Japan’s Suntory bought Illinois-based Beam Inc. for $16bn in January, and Albert Baldadi, president of Europe/EMEA for Beam Suntory said today the company wanted to drive ‘outperformance’ in the travel retail channel.
“The newly expanded Beam Suntory premium ranges creates the right moment to focus on our own portfolio in the travel retail channel,” Baldadi said.
‘A dynamic and strategically important channel’
Both Beam Suntory and Edrington recently formed global travel retail divisions – the former said on October 9 that David Wilson would head up this part of its business, which it described as a “dynamic and strategically important channel”.
And on October 1 Edrington created its first global travel retail unit. Based in Singapore, MD Tellis Baroutsis will seek to build on double-digit 2013 growth for brands such as The Macallan and Highland Park.
The spirits companies said today that ending the JV – Maxxium Travel Retail is the No.3 supplier in European travel retail – will help them integrate their European operations and manage customer relationships worldwide more effectively.
Scott McCroskie, Edrington group commercial director, said: “With passenger numbers and spending forecast to increase by double digits, the travel retail sector presents an outstanding opportunity to grow our premium brands, and we look forward to increasing this focus on our premium portfolio in this important channel.”
Travel retail – what’s all the fuss about?
In a May 2013 presentation on travel retail, Pernod Ricard forecasts compound annual growth (CAGR) of 15% in travel retail by 2016 – the company predicts general travel retail sales will hit $30bn in Asia-Pacific alone, $22bn in Europe, $16bn in the Americas and $7bn in Africa and the Middle East.
Emphasizing the opportunities that travel retail offered as a showcase for global spirits brands, Pernod Ricard said Asia-Pacific contributed to 90% ($424m worth) of wine and spirits travel retail value growth in 2012.
The group described Chinese travelers as a “unique opportunity”, as the No.1 spending outbound tourism group globally, with a high average alcohol spend at airports of $100+, followed by German travellers ($83.8) and US travelers ($83.7).
The Chinese are also traveling abroad ever more frequently – taking 83m trips in 2012 versus only 55m in 2010; in 2011 68% of their trips were to neighboring Hong Kong and Macau, demonstrating just how vital the travel retail channel around these two regions is for the world’s spirits giants.
Pernod Ricard and its peers are also extending the retail proposition beyond ‘duty free’ as we know it – to encompass special shops and immersive, large-scale fixtures in airports; downtown stores; installations in lounges and partnerships with airlines.