Duty Free Americas President, Leon Falic has told TRBusiness the drop in Brazilian travellers and their spend has affected the company’s operations in the first half of the year, but that hasn’t put them off bidding for retail contracts in the country.

As previously reported, Duty Free Americas won a 10-year contract to operate its first airport duty free concession in Brazil at Afonso Pena International Airport in Curitiba.

Although this is DFA’s first airport contract won in Brazil, many of DFA’s biggest assets hail from South America.

“The Brazilians are affecting us a lot; they’re not travelling, they’re not spending much,” says Falic. He also admits that sales have been disappointing in Uruguay where the travel retail industry heavily relies on Brazilian travellers

“It affects us less so in Miami because it’s so diverse, but it does still have an affect,” adds Falic. “But the thing with this market is they’re always flying somewhere else. I think the ones that are travelling are buying, but there’s just not as many travellers – as you said – and they’re not buying quite as much. They’re still there, but it’s not what it used to be. If anyone tells you it is, it’s not true.”

As previously reported, this sentiment was echoed by those making presentations at the annual ASUTIL conference in June and by exhibitors speaking to TRBusiness at the IAADFS (Duty Free Show of the Americas) in March.

Falic told TRBusiness earlier this year that he’d be happy with 2% sales growth to $1.25bn in 2015. “I think in certain categories we’re going to be very down and I think certain categories are going to be very up.”

Falic predicts that sales of luxury goods will suffer, but that the company should make up sales in liquor and fragrance. “Not everybody can buy an expensive watch or bag, but they’ll always buy when they see savings and value for money. They will buy fragrance, they will buy liquor, that’s our biggest business. So we’ll get our growth from there because we focus so much on it, but I think we’re going to get hit hard on the other categories.”

‘WE DON’T GO INTO A COUNTRY LIKE BRAZIL FOR ONE STORE…’

Despite Falic predicting an unfavourable impact from the slowdown in Brazilian pax, he confirmed that DFA has big ambitions for expanding its footprint in the country. “We don’t go into a country like Brazil for one store, so we’ll look at it.”

Falic also says that Brazil is concentrating on clearing up its act at the moment. “There’s a lot going on in Brazil in terms of internal corruption, political issues, so I think they’re cleaning that up and I think it’s going to be even better for anyone who wants to come in. I think it’s going to be a fairer process. I think it will be good.”

Falic also says that the slowdown in Brazilian passengers can be partially offset by Asian passengers, which have increased in number, especially in Miami, New York and the wider Latin America region.

“Latin America was not really somewhere where you’d see [Asian travellers] previously, but now we’re seeing them often, so Asian travllers are helping us; that I can tell you.”

Falic specifies that of the Asian passenger contingent he speaks of, the Chinese and Koreans are most notable.

“I think the Koreans are looking to invest a lot in this region, so they’re coming to LatAm, travelling through Miami to get to other regions and they’re buying. We’re selling all kinds of Asian cigarettes, which we didn’t do before and various expensive products, such as whiskies, Cognacs and there’s a lot of people travelling for business coming to this region.

“You have huge companies in Latin America: Samsung, LG, etc and big Chinese companies are buying steel and oil. They’re coming to the region and travelling around. Also they buy a lot of food; they go to Paraguay to buy a lot of food.”

The influx of Asian passengers requires a shift in the retail offer at some of DFA’s stores, but Falic assures TRBusiness that the company is flexible and can adapt very quickly. “We’ve got a small team of buyers and they’re in touch with the stores all the time. That’s one area where we’re very strong. We adapt very quickly and if we get enough requests for something we’ll immediately pull it in, we’ll list it and see how it does. If it fits in well we’ll keep it.”

The full-length interview with Leon Falic will appear in the September issue of TRBusiness.