Lotte to acquire JR/Duty Free in Australia & New Zealand

By Charlotte Turner |

JR-Duty-Free-Lotte-acquisition-leadAs predicted by TRBusiness, Lotte Duty Free and JR/Duty Free have both confirmed that they have signed the ‘main contract’ for the former to acquire JR/Duty Free’s business in Australia and New Zealand.

 

The transaction does not include JR’s interests in its duty free businesses in Israel and Tahiti and is still subject to ‘a number of conditions’.

 

Lotte’s acquisition of James Richardson Pty Ltd.’s Australian and New Zealand duty free business, includes stores in the following Australian airports – Brisbane Airport, Melbourne, Darwin and Canberra – as well as one on Swanston Street in downtown Melbourne. It also inlcudes an on-airport store in the capital of New Zealand, Wellington Airport.

 

We are considering such acquisitions as it is a way of gaining more buying power, which is very important for us as we always want a better position when it comes to dealing with brands,” said a spokesperson from Lotte Duty Free back in June when TRBusiness first reported the story.

 

MORE BUYING POWER…

“We can achieve more buying power by growing our revenue and in order to do so, the acquisition of other operators makes this possible.”

 

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JR/Duty Free departures store at Brisbane Airport.

 

Lotte estimates that the Australian duty free market registered sales of around KRW1.35 trillion ($1.2bn) last year, and that the number of outbound travellers has been increasing by 10% each year.

 

JR/Duty Free adds that this overall growth is supported by Chinese visitor arrivals to Australia increasing by over 20% year-on-year. “International operators such as Heinemann, Dufry, DFS and Aelia Duty Free operate duty free businesses in Australia signalling the importance of the region to global players,” said JR/Duty Free in a press statement.

 

Lotte Duty Free has ambitions to be the largest duty free operator in the world by 2023 and already operates in seven overseas locations in Jakarta downtown, Guam Airport, Kansai Airport, Tokyo Ginza, Bangkok downtown, Da Nang airport, Nha Trang Cam Rhan Airport.

 

BNE-Departures-JR-Duty-Free-large

JR/Duty Free’s liquor offer at Brisbane Airport.

 

LOTTE’S OVERSEAS SALES GREW 60% IN H1

According to the recently announced data for the first half of the year, Lotte Duty Free’s overseas sales grew 60% YoY. As reported, Lotte registered total sales of KRW2,700.9bn ($2.4bn) – an increase of 29% year-on-year – and operating profit of KRW155bn ($137m) in the first half of 2018 excluding its operations in Busan.

 

Lotte Duty Free Shop CEO Jang Seon-wook, who attended the signing ceremony of the contract, said. “The signing of the acquisition agreement is a stepping stone for Lotte Duty Free as we seek to move into new markets outisde of Asia. We will continue our efforts to do so. ”

 

Perth-Airport-arrivals-store-JR-Duty-Free

A promotional gondola in Perth Airport’s arrivals area.

Starting with the acquisition of JR/Duty Free, Lotte Duty Free is aiming to become the No.1 global travel retailer by 2023. Lotte Duty Free currently has seven overseas branches in operation – in Jakarta downtown, Guam Airport, Kansai Airport, Tokyo Ginza, Bangkok downtown, Da Nang airport, Nha Trang Cam Rhan Airport. According to its H1 2018 report, offshore sales grew +60% increase year-on-year.

 

At the signing ceremony, CEO of Lotte Duty Free, Sun-wook Jang, stated, “Lotte has been assessing this opportunity and entry into the region for a number of years.

 

STRATEGIC MILESTONE

“The acquisition is an important strategic milestone, as Lotte Duty Free becomes the first Asian player to operate duty free in Australian and New Zealand.

 

“The company will continue to seek overseas expansion in order to achieve the title of world’s best travel retailer.

 

“We acknowledge the expertise in the Melbourne based JR/Duty Free team and are pleased that the business will continue to operate out of its Melbourne headquarters.”

 

 

The Chairman of James Richardson Pty Ltd, Evelyn Danos, said: “In reaching this decision, our shareholders took into consideration the changing nature of the duty free business at airports in Australia in recent years.

 

JR Duty Free Group Chair Evelyn Danos and CEO Milton Lasnitzki

JR/Duty Free Group Chair, Evelyn Danos and CEO Milton Lasnitzki.

“After various approaches and then conducting a strategic review, it was concluded that a regional business such as JR/Duty Free in Australia and New Zealand would be most valuable in the long term as part of a strong multinational, with greater buying power and the ability to invest in expanding infrastructure and technology.

 

“I believe this transaction offers enormous opportunity for our stakeholders including employees, airports and importantly our customers.”

 

A mentioned the deal is still subject to a number of conditions, both Lotte Duty Free and JR/Duty Free are confident of the transaction’s success.

 

 

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