Indian duty free tobacco products withdrawn

By Kevin Rozario |

Following last month’s decision by the Indian government to halve the duty free tobacco allowance TRBusiness understands that leading duty free and travel retailers had to fully withdraw a large number of products from their shelves.

 

The Central Board of Excise & Customs (CBE&C) in India wasted no time in implementing the cut which now gives inbound passengers a maximum duty free tobacco allowance of 100 sticks, 25 cigars or 125g of tobacco.

 

CBE&C issued circulars to all the leading DF&TR operators which meant that standard 200-pack sizes had to be withdrawn immediately although local sources say that in some locations retailers were allowed to sell-through existing stock.

 

At Bangalore Airport, notification of the new allowance was almost immediate. Speaking to TRBusiness earlier this month, Anirban Chowdhury (left), Country Head, Nuance Group, India said: “Currently we are not selling tobacco [in arrivals] because we have not got the new stocks repacked as 100 sticks from the vendors… we are working on that.”

 

At Delhi’s Indira Gandhi International Airport where Delhi Duty Free Services is the DF&TR operator in Terminal 3, the situation is similar. CEO Duncan Lawley (right) says: “We are waiting for suppliers to repackage in new sizes… 100s were stopped many years ago, but we are now waiting for them to come back.”

 

In the meantime, DDFS says it is selling a new sku that has come in from some suppliers of specially-divided packs. “We have put them in dispensers at the till points much like a kiosk would do,” explains Lawley.

 

DAMAGE TO SALES?

While there will be an initial impact on arrivals sales – not least because some suppliers are saying they will abandon arrivals rather than go through the costly process of new packaging in small sizes – retailers at both locations believe they can minimise the damage.

 

At Bangalore, tobacco represents 8% of the total business and, within that, arrivals is around 20% so the overall share is 1.6% of sales [the arrivals business is 65% of total revenue at Bangalore]. For DDFS the share is slightly higher at 2%.

 

“To be honest, the majority of any shortfall will come back as individual sales at the till points because of the exposure to more people there,” says Lawley. “It is early days and we’ve only got single packs from one supplier at the moment but as that increases, and when brand-loyal customers see their brand available, sales should pick up as well.”

 

At Bangalore, Chowdhury says that local Indian brands will be back on the shelves shortly and they will take up a lot of the current slack. “I think we can compensate as they will supply the 100-stick packs.”

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