Heinemann anticipates another €1bn year at IST

By Kevin Rozario |

IST luxury retail

Gebr. Heinemann, Unifree Duty Free, and ATU Duty Free together operate all the airside retail space at IST.

Retail has boomed at Istanbul Airport (IST) and the momentum is set to continue this year, even though Russian spending power, which has been a driver of luxury sales, has moderated somewhat.

The gateway slipped by one spot on the ACI World rankings for international passenger numbers (based on preliminary data).

The hub, operated by iGA Istanbul Airport, moved down to sixth place, despite a 20% year-on-year increase in traffic to 58.2 million passengers (IST began operating at the end of 2018 and all traffic at Atatürk Airport was transferred over within six months to April 2019, hence its reported 47.1% rise in pax compared to 2019).

Singapore Changi’s 83% rebound allowed it to move into fifth place (from ninth in 2022) with 58.4 million passengers.

Despite the ranking downgrade, the airport’s retail business moved up a gear to break €1 billion in revenue for the first time.

The milestone has been achieved largely though the supply, management, and retail partnership efforts of travel retailers Gebr. Heinemann, Unifree Duty Free, and ATU Duty Free (which together operate all the airside retail space at the hub).

For Heinemann, its regional division – Middle East and Africa – includes Türkiye. Sales Director for this vast area of nearly 70 countries is Bernard Schlafstein who had strong experience in the Turkish market before taking on the role just over 18 months ago.

Bernard Schlafstein

Bernard Schlafstein, Sales Director, MEA, Gebr. Heinemann.

He told TRBusiness that he fully expects 2024 to be another record year. He said: “Istanbul is unstoppable. This year, again, we are above budget. It’s very strong, thanks in big part to the passenger mix. Turkish Airlines is doing a great job. It’s really busy.”

Consumer buy-in for high-end goods has attracted numerous promotional campaigns and one-off pop-ups from major players in beauty and spirits.

Unifree Duty Free’s Chief Commercial Officer Ceren Tonguç said: “Our foremost goal is to provide the best possible shopping experience and improve this every day through hosting ‘firsts’ in travel retail.”

The latest of those novelties was the opening, on 24 April, of a 43sq m world-first concept from Edrington Global Travel Retail in collaboration with Unifree and Heinemann.

The Scottish drinks group unveiled the inaugural shop-in-shop for single malt, The Macallan, in European travel retail alongside Highland Park’s first-ever travel retail shop-in-shop globally. [Ed – TRBusiness was on location for the launch, click here for the full report.]

IST Edrington pop up

Edrington Global Travel Retail partnered with Unifree and Gebr. Heinemann to open a “world-first” shop-in-shop at Istanbul Airport on 24 April, 2024, showcasing both its Macallan and Highland Park single malt Scotch whisky brands.

Choosing IST to make such a splash for these two ultra-premium brands, would have been a difficult decision.

However, IST’s passenger volumes and brand visibility to many different nationalities, particularly Russians, pipped other airports to the post.

Edrington’s Regional Managing Director – Global Travel Retail, Jeremy Speirs, said: “Istanbul Airport boasts a diverse passenger mix and ever-expanding list of destinations. The city is the meeting point of east and west and a strategic location in which to expand the presence of our key brands.”

Demand surge for niche fragrances

In the beauty category, an accelerated post-pandemic trend has been the demand for niche fragrances, which also tend to command much higher prices. At IST, for example, niche fragrances achieved a 42% increase in turnover last year compared to 2022.

They already account for 20% of the total share in the perfume segment at the location.

A lot of available space in an enormous terminal means that when Unifree and Heinemann see opportunities like this they can run with it.

“At Istanbul we’ve been able to create new concepts in the luxury and premium segments,” said Schlafstein. “We have been trying new ideas out and the results are proving that we’re doing the right things.”

The pandemic in 2020 had caused a lot of concern for both iGA and its retail partners as the gateway had only been inaugurated at the end of 2018.

“We were quite worried when the Chinese stopped travelling,” said Schlafstein. However, the Russians have done a good job in making up for them.

“Last year, their spending accounted for 40% of our turnover in fashion and accessories,” he said.

IST luxury retail

Heinemann expects 2024 to be another record year for retail revenue at IST.

IST, in a similar way to Dubai International, has risen as a result of the Russia-Ukraine crisis with Russians flying through Istanbul to reach Europe.

Russians have been paying for items in cash and using Mir, Russia’s own card payment system, which was initially developed and implemented when international sanctions were first imposed on the country in 2014.

Those sanctions meant nationals were not able to use Visa, Mastercard, or Amex. Eventually Türkiye also restricted Mir’s use.

Nevertheless, Russians are still travelling through IST and spending money, though revenue from them was down by about 20% in the first quarter, a level where it is expected to stay.

“But it’s been replaced by a lot of Middle Eastern travellers, for example Saudi Arabians, Kuwaitis, and Azerbaijanis. It’s a good passenger mix,” said Schlafstein, unfazed by the reduction.”

He added: “Russian spending is down but it’s still at a very high level. They can still pay in cash and we take roubles as well. We believe 2024 will be another €1 billion year, as we are having double-digit growth right now.”

Multi-million-euro General Aviation Terminal on horizon

Under CEO Selahattin Bilgen, iGA is forging ahead with ambitious expansion and modernisation plans backed by investments totalling €331.2 million.

An iGA spokesperson told TRBusiness: “A significant portion of this will be directed towards the phase-2A east-west runway project (started in August 2023). It is pivotal in reinforcing the airport’s capacity to accommodate increased air traffic.”

Another infrastructure development in 2024 that will impact commercial revenue to some degree is the General Aviation Terminal (GHT), costing €35 million.

The 3,800sq m space will offer food and beverage options plus suites, a spa and more.

At a route level, Asia has been a focus that may help bring back Chinese high-spenders.

The spokesperson said: “The addition of Air China as our 100th airline underscores the importance of the Asian market to us. We have actively pursued partnerships and collaborations to strengthen our presence in this key region.”

Over the past year, 17 new airlines were added to the IST roster, taking the tally above 100. They include two local carriers, two from Africa, three from Asia, six from Europe, one from the Middle East, and three from the CIS region.

This feature first appeared in the TRBusiness June/July issue.

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