Dufry Brazil continues to wait on legislation clarification of Law, 12.723 before it can open stores at the Brazilian border, but the company’s COO, José Carlos Rosa, is confident that it will happen.

 

The finer details of Law, 12.723 – which was approved in October 2012 by Congress to allow for the construction of duty free shops in Brazilian cities on the border – are still under discussion by the authorities in Brazil.

 

Rosa said that ‘Brazilian bureaucracy’ could mean that issues could take some time to resolve. “All of the procedures have to be defined by the Secretary of Customs.

 

“All we know is that some time in the future, border stores will be created this side of the border, but it’s not yet defined. Will they be allowed to sell only to foreigners? Will they be allowed to sell to Brazilians coming back into their country? What will be the limits or allowances? What will be the model – will it be one store per border or one, let’s say, free zone per border? Nothing is defined, so, yes we believe there will be border stores in Brazil, yes we do, but we don’t know when or how.”

 

SIGNIFICANT JOINT VENTURE WITH BRASIF

In September last year, Dufry won the key São Paulo 10-year T3 duty free contract with Guarulhos Airport (GRU) and formed a significant new JV with Brasif, ahead of a milestone year for Brazil.

 

Located in Guarulhos in the state of São Paulo, the duty free area of the new terminal is expected to be finished in May 2014 and Dufry says it will work across a total of 6,860sq m of retail space, which will comprise two general travel retail shops in arrival and departure – both designed as walk-through outlets.

 

Dufry arrivals shop at Guarulhos Airport (GRU).

 

In addition, Dufry plans to introduce 15 stand-alone branded boutiques for the first time as well as a duty paid 204sq m Hudson store.

 

“We believe that the Brasif’s experience in the local market will help us in developing the business to a new level; be it in airports, be it in border stores or whatever,” says Dufry Brazil’s COO, José Carlos Rosa.

 

INCREASE IN INDIVIDUAL ALLOWANCE

Recently the Brazilian Senate says it is backing a proposed increase in the individual allowance for duty free purchases made on arrival at the country’s airports, from $500 to $1200.

 

Right: Dufry Brazil COO, José Carlos Rosa.

 

“This is something that has been discussed for a while,” says Rosa. “There’s nothing that can guarantee that this will actually happen, or when this will happen, but I can tell you that we are monitoring it.”

 

The details are still being worked out, but if these plans are approved, Dufry’s arrivals business – which is estimated to be worth two thirds of the company’s business in Brazil – can reap the benefits.

 

“This would have a big impact on sales…Customers would be able to purchase an increased number of different products, because on top of this limit of the $500 allowance, there’s a limit on the quantity of products. So when you come to the arrivals duty free store in Brazil, you have the allowance limit of $500 but you also a limit of 12 bottles of spirits, or 12 bottles of wine, or five perfumes etc.”