TRAVEL RETAIL: THE SIXTH CONTINENT

THE OPPORTUNITY FOR ISRAELI BRANDS

ESSENTIAL COMMUNICATIONS

Essential Communications is an award-winning integrated public relations and marketing agency with a proven track record in travel retail/duty free and international wines & spirits. 

OUR CLIENT PORTFOLIO: SNAPSHOT

WHAT IS THE SIXTH CONTINENT FOR L'ORÉAL?

"The travel retail distribution channel is a strategic market for the development and visibility of our brands, and contributes to the quest of one billion new consumers."Barbara Lavernos, Managing Director of L’Oréal Group Travel Retail

WHAT IS TRAVEL RETAIL?

SHANNON – WHERE IT ALL BEGAN

DFS – CATERING TO THE JAPANESE TRAVELLERS

1999: THE END OF INTRA EU DUTY FREE

PANIC STATIONS!

TRAVEL RETAIL GROWTH

$34bn

20162008 2020 2050

$62bn

$85bn

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THE INCREDIBLE GROWTH IN AIR PASSENGER TRAFFIC

Over the past 35 years there has been a tremendous growth in international tourist arrivals, from 277 million in 1980 to just under 1.2 billion last year,

1980

277 million

2015

1.2 billion

TOURISM WILL CONTINUE TO GROW

“International tourism reached new heights in 2015. The robust performance of the sector is contributing to economic growth and job creation in many parts of the world. It is thus critical for countries to promote policies that foster the continued growth of tourism, including travel facilitation, human resources development and sustainability” UNWTO Secretary-General, Taleb Rifai.

GLOBAL TRAVEL RETAIL SALES BY REGION: $62.1BN

39%

32%

2%

18%

10%

Regions

Asia Pacific

Europe

Africa

Americas

Middle East

MUMBAI DUTY FREE

THE AMAZING SPENDING CHINESE

“Chinese tourists spent $215bn outside mainland China in 2015, up 53% on 2014” “ There were some significant shocks last year in the stock market and the currency, but it didn’t slow the growth of travel and tourism” World Travel & Tourism Council.

GLOBAL TRAVEL RETAIL SALES BY PRODUCT CATEGORY: $62.1BN

25%

21%18%

13%

11%

11%

Product sectors

Fragrances & Cosmetics

Wines & Spirits

Fashion & Accessories

Tobacco

Watches & Jewellery

Confectionery & Food

Electronics, Toys and Other

MAKING EVERY DAY PRODUCTS SPECIAL

LUXURY BRANDS AT AIRPORTS

GROWING CATEGORIES: SKINCARE, SUNGLASSES, NICHE FRAGRANCES, HAIR CARE, FINE FOODS.

PREMIUM PREMIUM PREMIUM

“Travel retail’s endemic premiumisation drive continues apace, with retailers keen to avoid any possible cannibalization of their upscale portfolio.”

The Moodie Davitt Report

GLOBAL TRAVEL RETAIL SALES BY CHANNEL: $62.1BN

57%33%

6% 4%

Where to buy?

Airports Downtown duty-free stores

Airlines Ferries and cruises

THE AIRPORT RETAIL ENVIRONMENT

DUFRY – THE WORLD’S BIGGEST TRAVEL RETAILER

A SENSE OF PLACE

DOWNTOWN DUTY FREE – WHERE THE GROWTH IS

CRUISE SHIPS – A CAPTIVE AUDIENCE

AIRLINES – A VARYING APPROACH

KOREAN AIRLINES SKY SHOP

INFLIGHT EXCLUSIVES

SO WHAT DOES THIS MEAN FOR ISRAELI BRANDS?

3.5BN PASSENGERS AND GROWINGBRAND SHOWCASE PRODUCT LAUNCHPAD BUILDING BRAND AWARENESS DESIRE FOR NEWNESS, EXCLUSIVITY

BRAND SHOWCASE

LAUNCHING OR RELAUNCHING BRANDS

Galaxy,

Galaxy Relaunch AtDubaiDuty Free

BUILDING TR PRESENCE – THEN DOMESTIC

WHAT DOES TRAVEL RETAIL MEAN TO GODIVA

"Travel retail is the window to the world for us; this is where consumers get to first interact with us if we are not present in the domestic market. We learn more about where the potential markets are and we learn more about what consumers like. We tend to plan our growth through the window or the lens of travel.” Godiva CEO Mohamed Elsarky

THE ESSENTIAL ELEMENTS

RIGHT PRODUCT RIGHT PACKAGING RIGHT INVESTMENT RIGHT SUPPORT

CHALLENGES

High marginsPrice

competitionBrand

awarenessHigh investment

Category competition

Listing feesVolatile industry Distribution

limitations

TRAVEL RETAIL IS NOT A QUICK FIX

THIS BUSINESS SHOULD BE LOOKED AT FOR MID-LONG TERM BRAND EXPOSURE/PROFIT, NOT SHORT TERM GAIN.