa, whereas South America has remained weak. Julian Diaz, Dufry Group CEO, says: “The improving market conditions seen in the first months of 2019 in all divisions, with the exception of Brazil and Argentina, where the environment remains challenging, have continued and are encouraging.” Dufry is always on the lookout for opportunities – new concessions and other ways of supporting the ongoing improvement in organic growth. Recent highlights include new operations at the MTR station in Hong Kong, the new airport in Perth as well as the addition of new cruise ships. The company has added 9,100 square meters of gross retail space and signed 18,800 square meters to be opened in 2019 and 2020 in existing and new locations across the globe. At the same time, it extended existing contracts and refurbished 14,400 square meters of retail space in the first quarter with plans to revamp a further 34,700 square meters in 2019.
Dufry’s Ezeiza International Airport location is one of the company’s New Generation Stores, which uses digital technology to create a highly personalized experience for its customers
12 THE AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2019
HKG Duty Free
HKG’s duty free store at San Luis Potosi International Airport is just one of the company’s venues in Mexico
Growing presence With a long history at the Mexico-US border, HKG Duty Free is expanding its presence both on the land border and in Mexican airports by RONNIE LOVLER
K
Liquors and spirits feature prominently among many other items available for purchase at HKG’s duty free store at the Culiacan International Airport
14 THE AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2019
nown primarily as a land border operation, HKG Duty Free will soon have a presence at several international airports in Mexico, while at the same time beefing up its numbers along the US Southern border with Mexico during the rest of 2019. The company, founded in 1977 by the Khaledi family, began as an electronic sales operation based in Laredo, Texas. Its duty free operations remained clearly focused on the US-Mexico border until 2016, when HKG Mexico opened its first satellite duty free store in Querétaro International Airport. This expansion is now continuing to three other Mexico locations. Alan Huxtable, HKG’s Vice President of New Business Development, shared some details in an exclusive interview with Americas Duty Free. “Further expansion will be forthcoming in the following
Mexico airport venues: Puebla International, Culiacan International, and San Luis Potosi International,” he said. All are scheduled to begin operations in 2019, with Puebla first on the list.
Further expansion
It was in Querétero that HKG initiated its first Mexico duty free operation, with a 30-square meter store in the main international and domestic departures area at the airport. At the Puebla airport, which comes on board shortly, passengers will be offered the opportunity to purchase a wide variety of spirits, tobacco, fragrances, watches, fashion accessories and confectionery. Similar offerings will be made in Culiacan and San Luis Potosi. HKG is also among those bidding for a duty free concession at the San Antonio International Airport in San Antonio, Texas. “HKG Duty Free is actively considering opportunities encompassing both duty free and duty paid concessions
in other US airport venues,” Huxtable said, although for now he offers no details about which locations are under consideration. The company is also working at expanding operations at primary border crossing points in Laredo, Hidalgo and El Paso in Texas and Otay Mesa and San Ysidro in California. In addition to its Texas and California locations, HKG also retains distribution and logistics centers in Laredo and Miami.
Border still strong
Huxtable underscored the importance of the border for HKG operations. “The US southern border commercial portfolio still remains (the) historical core channel for HKG. However, new business development will be specifically focused expanding Mexico and US airport business ventures,” he said. While HKG made its name in electronics, the company has now moved into developing a fashion brand portfolio as
well as fragrances, tobacco and spirits, and is looking to develop more categories. “HKG retains long-term successful business relationships, with major brands in all categories having full support as new channels are developed and activated,” Huxtable said.
Other business initiatives
HKG is the founder of Horizon Premium Brands, which focuses on quality tobacco products at a value price as an option for premium cigarettes. The company offers a wide variety of proprietary tobacco brands aimed at budget-conscious consumers, including Montana, Pitbull, Police and Teepee. The company’s business ventures include not only duty-free store operations, but also tobacco brand owning and distribution, logistic operations including freight forwarding and bonded warehouse, residential, commercial and industrial construction, e-commerce, real estate development and aviation support.
www.dutyfreemag.com THE AMERICAS DUTY FREE & TRAVEL RETAILING
15
Duty Free Americas/ SSP
New partnership SSP and DFA to boost restaurant roster at Salvador Bahia Airport
The fast-growing food court at Salvador Bahia Airport
S
alvador Bahia Airport will welcome seven restaurants and food and beverage outlets as part of a new partnership between SSP and Duty Free Americas (DFA). Under the new joint venture, called SSP DFA Restaurantes Brasil Ltda, a number of international and local brands will open at the airport. DFA operates Salvador Airport’s duty free store. From June, it will also run the duty paid store in the new boarding area, a 780 square meter walkthrough facility. “SSP brings expertise to add more high-quality options to our airport, while DFA offers sound knowledge of the Brazilian market,” said Marc Gordien, Commercial Director of Salvador Airport. Chris Rayner, CEO, SSP Latin America, added: “We’re delighted to have reached an agreement to open seven new restaurants in Salvador Airport. We’re looking forward to supporting Salvador Airport with their exciting plans to upgrade the passenger experience.” DFA President Leon Falic commented: “We at DFA are very enthusiastic about SSP DFA Restaurantes Brasil Ltda, our jointventure company, and the new agreement with Vinci Airports at Salvador. The new restaurants, together with our DFA duty free and DFA duty paid stores, will provide a unique sense of place experience for passengers going through Salvador Airport. We are committed and continue to work towards providing unique and memorable experiences for travelers.” Ritazza, the Italian espresso bar with a presence at international airports, is one of the key brands due to open at Salvador
16 THE AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2019
Airport. It will be joined by Italian restaurant Barzetti, Mexicanthemed concept Mi Casa Burritos, baked goods specialist Millie’s and healthy eating brand Haven. The units will be distributed between the landside food court and the airside area, both in the new commercial spaces in Arrivals and in Departures.
New chef restaurant
In other news, leading Brazilian chef Tereza Paim will shortly be opening her first restaurant in an airport at Salvador Airport. Bringing the flavors of Bahia and Brazil to the airport, Mesa de Tereza will open later this year. The project is the result of a partnership between Tereza and SSP DFA Restaurantes Brasil Ltda. Mesa de Tereza has been developed specially for Salvador Bahia Airport. Passengers will find the best regional cuisine. Located in the landside food square, it will open for breakfast, lunch and dinner. Some of Tereza’s handmade products, including farofas and spices, will be on sale.
Bahia Bar
In addition to Mesa de Tereza, SSP has created the Bahia Bar for Salvador Airport. Located airside, with decor inspired by Bahia beaches, it will serve drinks and meals. DFA’s Falic said: “Our new restaurants, particularly Mesa de Tereza and the Bahia Bar, together with our DFA duty free and DFA duty paid stores, will provide a unique sense of place experience for passengers going through Salvador Bahia Airport.”
Brazil Update
BRAZIL AND ARGENTINA CREATE PIVOT IN REGIONAL DUTY FREE WORLD
Duty free business set to expand in the region in spite of ongoing economic uncertainty by RONNIE LOVLER
B
razil and Argentina were at the forefront of our minds as we prepared our Latin American issue for your review. Brazil got our attention when it was announced that the Brazilian authorities had approved the opening of the first land duty free stores in the country. In Argentina, the continuing downward spiral of Argentina’s economy and its effect on the travel retail and duty free business are causes for concern. Developments in Brazil may offset the negative impact of Argentina’s shrinking economy and high rate of inflation, at 2.5% and 50% respectively at the time of writing. A law passed in Brazil six years ago to allow duty free stores to do business on the Brazilian side of the border finally became a reality with the announcement in early June that stores could open in Urugaiana and Jaguarão with more stores to follow. These first stores are being opened by small operators, but companies with a
larger footprint in the area, like Dufry and DFA, are expected to be part of the mix in the near future.
Expanding the business
Rather than being worried by the pending arrival of competitors across the border, established land duty free operators in Uruguay are buoyed by the news. Their collective sense is that the existence of duty free stores on both sides of the border at numerous locations will bring more customers to the border area which will create more business for everyone. At a time when some traditional duty free operations are being eliminated, such as duty free sales on some international airlines, we at Americas Duty Free agree that any means of expanding the duty free and travel retail business is to be welcomed. People living in the Southern Cone like to take road trips during the Latin American summer and holiday months. With expanded shopping opportunities at favorite border locations, more people
18 THE AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2019
may be tempted to find a reason to travel. It is to be hoped that this will offset the negative impact of Argentina’s worsening economic situation, which brings with it the possibility of more political instability. Rampant inflation and uncertainty about the future are keeping Argentines at home, which is detrimental to the duty free and travel retail industry. With one of the region’s largest economies, there is a constant refrain in the region that when Argentina sneezes, Paraguay and Uruguay catch cold. Certainly the business communities in these two countries, as much as that in Argentina itself, have reason to be concerned about what the coming months may bring in Argentina and whether it will make them (economically) ill. At Americas Duty Free, we share their concern but are hopeful. The results of Argentina’s elections, scheduled for October, will set a path for the country’s economic prospects and we are optimistic that the outlook will improve.
Motta International
Driving duty free growth
in Panama Motta International is seizing the opportunities offered by the expansion of Tocumen International Airport by RONNIE LOVLER
T
ravelers can’t miss Motta International’s Attenza Duty Free stores at Tocumen International Airport in Panama, and later this year, when the new terminal there is fully operational, the stores will be a magnet for shoppers. That’s because Panama-based Motta will have a major presence with multiple stores in the airport, both in Terminal 1 or the “old” terminal and in Terminal 2, known euphemistically in Panama as T2. In the coming months, hundreds of thousands more passengers and duty free shoppers are expected to pass through “the hub of the Americas”, as Tocumen labels itself and Motta will be part of the buzz. “We will have approximately 1,500 meters of general duty free,” said Motta CEO Erasmo Orillac in an exclusive interview with Americas Duty Free. “Additionally we will have a Cartier and Montblanc boutique, a Ferragamo boutique, an Adidas boutique, a Hugo Boss boutique and a consumer electronics duty free store. “Altogether we should have close to 2,140 meters of retail space,” Orillac said. And that’s just in Terminal 2.
In February, Motta opened an Attenza Duty Free electronics store in Terminal 1 and “the results are positive,” Orillac commented. “Tocumen has always had good stores for consumer electronics and we are keeping up that reputation.” That store is 154 square meters in size with a range of consumer electronic goods that includes personal computers. Cell phones and accessories, Apple products, headphones, small travel kits, soundbars, travel goods, rechargeable batteries, speakers, video games and their accompanying Nintendo or PlayStation systems are also available. In Panama, as well as in other countries where Attenza has a presence, electronics are attracting attention. “We are looking into specialty stores for Tocumen as well as for other airports with a substantial number of passengers,” Orillac explained. Motta is riding the wave created by the Tocumen expansion as well as that of Panama’s national carrier, Copa Airlines. The airport is expanding and Copa is continuing to increase the number of its
Reflecting on the choice of sunglasses at the Attenza Duty Free store at Tocumen International Airport in Panama
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routes and destinations in line with the airport expansion. When Terminal 2 is fully operational, Tocumen will have 54 gates, double the size it was just a few years ago. More than 16 million people traveled through Panama in 2017, and the number is expected to hit upwards of 23 million in the next few years. With a major airport expansion in the offing, paying attention to Panama was a key driver for Motta. Last month, in a separate interview, Julio de Leon, Motta Vice President for sales and marketing, underscored that point. “Our focus is on Panama,” commented de Leon. “It is the place where opportunities are presenting themselves for new growth and expansion.” From a business perspective, focusing on Panama makes sense for Motta. As a Panamanian-based company, founded by Panamanians, Panama remains the company’s hub. “We are trying to use that as a strength to help us expand into new business and to other opportunities, both in the airport and locally,” de Leon said. Motta is not ignoring its other operations in Colombia, Nicaragua, Ecuador, El Salvador and, most recently, Trinidad & Tobago, where Motta International does business as Attenza Duty Free. But business opportunities are not as buoyant as in Panama. “Traffic is slow in some countries due to the economic conditions, but we have to perform in these down cycles,” Orillac concluded. Motta was established in Panama more than 70 years ago. The company was founded in 1936 as Motta & Motta and began selling liquors and perfumes to cruise ships transiting the Panama Canal.
Spoilt for choice at the Attenza electronics store at Tocumen International Airport in Panama
Argentina Update
ARGENTINA
and a tale of ups and downs
Argentina prepares for October presidential elections amidst ‘same old, same old’ scenario: economic downturns and rising inflation by RONNIE LOVLER
O
n his election as president of Argentina in 2015, Mauricio Macri promised to reduce inflation and improve the economy – especially for business. He did, but only momentarily. Now Macri is facing similar challenges to the ones he confronted four years ago in his current bid for the country’s top office. He is trying to beat off the centerleft challenge of the opposition by selecting moderate Argentine Senator Miguel Pichetto as his running mate. But it may not be enough.
Just how much of a challenge Macri faces became apparent in mid-June when regional elections were held and the opposition, that includes former President Cristina Fernandez on the ticket in the vice presidential spot, won by a landslide. The leftist opposition won elections in several key Argentine provinces, which is widely being interpreted as a bad sign for the center-right Macri before he is put to the test in presidential elections set for October 27. The problem is the economy and Macri’s failure to improve it. The economic recov-
ery that he promised did not take place, with the country’s economy shrinking at a level of 2.5% last year and inflation now at over 50%, according to recent reports.
Structural lack of confidence
In a recent interview with the international media, Jimena Blanco, head of Latin America Research at Verisk Maplecroft, a risk analysis and forecasting company, zeroed in on the problem. “For Macri, it’s really an uphill struggle,” she said. “There’s a structural lack of
“The Argentine economic situation has proved to be incredibly complicated, and I dare say that many of those involved, including us, underestimated a bit, when we started with the Argentine authorities building the program.” CHRISTINE LAGARDE, MANAGING DIRECTOR INTERNATIONAL MONETARY FUND
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confidence in Argentina; not just inside Argentina, but outside Argentina. “When you talk about Macri doing the right things, there is a lot of debate about whether he did that, and the pace at which he did that, and also whether he went far enough, soon enough.”
Duty free watches and waits
The regional duty free and travel retail industry has been looking at Argentina with trepidation because the country’s flagging economy has kept Argentines at home and out of land border and airport duty free shops. Carlos Melconian, director of M&S Consultores, shared some of his concerns about Argentina with attendees at the Summit of the Americas, jointly sponsored by IAADFS and ASUTIL, in Orlando in March.
But that was just a forerunner to what is on his mind now. Melconian, who is reported to be close to Macri, said in a speech in mid-June to the Argentine Institute of Finance Executives (IAEF) that Argentina has no alternative but to seek another bailout from the International Monetary Fund. “To raise 12 times the quota that we contribute, in the negotiation with the Fund we must show a different program,” he said. But what form will that program need to take? Undoubtedly changes that will be unpopular with the Argentine electorate that can be expected to include more belttightening measures.
IMF support
Argentina came under scrutiny at a recent meeting of the American Enterprise Insti-
tute in Washington when IMF Managing Director Christine Lagarde addressed the group. Last year, the IMF signed a credit support agreement to Argentina that was just under US$57 billion, its largest loan ever, which was widely criticized at home. “The Argentine economic situation has proved to be incredibly complicated, and I dare say that many of those involved, including us, underestimated a bit, when we started with the Argentine authorities building the program,” Lagarde said. If the IMF underestimated the situation in Argentina, what about the rest of us? There has been a vicious cycle of inflation and hardships in Argentina with brief bouts of economic upturn before things went south again. As always, the economy and politics are intertwined and the ever-worsening state of Argentina’s financial affairs is bound to play out in the elections.
Your CO-PILOT in confectionery
www.dutyfreemag.com THE AMERICAS DUTY FREE & TRAVEL RETAILING
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Siñeriz Shopping
now
Both sides
While many retailers on the Uruguayan side of the border with Brazil are nervously awaiting new developments, Siñeriz Shopping may be readying to set up another land duty free store on the Brazilian side of the border by RONNIE LOVLER
An abundance of liquors and spirits available for purchase at Siñeriz Shopping
S
iñeriz Shopping welcomes the presence of land duty free stores on the Brazilian side of the border as something that will be good for business at their Rivera store by encouraging more traffic. And now the company may find more to be happy about if it is able to set up another store on the Brazil side of the border. In a conversation with Americas Duty Free, Siñeriz Shopping Commercial Manager Hilmi H. Abdullah Neto said the company has been looking at establishing partnerships with the Brazilian government to do just that. “For now we are just watching and analyzing every movement to decide our future strategy. At the moment there isn’t any specific indication which way we will go,” Abdullah Neto said. A new Brazilian law that was years in the making is only just allowing land duty free stores to operate at border towns in the country, and Siñeriz is one of many companies exploring the opportunities. “Of course we are studying all the possibilities closely and attempting to understand any missing details we will need to resolve for the project to effectively take off,” he said.
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Not rushing in
“As with any other legal changes, it will take time and patience to align the last details. After the new market starts to work properly we will definitely choose our strategy, now all possibilities are open,” Abdullah Neto said. He added that the possible duty free Brazilian border shop is not a solo Siñeriz Shopping project, but actually a Brazilian government project that might be considered a private/public partnership. As always, Siñeriz is playing it close to the chest. Abdullah Neto and the whole Siñeriz team have no worries about any negative impact from the forthcoming Brazilian stores. “We actually see with very good eyes, we understand that a new market will open. We understand that it will be a win-win,” he said.
Mostly positive
Competition is not a concern for this family-owned company, which has a strong foothold and visible presence in the region. “I think the impact will be the same as if any operator opens a
new store in your region, but in this case the new store will arrive with opportunities in addition to challenges,” Abdullah Neto said. In fact, there is only one cloud on the local duty free horizon and that is in neighboring Argentina, where the economic and political situation is tenuous at best. “Argentina’s economic situation its not easy, as everyone knows,” Abdullah Neto said. “It mainly impacts us in the summer, because the Argentinians are not traveling as much as in the past, but in the other seasons our main positive or negative impact is directly related to the currency and the Brazilians’ sense about their political and economic situation.”
Much to offer
Currently, Siñeriz Shopping operates what may be the largest land duty free center in South America, laying claim to a 10,000-square-meter complex that offers a multitude of services beyond shopping. Gourmet dining opportunities and a movie cinema are just some of the options. Last year, Siñeriz opened a Chiviteria, or place for burgers, in their food court, with homemade sauces and craft beer available for purchase. Crepes and coffee can be bought at Fragola Café. People come to Siñeriz Shopping to do more than just shop.
That’s one of the reasons Siñeriz built the center that handles all the immigration and customs transactions that a customer making a land border crossing might need.
Constant updates
The mega-complex Siñeriz Shopping Center opened in 2012, has expanded considerably since then and continues to do so. Recently, Siñeriz opened an area for a women’s underwear retail chain named Si-Si, adding to its wide range of apparel offerings for men, women and children. Abdullah Neto said the company has also rebuilt the children’s play space “as we do every year with new activities, new furniture, new colors and new products.” The children’s area gets an annual facelift to keep up with the trends in terms of what is capturing kids’ attention. Siñeriz offers products like perfumes and cosmetics, with the recent entry of MAC products, along with wines, fashion and much more – even outdoor offerings including bicycles, tools and accessories for hunting, camping and fishing. The company has been in Rivera since 1987, when duty free legislation first went into effect in Uruguay, but its megacomplex has truly set the bar for what duty free is and what it may become.
Customers have a myriad of products to choose from at Siñeriz Shopping, the land duty free store in Rivera, Uruguay near the border with Brazil
www.dutyfreemag.com THE AMERICAS DUTY FREE & TRAVEL RETAILING
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 Puerto Rico Cruise Market
Cruising
back Hurricane Maria struck Puerto Rico with a strength that caused horrendous devastation, but the Caribbean island is roaring back, with strong cruise numbers buoying that rise by RONNIE LOVLER
Two ships are docked in the port in Ponce, in southern Puerto Rico Mythical Puerto Rican characters stand at the ready to greet passengers aboard a cruise ship landing in the southern port of Ponce
26 THE AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2019
A cruise ship approaches the port just outside Old San Juan in Puerto Rico
I
n San Juan a major plan for privatization of the cruise ship terminal is taking place, with a huge construction project that will revamp the look of the Old City waterfront. Local officials and those involved with Puerto Rico’s tourism industry say the expansion is necessary since San Juan is both a regular stop and a home port for the cruise ship industry, and cruise traffic to the city is growing. “It’s a long-term vision but potentially a significant development in the future,” said Brad Dean, CEO of Discover Puerto Rico, the island’s destination marketing organization, during a recent conversation with Americas Duty Free. “The most accurate way to describe what we are building is as an expansion of existing port facilities that will allow us to add capacity and improve lasting infrastructure.” Puerto Rico’s Ports Authority has already issued a request for proposal to privatize the port. With that comes investment and infrastructure. “The current government has made strategic efforts to attract private-public partnerships,” said Dean. “This reflects the goal to reduce the size of government and increase partnerships with the private sector.”
On a roll
All this is happening just two years after Hurricane Maria devastated Puerto Rico along with many other Caribbean islands. But in Puerto Rico at least, tourism is on a roll again, and the cruise industry leads the charge. “Cruise lines were the first to come back,” he comments. “To me, the quick recovery in the cruise industry is a testament to the resiliency of the people of Puerto Rico and the unrivaled commitment of the cruise lines to get Puerto Rico back to business.” He said the projection for the 2019 fiscal year was 1.7 million passengers, and that figure is approaching record numbers. January 2019 saw an increase of 29 percent more cruise ship passengers over the same month in 2018. “That makes it pretty clear the cruise industry has come back quickly,” said Dean. The presence of cruise ships is one of the most vital and vivid indications of economic revival in the tourism sector. “When the cruise ships arrive, it creates a sense of energy, excitement and relief. So it is encouraging to see that,” Dean said. He gave an example of a recent week in April when the San
Juan port had eight cruise visits and six ports of call. “That is an essential part of the impact. And of great importance is that 25 ships used San Juan as a home port,” shared Dean.
New ships
New cruise ships are being added to San Juan’s port, some via visits and some that will call San Juan home. The Celebrity Edge, for example, will make San Juan its homeport. This ship is expected to make 11 visits in the upcoming fiscal year, and visits from that ship alone will bring in $2.6 million, Dean said. Other ships that will be cruising into San Juan in the near future include the MS Holland American and the MS New Statendam, with seven scheduled visits in 2019. In 2020 Disney Wonder will call San Juan home, and the Viking Sun included San Juan as one of its ports of call on its 127-day round-the-world cruise. “The message is the cruise industry has come back with a vibrant, robust return to Puerto Rico and we are incredibly encouraged to see not only the return of those who had already been with us, but also that new cruise ships will be home porting here,” Dean said. He said cruise activity is also picking up on the southern part of the island, in Ponce.
Even more
Dean said Discover Puerto Rico also tries to assure cruisers that there is plenty for them to do when they get off a ship on a day visit. Currently cruisers have a choice of 119 cruise shore excursions. Dean also discussed other new construction that will do even more to put Puerto Rico on the map, with a new entertainment district right next to the convention center and with easy access from the cruise ship ports in San Juan and most major hotels. Dean describes it as a kind of “Latin version of LA Live – very high tech and modern, with restaurants, dining, shopping and unique experiences you won’t find elsewhere. It will be a slice of Times Square with a Latin feel and a Caribbean flavor.” The entertainment district project was approved before Hurricane Maria hit in September 2017 and is scheduled to open later this year. “We’re coming back bigger and better than ever and we really mean it,” concluded Dean. www.dutyfreemag.com THE AMERICAS DUTY FREE & TRAVEL RETAILING
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Essilor/Luxottica
Costa and Bolon Eyewear
star in new showcase Essilor opens showroom at the crossroads of the Americas travel retail market
A
mericas Duty Free was privileged to be invited to an exclusive preview of the glamorous showroom that has been opened by global eyewear company Essilor Luxottica in Miami. The purpose-built facility at the Essilor offices near Miami International Airport will showcase sports performance brand Costa del Mar and the latest addition to the Americas, Bolon Eyewear, and will serve both the travel retail and domestic markets. Commenting on the choice of location for the new showroom, Monty Montañez, Director of Bolon Americas said: “First and foremost, we are in the Essilor offices so having the real estate makes it the most sensible location. Secondly, for both domestic and travel retailers, Miami is the heart of Latin America – I would say the Americas – when it comes to travel retail. For the domestic market it is definitely the gateway to Latin America. That being said, it is a crossroads, and
everyone comes here before they go anywhere else.” The Costa brand, whose ethos is to build polarized sunglasses for those who live to be on the water, was the first to be set up in the showroom. “Costa has already had a soft launch and [the showroom] is very much on brand,” Montañez enthused. “It gives people the opportunity to understand the authenticity of the brand and what it means. Even though the showroom is not directly on the water, it gives our best branding experience and demonstrates our elevated retail presence.” The showroom also offers a secondary location to the brand’s head office in Daytona for meetings with Costa buyers from Latin America. Bolon, an eyewear brand that focuses on fashion, design and craftsmanship at an accessible price, made its debut in the showroom in early June. “What this does is give us a ground zero for the brand, a physical location
Essilor’s glamorous new Miami showcase for Costa and Bolon eyewear
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where customers can meet us, whereas before it was more us going to them and meeting them at their workplace,” said Montañez. “We will continue to do that, because we need to see the market, but we also need a place to call home. Miami just makes sense, given that it is a crossroads for our industry.” The showroom is designed to cater to both domestic and travel retail markets for Bolon and Costa. “While the initial emphasis is on travel retail, for Bolon domestic this Miami office will be used frequently for customers coming in from Latin America to show them the collection.” Montañez is keen to make the buying experience as easy as possible for the customers while staying in touch with the frontline stores. “A lot of the other brands do their buying days here in Miami,” he said. “Very often all the brands do their buying days in the same time period. Having the showroom in Miami provides an opportunity for our clients to meet with us and see our collections as well without having to make additional accommodations or extend their buying visits.” With a stunning showcase at the heart of the Americas travel retail market, Montañez is optimistic that Costa and Bolon Eyewear will continue on their rapid growth trajectories.
Molsheim & Co
The art of
celebration Molsheim & Co’s Crystal Collection is the world’s first Champagne-inspired fragrance collection
Get ready for the exclusive travel retail launch of the French house Molsheim & Co’s Crystal Collection of niche fragrances inspired by Champagne celebrations
M
olsheim & Co is an established and bespoke prestige luxury goods house located in France, focused on luxury fragrances to haute Couture jewelry. The family-owned French house specializes in creating unique fragrances targeting the niche market, with Romeo Ricci serving as M&CO Fragrance Creative Director. Positioned at the top of its prestigious range is Molsheim & Co’s Crystal Collection is the world’s first Champagne-inspired fragrance collection, according to the company. This unisex line targets a niche uber fashion-forward clientele. Its packaging is inspired by the art of celebration and is designed to be glamorously displayed as an art piece. Both the design concept and inspiration have been envisioned by the Molsheim & Co family team and its Creative Director Romeo Ricci. The bottle colors are trend-setting and glamorous to reflect its fashion flair and bubbly aromas. Zurich Lloyds (ZL), a fine fragrance distributor, is excited to announce that it has been appointed the authorized distributor for Molsheim & Co’s upscale Crystal Collection of fragrances in the Americas (US and Latin America) in domestic and duty free markets. The company also has an agreement to distribute the Crystal Collection in duty free in Asia and the Middle East. ZL is gearing up to launch the exclusive Crystal Collection of four unisex fragrances initially in the duty free sector. “It is a tax free exclusive initially – and exclusively – for the first six months, and then we will launch it in domestic markets in the US and Latin America,” explains Paul Goldstein - Global Travel Retail Sales Director, Zurich Lloyds Corp. Following the travel retail launch period, the collection will be sold in high-end department stores like Saks Fifth Avenue and Bergdorf Goodman in New York. 30 THE AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2019
Global awareness and gifting
“We expect the Molsheim & Co Crystal Collection to be in most major markets for Latin America within a year of the launch. Firstly, because of its market positioning and who we’re targeting. The packaging and concept are not gimmicky-looking,” he says. “Secondly, the scents are niche. The Beluga line, for example, is an oud fragrance line that both men and women can wear.” The other three fragrances in this special private collection are called Gold, Rose and Platinum. The duty free retail price for each fragrance is US$75. Transformed with modern stylistic cues taken from cosmopolitan spirit, the Beluga fragrance is a seductive new interpretation of the renowned oriental ingredient. The Platinum line pairs explosive bubbly aromas of refined fibers with the allure of a sumptuous Arab evening that leaves an indelible mark, while Gold’s formulation blends seven notes to give the combination of a vibrant and fresh fruit character with a soft texture. The Rose line, the embodiment of the color pink, is described as an explosion of energy, and a celebration of vitality. Rich, fun and a little mysterious, the impassioned Rose fragrance is a symbol of desire and love. “The Crystal Collection comes in a jewelry-style hard gift box with gold foil. The box is large – it’s a very impress presentation,” continues Goldstein. “We’ve researched the demographics and positioning, and niche fragrance is one of the biggest growth markets. The packaging and niche market we’re targeting fit into the demographic market of the Middle East, Asia and Latin America.” Goldstein explains that Molsheim & Co is a small family company that makes everything specialized and bespoke “with passion and art inspired in its products”. Molsheim & Co succeeds by its multifaceted aspects: from Diamonds to fragrances, from the pursuit of excellence and passion to a unique spirit of avant-gardism, from architecture to art. “All of these qualities work together to compose M&CO engagement in the world of ideas and innovation, as the house has always considered fashion, luxury and beauty as an artistic essence in a unique sensory world,” enthuses the house.
Cloetta
CLOETTA follows the trends Confectionery group Cloetta is eager to communicate that its key brand ticks all the boxes for today’s millennial consumers
Cloetta’s allnatural The Jelly Bean Factory brand targets millennial consumers
C
loetta, a Swedish confectionery company created in 1862, offers a number of leading brands in the travel retail market such as its namesake brand Cloetta. The most international brand in its portfolio is The Jelly Bean Factory. The company wants to provide a total category solution, so it also offers chocolates. “We focus on sugar, but we have chocolate products for a total package of confectionery for the retailer,” says Berend-Jan van Egmond, Senior Market Manager, Cloetta International Markets. He describes The Jelly Bean Factory as the company’s hero brand for travel retail. A travel retail exclusive range is available in several formats, such as tubes and pouch bags. Turning to the subject of labeling, which is proving a tricky issue for some suppliers, Cloetta seeks to inform rather than warn consumers. For The Jelly Bean Factory, its key brand, clear labeling is important for the company, as the product is GMO-free, gelatine-free, with no artificial flavors and no artificial colors, and is Kosher. “We want to communicate all this, and the fact that it’s premium. This is a bit of a challenge, as it stands for higher pricing, and we need to communicate why. We get some questions about why is it premium compared to chocolate.
So we need to work on-shelf and on our pack communications that our goods are premium because of these factors.” The target consumer for The Jelly Bean Factory is aged 20-plus. “It’s not a children’s product – we’re targeting the 20-40 age group, both men and women, so it’s a brand with a very broad appeal.” Having said that, the company is planning to see whether it could work on a kids’ format as well, and whether that would interest retailers or not. “We don’t know yet. We are focusing on the millennials at this stage.”
What consumers want
In the last few years the travel retail confectionery has not been growing in double digits, notes van Egmond. He also points out that the sugar sub-category makes up around 20% of the travel retail market versus 80% for chocolate. This still differs markedly from the domestic market, where the sugar share is bigger. “In travel retail there’s still room for sugar to grow,” he states. “Confectionery in general is not the biggest category and there is room for growth – all the suppliers need to make it happen and listen to what consumers want.” So, what do consumers want? “I think, driven by millennials, they are more
Berend-Jan van Egmond, Senior Market Manager, Cloetta International Markets, brings newness to the sugar confectionery category
aware of what they are consuming, they want more natural or more responsible snacking, and that’s something we as suppliers need to communicate well. We need to make sure our products are in line with their expectations, and I think it will work. Everyone loves confectionery and it won’t disappear, but you need to make sure you follow the trends.” Speaking to Asia Duty Free at the TFWA Asia Pacific show in Singapore in May, van Egmond reports that consumers in the Asia Pacific region are generally receptive to sugar products. Asia is becoming a more important market for Cloetta, along with the Middle East. Those are the two most interesting and fastest-growing markets for the group. Meanwhile, he notes that in Europe, consumers are conscious of pricing and more aware of what they consume.
www.dutyfreemag.com THE AMERICAS DUTY FREE & TRAVEL RETAILING
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Travel Blue Group
Travel Blue Group
offers a unified category solution
Travel Blue Group introduces Lexingham Mobile Phone accessories, a range of accessories with a unified message by JAS RYAT
F
amily-owned Travel Blue Group has stood the test of time as it continues to expand its portfolio 30 years on. In May, the travel accessories brand introduced Lexingham Mobile Phone Accessories at the TFWA Asia Pacific exhibition in Singapore at its new booth space that has grown exponentially over the years. Travel Blue Group has kept up with the evolution of travel retail by consistently staying ahead of the curve. Following the introduction of the Hooded Tranquility Pillow, Tranquility Massage Pillow, Kids Plush Toy pillow range and Z-Zoom eyewear, with all of its supporting accessories, the company now offers Lexingham Mobile Phone accessories, an extensive range designed to suit the travel retail market.
Targeting millennials
Daniel Levin, Travel Blue Group Chief Operations Officer, brings Lexingham Mobile Phone accessories to attract the millennial consumer
32 THE AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2019
The Lexingham range of mobile accessories is targeted primarily at millennial travelers. Speaking to Americas Duty Free, Daniel Levin, Travel Blue Group Chief Operations Officer, said: “When people travel today they don’t only need a travel pillow, they need to stay connected. Millennials rely on their mobile devices to stay updated with friends and family, and the thought of being without power is very stressful. That’s why we decided to launch this range and provide them with mobile accessories, done right.”
The TFWA Asia Pacific exhibition in Singapore featured a newly renovated and expanded booth for Travel Blue Group. The hard to miss booth showcased three brands
Positive response
Lexingham is able to differentiate its product portfolio from others in the channel by offering a unified solution that covers the five major categories for mobile accessories: audio, cables, chargers, powerbanks and adaptors. Levin feels the current offering is very fragmented which causes millennials confusion resulting in lower spend. “The Lexingham range was designed specifically to attract millennials and excite them, down to the smallest details, as they are not like the consumers the industry has been used to up until now,” added Levin. “Millennials are emotional and impatient consumers.We like items that touch us on an emotional level, with a clear and quick understanding of the item. If it takes too much time to locate what we want, we will just move on.” Millennials make up one-third of travelers in travel retail, yet spend the least, according to Travel Blue Group. The firm has worked with User Experience professionals and design experts to produce a useable interface that appeals to millennials in a language they understand.
Jonathan Smith, Executive Director, Travel Blue Group is pleased with the great reception for the new brand at TFWA Asia Pacific. “Lexingham is the new range so we extended our booth space from two to three brands. I can honestly say this is the most successful exhibition ever in Singapore. At the Travel Blue Group, we have many product and display solutions to offer to travel retail,” enthused Smith. Levin echoed the positive response. “The launch was amazing. After months of intensive analysis and working with professionals to make the range attractive to millennial travelers, to see it all come together was very exciting,” he commented. “The responses we got were really heart-warming and humbling. Even clients we’ve been working with for many years were astounded with the whole concept and offering. We got a lot of requests for custom shop-in-shops for Lexingham.” Lexingham products are priced as impulse purchases with items ranging from US$12.99 to US$39.99 and will be available soon in duty free shops around the world.
Jonathan Smith, Executive Director, Travel Blue Group, is pleased with the booth expansion at this year’s TFWA Asia Pacific exhibition www.dutyfreemag.com THE AMERICAS DUTY FREE & TRAVEL RETAILING
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Duty Free Dynamics Corp
DFD engineers
win
a triple
Duty Free Dynamics Corp is offering exciting franchise opportunities to travel retailers across the Americas in sought-after product categories
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uty Free Dynamics (DFD) began life five years ago as a duty free distributor, but is now undergoing a transition period. Initially, the company began distributing watches. Over the last two years, it has started to expand, and today it is handling 10 different product categories. Previously, it was focused exclusively on watches. “We really developed that category; we waited until we could have seven brands to cover all demands and price points and then we started to develop other product categories, like outdoor apparel, footwear, electronics, travel gear, sunglasses, other types of accessories, and our latest addition is the confectionery category,” says Nicolas Dobry, CEO, Duty Free Dynamics Corp. The focus of DFD is on the non-traditional categories, meaning everything apart from fragrance, cosmetics, and alcohol. And it is focused exclusively in travel retail. “We don’t have many competitors in that field,” he says, noting the company’s point of difference. “Our motto/message will be that we are bringing innovation to the trade channel that is too traditional, which hasn’t changed for the last 20-30 years. We have realized that just in the Americas in the airports, traffic amounts to around 1.2-1.5 billion travelers a year. Airports have become the new and 34 THE AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2019
Duty Free Dynamics has recently partnered with LEGO to diversify options for children in travel retail
Nicolas Dobry, CEO, Duty Free Dynamics Corp is a visionary when it comes to expanding the brands portfolio offerings
biggest shopping malls of the world. Traffic at domestic shopping malls is falling, especially in the US and around the globe very fast, and passenger traffic in airports is growing.” The product offering in airports is limited, he continues, and DFD plans on offering innovation by partnering with the operators and then teaching them how to handle these new categories. “That was the focus of DFD since we started five years ago. We started with the watch category using the old-fashioned wholesale distribution model, but since 2019 we are changing our business model and shifting to become a regional master franchiser of non-traditional brand initiatives for Americas’ travel retail channel. So we no longer call ourselves a distributor, we call ourselves a master franchiser.”
Adding value
DFD’s strategy is to partner with operators in the region and offer them franchise opportunities within many different brand categories. “We educate the operator, and that makes us part of the value chain because we are adding a lot of value,” says Dobry. DFD has conducted in-depth research on the travel retail channel in the Americas to get a precise understanding of the channel’s requirements. A few years ago, the company hired a
Popular shoe brand TOMS has been added to the company’s portfolio as it offers newness to category that hasn’t been pursued in the past
“When we started to discuss incorporating shoes, operators were very frightened because they were worried about space, sizing, markdowns, etc. This is where our team of people come in and help operators on their learning curve.” DFD has already incorporated TOMS, the famous Californian brand of casual shoes and will be announcing new additions to complement the category very soon. DFD’s head office is based in Panama. It has two additional offices: one in Miami, which manages the North America and cruise businesses, and one in Buenos Aires, Argentina which takes care of the southern cone part of Latin America. The company is currently focus in expanding its presence in North America and cruise ships. “We are increasing our ship count pretty aggressively. We have also enlarged our staff based in Miami and one Key Account Manager in Houston to cover the West Coast. The cruise ship channel is an interesting proposition, although there is limited space. For now, it is focusing on products that do not demand too much space or that could be adaptable to those constraints.
Star products
US backpack brand Osprey presents a great potential in travel retail as it has a strong domestic following
consulting firm, which worked with DFD for almost a year to get a better understanding about the type of clients that travel through the Americas region. The research was segmented between all the different channels it serves, namely airports, seaports, border shops, inflight, onboard sales to cruise ships and ferries. DFD learned that the type of client varies a lot depending on the type of channel or the region. After really understanding its target client, DFD realized there are many different product categories that could be sold in duty free which are not yet sold in the channel. As an example, the company’s research revealed that 30% of travelers travel with kids. The remaining 70% have kids at home, grandchildren, or have contact with kids. “Duty free purchases are an impulse. We realized there are not very many offerings for kids at duty free, so one of the first categories we needed to diversify in was toys,” explains Dobry. DFD started talking to LEGO® two years ago and signed a partnership agreement with the world’s leading toy brand in terms of revenue (since 2017). Today DFD is looking to develop not just toys, but children’s products in general. There are many other categories where DFD can add a lot of value to the trade channel such as, footwear, according to Dobry.
Currently, watches are still the strongest category, as that is the most established. However, as Dobry notes: “If we have this same talk in one year, we project that watches will not represent more than 18-20% of our business. We are the master franchise business for LEGO, which is the number one toy manufacturer in the world. This business alone will hopefully be US$35 million in two or three years.” Dobry also expects great business from the US luggage brand Samsonite, and Osprey, a specialist in outdoor backpacks. He observes that water bottles is a flourishing business that helps conservation, and for this reason the company has recently incorporated HydroFlask, one of the leading brands in insulated bottles. DFD is also developing its electronics category, including Aftershokz, a new headphone technology. And will be complementing it with further additions which will be gradually announced between now and the end of the year The travel retail customer is evolving, and DFD aims to bring innovations and new brands like Aftershokz that appeal to millennials. This is a demographic that the company feels operators are not targeting. “Our marketing department is working hand in hand with operators to bring this new consumer to shops,” he says. “By presenting this type of novelty brand and aiming at this type of client, it develops this relationship.” For the future, DFD is looking to consolidate in the new territories that it is expanding into, especially North America. It is also looking to consolidate all the new categories that it is bringing into the market and is also expecting new brand launches. As part of a big family-owned private equity group with US$1.5 billion in liquid assets, an essential part of DFD’s DNA is its business model, which is based on partnering with operators in the region. “We thought the best way of approaching this is to use their know-how and for us to be facilitators and bring them added value. So we’ve reached a business model which consists of a partnership with the operator that benefits us both. We also benefit the brands because we bring them incremental business. It’s a triple win,” concludes Dobry. www.dutyfreemag.com THE AMERICAS DUTY FREE & TRAVEL RETAILING
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Monarq
Staying ahead
Wolfburn Single Malt is the latest addition to Monarq’s growing whisky portfolio
of the curve For drinks distributor Monarq, it is not enough to be reacting to trends in the market, the company is racing to stay be ahead of the game and have the next big thing on shelves today
T
he constantly changing face of the drinks market is an opportunity rather than a challenge for drinks distributor Monarq, which is looking to offer customers the next top trend before they know they want it. The strategy has paid dividends so far. About five years ago, Monarq began stocking Japanese whiskies in a market Monarq has recently signed a deal with the Asahi group to distribute its brands, including Peroni, in domestic and duty free markets
which was not yet ready for it – now brands such as Akashi and Toguchi are among the company’s best performers. “We actually want to stay ahead of the trend,” explains Managing Director Robert de Monchy. “Sometimes we are too early, like with Japanese Whiskies. About 5 years ago the market was not ready for this yet, now this is one of the hottest categories.” The whisky category is big business for Monarq and the company is about to boost its offering with the introduction of Wolfburn Single Malt Whisky, which is brewed in Scotland’s most northerly mainland distillery. Its existing brands are also building their presence; Monarq is working with US craft spirits group Samson & Surrey and recently listed some of their spirits, including whisky brands like Widow Jane and Bluecoat, with DFS, Dufry and International Shoppes in the USA. But de Monchy and his team are not sitting still, and they have turned their attention to the next exciting prospect for the market. The success of the Porn Star Martini in the UK is set to spread across the market and the Monarq team are already prepared. “We see this cocktail crossing the Atlantic any moment,” de Monchy says. “And [we] carry in our portfolio its main ingredient, Passoa.”
Building on current success
On top of that, de Monchy says the team is watching the growth of Mez36 THE AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2019
cal, Provence Rosé and tequila in the Americas, as well as a growing interest in vermouth thanks to the popularity of Negronis. He adds: “Gin and tonic is definitely still trending, while Pink Gin is the latest in gin. Whisk(e)y and Bourbon are strong.” “Beer remains strong and rum is gaining interest lately.” Monarq’s beer portfolio already features such names as Heineken, Sol and Brooklyn Lager and that offering will be boosted by the company’s new deal to be regional distributor for the Asahi Group, with brands such as Peroni, Grolsch and Asahi. Recent investments by Monarq are already paying off. At this year’s Summit of the Americas show, the company launched Bravazzi Italian Hard Soda, to tap into the emerging hard soda trend in the US. “Hard sodas and canned wines are new trends that are to stay,” de Monchy enthuses. Monarq is also turning its attention to its impact outside the drinks world by becoming a certified carbon neutral company. “Climate change is particularly worrying,” de Monchy says. But whether it is spotting new trends, going green, or developing current successes, de Monchy is clear on one thing: “Change is the only constant. It is of utmost importance to constantly think ahead and react to an ever-changing environment. This is natural for us, it’s in our DNA.”
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Questionnaire
All about
Antoine Bona,
Executive Sales Director, Essence Corp.
Antoine Bona with his adorable new born baby boy Remi Jacques
Enjoying a long-time passion for Antoine Bona – Surfing!
Where were you born and raised? I was born in Paris, France but I was raised between Panama and Miami - mostly in Miami as I have been living there for 30 years. I moved to Miami when I was ten. What motivates you in life? Being around good people and nice weather. I do enjoy some luxuries like travel, good food and good wine but, to be honest, if you have nice weather and good people around you that is the most important. I think as humans we like to be around people. What’s the best thing that’s happened to you this year/month/week? This year my son was born – our first –and it is a bit of a cliché but it was really an amazing experience. He was born on February 3 so he is an Aquarius like me which is nice. He was a surprise because we didn’t know the gender and I was excited that it was a boy - as any man would be. In May he celebrated his third month and was finally allowed to swim which is important for a city like Miami. His name is Remi Jacques. What would you choose as your last meal? I love seafood so it would be a combo of oysters and stone crab, which is a local speciality, perhaps caviar – definitely something seafood-oriented.
What’s your favorite ’90s jam and why? I love 90s rock. I listen to Satellite radio in my car and there is a station 38 THE AMERICAS DUTY FREE & TRAVEL RETAILING JUNE 2019
called Lithium; it’s non-stop 90s grunge like Pearl Jam, Soundgarden and Soul Asylum. I like any Red Hot Chili Peppers’ song and my favorite is probably Smells like Teen Spirit by Nirvana. How would you rate your memory? I would say I have a good memory.
What were you like in high school? I was athletic, kind and social. I swam, I played water polo and my passion was surfing. What do you think about when you’re alone in your car? I listen to music and podcasts but to be honest I don’t do much thinking in the car. I do more thinking in the shower. I have to take a hot shower in the morning; its like my morning coffee and I start thinking about my day and different strategies. Are you more of a hunter or a gatherer? I have never thought of that. I guess the cool answer is to say a hunter and I guess I am a bit of both. Do you prefer country or city? City.
What is your favourite city? One of the most amazing cities in the world is New York – Manhattan - where you feel stimulated, everything seems new and is dynamic. It is one of the most stimulating cities and anything that is cool originates from there. I look at Miami or Tokyo and if there is a trendy pop-up bar it probably started in Manhattan first. Paris is the most beautiful city and so is Rome, but in terms of energy and stimulation it has to be Manhattan. What do you work toward in your free time? Now I spend a lot of time with my baby and my wife but we are all fitness-oriented: yoga, stand-up paddle boarding, surfing and I love to travel. I like to go to different restaurants with my wife. We are pretty active – we don’t stay home and watch TV. What is your favourite place to vacation?
I love the Mediterranean in the summer. I love swimming in the Mediterranean – something about the cool, crisp water; it feels like a recharge, a rebirth, almost like a baptism. Something that is needed. Also I love the seafood in Greece, Spain, France! What in the world would you most like to change? I wish we would protect the environment more and be more conscious of that because I wonder what the future is going to hold for my son. I got to enjoy all these places in the world that weren’t polluted and the clean oceans. You get to see it less and less. There are swim advisories in Miami which weren’t a thing in the 80s. I don’t know if it was cleaner or we just didn’t have the data, but it is something I grew up with and it’s a shame that the next generation is not going to get to enjoy it as much as we did. What about yourself would you most like to change? I think I would like to be more poised at all times. If I get frustrated, I internalize it and I would like to be able to leave it and just move on. What is the most important piece of advice anyone ever gave you? Two things: one is to be impeccable with your word – really to say nice things; and I do believe in karma, and what goes around comes around, so do nice things and be kind. What is something about you that most people would find surprising? I am an avid surfer. Also, after college I did an internship in Australia for six months and the following six months I hiked, hitchhiked and camped along the entire south-east and south-west coast of Australia.
If you could know the absolute and total truth to one question, what question would you ask? As you know I am a new father so everything revolves around my son. I would like to know what the future holds for my son and what the world is going to be for him. I know the way my parents worked in the past; they worked extremely hard but there was more of a balance between work and play. It is
partly because of the speed, the data, the technology and I wonder what it is going to be like for the next generation. My parents say they don’t envy us workwise. But generation Z is supposed to change the world; they are fed up and it’s a rocky environment in terms of wars and climate. They are more conscious of that and it is much more important to them. I got to enjoy college and enjoy the good old days when I started working and traveling and being less tied to my emails. I remember traveling in South America and you could do three weeks and there wasn’t a need to head back to the office and report to finance or catch up with emails. Those were the good old days. I do enjoy my work now – I am motivated and challenged and I learn every day but I wonder if they will have that. I am sure my dad had good old days and my grandfather when he started the company he traveled for three consecutive months out of the year. What kind of adventures did he get into! If you had the opportunity to meet one person you haven’t met, who would it be, why, and what would you talk about? I think I would like a sit down with my grandfather who passed away when I was ten so I didn’t get much time with him. On my mom’s side my grandfather passed away recently. I would like to hear more about what things were like back then. Especially my grandfather on my dad’s side who founded the business – how did the business come about, how were these markets in the Caribbean, in Central America, the free zones. We always think about it as the ‘wild west’ but I would like to get his point of view.
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