According to the Asia Pacific Travel Retail Association (APTRA) cigarette consumption in Australia has not been affected by the measures made by the Australian Government. Australian legal tobacco sales volumes have increased by 59m sticks in 2013 compared to 2012, while illicit tobacco as a percentage of total consumption rose from 11.8% in 2012 to 13.9% in 2013.

 

While the measures have not had the desired positive impact on cigarette consumption in the country as intended by the regulator, they have greatly affected the business of both domestic and duty free retailers and increased the presence of illegal cigarettes in the country.

 

Right: Sydney International Airport.

 

As reported by TRBusiness.com, two years ago the Australian Government introduced plain packaging of tobacco products in addition to the reduction of the duty free tobacco inbound allowances of travellers when entering the territory from 250 to 50 sticks.

 

APTRA’s research shows that, following the introduction of the measures, outbound sales at Australian duty free shops fell by 50% while inbound sales (arrivals duty free) fell by 85%.  The Australian restrictions have also impacted sales at other airports to travellers destined for Australia.

 

Research that was undertaken by DKMA, as reported by trade publication TRBusiness, found significant shifts in passenger purchasing behaviour on international traffic to Australia.  Passengers purchasing tobacco decreased from 37% to 12%, while the average duty free spend of these passenger fell by 35%.

 

The study also points to the restrictions driving reductions in other categories as the proportion of passengers buying alcohol and fragrances also fell, with the alcohol category being the most severely impacted. This behaviour confirms retailers’ experience where tobacco has proved to be a key footfall driver to bring passengers into the shops.

 

The Australian case shows the importance of ensuring that national governments understand the distinct nature of the duty free channel which requires a different approach from a regulatory point of view. Duty free retailers compete at a global level and such country-specific restrictions, besides being ineffective vis à vis local health objectives, simply jeopardize an important sector of the national economy and its significant contribution to the financing of the airports’ operations.

 

APTRA President Jaya Singh commented: “The outcome of the research and this assessment clearly indicate that regulations which target the duty free channel do not achieve the desired aims. We tried to impress this upon the Australian Government before the measures were introduced.

 

Right: APTRA’s Jaya Singh.

 

“APTRA and other regional and global duty free retailers’ associations continue to seek consultation on policies which affect our business and to deliver the message to regulators about the uniqueness of the duty free and travel retail channel. This is a long and difficult process but we must continue our endeavours to support retailers locally with their own efforts to obtain regulations which take these differences into account.”

 

Earlier today, New Zealand Customs Minister Nicky Wagner and Associate Health Minister Peseta Sam Lotu-lig retrospectively celebrated the duty free tobacco allowance reduction today.

 

In a statement, both said that the ‘more than 800kg of tobacco and cigarettes’ left at the border since 1 November ‘is a further step towards reducing the damage caused by smoking’. This follows the well-publicised duty free allowance reduction from 200 cigarettes to 50, which came in on 1 November.

 

For further information about the work of APTRA please consult www.aptra.asia or contact [email protected]