The Duty Free World Council (DFWC) and Asia Pacific Travel Retail Association (APTRA) have today (31 October 2019) launched their jointly commissioned Economic Impact Report of Duty Free and Travel Retail in Asia Pacific.
The report, was launched during the inaugural APTRA Exchange forum for the industry, which took place this morning at the Trinity Forum in Doha. The data will enable APTRA to advocate for the industry by ensuring regulators consider duty free and travel retail’s particular characteristics and positive economic impact its growth will enable.
Amid increased regulations, the report aims to highlight the impact of duty free and travel retail in real economic terms, while calling out the trends affecting the increases.
Among the key findings was that Asia Pacific travel retail is projected to maintain its global market leadership at an estimated 8.7% annual growth rate between 2017 and 2022. This is after generating an estimated $36.2bn in 2017, which accounts for 45% of total global DF&TR sales.
Further findings suggest Mainland China will strengthen its position as the second biggest DF&TR market in the region, behind South Korea, which accounts for around $12bn in sales. China and Japan are also ‘globally significant markets’, according to the report.
On the product front, fragrances and cosmetics, wines and spirits and fashion and accessories accounted for approximately 67% of total sales in the global DF&TR sector in 2017. In Asia Pacific, these product categories comprised 75% of all DF&TR sales.
According to the report, duty free shops in Asia Pacific are increasingly looking to digital platforms to facilitate their purchases. This involves the use of mobile apps which are becoming increasingly common payment methods for consumers.
Total estimated duty free and travel retail sales by land channels were $14.2bn in 2017. It is also apparent that downtown duty free in Asia Pacific comprised a significant portion of sales for all land channels. Ocean cruising is an emerging sector in Asia, with capacity growing at an annual rate of 41% over the last five years as the fastest growing sub-region in the world.
Hosted in the main conference hall of the St Regis Hotel, Doha, the APTRA Exchange launch event comprised a panel featuring Jaya Singh, World Travel Retail Managing Director, Mondelez, Ed Cottrell, Global Travel Retail Managing Director, William Grant & Sons, Angela Gittens, Director General Airports Council International, Pan Har Ying, APTRA Board Member and Corporate Affairs & Communications, Japan Tobacco International and Grant Fleming, President APTRA and Head of Strategic Development Asia at Lagardère Travel Retail. The panel discussion was moderated by Martin Moodie, Founder and Chairman of The Moodie Davitt Report.
Aside panellists discussing findings from the new Economic Impact Report of Duty Free and Travel Retail in Asia Pacific, The Exchange provided an industry discussion forum focussed on the needs, opportunities and challenges of suppliers, retailers and airports in driving the Asia Pacific region and its pivotal role in the long-term growth of the global travel retail industry. Important issues relating to key macro-economic factors and the industry’s economic contribution to the region were discussed.
On the importance of the Exchange Forum, Fleming, who was elected APTRA President in May 2019 commented: “In the most dynamic and fast-moving economic region on the planet our industry must keep pace with the world around us and ensure we seize every opportunity to identify, assess and respond to the issues and opportunities that influence our shared customer and that shape the future of our industry.
‘A CANDID PLATFORM’
“The APTRA Exchange is designed to do exactly that — a candid platform open to everyone in the industry to share information, opinions and business strategies, all staged around an expert panel, within an open room that encourages forthright interaction with the audience.”
Regarding The Economic Impact Report, this is the first quantifiable measurement of the impact of travel retail and duty free in Asia Pacific. It shows a clear view of the industry size and importance — employing more than 300,000 people in the region and adding almost $15bn to GDP.
Speaking to TRBusiness as part of an extensive video interview earlier this year, Christina Oliver, Executive Director, APTRA, described the report as a really exciting piece of research. She said: “It does not just have commercial information about sales, channels and per category, but actually covers socio economic aspects such as GDP, job creation and probably some estimations about tertiary industries that are affiliated to travel retail. It is very important to us.”
Fleming commented: “Regardless of each member company’s role in the region, the Economic Impact Report for Asia Pacific provides a foundation of crucial information to enable us all to understand and address the industry’s key challenges.
“APTRA is fully committed to supporting our members with a broad range of innovative research and this report also gives us vital new weaponry to use in advocacy, including regulatory influencing, with substantial strategic evidence of the commercial impact of the industry and its broader socio-economic influence in employment and contribution to emerging economies.”
Elaborating on the significance of the report, which will be a key tool in stakeholder engagement across the region, evidencing the impact of the duty free and travel retail sector he added: “The report highlights the significance of the Asia Pacific region to global duty free and travel retail, and on a macro level to economies in the region through job creation and contribution to GDP.
“As the industry body that supports, protects and nurtures the growth of the travel retail industry, we are encouraged by the positive trends indicated by the report findings.
“Understanding the industry’s size and its impact on the regional economy as well as the underlying impetus for emerging travel retail trends is critical to ensuring industry relevance and long-term growth. As the travel retail landscape evolves, the regulatory environment is evolving too.
“APTRA looks forward to applying the report findings and working with regional stakeholders to help frame and develop policies that will contribute to the sustainable growth of the industry in years to come.”
Frank O’Connell, Duty Free World Council President, says Asia Pacific is registering exceptional growth in duty free and travel retail sales and that the regulatory landscape is becoming more complex and dynamic across the various product categories.
He remarked: “This report is an important investment on the part of DFWC and APTRA in getting the data that will help us engage policymakers and regulators in protecting the sustainable growth of our industry. The contribution to GDP and jobs is significant and expanding in Asia Pacific. This report outlines some of the key drivers of that growth and the reasons why we need to preserve the uniqueness of this channel.”