Global Industry Survey 2023: Gauging trading expectations & challenges

By Luke Barras-hill |

In an addendum to the inimitable annual Global Industry Survey, published in the January 2023 e-zine, TRBusiness is publishing in full a wealth of responses to several pressing questions that offer a crucial temperature check on the health of the global DF&TR industry.

The easing of travel restrictions in most parts of the world has bred accelerated returns in passenger traffic and revenues for retail operators and their partners, yet many countries are contending with rampant inflation, rising energy prices and a cost of living crisis exacerbated by the war in Ukraine. Moreover, the threat of an economic downturn clouds the outlook.

TRBusiness asks the following question: “What are your expectations for your business in travel retail in 2023 and what are the major challenges you anticipate?”

The Global Industry Survey was conducted during November 2022 up until the second week of January 2023. Some of the views expressed are representative of individuals rather than their entire organisations. Some of the comments were also shared prior to China’s announced easing of travel restrictions from 8 January. To access the Global Industry Survey, click here.

HENDRIK VERBRUGGHE, Founder, TRBIZZ

I see that the big travel retailers are rolling out plans for sustainability with big seriousness. They have dedicated task forces and are accountable for bringing in the results as per plan, in some cases publicly available, for all their stakeholders. This would bring forced change, in my opinion. Smaller brands operating from one location and trying to conquer the world will face difficulties in doing so, as they might not get considered any longer by large distributors due to their CO2 footprint impact.

The direction clearly is sourcing locally, sustainably, and efficiently. This can be good for smaller brands too, but then they need to re-adjust their target to become a global travel retail brand. The passenger volumes will continue to grow. It is up to vendors and retailers how to benefit from this growth.

ROB ROBERTACCIO, SVP, Global & Travel Retail Sales, E. GLUCK. CORP

I think we will continue to see progress in 2023. I would say that the solid base of business that has come out of 2022 will lead to many growth opportunities again. I believe there are pockets of business, like cruise, that may grow at a faster pace. However, there are still challenges like Asia and particularly China, that still have a long a way to go. It will be difficult to build back to industry-wide 2019 levels, unless this business fully reopens, but the offset that is coming from other regions is definitely helping.

ADRIAN PITTAWAY, Head of Retail, MSC CRUISES

We are very bullish about 2023 in the cruise industry and we should expect the full year to generate higher guest numbers than 2019. Overall spend will be in line with expectations with what we have seen evolve across 2022. Challenges will be the softening of individual customer spending back to pre-pandemic levels with the challenges of inflation, continued global conflicts, supply chain difficulties and underprepared infrastructure counting against us.

Global DF&TR is banking on the swift return of Asia Pacific international traffic, particularly Chinese travellers. Source: Shutterstock.

GRAEME STEWART, Chief Executive Officer, ENVIRO-POINT

Twenty twenty-three feels like a potential ‘break out’ year – with so many new products and potential customers, it is met with excitement, rather than trepidation.

OLIVIER LE SAGE, Global Marketing Manager, NESTEC SA

A possible slow down globally. China and the Far East slowing down, despite the easing of Covid measures. The China situation might get worse. Europe will still be affected by uncertainty in the economy and the war in Ukraine. North America [is] probably best to generate growth.

JANA STROOP, Global Travel Retail Manager, CLOETTA

People are still catching up on missed travel opportunities during the pandemic, so travel will not slow down. With the cost of living going up, however, travellers will be selective about how they spend their money.

Thomas Henningsen, Partner, Blueprint.

Thomas Henningsen, Partner, Blueprint: “We expect 2023 to be a promising year. We believe that the biggest opportunity travel retail is facing is adapting to the changing traveller profile. By 2028, Next Gen, Gen Z and millennials will represent 60% of travellers. These younger, greener and less affluent travellers will continue to seek out extraordinary shopping experiences, fundamentally changing the brand landscape as we know it.”

KATRI KEIAN, Travel Retail Project Manager, TALLINK DUTY FREE 

The major challenge anticipated in our region is still the high rate of inflation. Our business can grow only together with our customers and suppliers. We have already seen the impact of the inflation for the prices and 2023 will be another year for adaption and quick decision making in order to bring the best possible service to our clients and partners.

CHRISTIAN RUEHRSCHNECK, Sales Director, FRAAS

Growth will be coming due to the fact that the first months of 2022 were very slow.

ZOE FARMER, Global Director Retail Management, GATERETAIL

Positive growth on sales with significant continued challenges on cost prices and supply chain issues.

SVEN ADRIAENSSENS, Senior Channel Manager Travel Retail & Duty Free, CHOCOLATERIE GUYLIAN

We expect growth of the past year in travel retail to continue in 2023, especially with a stronger recovery in Asia. Nevertheless, we remain thoughtful and agile for unforeseeable circumstances in every region we operate in.

The largest concern situates around the downsized purchasing power of consumers in the world, but especially in traditional strong markets like the UK or Europe. Also, the typology of the average traveller has changed over the last two years, meaning the shopper approach and offered assortment require adaptations too.

ALAN BRENNAN, VP Corporate & E-Com, PANZERGLASS

Inflationary pressure, economic uncertainty, on-going/escalation of the Ukraine conflict have been the main challenges putting pressure on passenger traffic and basket spends. However, there’s a great opportunity to build on the sales momentum in 2022, to improve the customer experience. Equally the re-emergence of the Chinese and Asian traveller will have a positive impact on sales, and we believe we will see different levels of growth in Europe/US versus the Middle East and Asia, with the latter being stronger.

TIM JOBBER, Owner, JES TRAVEL RETAIL

We have our new division JES recruitmenTR launching out of the Middle East and the US in early 2023 and, therefore, we are excited about this. Our service model division JES Partner Programme is also growing and we are expecting a good response to our newly launched travel retail TikTok consultancy model in addition to a number of brands launching in the US during 2022 via our brand ambassador model.

We have also partnered with our first Korean office. The main division, JES Travel Retail (a consultancy to brands looking to enter into or expand within global travel retail), is continuing to show signs of growth with a 37% increase in clients during 2022. It’s expected to have similar growth in the coming year.

GARY CHAU, General Manager, TASA MENG CORPORATION

We expect much better growth in 2023. Supply chain issues are still a major issue as suppliers are unable to satisfy the sudden demand of stock as China and Hong Kong opened their border in January. Logistics costs still high. Flight capacity still a major issue. High travel costs due to limited flights, and no competition between airlines.

THOMAS HENNINGSEN, Partner, BLUEPRINT

As a business development agency committed to helping extraordinary brands accelerate their travel retail businesses, we expect 2023 to be a promising year. We believe that the biggest opportunity travel retail is facing is adapting to the changing traveller profile. By 2028, Next Gen, Gen Z and Millennials will represent 60% of travellers. These younger, greener and less affluent travellers will continue to seek out extraordinary shopping experiences, fundamentally changing the brand landscape as we know it. Blueprint’s growth opportunity is to always become better at helping right brands accelerate and scale their travel retail businesses.

The results of Heavyweight DF&TR airport tenders beckon this year in the likes of South Korea and Spain (pictured). Source: Aena.

DAVID RODIEK, Managing Director GTR, BROWN-FORMAN

Expectations: Better than 2022, crossing pre-pandemic levels and returning to growth. Additional tailwind: Full year versus six months (Australia/NZ/PI) comparison and now the opening of China (let’s see how this evolves). Increasing aircraft or seat capacity of some of the major air carriers as well as cruise/ferry operators’ optimism speaks to the confidence around the opportunities in the travel sector.

Challenges: Geopolitical conflicts, energy crisis in Europe, rising cost of living, de-globalisation, ongoing supply disruption.

MONIKA DAGBERG, General Manager, R&F TRAVEL RETAIL

Travel retail is depending on people having the incentives and [a] good enough economy to both travel and to shop. A worldwide recession will harm the industry. The recession will also reduce the will to invest in new shops, new tenders, etc.

JEFF BOND, Channel Sales Director, ACCOLADE WINES

We expect to continue our recovery to pre-pandemic levels but will focus more on premiumisation than volume sales. We believe that consumers are looking for different/new/premium in travel retail, so we will use our extensive portfolio to open opportunities in this area.

This doesn’t mean we will be solely focusing on the luxury end of the price range, rather a tiered approach where consumers can get a great bottle of wine from £15+ that is extremely good quality and value, up to the top end where we only produce small parcels each year. Sustainability is still a key focus for us and we have a number of innovations coming in 2023 that are well suited to the channel.

ANDREW MACHIN, Managing Director, KOUNTER (PART OF THE BLUEDOG GROUP)

Huge expansion. No real challenges other than keeping up with the rate of our growth.

The rebound in the Americas in 2022 was driven by increased domestic flights across the US and demand for intra-regional travel to Mexico, Central America, the Caribbean islands and Dominican Republic (pictured is Dufry’s shop at Puerto Plata Airport).

ROWENA HOLLAND, Managing Director, ESSENTIAL COMMUNICATIONS

We’re continuing to head back towards our 2019 level of business and are confident that 2023 will see us continuing to expand both with new clients and team members. We’ve got a fantastic portfolio of clients across all key industry categories and a strong team of account managers who know the business inside-out. Sadly, some of our established clients pre-Covid are no longer in the industry, but the last year has seen us signing up several new clients and we’re confident that will continue this year. Our challenges are the same as those affecting all of us ­– rising costs in all areas of our business.

NICK KING, Chief Executive Officer, BLUEDOG

The expectations are that things will improve and brand budgets will grow. The biggest challenge is to navigate these unseen circumstances with good business acumen to enable growth in our agencies and ROI for brands.

JAN PASOLD, Managing Director Global Travel Retail, ALFRED RITTER GMBH & CO.KG

The expectations for 2023 are very positive despite all the geopolitical, global economic and exchange rate uncertainties and challenges. It is positive that China is reopening for international travel, which will bring an additional boost to the business. At the same time, the cost, supply chain and logistical challenges remain also in 2023 for manufacturers. Therefore, the biggest challenge is constant availability of products and that the trade is understanding the situation of manufacturers.

SIMON ROFFE, Business Development Director, PENDERYN DISTILLERY (THE WELSH WHISKY COMPANY)

Having experienced a remarkably strong 2022, the commitments we have in place indicate 2023 will be another strong year for our business in the travel retail channel. We anticipate opening up with travel retailers on a wider footprint supporting our presence in key international markets such as France, the US and China, as well as working to grow our fast-growing travel retail business with all key UK operators.

Hubs such as Istanbul Airport are enjoying a healthy traffic rebound, benefitting travel retailers such as Gebr. Heinemann/Unifree Duty Free.

Challenges remain: operators’ desire and ability to respond to innovation; scale (we cannot compete in investment terms with the multinational brand owners); and logistics.

STUART HOLCOMBE, Managing Partner, TRAVEL RETAIL PARTNERS

Brands to be more selective of opportunities. Labour costs (wage rates and benefits) coupled with rigid contractual operational hours will impact many smaller operators.

PATRICK DORAIS, Director Of Sales, AL NASSMA CHOCOLATE LLC

We believe the world will continue to open up and once Chinese nationals start travelling again (and hoping there are no knee-jerk reactions or re-introductions of Covid-19 restrictions) we all stand to benefit from this passenger segment. There is still a pent-up demand for travel both from a leisure and business perspective and this should continue to herald recovery.

BENNO LEESER, Chief Executive Officer, GASSAN DIAMONDS BV

We expect to reach the 2019 figures. Major challenges are, of course, the recovery of the Chinese market. We have to see how this will develop.

PETER ZEHNDER, Head Of Division – Global Travel Retail, LINDT & SPRÜNGLI (SCHWEIZ) AG

Overall, we are feeling extremely positive about the prospects for our business in 2023. Restrictions in APAC are easing finally, and passenger numbers are picking up more rapidly than had been predicted, and we are seeing a similar trend within our own business. In a number of locations, we are trading ahead of pax growth, which is really encouraging. It is clear that people are excited to be travelling again and are rediscovering and engaging with the travel retail offer.

In terms of regional trends, the Middle East, Europe and the Americas are leading the recovery. Our business at some major airports, including Dubai and Istanbul, is already back to 2019 levels. With recovery accelerating, and investments being made in our strategy and portfolio, we are excited about what 2023 holds.

BARRY GEOGHEGAN, Founder, DUTY FREE GLOBAL

I think it will be a stronger year all around compared to 2022. I think it will take several months before we begin to feel the benefits of the returning Chinese pax. This was the case in other regions as infrastructure struggled with the re-opening both in terms of staffing and systems. I do think overall business will be ahead of 2022, but it is key to plan resources carefully as pax profiles will be very different initially as new markets open and the correct offer/assortment needs to be correct.

GUSTAVO VALDOR, International Commercial Director, MEZCALES CASA ARMANDO SA DE CV

Our products will continue to grow in travel retail. Our category is Mezcal and it is slowly growing in travel retail locations outside of Mexico (as in Mexico it is a destination item) and we are the leading company with the leading products within the category. We have two of our brands in Attenza Duty Free in their locations in Central and South America, Zignum Mezcal and Señorío Mezcal; we have all three brands (add El Recuerdo Mezcal to the previously named) in North America at the DFS locations; and we have Recuerdo Mezcal at Austin International Airport. We continue to grow, slowly but surely and we are always looking for new business partners that want to grow the category with us.

GARRY MAXWELL, Director, GMAX TRAVEL RETAIL

Thabet Musleh, Vice President of Qatar Duty Free.

Thabet Musleh, Vice President, Qatar Duty Free: “I believe for QDF we will be way ahead of 2019 and back to our usual double-digit growth. However, I believe it will be tough and not easy, and the global recession will make it hard.”

I started my business during the lockdown in June 2020 after losing my business due mainly to the pandemic. It has been a very difficult two years or so and now the future is finally starting to look bright for GMAX Travel Retail. We have some amazing brands and as said before the ‘vibe’ for the business has really returned and we are already gaining many listings. The disappointing part and a major challenge is the limitations of some major operators in GTR to think outside the box with brands which makes it hard to bring innovation and emerging key ranges to the marketplace. Thankfully there are still a number of operators keen to try things and keep their assortments interesting and these are seeing excellent results.

ANDREAS RECKART, Head of Travel Retail, RICOLA

I expect the Ricola business to grow further in 2023 from a strong base that we achieved in 2022, when business exceeded 2019 results by 75%. The main reasons for the excepted additional growth are the recovery of the business in Asia, a more effective distribution as well as additional listings with existing customers. As in 2022, there will certainly also be bumps in the road in 2023, such as, for example, inflation, the expected global recession, or the war in Ukraine. However, we are confident that, overall, the positive trend will prevail, and we’ll see a very good year for the entire travel retail industry.

THABET (TAB) MUSLEH, Vice President, QATAR DUTY FREE

I believe for QDF we will be way ahead of 2019 and back to our usual double-digit growth. However, I believe it will be tough and not easy, and the global recession will make it hard.

STEVEN CANDRIES, Commercial Director, CHOCDECOR/BELFINE

For the Belfine decorated chocolate lollipops, the travel retail industry is a new channel, thus a new chapter. With winning the Travel Retail Award for the Best Confectionery & Fine Food Product voted by travellers in October 2022, I expect new opportunities in this beautiful channel. With a major listing with Lagardère in Belgium (Brussels and Charleroi Airport, as well as the Brussels Gare du Midi and Eurostar train station), with Aer Rianta at Larnaca Airport and at Korea’s Jeju Airport, we made our first steps in the industry. With a very promising rate of sale, we have now references that can be convincing factors.

We are on the waiting list for a stand in Cannes for 2023 and I hope to have an agreement with some duty free distributors. So yes, our expectations are high and [we are] are fully motivated to get this channel on track for Belfine.

One of the challenges is ‘trust’ in brands and its products, and this goes hand in hand with the Sustainable Development Goals of the United Nations. We take pride in being sustainable, both ecologically and socially, through our packaging, production and sourcing as evidenced by Route De Cacao (our own sustainability programme supporting 148 cocoa farmers in the village Tigorikro, Ivory Coast – thanks to training, they can produce more and excellent quality cocoa in a sustainable and responsible way, thereby increasing their incomes and improving their livelihood). What is important is that we want to inspire [to] a world of fantasy and imagination for children and parents to share.

GARRY STONER, Travel Retail Sales Manager, AURORA WORLD UK

We see growth in 2023 – our push into sustainability with product concepts such as Eco Nation (it takes eight 500ml plastic bottles to produce each plush toy) has and will continue to be a driving force, coupled with our ongoing new product development programmes. During 2022, we did experience some bumps in the road with logistics/supply chain, as I am sure did many brands who manufacture in the Far East. These issues are quickly fading into the rear-view mirror as now our factories are back to full speed and production and the container shortage issues are now, for the most part, a thing of the past, so we are looking forward to providing our customers with a much improved supply chain this year.

HIROOMI EGUCHI, Vice President, Retail Operations Department, NARITA INTERNATIONAL AIRPORT CORPORATION

In 2023, meeting the recovery in demand after the Covid pandemic will continue to be of primary importance. While working with the border measures which are being placed on arrivals from China, for example, we believe that it is important to work closely with stakeholders to ensure that the services we provide can cope with the rapid recovery in demand for aviation services to and from other countries and territories.

HOJ PARMAR, Chief Executive Officer, BITMORE LIMITED

I would expect business travel to really ramp up this year. I personally haven’t been able to travel to China for almost three years, and prior to Covid I was a regular commuter to Hong Kong and Mainland China. Many others will be doing the same. Most of the data also backs this up.

FABRIZIO CANAL, Chief Executive Officer, FOOD ACCADEMIA

Jaya Singh, Managing Director, Mondelez World Travel Retail: “Traffic is extremely positive at key international transfer hubs like Dubai, Qatar, Istanbul and Amsterdam and in turn we are seeing sales at a number of these locations surpassing 2019 performance. Travel retail’s full recovery really hinges on the situation in Asia, and specifically China.”

Now more than ever, the food and beverage sector has a key role to play as international travellers return in significant numbers. Quality and the continuous search for new food products that are an expression of the local area not only allows retailers to meet customer demand, but also to promote and enhance a sense of place and distinguish an individual airport as part of the destination country experience.

This move towards fine dining and drinking is not confined to restaurants but is affecting retail offerings; it meets a number of key traveller needs: gifting, self-treating, convenience and personalisation, and also helps retailers generate the experiences that travellers increasingly demand. I would say that, in this case, the food category provides a ‘taste of place’ instead of a sense of place.

HANNES KOCH, Founder & MD, TRAVEL RETAIL COOPERATION

While Covid seems to become less and less relevant in most countries, we have severe threats from economic and political crises which could put investments and projects on hold and slow down the recovery. Generally, travel numbers will go up considerably due to countries fully opening up and this will be of great help in bringing in revenue and hopefully profit. Prices of airline tickets will go up significantly and this might cause some travellers to travel less and go somewhere nearby on holidays.

MATHIEU VAZART, Global Travel Retail Manager, PURESSENTIEL

A big growth with Asia reopening. The main challenge is the lack of staff for operations excellence in retail stores.

SANDRA CHALITA, Lead Consultant, SMARTEST MOVES

In Latin America and the Caribbean we are increasing the international passenger numbers by about 20%.

JAYA SINGH, Managing Director, MONDELEZ WORLD TRAVEL RETAIL

Traffic is extremely positive at key international transfer hubs like Dubai, Qatar, Istanbul and Amsterdam and in turn we are seeing sales at a number of these locations surpassing 2019 performance. Travel retail’s full recovery really hinges on the situation in Asia, and specifically China. The best potential growth should come from some Asian markets like the Philippines, Australia and Hong Kong, which had slower recovery, as well as other regions that have already started their recovery in the second half of 2022. Outside of Asia, projections for 2023 remain very strong, with most locations expected to further continue to improve to levels greater than 2019.

KEITH HUNTER, Co-Founder Partner Hunter Palmer/Chief Retail Officer, URBAN-AIR PORT

We are currently still in ‘start-up’, so our main focus is to continue to attract investment and orders for our airports, growing our partnership base with brands and service partners, building and developing our e-commerce platform, and spreading greater awareness of the opportunities within future urban air mobility. The current state of the global economy and the energy sector will remain a significant challenge, but the main challenge is always the hearts and minds of future customers and their readiness to accept this inevitable and exciting future form of transportation.

WILLIAM OVENS, Global Travel Retail Director, IAN MACLEOD DISTILLERS

Growth of distribution of our expandable brands: i.e. King Robert blended whisky; Edinburgh Gin and our innovative new Speciality Malt collection (Shieldaig Highland Single Malt, The White Cask Speyside Malt, As We Get It Highland Single Malt and The Six Isles blended malt). Also, expansion into new regions. We’ve stepped up our focus on activations and visibility for core malt brands in select outlets – for Glengoyne Highland Single Malt, Tamdhu Speyside Single Malt, Smokehead Islay Single Malt and Rosebank Lowland Single Malt. I am also concerned about a return of Covid restrictions and further supply chain challenges. The tragic Ukraine conflict will continue to have an impact on business, but that is clearly secondary to the implications to the citizens of Ukraine.

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