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The Latin America Report News and views on the airport, airline and travel retail sectors in the region www.thelatinamericareport.com

February 2010

Buyer numbers strong: Payne

In this issue: Page 4

February traffic positive Page 6

Latin airports admired Page 10

Diageo outlook good

The IAADFS Duty Free Show of the Americas takes place at the Orlando World Centre Marriott. By Wendy Gallagher With only days to go until the official opening of this year’s Duty Free Show of the Americas, attendee numbers are looking good. IAADFS Executive Director Michael Payne says while final numbers can’t be evaluated until on-site registration is complete, the show is up in registration numbers and “the buyer numbers are strong.” With the show moving from Fort Lauderdale to Orlando, Payne says comments on the venue change have been “mostly very positive. My sense is most are looking forward to the move back to Orlando.” Since 2005 when the show moved to Fort Lauderdale, another 100,000 square feet of additional floor space was added at the Orlando World Centre Marriott. See Page 4


Airlines Aeromexico cancels Canada routes

A decision by the Canadian government in July requiring a visa for Mexicans visiting the country has had a negative impact on airlines. Aeromexico, who less than a year ago launched services to Toronto and Montreal, is withdrawing its service. According to the company, 90 percent of its passengers were Mexicans visiting Canada. The company says Mexicans are not taking kind to having to get a visa and are changing their travel destinations to elsewhere. Mexicana Airlines also reports a negative impact from the visa implementation, citing traffic on routes to Canada down 30 percent. Canadian carriers have not been hurt by the new laws, as their Mexican-bound passengers are primarily Canadians heading for holidays. According to Statistics Canada, more than two million passengers flew to Mexico on Canadian carriers last year.

Uruguayan airline Uruguay’s newest airline BQB Air is hoping to begin service by the end of this month. Owned by Argentinean ferry/bus service Buquebus, the carrier will begin routes from the resort city of Punta del Este to Buenos Aires’ Aeroparque and Port Alegre in Brazil.

Copa expands fleet

Panama’s Copa Airlines continues to expand its fleet. As part of a US$2 billion investment in aircraft, Copa has just taken delivery of two new Boeing 737800 aircraft. “Our fleet is a point of pride for our airline,” said Pedro Heilbron, CEO of Copa Airlines. “These new Boeing aircraft make it possible for us to continue growing our route network and increasing frequencies this year with a product that is attractive to our passengers.”

LAN loses on fuel bet LAN Airlines’ profit dropped 31 percent in 2009 over the previous year. A major factor was a $128.7 million fuel hedging loss, leaving LAN with a US$231.1 million net profit, versus US$336.5 million in 2008. LAN states the profit shows “the strength of the company’s business model and LAN’s resiliency to external shocks.”

President-elect to sell LAN shares

GOL

Brazil’s GOL airlines saw passenger numbers jump 32.1 percent last month over the previous January. GOL attributes the growth to the “improved economic scenario in Brazil and South America…”

Iberia

Spain’s Iberia airline has added three new Madrid-Buenos Aires return flights each week, bringing the weekly number of flights to 17. - Page 2 -

Chilean President-elect Sebastian Pinera will sell his majority stake in the country’s flagship carrier LAN Airlines. Pinera, who takes office March 11, had vowed to sell his 26 percent stake in LAN. The Cueto family group, which owns 25 percent stake, has the first option to buy the shares. LAN shares have climbed about 16 percent since November, when Pinera was expected to win the election and give up his shares. In the meantime, LAN continues to see an increase in passenger traffic, with a 10.9 percent increase in 2009. The carrier signed an agreement with Airbus to purchase 30 new A320s, valued at close to US$2 billion.


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Airlines February traffic numbers positive: OAG

Copa doubles profit

TAM adds first class

OAG (Official Airline Guide) aviation data says February is showing positive signs of passenger growth. The only regional decline to report for February 2010 is for traffic within North America where frequency and capacity have reduced by 1 percent and 2 percent respectively, says OAG. Latin America, Central/South America, Africa and the Middle East are showing increases in frequency and capacity. Service between North America and Central/South America is up compared to a year ago, while routes between Western Europe and the Middle East have also grown compared to February 2009. A hubs analysis shows impressive growth in South America São Paulo and Bogota with frequency increases of 24 percent and 17 percent respectively.

Copa Airlines and its parent company Copa Holdings more then doubled their profit for 2009. The company recorded a US$240.4 million profit last year, compared to US$118.7 in 2008.

LAN to San Francisco

LAN Peru will begin flights to San Francisco in July. The airline will offer four flights a week from San Francisco to Lima. “This announcement represents LAN and its affiliates’ continued commitment to growth in North America and expanding the travel options available to its passengers in this market,” said Pablo Yunis, Vice President of North America operations.

Brazil’s TAM Airlines is improving its service to business passengers. Due to a rise in business passengers between the UK and Brazil, TAM is offering a new first class cabin on its daily flights between Heathrow and São Paulo.

Qatar

Qatar Airways will begin flying to Brazil in May. It will offer direct flights from Doha to São Paulo, and then continue on to Buenos Aires.

US Airways US Airways Group Inc. reports traffic to Latin America grew in January. While overall traffic fell 1.3 percent, passenger numbers to Latin America rose 13.1 percent.

Orlando location under one roof FROM PAGE 1

“I think people are looking forward to being back under one roof for all the business and social activities. Hopefully we will develop the intimacy that used to be associated with us all being together and that should help with the business and networking elements of the meeting,” Payne tells The Latin America Report. Asked if he’s seen any improvement in optimism given the hardship the industry has been suffering from the world financial crisis, Payne replies: “I see some

improvement in people’s attitude about the economy, but having said that it is still a very difficult economy for some, better for others and is likely to remain that way that way for this year in my opinion.” Payne says the success of the show will be measured most importantly by exhibitors and buyers having a productive and cost effective show. “We of course also want it to be a smooth transition back to Orlando as attendees adjust to what will be a new location for many. I’m confident it will meet those expectations.”

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News

Keep stores glamorous: Heredia By Wendy Gallagher Asutil’s newly-elected president will work to keep the image of duty free stores in Latin America glamorous. Francisco ‘Paco’ Heredia, who also serves as Commercial Director for South American retailer London Supply, says his goal is to “complete the excellent job of my predecessor Daniel Montero.” Heredia tells The Latin America Report it’s important operators, suppliers and authorities work together and “not make the mistake” of converting the glamour and exclusivity atmosphere of South America stores into “simple convenient supermarkets with good prices.” He says travelers should continue to have that “special feeling” when inside a duty free store, stating they buy “first on impulse” and then what they need. In the meantime, Heredia keeps busy with renovations and expansions in London Supply stores throughout the region. “Teddy (Taratuto -- President of London Supply) is always thinking about changes and raising the bets.” In the last year, London Supply doubled the size of its duty free shops in the new area of Ushuaia’s Malvinas Argentinas International Airport. This year the operator will set up stores in the new terminal at the Trelew Airport and the terminal at Puerto Pañuelo in Bariloche. Finally, London Supply continues its corporate responsibilities including its involvement on construction of a school in Iguazú. - Page 5 -


News

Uruguay, Argentina airports named among world’s most beautiful sweeping views of the runways.” A New-York based architecture critic is giving high Jacobs also praises the airport’s terraces and lounges marks to two airports in South America. as “dramatic and welcoming” for Karrie Jacobs article in passengers, as well as friends and Travel + Leisure magazine, family who come to greet or see citedd Carrasco’s new termiyou off at the airport. nal one of the 15 most beautiAlso making the list was Malvful airports in the world. inas Argentinas Airport, in “The new terminal, opened Ushuaia, Argentina. in 2009 and designed by “Located in Tierra del Fuego at Uruguayan-born architect Uruguay’ s Carrasco airport. the tip of South America, this is Rafael Viñoly, is a gorgeous the world’s southernmost internathrowback to JFK circa 1960. tional airport. Its beauty is largely a function of its natIn spirit, it’s like Saarinen’s TWA Terminal, but in ural setting—flights here come in low over the style, it’s more similar to the JFK’s international arrivals hall designed by Skidmore, Owings & Merrill. A majestic Andes Mountains—and its role as a gateway to Patagonia and the Antarctic. But, while many remote 1,000-foot-long, low arch, it is as simple as a child’s airports are marred by ugly bunker-style terminals, the drawing of an airport, one unbroken, graceful curve. charming timber-framed main building here doesn’t Inside, the departures hall is a great, sunlit room, like detract from the natural setting,” writes Jacobs. an old train station, and a top floor terrace commands DANZKA logo and DANZKA bottle design are registered trademarks owned by Belvédère SA © 2010 Belvédère SA

Changes at Cadbury With the sale of Cadbury to Kraft complete, changes in personnel have been announced. Steve Brock, who was in charge of the company’s travel retail business, has left the business. Jo Willey has taken on the role of Acting General Manager. Tiho Marinac will continue his role as regional director for the Americas. Anouska Forte will be in charge of Cadbury’s communications in the travel retail channel.

Dufry expands training

THE WORLD’S BEST TRAVELLING VODKA PREMIUM DANISH VODKA IN A LIGHTWEIGHT BOTTLE THAT CHILLS FASTER AND DOESN’T BREAK

Dufry’s new sales training program will soon be rolling out to its locations worldwide. Called Dufry plus 1, the program focuses on added activities the salesperson can provide to further boost the customer experience, says the operator. Marcus Griffin, Global HR Manager, and co-ordinator of the Dufry plus 1 programme, commented: “Our colleagues get training to structure a sales process and to put them more in control of each selling situation. As a result, they can focus better on each customer and assist them in identifying additional products with measurable results. The Dufry plus1 programme will become one of the cornerstones for developing our people.” - Page 6 -


News

Lima airport future is bright: credit report The financial state of Lima’s Jorge Chavez International Airport is looking good, according to a U.S. credit rating agency. Fitch Ratings has raised Lima Airport Partner’s rating to positive from stable. “The airport has significantly outperformed its traffic growth projections, with a compound annual growth rate of 13 percent from 2007 to 2009, representing one of the highest growth rates of airports in the world. In 2009, the airport continued to post positive traffic trends despite the global

economic recession. Traffic in 2009 increased 6.1 percent to 8.8 million passengers from 8.3 in 2008,” says the Fitch report. “Gross revenue up to September 2009 is up 11 percent over the same period in 2008. Although JCIA’s [Jorge Chavez International Airport] passenger base is almost 50/50 international / domestic, ex-

cluding transfer and transit passengers, international passengers (who are charged higher tariffs) grew by 4.5 percent in 2009 and domestic traffic grew by 6.5 percent. In 2009, international traffic growth was driven mainly by the U.S. with the largest share of visitors to Peru (24%), then by Chile (11%), Colombia (11%) and Spain (9%). In sum, South America represented 49 percent and North America 28 percent of international traffic,” according to Fitch. “Interestingly enough, in 2009 Colombia and Spain more than doubled its participation when compared to 2008. Positive traffic trends at JCIA also capture LAN Airlines aggressive market strategy in 2009 to substantially expand its domestic destinations and frequencies as well as coverage in the carrier’s main markets. LAN’s expansion of coverage at Lima Airport parallels the continued growth of the economy and Peru’s strong fundamentals when compared with other regional airports.”

Springer takes on new Diageo role Diageo Global Travel (GTME) has appointed Sara Springer as Innovation Director. Phil Humphreys, Managing Director Diageo GTME said, “Sara has shown remarkable leadership of the innovation function within GTME for more than three years. Passion, commitment and energy have always been hallmarks of her approach and it’s unthinkable that GTME could achieve its goals without a strong voice for innovation and gifting at our top table and Sara has clearly earned her place there.” - Page 7 -


News

New Mexican distributor primed for business

New Mexican company Prime Brands Duty Free S.A. is looking to be the largest brand distributor and agency for Mexican travel retail. Based in Mexico City, Prime Brands plans to represent leading spirits and gourmet food brands with a long-term goal to extend the business into other categories such as fashion, luxury goods and perfumes. Prime Brands President and CEP Prisciliano Tavera is no stranger to duty free. He recently left his position of Commercial Director for Tequila Milagro and has also served as the Strategic Planning Director at Latino Americana de Duty Free S.A. “The idea behind Prime Brands was to fill an existing market gap for brands who consider Mexico a key market, but locally don´t have the structure or distribution to meet the needs of the region,’ says Tavera. “Another important reason was to integrate leading brands in all spirits categories creating a premium portfolio with significant leverage, whilst establishing alliances and synergies between the brands, presented as one face to Mexican operators.” Tavera will attend the IAADFS show in Florida and can be contacted at (+52) 728 282 5698, Mobile (+52) 728 282 3453 or email: ptavera@primebrands.com.mx.

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News

Diageo remains positive despite tough 2009 Diageo travel retail ended last year with a net sales increase of 4 percent, and a star performance with Johnnie Walker. According to Geoff Biggs, Regional Director, Diageo GTME Americas, 2009 was a “tough year” but a year that also further emphasized the company’s core strengths, “particularly our responsiveness and continuing commitment to investment and innovation.” “If I had to select one star performer from the year it would have to be Johnnie Walker. Both the F1 activity and Johnnie Walker Black Label centenary were sustained drivers throughout the year and I think provided the industry with some of the most spectacular and effective activations it has ever seen – providing significant boosts in a highly challenging climate,” says Biggs. Scotch performance has been driven strongly by Central America, and South America. “Our return to Caracas airport in August ‘09 was a strong boost after around 2 years away,” says Biggs. “Working with a very insightful retail partner, Global Brands (a division of Motta), the last quarter of the year was very promising and we also have the opening of a second store (by DFASS) to look forward to.” A strong performance was also notable in Mexico, at Cancun, in partnership with Aldeasa (Autogrill), adds Biggs.

Deroual named P&D director Perfumes y Diseño announces Benoît Deroual as its new International Director. The Spanish perfumery company which creates and distributes fragrances for TOUS, J. del Pozo and Roberto Verino, operates in more than 100 countries. Benoît brings more than 20 years of experience, including

heading international expansion in the L’Oreal group and the Clarins group. “Benoît’s experience in analysis and diagnosis of each market will bring a different vision to the global business at Perfumes y Diseño,” says Pedro Trolez, Managing Director, Perfumes y Diseño. - Page 10 -

Florida oranges used in vodka What better place to introduce a new orange vodka than in Florida? That’s what Belvédère Duty Free and Imperial Brands Inc. will do with their 4 Orange Vodka, distilled from four different types of Florida oranges grown in the areas surrounding Orlando. “Late 2009 we launched 4 Orange Vodka in South Florida and after a successful launch with a very limited range of customers, we feel that the time is right to launch this new brand into the United States and the Caribbean Duty Free and perhaps beyond during the IAADFS Show,” says Paul Massey, Imperial Brands Vice President of National Accounts. “Our festive launch at the Orlando Show will begin at Sunday’s Poolside picnic where we are serving our irresistible 4 Orange cocktails made with this incredibly smooth tasting orange vodka. They will be prepared and served at our specially designed grove bars that evoke a nostalgic, ‘Old Florida’ feeling, and have been a huge hit every place we have used them to date. Remember this is a Florida Vodka, so nothing is more appropriate than a poolside tasting!”


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News/Products

Hershey’s makes show debut The Hershey Company will have a booth for the first time at the IAADFS show. It will unveil two new products exclusive to travel retail: Reese’s Peanut Butter Cups, individually wrapped, in 200g bags and Hershey’s Miniatures, individually wrapped, in 385g bags. John San Miguel, Marketing Manager, The Hershey Company says “We are excited to be present with a stand at IAADFS and equally as excited to be able to present our new additions to the Travel Retail Exclusives in the Americas.

Ferrero launches gift pack

New Coty appointments

Ferrero Trading SA Travel Retail Division is set to launch a Nutella gift pack in travel retail. The gift box contains a 180g jar of Nutella spread and a collectable key ring. Nutella will be exhibited alongside the Ferrero Rocher, Kinder and Tic Tac brands at booth 838 at IAADFS Duty Free Show of the Americas.

Tanguy de Buchet has joined Coty Prestige as Regional Director, Travel Retail & Export Americas, based in Miami. Tanguy will be responsible for Travel Retail Americas and Latin America export, reporting to Peggy Elsrode. Tanguy has experience in travel retail and export markets gained in Europe, Asia and Americas with BPI and LVMH. Due to personal reasons Markus Stauss will be transferring to Geneva to replace Edgar De Trentinian (recently appointed in Global Marketing). He will be responsible for leading the marketing strategy and implementation across all Travel Retail and Export regions as Marketing Director, Travel Retail and Export Worldwide.

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Thumb-sized atomizer Travalo is a glass-free, Aircraft Grade, aluminium, refillable perfume atomiser. Only three weeks after launching, it became the top selling gift item onboard Thomas Cook. The patented pump and fill atomiser fills in seconds. The thumbsized Travalo carries 50 sprays, with a window that helps users to ensure they never run out.

Tous helps water projects As part of the launch of the TOUS H2O fragrance, Tous Perfumes promised to donate a percentage of its annual sales from the perfume towards water projects in countries where the NGO is working. Rosa Tous, Institutional Relations Director of the Spanish jewellery brand presented Ariane Arpa, Director of Intemón-Oxfam, with a cheque for €57,000, corresponding to sales in 2009.


Pramsa Border & Duty Free

Distributing your products throughout the region Montevideo - Uruguay Tel: 598+2 708 6602 pramsa@pramsa.com -- www.pramsa.com

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Products

Margarita in a box

Pupa

Tequilera Milagro introduces a special new promotional pack to travel retail. The pack combines a 75cl bottle of Milagro Silver Tequila with a 37.5cl bottle of Milagro Ultra Premium Agave Nectar – a 100% certified organic sweetener. The presentation box includes the recipe for ‘the world’s freshest Margarita’ using the Agave Nectar and fresh squeezed lime juice in place of the traditional triple sec and sour mix. The company reports a strong 2009 says Pablo Boggio, Tequilera Milagro Regional Manager LATAM/Duty Free. Growth in Latin America duty free markets was at 27 percent, he says. “Milagro is now the second largest brand by value in Mexican duty free,” continues Boggio. The brand is available in Panama, Nicaragua, Colombia, Guatemala, Salvador and Honduras. The product will be available at the William Grant booth 100 in Orlando.

Cheekbone Enhancer fills up cheeks through a lip-filling cosmetic action, giving a new shape to the face contour. Breast Enhancer is said to increase breasts by up to one cup size and firm and lift like a natural bra. Buttock Enhancer offers volume and shape to saggy or flat buttocks. Mascara Energizer is designed to stimulate the growth of lashes. In Case of Love offers a fragrance, heart shaped pouf and red satin face mask.

Hawaiian Host multi-packs Hawaiian Host is introducing new multi-packs featuring Disney characters at this year’s Duty Free Show of the Americas (Chase International booth 1111). The Disney multipack boxes feature Mickey Mouse, Minnie Mouse and Lilo & Stitch. Each pack contains six 2oz (56g) boxes of premium whole and half Hawaiian Host Macadamias covered with rich, milk chocolate.

MAC

Mac introduces Mineralize SPF 15 Foundation. The product comes in a solid cream compact.

Jo Malone Bath oil, body crème and a candle have been added to Joe Malone’s Vanill a & Anise fragrance.

Clinique A new patent-pending Youth Surge Night Age Decelerating Night Moisturizer is being released by Clinique. It’s available in three skin-typed formulas.

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