Spirits&Tobacco AUGUST 2020 · SPECIAL ISSUE
Keeping spirits high p. 8 Shisha tobacco boom in Middle East p. 12 Tobacco in a state of flux p. 16 Fraternity introduces Corralejo Tequila Liqueur p. 28
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Letter from the Editor
Re-strategize. Rebuild. Recover.
riting this issue of our highly anticipated Digital Spirits & Tobacco issue took me, and all the contributors at Americas, Asia, Gulf-Africa Duty Free, on somewhat of a transitional journey from the beginning to the end. When we began working on this issue several months ago, we were encountering shock and uncertainty as the industry as a whole tried to understand how to manage the global pandemic. However, as I complete the final touches on this issue, it is apparent that people are now focused on a strategy to recover and rebuild. “When the house is burning, you first secure the people and the most precious thing you have inside; then you need to stop the fire, and then you need to think about rebuilding.” In an exclusive interview with Jean-Christophe Hollay, Oettinger Davidoff Head Partner Markets & Duty Free EMEA, he shared this metaphor that genuinely describes the different phases every business is transitioning through to survive. As the industry moves past the “burning house” phase and sets sight on the “rebuilding” phase, it’s apparent that travel retail will not be the same. Stakeholders will need to rethink their strategies and their entire approach to the channel in order to remain relevant to consumers, according to the latest consumer insights research report from Swiss agency m1nd-set on shopper behavior in the post-COVID-19 travel retail context. Going forward we all must understand that health and safety is now indispensable and will be top of mind for shoppers as they venture into stores again. m1nd-set’s report states that the sensorial shopping experience will inevitably be changed from the pre-pandemic era, but the majority of passengers will continue to touch, smell and test products, applying greater precautions while doing so. Spirits, a category that relies heavily on product sampling to drive sales, will be forced to re-imagine its narrative in order to reach consumers in new ways. On the other hand, tobacco reports a strong domestic market performance making up for the lag in travel retail channels. Stuart Buchanan, Global Sales & Marketing Director of KT International (KTI), the independent manufacturer of The King and Corset cigarettes, reports a record-breaking domestic market performance for its brands, with “outstanding” growth across Europe – but not so in the travel retail channel. “Our travel retail business has obviously seen a downturn as global travel came to a standstill,” he says. Spirits and tobacco continue to play an integral part of the duty free landscape. Although it has been a challenging time for every category in duty free, spirits and tobacco show promise of a quick recovery. Both categories remain fundamental to the channel, and their presence has become an expectation for the traveler. Kindest Regards,
AUGUST 2020 · SPECIAL ISSUE Global Marketing Company Ltd., 26 Pearl Street, Mississuaga, Ontario L5M 1X2 Canada. It is distributed to duty free operators and distributors in the following countries: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, UAE, Yemen, Algeria, Azerbaijan, Benin, Cameroon, Cape Verde, Djibouti, Egypt, Ethiopia, Gabon, Ghana, Guinea, Iran, Ivory Coast, Jordan, Kenya, Lebanon, Madagascar, Malawi, Mali, Mauritius, Morocco, Mozambique, Niger, Nigeria, Namibia, Pakistan, Reunion, Senegal, Seychelles, South Africa, Sudan, Syria, Tanzania, Togo, Tunisia, Turkey, Turkmenistan, Uzbekistan and Zaire, as well as to duty free suppliers worldwide.
AMERICAS, GULF-AFRICA, ASIA DUTY FREE & TRAVEL RETAILING 26 Pearl Street Mississauga, Ontario L5M 1X2 Canada Tel: 1 905 821 3344; Fax: 1 905 821 2777 www.dutyfreemag.com PUBLISHER Aijaz Khan firstname.lastname@example.org EDITORIAL DEPARTMENT EDITOR-IN-CHIEF Hibah Noor email@example.com DEPUTY EDITOR Jas Ryat firstname.lastname@example.org SENIOR EDITOR Mary Jane Pittilla email@example.com SENIOR WRITER Rebecca Byrne firstname.lastname@example.org WRITER Laura Shirk email@example.com ASIA CORRESPONDENT Elena Owyong firstname.lastname@example.org AMERICAS CORRESPONDENT Ronnie Lovler email@example.com ART DIRECTOR Jessica Hearn firstname.lastname@example.org
JAS RYAT Deputy Editor email@example.com 4 AUGUST 2020
CIRCULATION & SUBSCRIPTION MANAGER firstname.lastname@example.org
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Lead Stories 8 Spirits Update
16 Tobacco Update
Keeping spirits high The liquor category is gearing up for substantial changes in shopper behavior as the pandemic triggers a rethink on everything from sampling to digital
Tobacco in a state of flux Tobacco manufacturers have been hard hit by the travel shutdown caused by the pandemic – but they are looking ahead with cautious optimism
12 Shisha Update
28 News from Fraternity Spirits
Homing in on smoking trends Mazaya is taking advantage of a boom in at-home shisha tobacco consumption as a result of new rules in the Middle East– and this could be good news for duty free sales
Message of confidence Veteran duty free cigar brand Oettinger Davidoff is using this time to learn, reflect and explore relationships with its travel retail customers
Seeing the blue light Fraternity Spirits stays true to its creative DNA with the introduction of new Corralejo Tequila Liqueur
Reclaiming the throne Clara Susset, m1nd-set Travel Retail Research Director, explains why restoring trust amongst travelers coupled with richer brand content may be the answer to a strong spirits recovery in travel retail
From waste to taste For Beverage Architect Hanna Kaur, whose inspired creation Re-crafted Crafter’s Junibeer was nominated best beverage concept finalist in the WBIA in 2019, sustainability is as important as taste
Features Editor’s Picks 20 SEVA invests in the future 24 InnoTRI attracts rum experts 34 Halewood Spirits shares its vision 36
LatAm’s annual passenger traffic 37 Sanitizing the seatback 38 Air Canada unveils new program 40 Canadian border stores will recover 46
spirits high Creative agency CircleSquare has experimented with filling bubbles with aromas, which burst when caught. The bubbles can drop from the ceiling, so no one touches them
THE LIQUOR CATEGORY IS GEARING UP FOR SUBSTANTIAL CHANGES IN SHOPPER BEHAVIOR AS THE PANDEMIC TRIGGERS A RETHINK ON EVERYTHING FROM SAMPLING TO DIGITAL by HIBAH NOOR
ravel retail will not be the same as it was before the pandemic and travel retail stakeholders will need to rethink their strategies and the entire approach to the channel in order to remain relevant to consumers, according to the latest consumer insights research report from Swiss agency m1nd-set on shopper behavior in the postCOVID-19 travel retail context. As with other product categories, this finding will affect the spirits sector, as suppliers and retailers grapple with the significant behavioral changes across all shopper segments that are to be expected. Health and safety will be top of mind for shoppers as they venture into stores again. m1nd-set’s report states that the sensorial shopping experience will inevitably not be the same as in the pre-pandemic era, but the majority of passengers will continue to touch, smell and test products, applying greater precautions. Pre-pandemic, product sampling was a major feature in the spirits category, helping to drive sales. Mark Meek, CEO at IWSR Drinks Market Analysis, says he expects spirits to fare better in
8 AUGUST 2020
terms of recovery than some other travel retail categories. Beauty and fashion face challenges over travelers’ access to product testers/samples and trying on clothes, for example. Sampling of spirits could pose some problems, he believes, but if retailers implement hygiene measures, such as using disposable cups, there should not be a significant impact on sampling activity. Spirits companies are likely to tailor their offering based on changes in consumer behavior as passenger traffic recovers. Based on IWSR store checks conducted this year, the presence of local spirits, such as gins and whiskies, continues to grow in travel retail outlets. But how travelers react to a different travel
Mark Meek, CEO, IWSR Drinks Market Analysis
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environment could affect spending trends, Meek warns. IWSR forecasts that travel retail volume sales of wines and spirits will recover to 2019 levels by 2023.
Classic brands to the fore
The research from both m1nd-set and IWSR is borne out by the experience of ARI North America, which is acutely aware of the health and safety measures necessary to attract shoppers into its spirits and tobacco areas. Jackie McDonagh, General Manager of ARI North America, says all liquor tastings in stores are suspended in order to limit physical contact between staff and passengers. This applies to scheduled brand tastings, tastings by its team as well as passenger-requested tastings. Instead, ARI is collaborating with liquor partners to develop a pre-mixed single serving for tasting (for example Strawberry Daiquiri, Margarita, etc), again limiting contact with passengers. Hand sanitizer distributors have been installed in the spirits and tobacco departments, and the company is ensuring that items potentially touched by customers are cleaned consistently at the start and end of shifts. Despite the retail upheaval brought about by the pandemic, McDonagh is optimistic about how she thinks the spirits category will perform post COVID-19, estimating that liquor will contribute nearly a quarter – or 22% – of the overall sales of the business. She says that immediately post-pandemic, shoppers are tending to purchase classic whiskey, vodka and gin brands, as opposed to niche spirits. “This trend is coming from a mix of people who know the classics, trust and know their quality; [but] in a few months passengers will be more confident, they will be willing to treat themselves and experiment with something new.” The operator has implemented six promotions reaching all segments of liquor consumers, maximizing every sales opportunity. They are: buy five bottles of wine and get one free; mix & match two for US$40; and 25% off selected whiskey, Cognac, vodka and ice wine. To better engage with passengers, offers are strategically placed at the front of the shop and on gondola end caps. Passengers can also see the promotions on its new website before they shop. ARI-North America is also preparing to launch its new website for Montréal-Trudeau International Airport in Canada. This will give passengers the option to save time and shop online. Using the Click & Collect convenience service, customers will be able to shop online up to 90 days before flying and collect their purchases in-store on departure. The website is now available to its passengers. m1nd-set’s research highlights the significant increases in digital revenues across all sectors and the impact this will have in the long term on travel retail revenues. According to m1ndset, the shift to digital and e-commerce will not disappear in the post-pandemic world, reporting a significant percentage of consumers claiming they will continue to purchase online even after the pandemic. This figure varies considerably depending on the market, m1nd-set adds.
10 AUGUST 2020
Jackie McDonagh, General Manager, ARI North America
Using the five senses
As the impact of the COVID-19 batters the industry, Philip D. Handley, Executive Creative Director of UK-based creative agency CircleSquare, is brimming with fresh, disruptive ideas for suppliers. There’s a huge challenge ahead, acknowledges Handley, and that includes tight budgets. But even this can be overcome. “I look at things we used to do years ago, like for example the Hendrick’s [gin] brand, when we launched in travel retail. That stuff was all big cardboard cut-outs and stage scenery. We didn't spend substantial money on it. But the consumers loved it, they loved the vibe and the emotion that went with it. You don’t have to have big budgets to do that, you just need to be smart.” Handley and his team are working hard to find a solution to the sampling conundrum, as tastings reassure consumers that they are buying the right item in key categories such as liquor. “We've been looking at doing drinks sampling where we have ambassadors holding two-meter-long poles like fishing rods, that hold individual samples at the end. The samples are pre-created, so no one touches them.” Another potential solution lies with using all our five senses. The company has experimented with filling bubbles with aromas, which burst when caught. The bubbles can drop from the ceiling, so no one touches them. Motion sensors can also be used, where the aroma is emitted when you pass your hand in front. “We need to work with the other senses,” says Handley. “They're there and they’re available. It doesn't matter if they look a bit weird and unusual. People are always asking for something disruptive – well, this is going to be really disruptive!” Disruption could be just what is needed as we move through one of the most traumatic periods in the industry’s history.
Mazaya finds creative ways to catch buyer attention at all duty free tradeshows and conferences
Homing in on smoking trends Mazaya is taking advantage of a boom in at-home shisha tobacco consumption as a result of new rules in the Middle East– and this could be good news for duty free sales
by HIBAH NOOR
ike many other businesses around the world, shisha tobacco supplier Mazaya has seen its travel retail plans and projects canceled or postponed to next year due to the COVID-19 crisis. Before the pandemic struck, the Jordanian com-
pany had planned to introduce limitededition products and start some new listings. The new listings were temporarily paused during the lockdown period but they resumed in July 2020. While travel retail sales have been hit, the local markets are a bright spot.
“Currently we are doing very well in the domestic market, and this is the case for many FMCG industry companies,” says Rawan Elayyan, Global Duty Free Manager of Mazaya, who is carefully and professionally navigating through the crisis from the company’s offices in Dubai. “This is the case in the stable markets. This is not the case in the emerging markets, because the supply chain isn't stable and it's not an easy thing to match supply with demand.”
Rawan Elayyan, Global Duty Free Manager of Mazaya thinks it’s too early to judge whether the recent EU/US ban on flavored vaping products and menthol cigarettes will translate into opportunity for Mazaya
12 AUGUST 2020
Rawan Elayyan, Global Duty Free Manager of Mazaya
The pandemic has had an undeniable effect on Mazaya’s travel retail business, Elayyan confirms. “For travel retail, it was a nightmare for us as it was for other companies. Having all the shops shut down and having all the events canceled. In contrast, this wasn't the case for the domestic market, which was a good thing, taking into consideration the sales.” On the other hand, many Arab countries have banned shisha smoking in public places like cafes from May 2020 for hygiene reasons. But this has been good news for retail sales, which have increased. Mazaya has experienced a spike in sales in countries such as Jordan, Lebanon, Iraq, Syria, KSA and Qatar. The impact of COVID-19 has also encouraged athome consumption. Elayyan explains the reasoning. “During the pandemic, if you typically bought one pack of shisha tobacco, you might have bought extra because people are afraid that it will be sold out or maybe they won't be able to go out again, so demand was high.”
whole smoking experience is changing. This will affect the duty free sales on the long run. Home usage will increase taking into consideration the new normal happening post COVID-19 and technically duty free and retails sales will increase. They banned smoking in public places because you are using the same equipment for many consumers. Governments and health municipalities thought it was risky and it's safer to smoke your own shisha.” Purchasing habits have changed also, she reveals. Rather than buying 250 grams, people will buy one kilo or half a kilo, because they are a regular shisha smoker at home. FMCG and other consumer goods didn't take the hit during the pandemic, Elayyan says. “Consumer goods generally will bounce back quicker and easier compared to other companies because people want to consume these things.” This will also be the case in travel retail. Once the shops are open and the travel restrictions have eased, people will continue buying, Elayyan believes. “They might even buy more, if the tobacco allowance permits. It will depend on the travel procedures. If they keep the travel procedures as strict as they are now, passenger flow will remain very slow. For consumer goods to bounce back easier [in travel retail], we need to have action from the airports and countries to ease the travel procedures.”
Digital shopping on the rise
Travel retail will take some time to pick up, she believes. Traveling won't be as
frequent as it was and people won't feel as comfortable as they once used to. “Travel retail is a luxurious experience. It's a state of mind. You want to be comfortable and entertained while you shop. That's why you see retailers having amazing HPP areas. Nowadays people want to get out of the plane and out of the airport. They don't feel safe in the airport environment. That's why many operators are looking at digital shopping as many people will feel safer, rather than actual shopping,” she says. Turning to the recent EU and US ban on flavored vaping products and menthol cigarettes from May 2020, Elayyan thinks it’s too early to judge whether this will present more opportunities for shisha smoking. She notes that cigarette and shisha smokers don't intersect. However, people that prefer flavored tobacco might shift to other smoking habits that include flavors. Right now, Mazaya’s travel retail team is in touch with operators on a post-COVID action plan. “We need to find some alternatives, some other ways to push sales. For the rest of the year, it will be a good opportunity to have enough free time to plan for 2021 and to regulate and manage our current listings and retail presence.” 2019 was a very good year for Mazaya. On average the company achieved a 65% growth rate thanks to its business with key operators, and Elayyan is hopeful that this will be replicated in 2021. “We had many plans and high targets for 2020 but now we have shifted those projections for next year. The industry needs some time to pick up.”
The whole shisha habit has shifted from outside home usage to in-home usage since the ban on shisha smoking took effect at restaurants and cafes in the Middle East. “The
Consumer goods firms generally will bounce back from the crisis more quickly than other companies because people want to consume these products www.dutyfreemag.com
Oettinger Davidoff Update
M E S SAG E O F C O N F I D E N C E
Veteran duty free cigar brand Oettinger Davidoff is using this time to learn, reflect and explore relationships with its travel retail customers
Hollay uses a metaphor to explain the different phases businesses are going through to manage the challenges brought on by the global pandemic
by JAS RYAT
n an exclusive interview with JeanChristophe Hollay, Oettinger Davidoff Head Partner Markets & Duty Free EMEA, he shares a metaphor that describes the different phases every business is transitioning through to get to the end destination of recovery. Hollay explains the current global state as “very specific” as no one has been able to match this pandemic with past experiences. However, the mood at Oettinger Davidoff remains positive because of the boost the domestic market has seen since the recent shift from duty free. “This has been a learning experience for us. One thing we have done really well is kept extremely good relationships with our partners,” explains Hollay. “It was a good time for us to talk with them, to exchange ideas, not only on the current situations but also for the future. The 14 AUGUST 2020
mood is a mixture of surprised and unexpected and the future is unpredictable.”
Proceed with caution
Hollay feels the initial shock and challenges of the pandemic have been managed. The first challenges the company had to manage were the abrupt change in cash flow and determining how to deal with employees, both because of the instantly revised retail situation and also because of the need to ensure a safe work environment. The coming challenges are more long term, and the company will be approaching them with caution. Long-term challenges include the way determining a safe and effective way for duty free staff to interact with customers, understanding and working with any changes in consumer behaviour, deciding on optimal product selection on the
JeanChristophe Hollay, Oettinger Davidoff Head Partner Markets & Duty Free EMEA
shelves, and seeing the way people will travel. Right now Hollay says it is the time to collect data, assess timing for business recovery and understand the impact on the future. Referring back to the metaphor about the burning house, Hollay expands, “In such cases people ask, am I going to rebuild the house the same way? In the
same location? It really comes back to my point that that there is a lot to be learned, not only for duty free but for people in general.”
Confidence is key
The Tobacco and Spirits categories have collectively been the backbone of the duty free channel, and Oettinger Davidoff has been an integral part of the structure. To put it in perspective, Oettinger Davidoff has been present in duty free from nearly the beginning, as one of the original tobacco brands to penetrate the channel. The brand has strong relationships with its international customers in part for this reason. Hollay underlines that duty free “is not an adventure” for the brand. Instead, it is considered a key channel that the company will continue to focus on and develop. While it’s safe to say the year 2020 has not panned out as originally projected, Hollay is not worried for the future. “We needed to revise the short-term business model planning. But long term, we are on the same track. We know what to do because the duty free channel is a strategic one for us. We know that the [global situation] will affect the timing in regards to achieving our targets. Short term, the pandemic has put a little bit of pressure on the figures, however it’s not changing the vision of our long-term goals,” he says.
The Tobacco and Spirits categories have collectively been the backbone of the duty free channel, and Oettinger Davidoff has been an integral part of the structure." Tobacco remains crucial for duty free
Although it has been a challenging time for every category in duty free, Hollay is confident that tobacco will be quick to recover; the category remains fundamental to the duty free landscape, as it has become an expectation for travelers. Says Hollay: “Tobacco and spirits are part of the original duty free. People will continue to expect it, and will probably come back more quickly to this category. What we can understand is that it can take a little bit more effort to gain customer confidence than before, however it remains a secure and less risky category in terms of stocks and novelty.” He continues, stating that Oettinger Davidoff has is a high level of comfort when managing the tobacco category as
the company does not need to diversify or optimize the portfolio offering.
The company will be reviewing its brand building approach in duty free when compared to other markets. Brand activations such as samplings will have to be revisited and re-imagined. “Again it’s a good mix of a good price, good product, combined with a good activation (according to the laws). But more than this, I think people know when they are going to a duty free environment that tobacco is on their list, whether they are buying it for themselves or as a gift. It’s a destination category,” says Hollay. Recently, Oettinger Davidoff released the Special «53» – Capa Dominicana into the domestic market. The domestic release was originally meant to coincide with the release in the duty free market; however this has now been postponed. Hollay admits there is no point in launching new products at a time when most locations remain closed. When the channel reopens there is no doubt the Oettinger Davidoff will be ready to deliver. The brand has taken this time to strengthen its relationships with customers and is confident that its reputation coupled with demand for its superior product will pay dividends in the long run.
Oettinger Davidoff recognizes that duty free is a crucial channel and will remain an area of focus and development
Oriental General Trading observes that tobacco trends in Asia seem to be growing as they were before the pandemic hit
Tobacco in a state of flux by HIBAH NOOR
Tobacco manufacturers have been hard hit by the travel shutdown caused by the pandemic – but they are looking ahead with cautious optimism
obacco suppliers KT International, Oriental General Trading and Monus Tobacco Company are reeling from the negative effects of the COVID-19 crisis on international travel retail, but all are agreed that domestic sales have held up well during the lockdown period. Stuart Buchanan, Global Sales & Marketing Director of KT International (KTI), the independent manufacturer of The King and Corset cigarettes, reports a record-breaking domestic market performance for its brands, with “outstanding” growth across Europe – but due to COVID-19 travel retail has experienced a slow down. “Our travel retail business has obviously seen a downturn as global travel came to a standstill,” he says. “PreCOVID, our travel retail growth was a sustainable 25-30% annualized; however, as with most categories, our volumes through this period have been almost zero. We are hoping that as travel returns we will see a return of at least some of these volumes in 2020.” KTI expects a very slow return to normal, while understanding that the new reality will be different, post-pandemic. “In this situation, and with things changing literally on a daily basis, we are very cautious with any long-term plans and projections,” says Buchanan. While the company prides itself on its ability to respond to changing consumer and trade needs, and with business travel being restricted, it has not been able to keep its close interaction with its markets. Buchanan is hopeful it will soon be able to start to fill this gap in the coming months as business
16 AUGUST 2020
travel returns. He notes that with all tobacco and travel retail exhibitions canceled, it has also lost an important platform for corporate communication, although it has made significant progress in its digital communication to trade partners. Tania D’Souza, General Operations & Marketing Manager, Oriental General Trading Inc, the distributor and travel retailer of brands such as Oris China, describes the lockdown period as “a tough couple of months” for the business, particularly on the travel retail side, as airports and borders were closed. “Business has slowed down for us – especially in duty free – but we remain hopeful that things will turn around for us and the industry for the better soon.” Monus Tobacco Company, the Serbian producer of De Santis, Monus and Nero cigarette brands, was also deeply affected by the crisis. In the first quarter of this year, Monus achieved a betterthan-expected 29% increase in export sales, but the following quarter produced an extremely low sales report – only 30% of what it had planned. Alongside the problems of procurement and production, the hardest part was delivering its cigarettes to its partners and clients around the world, according to Tatjana Agrez, Director of Export Department, Monus Tobacco Company. In the last few months, the company has struggled to stem the sales decline by finding ways to send goods to its customers, and is also trying to strengthen cooperation with new partners. Monus has started cooperating with a new client in Africa, and it is in the process of opening some more new markets in Asia. It is also working intensively on redesigns and development of new brands. Shipchandling is also affected by reduced international trade around the world. With fewer ships, there is lower demand from shipping crews, observes Agrez.
Affordable global brands
All three suppliers we spoke to agree that there has been a change in consumers’ smoking habits amid the crisis. Oriental’s D’Souza believes that COVID has impacted both smoking and tobacco sales. Cigarettes were impacted the least, but shisha tobacco was hit due to the shisha cafe closures globally. “I wouldn’t say consumer habits have changed significantly but I do believe some people are more cautious about smoking in general after witnessing the effects of COVID.” KTI’s Buchanan says that although tobacco consumers are highly brand loyal, in a time of global crisis the company has noticed a trend for smokers to turn to quality international brands at an accessible price point. “In a category dominated by the brands of the multinationals, this is a favorable trend for an independent manufacturer like KTI. Our global brand portfolio offers consumer-oriented high quality products and global brands at an affordable price. Consumers are also searching more for alternatives and different varieties and we have responded to that by extending our The King and Corset product ranges with new formats and tastes.” Monus’s Agrez says the pandemic has affected smoking patterns, as some consumers stopped, some downgraded their brands, and others reduced their smoking. Because some people have been hit financially by the crisis, this has led to them stopping or reducing smoking, especially in North Africa, and South and Central America. Turning to tobacco consumption trends in Asia specifically, Agrez notes that there has been significant growth in capsule, lights and ultra-lights cigarettes, and e-cigarettes in the region since the pandemic. In Japan, there was a shift to snus and flavored snus and nicotine pouches. India, which was badly hit by the virus and came under strict lockdown, has seen a downward shift in smoking, and the same goes for Pakistan. Taiwanese consumers, on the other hand, are smoking as usual, and in Malaysia there has been a minimal effect. “Overall, Asia has been affected, but in time it will bounce back and we will see growth in snus, electronic cigarettes and vape, and also the lights and capsule categories,” says Agrez.
Oriental’s D’Souza observes that tobacco trends in Asia seem to be growing as they were before the pandemic hit. “China is a country that has managed to control the pandemic even though
Survey highlights Chinese love of tobacco Swiss travel research analyst m1nd-set has released a report about tobacco consumers and their post-pandemic behavior. The consumer survey found that tobacco is more likely than other categories to be shopped by the Chinese (41% of the Chinese surveyed said they would purchase the category), and those aged between 28 and 35 (42% of those polled). Tobacco shoppers are more likely to be frequent travelers, taking 5.2 international trips per year (versus the global average of 4.5 trips) and are more inclined to be considered middle income travelers (63% vs 53%). However, their household disposable income has been more negatively impacted by the COVID19 crisis than that of other consumers (66% vs 57%), m1nd-set found.
it was hit hard early on this year. However, due to availability, price, etc, consumers can switch to perhaps a different brand, form of smoking (heat products) or switch to an affordable brand based on market availability.” Until 2018/19, KTI’s focus has been on markets in Europe, the Middle East and Africa, but it started specifically targeting Asia in 2019/20 with dedicated products and market entries. “COVID has obviously slowed down those plans and we will need to recalibrate our approach. Besides the current trend of consumers looking for price-accessible international brands, we see both Asia and Europe continuing similar trends in terms of increased regulation,” he says, citing track and trace, plain packaging and the ban on flavored products. While the pandemic has profoundly affected KTI, Monus and Oriental, all three are optimistic that the tobacco category will bounce back quicker than others and sales will eventually recover. Monus’s Agrez points out that on the first day the lockdown was lifted in France, there were queues at tobacconists, and sales
KTI says that although tobacco consumers are highly brand loyal, in a time of global crisis the company has noticed a trend for smokers to turn to quality international brands at an accessible price point
Monus says the pandemic has affected smoking patterns, as some consumers stopped, some downgraded their brands, and others reduced their smoking
in North Africa have bounced back already, even with the partial opening of borders. “So, the answer is very simple: the tobacco and liquor business will bounce back very fast to its previous trend, however it will be inversely linked to the easing and confinement trends.” Oriental’s D’Souza agrees: “Tobacco will bounce back much quicker than other categories, yes, but there are quite a handful of issues to be sorted out for the industry to fully recover to its pre-COVID days.” As far as the rest of this year is concerned, D’Souza says: “I feel that the 2020 bounce back will not be as quick but instead provide opportunity to plan better for next year. With airports operating flights and borders open in certain countries, we feel there is hope for the travel industry and for its retail industry.” KTI’s Buchanan points out that while tobacco sales in domestic markets have been very strong, even during the crisis, in terms of travel retail the company believes that it will take a couple of years – perhaps decades – for travel to return to 2019 levels, “but we are confident that our company growth will continue as travel returns”. Somewhat optimistically, he adds: “We have also noticed a very aggressive pull back from some of the big multinationals in travel retail through COVID and as things return to normal we see this as an opportunity for smaller players in what has traditionally been a very expensive channel to compete in. With the pandemic upon us, we all saw that the concept of the future has changed and it is almost impossible to foresee what the future will bring; however, we will continue to draw inspiration from our tobacco expertise and flexible approach to offer quality products for our adult smokers worldwide.”
What does the future hold for these tobacco suppliers, postpandemic? KTI expects to continue the sustained growth and market expansion it has seen from previous years. Pre-crisis, its plans had included new market entries, volume growth and portfolio expansions. The company has revised and adapted its business 18 AUGUST 2020
plans and strategies to the new reality, including reducing some of its marketing investments and expansion plans. “We still plan to keep a positive growth trend in the business, though slower in percentage terms versus previous years,” says Buchanan. At the end of 2020, Monus is set to launch a new cigarette label and promises to offer its consumers something “totally different” compared to the competition, asserts Agrez. The new cigarettes will be premium tier. Alongside the new product, the firm is expecting to redesign two of its brands by the end of 2020. She adds: “Something that we can definitely state as a fact is that it will take a while for the cigarette markets to stabilize, and that is still totally dependent on the development of the situation with COVID-19. It is difficult to give any
Until 2018/19, KTI’s focus has been on markets in Europe, the Middle East and Africa, but it started specifically targeting Asia in 2019/20 with dedicated products and market entries
forecasts; however, it is encouraging to see that from the beginning of July, there has been a mild recovery in the cigarette business, which of course gives us a case for much-needed optimism.” Meanwhile, Oriental is moving forward with a united front in 2020 and beyond. “We are reshaping our strategies for business continuity where we look into the financial aspects, supply chain, budgets, etc, for the next couple of years. The key is to protect your human resources, address challenges like workplace safety and, more importantly, to maintain communication and relationships with stakeholders. It is better to be stronger together.”
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to New Zealand, is distilled three times from whey, an environmentally friendly and sustainable use of the natural protein and milk sugar liquid that results from dairy production. The all-natural vodka is gluten-free, GMO-free and sugar-free, with no additives.
Old Ultra-Luxury Rum: Aged in a single barrel since 1988, Flor de Caña V Generaciones is presented in a sleek black leather case and features the signatures of the five family generations behind Flor de Caña, a bottle cap made from real volcanic rock and a replica of the iconic 1902 volcano postal stamp of Nicaragua.
2. Squealing Pig Rosé Gin: The Squealing Pig Rosé Gin is made with 10 botanicals and a dash of Squealing Pig Rosé wine, making it perfectly balanced and oinkingly delicious. Just serve the Squealing Pig Rosé Gin over ice with soda water to enjoy this dry and refreshing gin with subtle juniper and bright citrus flavors, and balanced spices.
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4. Recuerdo Mezcal: Recuerdo Mezcal, one of the leading Mezcals in Mexico, is known for its smoky flavor characteristic of traditional Oaxacan Mezcals. It is cooked with certified wood over river rocks and distilled with traditional Mezcal production techniques that are honored and proven to produce the finest final spirit. The agave is
The spirits category once again proves there is no shortage of ingenuity in the face of adversity
sustainably harvested in Oaxaca, in a manner that ensures the preservation of the agave plant and the environment. Recuerdo Mezcal is available with Gusano for those who prefer the silky texture the agave worm gives the liquid, as well as without the agave worm for those who seek smoky notes with less complexity.
5. BLOOM Raspberry & Rose Gin: Quintessential Brands unveils its latest Fruit and Floral Fusions BLOOM Raspberry & Rose Gin. The gin features sweet fruits and subtle florals, resulting in a smooth, fruity and floral taste created without the addition of sugar or sweeteners. Inspired by some of the hottest flavor trends in the cocktail scene, flavoured gins are continuing to attract shoppers and add significant value and growth.
The Cihuatán valley’s secrets and legends are now revealed through our rum. Discover Cihuatán Xaman, an extra-old rum uniquely finished in Mayan Ceiba in honor of Xaman, Mayan god of the North Star.
INVOKE YOUR CURIOSITY WWW.CIHUATANRUM.COM email@example.com
6. Tsar Ivan the Terrible: Ladoga has successfully commenced worldwide distribution of Tsar Ivan the Terrible super-premium Russian vodka, launched exclusively in the Russian duty free market in early 2020. Produced by Ladoga Group, Tsar Ivan the Terrible is a multiple international awardwinning vodka. It has a distinctive elegant character based on the delicate herbal infusions blended in the finest grain spirit for a touch of luxury.
7. Bunnahabhain 36 Years Old Spanish Oak Matured: Bunnahabhain 36 Years Old is the latest edition in the brand’s superpremium Elements Series. This very special limited-edition single malt was exclusively bottled for CDF-Lagardère and only six decanters are available. On the nose, the whisky offers notes of bitter dark chocolate and treacle toffee, balanced with raisins, dried apricots, and hints of sweet oak. It
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provides a richer oakiness on the tongue, followed by notes of creamy coffee liqueur chocolates softened by hints of sweet dried fruits, and the characteristic Bunnahabhain salted nuttiness.
8. Team Canada Vidal Icewine: Team Canada and Pillitteri Estates Winery unite with a perfect pairing of tradition and excellence. Deeply rooted in pride, respect and the pursuit of greatness, Pillitteri proudly presents the Official Team Canada Wine Collection. With every bottle, a $1.00 donation will be directly contributed to the Canadian Olympic Foundation and its efforts to support Canadian athletes. The Team Canada Icewine is available in Canadian Duty Free stores.
9. Delaire Graff Coastal Cuvée Sauvignon Blanc 2018: Diverse Flavours brings duty free and travel retail award-winning Delaire Graff Coastal Cuvée Sauvignon
Blanc 2018. The grape varietals include 90% Sauvignon Blanc and 10% Semillon, with tasting notes from Coastal Cuvée, which is rich in tropical fruit flavors underpinned by layers of blackcurrant, gooseberry and nettles. Well balanced and complex, it finishes long, with concentrated fruit and fresh, crisp acidity.
10. 25-year-old Laphroaig: Beam Suntory’s Laphroaig has announced the release of a super-premium 25-year-old Laphroaig, which celebrates the life of Bessie Williamson, an icon of Laphroaig and the first female distillery manager to own and run a Scotch whisky distillery in the 20th century. The whisky is peaty with spicy and floral notes in addition to sweeter notes of pear drops, green apples and bonbons that add to a sweet malty backcloth. Laphroaig 25 Year Old, The Bessie Williamson Story, will be a global travel retail exclusive.
AWARD-WINNING BRANDS FROM THE HOME OF ARTISANAL SPIRITS
For information about Halewood Wines & Spirits please contact Eamon.Prunty@halewood-int.com halewood-int.com
SEVA Group Update
INVESTING IN THE FUTURE With a hunger for growth in travel retail, SEVA Group continues to focus on its investment strategy
ith the fundamental belief: we can always make things better, SEVA Group applies this way of thinking to grow at a faster rate, which supports its ambitious growth plan to be among the Top 25 travel retailers within the next five years. Committing to making the travel journey better for everyone and operating across a number of industries, SEVA Group’s travel retail division has been strongly impacted by COVID-19 – the same as its partners, supporters and
by LAURA SHIRK
competitors. The difference: because of its hunger for growth, company culture and life cycle stage, the distributor has continued to invest. Although it’s painful at the moment, when it comes to investment, SEVA Group isn’t letting the pandemic stand in its way. Looking back, Roger Jackson, Managing Director, Organico Solutions, part of SEVA Group, says the team will describe this as a reflection period, which helped to achieve its ambition more quickly.
Following the lead of Severino Pušić, Founder of SEVA Group, the company offers a strong, positive and communitybased outlook and culture. Taking this change of pace to review its processes and focus on new opportunities, partnerships, brands and markets, many of which originated as a result of its investment strategy, SEVA Group has encouraged an external and internal perspective. While its external perspective assists customers during this time of need through payment
Although this year hasn’t been successful commercially, SEVA Group is currently thriving in regards to building brand partnerships and expanding its customer base
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SEVA Group Update
Agility and service
Offering a fresh approach and a strong return on investment, its marketing team is equipped with the right tools, skills and experience to deliver the best overall strategy from a distributor perspective
support and staff training, its internal perspective allows employees to seek further education and personal development, leading to greater productivity and delivery.
was already on – more digital focus, more click&collect, more disruptive and less complacent approach in attracting passengers to spend,” adds Jackson.
A step in the right direction
Although its original plan, marketing strategy and financial expectation for 2020 has been revised, SEVA Group and Organico Solutions (its trading name for the Middle East & Africa region) still expects to double its consumer base and introduce new brand partnerships this year. With an additional focus on digital platforms during lockdown, the team has shared its core values and strong brand distribution base with more customers and expanded its global footprint. Across the company, in regards to sales targets and performance, SEVA Group has declined by 75-80%. It’s believed that this statistic is unlikely to significantly change until the end of the year. However, in terms of establishing new brand partnerships and building new customer and retailer relationships, the team is thriving. Although approximately half of this planning was in the works pre-pandemic, COVID-19 has allowed individuals, companies and businesses time to reflect on their current practices and relationships and change partners. Referencing new projects and partnerships, Jackson notes the public will learn more in the coming weeks. Acknowledging that the group doesn’t have all of the answers to battle the pandemic, SEVA Group has increased its data and statistical analysis and teamed up with parties to improve digital content and warehousing logistics.
Following in the steps of Dubai Duty Free (DDF), SEVA Group has adapted to new health and safety measures by implementing all local and global regulations. Naming DDF as setting the standard for winning back consumer confidence in the current environment, the company is practicing strong social distancing rules and hygiene protocols. Looking ahead, SEVA Group is prioritizing the health, safety and comfort of shoppers and providing in-store packs across its brand portfolio. As Samsonite’s travel retail distributor in the Middle East & Africa, the group is learning more about and incorporating anti-bacterial technology into its upcoming plans – including gift with purchase. With such a small number of people traveling at this time, it’s difficult to analyze the situation and response, resulting in the releasing of conflicting data. Before understanding the wants and needs of consumers, the industry needs to regain a decent traveling base. “Retailers, airlines, brands and distributors all need to work in partnership through social media and traditional press to re-enforce the shear extent of safety measures in place. Of course, the retail environment will continue to change. However, in many regards this will simply accelerate the journey that travel retail 26 AUGUST 2020
Projects and partnerships to come
Primarily a real estatebased business, most of SEVA Group’s workforce is employed in this sector. However, brands, luxury and travel are personal passions of Pušić – all of which are related to the travel retail industry. A self-styled “boutique distributor”, the company offers quality customer service. Considering the strong experience of the members of its marketing team, the company promises a great return on investment for existing partners. From ensuring the right range is on display to selecting the best location within airport, store and shelf level, the team provides a service that is unique to travel retail at the moment. “Significant experience in net revenue management, promotional effectiveness and shopper marketing is what sets apart our marketing team. In addition to our agility, we believe having the skills to understand the data as it unfolds and our relationships to make quick and effective changes will ensure that sales and investments are maximized. However, this isn’t new thinking for us. Our reputation for delivering in this area has attracted new brand partners and retailers that might have been looking for a fresh approach,” explains Jackson.
A need to succeed
Taking on the leadership role of diamond sponsor of The Moodie Davitt Virtual Travel Retail Expo, which is set to take place October 12-16, SEVA Group aims to showcase its ability to be a top travel retailer and support the longevity of the concept. “More than any other year, travel retail needs partners that are prepared to invest ahead of the curve. We want to show our absolute commitment to the long-term future of the industry that we love. For us, 2020 is not the year to stop spending and this approach has been well received by all of our partners. In the long-term we know this loyalty, consistency and focus on sustainability will be what takes our group into the Top25 travel retailers,” concludes Jackson.
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Passionately crafted from real icebergs.
Fraternity Spirits introduces its newest innovation Corralejo Tequila Liqueur
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blue light FRATERNITY SPIRITS STAYS TRUE TO ITS CREATIVE DNA WITH THE INTRODUCTION OF NEW CORRALEJO TEQUILA LIQUEUR
he two main values that make up the DNA of Mexico-based Fraternity Spirits are creativity and innovation, according to Raffaele Berardi, Owner, Fraternity Spirits World. When faced with the adversities that Covid-19 has presented to the tequila maker, the team’s focus turned to finding opportunities to create new products, add excitement and value for its customers and consumers during this unusual time. “We are very happy to announce that we have been working on new SKUs in order to increase our selected portfolio range. Now we gladly announce our new Corralejo Tequila Liqueur. It´s ready for the international market,” says Berardi. The new Corralejo Tequila Liqueur is highly aromatic, featuring a silky grade unctuous and aromatic high‐ grade tequila néctar obtained from the slow distillation of 100% Blue Tequilana Weber agave, and the sweet and delicate mixture of secret ingredients, which rest in a stainless steel tank to enhance and permeate its natural flavours, cooked agave notes and aromas. The result is a high-grade agave nectar liqueurthat is ideal as a digestif, Margarita base, or to create different flavors and textures in cocktails. Corralejo Tequila Liqueur will play well into the narrative of the curious millennial, food lover and creative bartender. The new liqueur is set for launch for the US market in Q3, followed by the European market two months later.
by JAS RYAT
Blue skies ahead
Berardi, a duty free veteran of over 30 years, is no stranger to the challenges the global market presents. Unsurprisingly, he describes the ripple effects of Covid-19 as a very difficult and an atypical situation. “All the markets have shrunk among our value chain, but at the same time we took it as a special challenge,” he points out. “We are always focusing on opportunities, like how we can create and add value within our products and for our partners, markets and consumers.” The company has also created additional opportunities through social media platforms, relevant media content, digital activities such as mixology capsules, and courses.
Out of the blue
Fraternity Spirits has been working to support launches that can fit — or be evolved — into new market needs. ‘SEEING THE BLUE LIGHT’ is the brand’s
new promotional metaphor. “We attached our blue Corralejo light as a destiny, as a symbol that we can offset every challenge in front of us, based on our values,” explains Berardi. Berardi’s optimism has led the company to remain active in the ecommerce arena as duty free and travel retail channels have suffered with the lack of travel. Says Berardi: “Even though on-premise channels such as the physical retail stores have been closed for several months and the category suffered a contraction, we have seen that the category is still very active trough digital efforts and purchases. People are still drinking at home, and they are curious to go further in learning things like pairings, new cocktails, recipes, process, etc. Of course it´s not the same as it used to be, but at least we have seen more opportunities than other industries that unfortunately have been greatly affected.”
“Seeing the blue light” is the brands new promotional metaphor that represents Fraternity Spirits ability to offset every challenge
Reclaiming the throne Clara Susset, m1nd-set Travel Retail Research Director, explains why restoring trust amongst travelers coupled with richer brand content may be the answer to a strong spirits recovery in travel retail by JAS RYAT
Susset emphasizes the importance for niche brands to stand out and share their stories to capture the attention of the consumer
he spirits category continues to be a multifaceted one that offers theater, innovation and resilience to the landscape of duty free. Now, as Global Travel Retail (GTR) shifts gear into recovery mode, the spirits category will be forced to re-imagine its narrative in order to reach consumers in new ways. Clara Susset, m1nd-set Travel Retail Research Director, feels a key element for strong recovery will be restoring the trust of the consumer. She says consumers essentially want to resume regular traveling, with the addition of increased safety and hygiene measures prior to engaging in any traditional interactions. “Our research shows that testing of products and interaction with staff will be less appealing to spirits shoppers. Sixty-one percent will refrain from being in proximity with retail ambassadors and sales staff, while 49% will refrain from testing or trying out products in the duty free shops,” explains Susset.
Susset feels there is room to revisit the experience for consumers in the spirits category. Whereas tastings used to be a very important part of their decisionmaking process when purchasing, executing a traditional tasting would prove difficult at this time. “Brands and retailers will have to work together to come up with other ways to
offer an engaging in-store experience, such as virtual reality, augmented reality, quick response codes and digital screens explaining the product’s history and uniqueness; it won’t be possible to rely on taste only,” she explains. Brand awareness is a very important driver of choice for spirits products in travel retail; therefore it is even more
This m1nd-set research represents the expected behaviour of spirits shoppers in travel retail when the channel reopens
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m1nd-set research shows the key aspects that would encourage conversion when purchasing alcohol
imperative than ever for brands to create a compelling experience beyond taste.
Intent to purchase
According to m1nd-set research, consumers post-Covid-19 will be more likely to pre-plan their spirits purchases, as with many other duty free categories. “Travelers will be less open to browsing if they have no mission, but will visit the store if they have a specific purchase in mind. Indeed, 90% of spirits shoppers expect they will plan their duty free shopping in the future,” says Susset. Research shows that pre-Covid-19 only 16% of purchases in the spirits category were made purely on impulse, versus 21% of duty free purchases overall. This puts the category in a strong position, says Susset: “Looking ahead, we expect that impulse purchases will be the most
impacted, which is good news for the spirits category and could mean it will bounce back relatively quickly.”
Pushing all the right buttons
The focus at the moment is recovery — how to trigger interest and increase conversion. It’s important to differentiate to the consumer what duty free has to offer and revisit the appeal value proposition of the channel. Susset highlights that retailers and brand owners must emphasize the reason why consumers shopped in duty free pre-Covid-19. “I think duty free shopping will be affected the first couple of weeks [after reopening] and there is no way around that,” admits Susset. She notes that although the initial reaction of travelers is to be apprehensive about sampling products, they are still open to this type of
interaction if the necessary measures are in place. Consumers prefer to stay away from sales staff if they are not wearing face masks and are reluctant to touch products unless they are able to clean their hands. Compulsory face masks and gloves for the staff (48%), strict distance between staff and customers (45%) and disposable hand sanitizer for customers (42%) are all factors that will contribute to making the shopper feel more comfortable in duty free. She continues, “It’s going to be very important to gain that trust again. Even though there are ways to get around tastings with the right brand activations, richer brand content refocusing on the brand history and its uniqueness — in the end consumers want to test what they are purchasing so we will have to find a way to offer that.”
Attractive pricing and theatrical activations will all be part of the post-Covid-19 success story for the sprits category www.dutyfreemag.com
F R O M WA S T E
ate last year, Estonian spirits company Liviko launched a beverage that is not only a new flavor but also an entirely new creation. Juniper berry-based soft drink Re-crafted Crafter’s Junibeer, which is offered as a 0% ABV soft drink and also as a low-alcohol 3.2% ABV fermented drink, brings a brand-new taste to the ginger beer subcategory. With its unique bitter taste and its provenance rooted in sustanability, this new drink embodies what today’s consumers are looking for in a low-alcohol or non-alcoholic drink option. “Re-crafted Crafter’s Junibeer is made for the consumer who is looking for unprecedented sensory adventure, and who values wellness and sustainability,” says Hanna Kaur, Beverage Architect, Liviko. “Junibeer is suitable for vegans, and as veganism is increasingly being adopted by a wide range of people, we see clear trend in marketing toward this growing target group. The young greener generation consider a product’s ecological footprint from design to production. Junibeer covers most of the needs of the new conscious consumer.” Re-crafted Crafter’s Junibeer is the result of the company’s zero-waste production philosophy. Juniper berries once used in its handcrafted gin distillation are “recrafted” into an entirely different beverage. “Zero waste distillation can be interpreted in our single botanical distillation method. We distill each botanical separately to extract the maximum
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amount of characteristic flavour – more flavour compounds with less kW,” says Kaur.
Kaur’s position of Beverage Architect at the company is an especially unusual one, as it combines science, marketing and R&D. Kaur, who started at Liviko as a chemist 16 years ago, has held this role for three years. She looks at trends, tries to predict where they are going, creates a beverage that works with those trends, and then manages its marketing. “From the bottom of my heart I can say that it has been incredibly exciting time, time to adapt in this changing world with new consumption patterns. I have always been interested not just in the products I create, but as well to whom and for what purpose I`m creating them.” Kaur appreciates the unique position she is in to share her passion with the final consumer
Call of Nordic nature
Kaur says she spends half her working day in the lab or looking for new flavours. “It’s very exciting to test various botanicals to find new sensory experiences,” she says. “Liviko has a superior laboratory that gives me as a beverage architect great opportunity to analyze all the crazy ideas I get for new products, whether recipe or technology. The Nordic environment is full of peculiar botanicals, and our taste culture has its roots deep down in the four seasons and untouched wilderness.
For Beverage Architect Hanna Kaur, whose inspired creation Re-crafted Crafter’s Junibeer was nominated best beverage concept finalist in the WBIA in 2019, sustainability is as important as taste by JAS RYAT Beverage Architect Hanna Kaur combines science, marketing and R&D to create a drink that aligns with today’s trends
My main experiments include researching Nordic botanicals and the distillation process that is the basis for gin production.” Crafter’s gin is a modern handcrafted masterpiece from a 122-year-old factory. “Ours is a real boutique distillery, with our heritage, our traditions and our hightech lab. We do things the Estonian way – smart and with strong passion,” says Kaur.
Kaur highlights Liviko’s commitment to sustainably as imperative. “Massive consumption in recent decades has reached a point where it can no longer continue. The new generation is growing with mindful thinking and environmentally conscious values. For brands it’s only rational to think seriously and take real actions in advance.” Re-crafted Crafter`s Junibeer from Liviko is a Juniper berry-based soft drink that is a result the company’s zero-waste production philosophy
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InnoTRI attracts experimental rum connoisseurs with the promise of quenching their thirst for curiosity by JAS RYAT
Cihuatán Sahumerio is Cihuatán’s limited edition rum for 2020 that is encased in packaging that exudes the brands rich narrative
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s travel retail begins to recover from the blows it has been sustaining in 2020, Miami-based InnoTRI has shifted its focus to support its brand partners in efforts to enter the US domestic market. With El Salvadorian partner Cihuatán Rum, InnoTRI has managed to extend its reach into multiple US states, Florida to follow in 2021, and over 200 stores. As liquor stores are considered an essential business in most US states, they have remained opened. In the midst of the global pandemic InnoTRI managed to actually open up the state of Texas. Coupled with the Cihuatán team, InnoTRI has managed to achieve its first semester targets for the US domestic markets. Innovation plays a key role in InnoTRI’s DNA. As Christoph Henkel, InnoTRI Co-Founder & Manager, and Walter Aguilar, Commercial Director for Cihuatán, have successfully built an extension to the domestic business, they are now positioning themselves to be prepared when the doors to travel retail fully reopen. “We are close to finalizing an agreement with a major liquor producer who we will partner with for the region in travel retail. At the same time we want to keep our approach of adding excitement and innovation to the spirits portfolio and distribution in the travel retail channel,” explains Henkel. “We have and will continue to offer a true partnership with our brands as we also think long term in getting back to a strong and exciting business that offers innovative products and value for retailers and customers without compromising brand values.”
In with the new
Most recently the team introduced Cihuatán Sahumerio and Cihuatán Xaman, the first XO to be exported from El Salvador. Cihuatán Sahumerio is Cihuatán’s limited edition rum for 2020, created as a celebration of fire, regarded by the ancient Maya as a benevolent and transformative force. According to Mayan lore, fire was the conduit of love, passion and bliss. Thus, every loving home would have a “Sahumerio” burning at its center in honor of Chantico, goddess of fire and love. Cihuatán Xaman is an ultra-premium rum that joins the Cihuatán range in July
2020. This XO rum is the ultimate ode to the Cihuatán valley’s enchanting Mayan heritage. Fondly named after Xaman, god of the North Star and protector of the valley, this elegant composition features a blend of extra-old rums aged in American oak ex-Bourbon barrels and then finished in Mayan Ceiba, the tree of life. In true Cihuatán fashion, the bottles are a crucial part of the brand messaging. In the heart of every bottle of Cihuatán Xaman lies the “Sleeping Woman,” Mayan goddess and guardian of the Cihuatán valley. Legend has it that under the veil of night, the Sleeping Woman would look for the brightest star in the sky. This was Xaman, god of the North Star. She would ask Xaman for wisdom and prosperity for the valley and its people. Xaman would then rest atop a sacred Ceiba tree, the Mayan tree of life. Both items will be able to ship to customers in the last week of July or early August 2020.
All that sparkles
A report from the Whisky Exchange (TWE) states that sales in rum skyrocketed by 165 percent in the third quarter of 2019. InnoTRI is ready for a rum renaissance as both new expressions are made to attract the lovers of dark premium spirits such as cognac and aged whiskey. The Cihuatán range is out to engage with experimental men and women in their pursuit of wanderlust, who are attracted to its striking design and exceptional taste. The limited editions (Sahumerio in 2020) have seemingly caught the attention of collectors, purchasing to consume and curate. Aguilar comments: “In my opinion the travel retail environment has always been and will always be a place where you want
to find something special — exclusive products with a story and quality but also expressions of brands that are growing in the domestic markets in a fast way as it is the case for Cihuatan for example in the US, Canada, Germany, France, Czech, Switzerland, Italy, Denmark, Ecuador and others. He continues, “At the same time it is not a product that is involved in this fierce price war between domestic and travel retail environments and therefore will for sure bring a sparkle and value into the liquor section of each store. Most buyers are not looking at range extensions at present, but for sure are benefiting from unique products, packaging and quality artisanal aged rum that really pops and looks fantastic and will draw the muchneeded end customers.”
More than the basics
At the moment InnoTRI, like many brands, is focusing on bestsellers because of the COVID-19 situation. “The consumer will have a desire for a fresh option on the shelf. Wanting to sell only bestsellers and not considering the customer looking for innovation would result in loss of sales and creating an image of not having the latest products,” explains Henkel. Henkel is confident the spirits category in duty free will continue to be more resilient when compared to other categories. He feels the InnoTRI consumer is much more aware and educated about the happening in the category. Henkel’s positivity mandates inevitable success: “Sustainability, Social Responsibility, a long-term vision combined with [brand] values and constant innovation will help brands to bounce back from this crisis.”
The first XO to be exported from El Salvador, Cihuatán Xaman will be available to customers late summer 2020 www.dutyfreemag.com
Halewood Wines & Spirits Update
Delight and by JAS RYAT
INSPIRE EAMON PRUNTY, HEAD OF GLOBAL TRAVEL RETAIL HALEWOOD WINES & SPIRITS, SHARES HIS VISION TO ADAPT AND SUCCEED IN THESE CHANGING TIMES
amon Prunty, Head of Global Travel Retail Halewood Wines & Spirits, brings over 30 years of spirits industry experience to his current role. Originally joining Guinness Great Britain before he was even of legal drinking age, Prunty eventually moved on to Diageo as part of the merger. He spent the majority of his time there in the UK domestic market, with the last five years in the travel retail business. “I joined Halewood in December 2016 to manage the European Export Business,” explains Prunty. “In January 2019 I took over responsibility for Halewood’s European travel retail business, and this April I was appointed to head up the travel retail business globally. I am based in London, although in a ‘normal world’ I would be traveling for the majority of the working week.” He reports directly to the Halewood Group CEO and is responsible for travel retail & duty free business globally, across all Global Travel Retail (GTR) channels. Although Halewood’s business has undoubtedly been affected by the pan-
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demic, Prunty believes there is light at the end of the tunnel. With markets beginning to reopen, airlines offering more flights and airport retailers cautiously reopening, “the worst of the crisis is over and business will start to pick up in GTR, albeit in baby steps,” says Prunty.
Home turf advantage
Halewood’s reign in UK’s domestic market has helped to keep the brand resilient throughout the pandemic. Although the company’s export business has been hit hard, since the overseas markets shut down completely, the UK online platform has been extremely strong, performing at record highs through the crisis. Tough business decisions have unfortunately led to a corporate restructure, this decision deemed necessary to meet the challenges post Covid-19. Prunty notes that at this point it is virtually impossible to predict the challenges Halewood will face as the skies and borders reopen. “GTR pre-Covid was about touch and feel, sampling goods; a lot of this simply cannot happen in the same way in a post-pandemic world. Brand owners and retailers will have to work together to innovate in this area, using online platforms and other digital means to tailor our offer to the consumer’s new shopping habits,” he says. He continues, “For the rest of 2020, we will endeavour to build on the great foundations we have established in GTR over the last three years, working with all
our partners, adapting our forward plans, executing them with vigour and pace, and thereby securing the best results possible for all our businesses.”
Halewood will continue to focus on travel retail business within key markets in Europe, Asia, the Middle East and the Americas as innovation across its portfolio of handcrafted gins and premium artisanal spirits continues to inspire the consumer. Through a combination of creative brand promotion and strict hygiene standards when sampling at airport activations, the company will continue to showcase its diverse brands. Within Halewood’s award-winning portfolio, Dead Man’s Fingers spiced rum recently won awards at the Spirits Business Rum & Cachaça Masters 2020, and Mary-le-bone Orange & Geranium Gin has been voted the World’s Best Flavoured Gin at the World Gin Awards 2020. “We were delighted to receive these awards for Dead Man’s Fingers and Maryle-bone gin. Winning these prestigious awards, with their globally respected tasting panels, demonstrates just how important the focus on quality is to us as a distilling company. These awards enable us to fully promote our ranges to new distribution partners and customers around the world using a variety of means: digital and social media, on-shelf and through the education of key influencers,” concludes Prunty.
Airports Council International-Latin America and Caribbean
Latin America’s annual passenger traffic halves The latest regional passenger traffic figures from Airports Council International-Latin America and Caribbean make grim reading
afael Echevarne, Director General, Airports Council International - Latin America and Caribbean (ACI-LAC), gave an informative presentation of the current state of affairs in the Latin American aviation industry during the South American duty free association ASUTIL’s third webinar. Passenger traffic in the year to June in Latin America was 51% lower than last year. “We have lost half of the passengers,” said Echevarne. ARI-LAC forecasts that the rest of the year will also be down 51%. He noted that Mexico was the only country in the world that didn’t impose any restrictions on air transportation. But in other countries, such as Colombia and Argentina, the lockdown had been very strict. Uruguay was the only country in Latin America that had been allowed to reintroduce flights to the European Union, and
by HIBAH NOOR
Ecuador was the only country that went from a complete lockdown to an opening of air transportation, he added.
Domestic traffic boost
In big countries like Brazil and Mexico, the situation was different from the rest of the region, because there’s a lot of domestic traffic. In both of these countries, there was a 70% decrease in traffic compared to last year, as opposed to 90% in the height of the crisis. Airports throughout the region have already introduced all the measures and protocols to ensure that air transportation is not a factor in the transmission of COVID-19. For example, only travelers can access the terminal building, passengers and employees all wear masks, and social distancing is imposed. “I have been traveling all over Europe and I can say that the protocols in Latin
America are much stricter than in Europe,” continued Echevarne. “Many countries in Europe are not using thermal cameras. Although it’s questionable how effective they are, it’s more in order to provide confidence to the travelers.” Echevarne observed that if countries impose quarantine restrictions, that immediately means a huge reduction in demand for air transportation and tourism dries up. He said the requirement for passengers to prove they are virus-free was becoming more popular. This usually involves taking a test within the last 72 hours and proving you don’t have it at the airport, or taking the test upon arrival. He explained that in travel bubbles, people can travel freely within an area, such as in Europe, and there is no need to go into quarantine. “This is the only way of stimulating air transportation,” he said.
Airport reopening dates in Latin America (Source: ASUTIL) www.dutyfreemag.com
Sanitizing the seatback In this guest column, Laurent Safar, Chief Executive Officer of Adaptive Channel, gives his take on the future of inflight magazines in a post-COVID-19 world
Laurent Safar, Chief Executive Officer, Adaptive Channel
he year 2020 has not been – and, most likely, will not be – the year that any of us expected. Of course, I’m referring to the COVID-19 pandemic that, for many months, effectively shut down all aspects of the travel industry, with the aviation industry being particularly hard hit. Even now that some countries have started to flatten the curve and borders are opening up, it is still anticipated that the travel industry could take years to return to pre-COVID-19 and 2019 numbers. It’s plain to see – no matter how much travel picks up in the coming months or years – that no airline will come out of this unaffected. However, some will be facing a much better financial outlook post-pandemic than others. What are the factors that will decide which airlines are most successful, post-virus? This can be answered in one word: innovation. Now is the time for airlines to establish their post-Coronavirus operational strategy so they will be ready when the demand returns. Airlines must dig deep and truly think outside of the box when it comes to how they will fulfill passengers’ needs, while cutting costs and boosting revenue.
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COVID-19 has introduced a new normal for every aspect of our daily lives and it has shifted travelers’ perspectives and priorities for their inflight experience as well. Health and safety will be front-of-mind for passengers and they will be looking to airlines to implement strategies to protect them from potential contagions that they may encounter while traveling. As such, inflight amenities and services will need to be considered and updated to address health-related concerns. So how can airlines provide for their germ-conscious passengers? First, it’s important to put yourself in your germ-conscious passengers’ shoes. You’ll quickly see that the aircraft and seats could be perceived, by passengers, as a possible cesspool of germs – and the airline must act today to ensure that they’re ready to greet these passengers – with their new needs and wants – as the industry very slowly picks up again. Today’s passengers want some pretty big changes. Of course, more regular disinfection must be a priority, including the seat, seatbelt, tray table and seatback pocket, even during short turnarounds. COVID-19 is also accelerating digital transformations that were already underway in the aviation industry. To significantly
interacting with cabin crew – creating a real opportunity for them to promote relevant ancillary services through their mobile apps to an almost captive audience.” If you’re still not convinced about the value of digital press content in a post-pandemic world, here are some other key benefits to this innovative strategy:
Boost Ancillary Revenue Ancillary revenue opportunities abound with digital press access Studies show that removing seatback print and replacing it with digital can save $4.5 million for a fleet of widebody aircraft
Digital press content gives airlines important insight into passengers’ interests, needs and wants. The content-rich nature of newspapers and magazines provides the opportunity to mine data that will improve their ability to deliver targeted compelling ads more effectively to the right passenger, at the right time – drastically improving an airline’s travel retail conversion rates by leveraging up-selling and cross-selling opportunities.
decrease passengers’ perceived exposure to contagions, airlines should digitize everything possible, including hard copy inflight magazines and instead share the same content via a digital magazine. The switch from hard-copy newspapers to digital newspapers, readable on the same device as digital magazines, is another way to offer passengers the press content that they want, both inflight and in the lounge, from the safety of their own device (via the airline’s mobile app or a web portal in lounges). Finally, airlines must consider digitizing duty-free catalogs, safety cards and menus - again, reducing opportunities for transmission of contagions between passengers and saving time on turnaround sanitization measures. An April 2020 article by Future Travel Experience, entitled ‘How the COVID-19 pandemic could change the end-to-end passenger experience forever,’ states: “… passengers may be more wary of touching inflight entertainment (IFE) screens and may turn to their own devices en masse. There could be an opportunity here for airlines, or more specifically airline apps. Airlines may have more success in convincing passengers to use their apps if it adds value at every touchpoint – from checking in and navigating through the terminal, to controlling IFE and even
Eliminating hard copy press is also a great way to cut airlines’ operational costs; by eliminating the extra weight that hard copy newspapers and magazines add to each flight, airlines will experience a significant cost reduction on fuel. “According to research from Boeing, removing the weight of print newspapers and magazines equates to an annual savings of over $4.5 million for a fleet of wide-body aircraft operating 1,000 flights per day,” as reported by the Airline Passenger Experience Association (APEX) in 2016. As well, offering digital press eliminates the logistical costs associated with providing hard copy newspapers and magazines, giving airlines another way to decrease their operating costs. Help improve the environment, one flight at a time Today’s passengers are also very environmentally conscious, giving airlines who prioritize improving their overall environmental impact a significant financial advantage when appealing to travelers. By eliminating paper waste from hard copy newspapers and magazines (and the weight associated with them), airlines use less fuel per flight, decreasing the overall carbon dioxide emissions and improving their carbon footprint – and, as a result, making their airline much more attractive to potential guests.
It’s A Brand New (Digital) World
As you can see, the change from hard copy inflight magazines and newspapers to digital press will improve your passenger experience and Net Promoter Score, create new ancillary revenue opportunities, offer valuable ways to cut logistical and operational costs, give your airline a financial advantage over airlines that aren’t prioritizing improving their environmental impact and, most importantly, it will reassure health conscious travelers of their safety inflight. Airlines worldwide have already started implementing the switch to digital press inflight because they recognize their passengers’ general discomfort in touching items they don’t know are completely clean and sanitized. We expect to see many more forward-thinking airlines adopting digital press, through their IFE solution, in the coming weeks and months – after all, it will be an operational imperative for airlines worldwide during the very slow, COVID-19-impacted travel market - and beyond! www.dutyfreemag.com
Airline Profile Airport kiosks get serious attention as part of the CleanCare+ program
A CLEAR PICTURE by RICK LUNDSTROM
With its multi-layered CleanCare+ program, Air Canada sought to send a message to passengers that it is doing everything it can to win their confidence and instill a sense of safety
ir travel into Canada from other locations was still rife with restrictions and limited access at the beginning of July; but the country’s flag carrier was already thinking beyond lockdowns and quarantines to a time when passengers will be boarding again, all with various levels of anxiety and trepidation. As the industry was rocked to the foundations with the outbreak of the COVID-19 virus, Canadians were traveling within the country on limited airline schedules. However, passengers flying in from abroad still had to languish in a 14-day quarantine when they arrive, while US citizens to the south must show an essential need
Andrew Yiu, Vice President of Product at Air Canada
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to be in the country. Some of those restrictions will hopefully fall away as the summer wears on. When they do, Air Canada will be ready with a step-by-step plan to elevate the passenger experience by degrees through the end of the year. And if there are silver linings to the whole experience, Andrew Yiu, the airline’s Vice President of Product, says they can be found in the ability for Air Canada to design a passenger experience from the ground up and move faster to realize the industry’s dream of a “connected cabin.” Right now, Air Canada is in the midst of a multi-stage process announced at the end of June. Some of the changes promise flexible re-booking options for Economy Class passengers anxious about a too-full cabin. The airline will notify passengers with rebooking options if seating in Economy Class is filled near capacity. Air Canada has also launched a program called CleanCare+, designed to make passengers feel as safe as possible about their trip. Passengers will soon see additional touch-free features at airports, that will allow them to check their own baggage. Later this month a “virtual queuing” at select counters will alert passengers through a phone notifications when an agent is available to help then. At the airline’s Maple Leaf Lounges passengers will be able to minimize human contact at a self-scanning entry station. To enhance the passenger experience, Air Canada will resume a more robust meal service in Signature Class and on international flights in Economy Class. Awaiting passengers as they board will be the airline’s CleanCare+ customer care kits developed in-house. Comfort items like pillows, blankets and duvets will arrive sanitized in plastic. Yiu said Air Canada
Virtual queuing alerts passenger when staff at airports are ready to assist them
Touchless kiosks are now at several airports in the Air Canada system
was working with its suppliers on more sustainable options for plastic wrapping. On flights of more than two hours in North American Economy Class passengers able to pre-order meals. An expanded offering of alcoholic and non-alcoholic drinks will be available on flights where they are offered complimentary. Behind the scenes the airline has a number of safety and sanitation measures outlined in videos on its website. The initial policies that became CleanCare+ began back in April. It was then, Yiu said, that Air Canada first began mandating face masks. Along the way, pre-flight temperature checks and seat blocking were also added. Later, Yiu said planners decided it was important to have a transparent program with a name and a full set of initiatives. “Ultimately we wanted to put a program together that was something easy for a customer to understand which puts everything we are doing for their health and safety from COVID-19 under one brand name,” Yiu says. Phase one of the airline’s food service improvements was the product of the Air Canada Culinary Panel with meal boxes designed by one of the group’s chefs. Hot meals will be served in Signature Class while passengers Premium Economy Class and Economy will be served a cold meal. Beverages of all types will be delivered to the passenger in single-serve containers. “It goes with the whole concept of slowly phasing things in,” said Yiu. “We want to make sure the crew are comfortable heating up meals. We want to make sure the crew is comfortable putting a hot meal in a box and delivering it to the customer.” When Air Canada feels that it is safe to move on to the next phase, Yiu envisions a return of wine service poured from larger bottles and hot meal service in the rear cabins. Choices will be expanded in Economy Class. Buy on board options are also being considered. One thing that may remain a part of the Air Canada meal service is a cold meal option, he says. While hot meals in airline service are pre-made, frozen and heated up on board, the fresh-
ness of a cold meal may appeal to passengers in the future. What passengers in the future may also see is the aforementioned dream of a connected cabin where orders are placed and purchases are regularly made through a personal electronic devices or a seatback screen or before the flight through technology that has been in place for years. “Those are things that customers wanted to see before COVID19,” Yiu says. “And now it’s almost becoming a necessity.”
Air Canada is modifying its service in Signature Class to deliver meals in a meal box. Cold meals are being used extensively in Economy Class
learning curve Recaro supplied Business Class seating with privacy features on Delta’s A321neos
by RICK LUNDSTROM
ver this unusual summer, seat manufacturing companies and their airline customers are diligently keeping their social distance from each other, but that does not mean that they are communicating or seeking solutions any less. While a number of products have been developed to help airlines make passengers feel as safe and comfortable as possible, work has also been devoted to what needs to be done in the years they say it will take for the industry to recover. All this while struggling airlines are devoting much of their efforts to regaining passenger confidence. Even before the COVID-19 virus prompted a jarring and sudden pause to air travel, some of the largest seat manufacturing companies were preparing for what they saw was a softening of the commercial aviation market. Aircraft order books at major events were not as large as the three-figure announcements in years past. The red-hot industry that led to double digit sales growth was giving pause for reflection and long-term planning. Now, they say, they are listening to the stories, talking with focus groups and assessing what is needed to maintain and improve their partnerships for the long haul. 42 AUGUST 2020
As a variety of seating products are appearing around the industry, seating companies are seeking out feedback from customers on what is needed long term
“The immediate impact on the industry has been swift and devastating,” Troy Brunk, President of Interiors at Collins Aerospace tells PAX Tech. “Airlines are financially strapped right now, so we have centered our efforts on investigating solutions that build upon our already existing cabin technologies that can be implemented quickly and efficiently; and a more touchless, hygienic and enjoyable experience for cabin and crew.” Brunk has 27 years’ experience at the company, and took over the top spot in the Interiors division in April of this year. Though he has been with the company for decades he said he has seen the passenger journey that all suppliers and airlines study meticulously change completely in only a few months. While he said he relishes the opportunity to look at the big picture for years to come, a redefined travel experience and product development is starting out in some of the smallest places on the aircraft. “Really, we are taking a very close look at anything that requires human contact onboard an aircraft,” he says. “And we are evaluating both the ready-now solutions we can provide and which longer-term technologies we can build for the future.” Collins Aerospace will be researching materials with antimicrobial coatings, assessing cabin configuration options to
High walls and and other privacy features are in the Horizon Premier seat from Collins Aerospace
maximize space within the aircraft and mitigating the spread of pathogens, while eliminating the need for physical touchpoints across the cabin. From there, developing products that fit the budget of airlines is an urgent priority. “It is our responsibility at Collins Aerospace to be cognizant of that and develop solutions that airlines can swiftly implement to help begin this industry’s recovery,” Brunk says.
Hygiene on the front burner
In the summer of 2018 seat-maker Recaro was celebrating an innovation award in Berlin for its Hygienic Seat, coated with antibacterial substances and designed for aircraft with increasingly long stage lengths. At that time, the company was also experiencing a period of unprecedented growth where sales increased more than 20 percent for the years 2018 and 2019. Recaro itself needed to quickly change focus as COVID-19 spread from Asia to Europe. With a manufacturing plant in Qingdao, located between Beijing and Shanghai, the company began using China operations as a blueprint for preparing for the eventual outbreak in Europe. It also turned its attention to the company’s supply chain to maintain on-time deliveries.
Collins Aerospace Interiors President Troy Brunk took over the top spot in the division in April
The year 2020 was one where the company had already planned to see sales softening. But nothing could have prepared for the blow the industry took, or seen the urgent need for a product like the Hygienic Seat. Trade wars and problems with the 737 MAX were going to hamper the industry, says Dr. Mark Hiller, Chief Executive Officer and Shareholder of Recaro, but add a pandemic to the mix and fortunes for airlines and suppliers changed quickly. Hiller says the “third wave” to affect company operations was the expected cancellations and postponements that will result in a 60 percent loss in revenue over 2019. The plastic surfaces and metal parts in Recaro seats can be equipped with the antibacterial coatings, if customers pick the option. The properties of the coatings make germs disappear within a short time. Currently, Recaro is in the final stages of www.dutyfreemag.com
The Interspace line of products for Business Class from Safran
tests for its anti-viral effects. The company reports the results are promising. The coatings work alongside the existing systems, such as HEPA filters to reduce the risk of infectious disease transmission within the aircraft. However, Hiller says “most of the airlines are thinking about short-term solutions which can be implemented on short notice which have a minimal impact on cost and weight which they might be able to quickly un-install.” At this year’s Aircraft Interiors Expo, Recaro planned to show visitors its BL3710 medium range seat with advanced inflight entertainment integration and privacy features built in. The company was also keen to highlight its Sprint program which promises aircraft seat delivery in a period of less than two months. The latter program will be important to airlines because, as a result of the worldwide spread of COVID-19, many aircraft are changing ownership or being returned to leasing companies.
Privacy and distancing
Another company that has done much to prepare for the new air travel dynamic was Safran Seats. Safran began looking at passenger privacy with the help of a partner company called Universal
Movement. One of the outcomes of the partnership was products called Interspace and Interspace Lite, which allows airlines to easily reconfigure cabins in Business Class and Economy Class. The features give privacy to passengers by locking out either the central or outboard seats of a row or by adding a lateral privacy wing along the height of the backrest. The company began working with Universal Movement on product development late last year, but quickly the need for such a collaboration became clear as the COVID-19 virus rocked the industry. “Safran Seats is confident that this partnership with Universal Movement will generate value for our customers thanks to its recognized agility and innovative spirit,” says Quentin Munier, Executive Vice President Strategy and Innovation at Safran. “Interspace is a great innovation for privacy of passengers, even more so in the post-COVID-19 travel environment that is ahead of us.” Social distancing without loss of passenger density, touchless interactions and virus free surfaces are part of the French company’s Travel Safe by Safran Seats program. One of the most visible elements of the company’s program was the Ringfence, a simple solution that involves installation of a removable partition that isolates passengers seated near each other. Another attachment allows backrests to be reclined with a pedal mechanism. Finally, Safran has also developed a coating for seats and tray tables for easy disinfection and cleaning. Munier tells PAX Tech that Safran is seeing interest in all the products and the company is working to clear regulatory requirements and have the two product lines delivered as quickly as possible. A launch customer for some the product line is expected before the end of the year. In addition to supplying products, Safran is keen to work with its wide customer base on future solutions. With the announcement of Interspace and the Travel Safe by Safran Seats the company also announced a program called Create with Safran Seats. The goal of the program is collaboration on solutions that airlines can place into service in a short period of time. The company has hopes it will result in a selection of customized seats adapted for the post-COVID-19 travel environment.
Some of the privacy features Safran has incorporated into its designs for Economy Class
44 AUGUST 2020
FDFA - Industry Update
FDFA’s Barbara Barrett discusses how the Canadian border stores will survive and recover
Barbara Barrett, Executive Director Frontier Duty Free Association, continues to advocate with FDFA to ensure Canadian borders stores are well equipped with the programs needed to survive the current border closures
Barbara Barrett, Executive Director Frontier Duty Free Association gives an update on the current situation at Canadian and US border by JAS RYAT
s the US leads the world in highest number of Covid-19 cases, recently surpassing four million, the Canadian and US governments have extended border closures to all nonessential traffic until August 21st, 2020. Barbara Barrett, Executive Director Frontier Duty Free Association, updates Americas Duty Free on the extended border closures and why it’s important to focus on programs that will get all border stores on the road to recovery. “The border closure has been extended to August 21st, which came as no surprise to anybody. That’s the official date at this moment. From what I’m hearing anecdotally [not officially], it may go beyond that. The trends in the US are not going in the right direction. It’s a given that we as an association support this decision for the Canadian government and public health reasons, however we really need to focus on programs that will help stores get through this period,” states Barrett. Currently 18 stores are fully or partially open along the Canadian border at this time to service essential workers or truckers passing through. A combination of reduced hours and minimal traffic has resulted in a difficult situation for these stores. “What we do know is that recovery will not be like turning on a light switch,” says Barrett. “Recovery is going to take some time. It could take up to the end of the year to open up the Canada-US border. We have to come to terms with that. People will not be rushing over the border in droves even once the border is open.” FDFA has been working with government and other stakeholders such as the Tourism Industry of Canada to ensure
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Canadian border stores will survive the ongoing border closures.
The Canadian government has also come out with different programs to support those affected by the ripple effects of Covid-19. One program, the Canada Emergency Wage Subsidy Program, allows Canadian employers whose business has been affected by Covid-19 to be eligible for a subsidy of 75% of employee wages for up to 24 weeks. The program originally was offered only until August 2020, but has been extended until December 2020. This program has allowed many border stores to retain employees despite being closed or only partially open. FDFA has also worked extremely hard on convincing the government to extend the Canada Emergency Commercial Rent Assistance (CECRA) to apply to border store landlords. Says Barrett: “The government came up with CECRA and they had not aligned that with government entity landlords. So we lobbied very hard to get them to realize that they too are landlords and they too need to participate in that program. The government listened. We are now talking to them about the fact that as long as the border is closed they need to continue with this program, and perhaps even beyond.” Currently CECRA is available only until August 2020.
More work to be done
FDFA is now finalizing a Duty Free Economic Stimulus Package that was presented to the association members this week. This stimulus package will be shared with the government as it maps
out a strategic plan for duty free stores to survive and recover. An overview of this package includes items like red-tape reductions, for example removing barriers and regulations that prevent business happening in Canada, and also a proposal for a duty free interest free loan program. “The duty free interest free loan program highlights that even if stores have rent relief, they still have expenses like property tax, utilities, and other items to keep going and if money is not coming in the door due to border closure, they need money to get through all of this,” explains Barrett. FDFA has briefed the Deputy Prime Minister’s office, Finance Minister Bill Morneau’s office, as well as the Leader of the Opposition about this stimulus package. They are also collectively working with Small Business and Marketplace Services (Innovation, Science and Economic Development Canada), as well as the Parliamentary Tourism Caucus and the Office of the Prime Minister. “Because duty free is so niche, I don’t think the government considers all the ramifications of the border being closed and how that affects border communities and small businesses. So it’s up to us to remind them of that,” says Barrett. The association recently announced that its conferences will be veering away from the traditional format to accommodate Canadian social distancing restrictions. Virtual events will include cocktail contests, formal and informal information sessions and possibly an online auction. Barrett highlights that the FDFA community is a family and this is the perfect way to stay connected and celebrate our industry.
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