European Travel Retail Council (ETRC) Secretary General Keith Spinks addressed the Baltic & Eastern European Conference in Warsaw last week (November 11-13) where he warned of the extent of potential problems that may face the

duty free and travel retail industry in relation to potential regulatory threats from the World Health Organisation (WHO) and health authorities over the next few years.

In a presentation entitled, 'The World according to the WHO: A future for Duty-Free?', Spinks said that the industry has come a long way since the first duty free shop opened in Shannon Airport in 1947. In those days air travel was 'a glamorous pursuit enjoyed by the lucky few', with alcohol and tobacco products enjoyed to the full by almost everyone and duty free's very creation born as a means to subsidise air services.

But today is a very different reality with health related and environmental bodies playing out the mantra that tobacco, alcohol and chocolate are bad for us and air travel is bad for everyone.

Spinks said that the most pressing threat comes from the WHO Protocol on Illicit trade in tobacco products which is currently being negotiated in Geneva. Between March 14-21, 2010 he says that there will be considerable pressure to ban duty free tobacco sales completely at the INB4 discussions, with false allegations by anti-tobacco groups that duty free tobacco sales contribute to illicit trade being at the fore of the pro-duty free tobacco-ban argument.

THIS IS A VERY REAL THREAT
Spinks says that this is now a 'real threat' to a product that generated 11.3% of duty free sales in Europe in 2008, which is why the industry has been lobbying across the globe on this issue.

He said the real fact of the matter is that the duty free industry actually supports the Illicit Trade Protocol in the confidence that airports, airlines, ferry operators and border shop operators are not involved in any criminal activity and he says there has been significant success to date with this argument.

Spinks emphasised that the EU and major countries have now taken a formal position that there is no place for duty free in the Illicit Trade Protocol, but he added that the industry still needs to do more to ensure that duty free does not become a spin-off casualty of INB4.

With regard to supporting any ban on duty free tobacco sales, he says most countries were non-committal at the last round of the INB3 discussions, but more worryingly many others simply adopted the anti-tobacco activists' position.

Spinks said that it is now a matter of priority that as many countries as possible give their active support to retaining duty free tobacco at the INB4 discussions.

ADDITIONAL PRESSURE
He also pointed out that there will be a review of the pricing and taxation on tobacco products in 2010 and questions will be asked on duty free in relation to the affordability of tobacco products. When this happens he says that the industry needs to be equally prepared for another major battle – since unlike the EU's support for duty free tobacco sales' continuation alongside the Illicit Trade Protocol issue – the EU may not necessarily be supportive of the industry on this other contentious issue.

At the same time, he warned that the current threats to the duty free industry do not end with tobacco considering that a draft strategy to reduce the harmful effects of alcohol is on the WHO Executive Board agenda in January of next year.

A strategy is to be adopted at the World Health Assembly in May 2010 and while it is non-binding, it will nevertheless set out future goals within which the price and affordability of alcohol products will be key components for discussion. Once again, Spinks warned that the duty free industry needs to vigorously defend its position in relation to this development.

He also warned of more dark clouds on the horizon with the WHO global strategy to combat obesity which will obviously target food and confectionery products. At the same time, new rules on product labelling and consumer information within the EU could make the costs, logistics and viability of supplying duty free confectionery very difficult – especially considering the proposals to include contents and nutritional information in multiple languages.

Once again, he said it is important to ensure that the industry is ready for any possible assault by the WHO on the confectionery sector as a result of this process.

WHAT THE INDUSTRY CAN DO ABOUT IT
Turning to what positive action the industry can take, Spinks pointed out that the World Health Organisation does not dictate government policy and in most cases WHO policy is advisory, meaning that governments can make their own decisions on whether to adopt policies or not. As a result they can be influenced by lobbying and the industry can help to neutralise some of these current threats.

Spinks urged the audience to address the immediate threat to tobacco and he called for a coordinated advocacy activity to support the ETRC campaign to show that duty free and travel retail is a safe, secure and responsible retail channel. He said this should involve effective lobbying of national governments by all industry stakeholders, including airports, airlines, cruise and ferry operators and allied trade associations.

Most importantly, industry solidarity is needed, he said, to coordinate lobbying across the world by stressing the benefits of duty free and building the case for duty free to all governments, while engaging intensively with political representatives.

The industry must use airports, airlines, cruise and ferry operators and trade associations to defend itself, while cultivating support with duty free friendly governments, he said, otherwise ‘the future is ours to lose’.

This message will be reinforced during the second day of the MEDFA Conference programme on Tuesday November 24 (next week) in Dubai where a panel discussion will take place on the subject of 'The future of tobacco in duty free' with the region's duty free associations.

Participants will include Keith Spinks, Secretary General, ETRC; Santiago Llairo, Corporate Affairs & Communication Worldwide Duty Free, JTI; Sunil Tuli, President, APTRA; plus Ramesh Cidambi, Director of IT and Logistics, Dubai Duty Free. It will be moderated by Doug Newhouse, Editor, The Travel Retail Business.

Last week's Baltic & Eastern European Conference in Warsaw was organised by DFNI Magazine-Ed.