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Cannes and liquor's place in duty free

The latest news about Cannes plus thoughts on the wine and spirit category’s performance in attracting traveller spend, from Erik Juul-Mortensen, president of TFWA

Erik Juul-Mortensen TFWA

Around this time of year the mistral, the cool wind that sometimes batters France’s Mediterranean coast, starts to blow more strongly. Currently preparing for its annual gathering in Cannes on that same coast, the global duty free and travel retail industry has been facing a few headwinds of its own over the summer. Volatile currencies and nervous stock markets, the continued decline in conspicuous consumption by the Chinese, an outbreak of Middle East Respiratory Syndrome and media fury over VAT at UK airports have all buffeted the business lately. And yet despite the adverse conditions, TFWA World Exhibition & Conference 2015 (18-23 October) promises to be busy, both exhibitor and visitor registration proving brisk.

The liquor category has been on something of a roll recently at the annual event in Cannes, enjoying the largest increase in stand numbers across all product groups in 2014, itself a record year on all fronts. With well over a hundred exhibitors in the drinks sector already confirmed for 2015 plus the possibility of a few last-minute additions, this category will again account for around a quarter of all companies on the exhibition floor.

Among the newcomers to Cannes and those returning after a break are some noteworthy names – major cava player Freixenet and family-owned Champagne Drappier will lend some sparkle on the wine side, while Antica Sambuca and Crystal Head vodka further reinforce a strong spirits contingent.

As usual, the industry giants will be present – all of the top-ten liquor companies in duty free as ranked by research provider Generation are exhibiting – but there will also be an impressive field of independent, specialist and emerging brand companies.  

I’m especially pleased to see increasing numbers of wine firms participating, as our channel has sometimes struggled to serve the travelling wine-drinker as well as it does the whisky or cognac enthusiast.

Much of the talk in the Exhibition aisles will concern, no doubt, the accelerating pace of travel retailer consolidation with its consequences for the supplier community, and the debate on how best to mix online marketing with a physical retail presence is sure to continue. Anyone with an interest in reaching today’s travelling consumer should be there.

Liquor’s prominence in Cannes comes from the category’s status as one of the twin pillars around which many a successful duty free offer has been built (the other pillar being perfumes and cosmetics). In 1998, one year before intra-EU duty free was abolished, wines and spirits represented 22.5% of total global sales to travellers, closely followed by perfumes and cosmetics with 21.6%, based on Generation data. Fast forward to 2014, however, and the drinks sector share – in spite of year on year growth in sales - had shrunk to 16.4% while fragrances and cosmetics stood in first place with 30% of all duty free and travel retail turnover.  

What has brought about this change in market shares which has seen P & C surging so spectacularly to the fore?  Well part of the answer, as I see it, lies in the latter sector’s embrace of skincare and a whole raft of functional beauty products that have captured travellers’ attention and credit cards. In comparison, wines and spirits can seem more conservative and a bit out of touch, their makers refining existing propositions and tweaking (or dropping) age statements instead of trying to interest younger consumers, make liquor more appealing to women or devise channel-friendly packaging.

The liquor category has done an excellent job of trading existing consumers up the value chain with increasingly elaborate, exquisitely packaged offerings, but there has been less thought for buyers not so willing or able to pay super-premium prices. Drinks company marketers sometimes ignore entry-level customers at their peril, for where else can tomorrow’s more affluent champagne- or artisan-gin-drinker be recruited?

A consumer-centric approach to product development that goes beyond current category wisdom, allied to a market vision which offers gateways into wines and spirits across a range of price points, will start to help liquor regain ground lost to other product groups in recent years. Failure to act would invite further erosion of liquor’s market share, not just by an increasingly dominant fragrance and cosmetic sector but also other categories prepared to put the traveller first.

18 September 2015