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Top Spirits Players See Travel Retail Market Gain Traction

September 20, 2019

The travel retail world will be focused on the South of France early next month with the kickoff of the TFWA duty free show in Cannes, and among the exhibitors will be 127 wine and spirits companies eager to accelerate their momentum in the luxury-focused channel.

Impact Databank’s latest survey of the global travel free retail market shows that Johnnie Walker remains the largest spirits brand by far in the sector at 2.7 million cases last year, a 2% increase, according to Impact Databank. Jack Daniel’s was the fastest-growing brand among the top 10, rising 14.7% to 1.31 million cases. Chivas Regal ranked third with 945,000 cases, a 0.5% advance. Baileys, Hennessy, Ballantine’s, and Martell were also on the rise, while Absolut, Bacardi, and Smirnoff shed volume. Outside the top 10 brands, single malt Scotches, smaller whisk(e)y brands of various types, and other spirits are driving overall volumes higher.

Exclusives and experiences are driving drinks growth in travel retail, with whiskies in particular showing vibrancy. The sector is also benefiting from a surge in demand for luxury goods, most notably from Chinese consumers. Growth is occurring against a backdrop of strong increases in global travel. Global airlines carried 4.3 billion passengers in 2018, compared to 4 billion in 2017, according to data from the International Civil Aviation Organization. Cruise lines also were in growth mode, transporting 28.5 million passengers, a nearly 7% rise, according to the Cruise Lines International Association. Those conditions led to a 7.2% increase in travel retail sales of wine and spirits last year to $12.17 billion, according to Generation Research.

Marshall Farrer, managing director of Brown-Forman Travel Retail, says the channel is robust at the moment. “It’s being driven by healthy passenger growth, a more balanced foreign exchange environment, continued global expansion of U.S. whiskey, and continued premiumization.” He adds that “whisk(e)y, across all the sub-categories, remains very healthy,” and gin is also faring well, while vodka is struggling.

Pernod Ricard reported a 6% travel retail sales increase in its fiscal year ended in June. “Strong growth in travel retail (was) driven by Asia as well as globally,” chairman and CEO Alex Ricard noted. “It’s a very strategic channel, but it’s also a profitable channel with a lot of effort made on pricing, on mix, strong focus on consumers, and there is an accelerating pace as well on a number of innovations.”

“Shoppers in travel retail are in a discovery mindset—they’re in the mood to try something different,” says Julie Witherden, marketing director at Bacardi Global Travel Retail. “Some 40% of alcohol buyers in global travel buy products that are unique to the channel. Impulse purchases are driven by 35% on gifting and 45% on self-treat shopping missions.”

The top players continue to ratchet up their attention to the travel retail customer experience. “Experiential marketing is an area we’re investing in,” says Farrer. Bacardi’s Witherden agrees. “Our investment in retail ambassadors is a cornerstone of our strategy, especially in key locations with high numbers of Chinese and Indian travelers, who enjoy the personal interaction with brand experts and the chance to find out more about our brands before they buy,” she says. For Patrón, Bacardi Global Travel Retail has launched a tasting bar at Cancun International Airport, where passengers are welcomed by a professional Patrón mixologist and a team of retail ambassadors. Such experiences are expected to be an increasing part of the travel retail marketing mix moving forward.—Carol Ward

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