Transcript Duty Free Trade Industry Opportunities and Challenges

Duty Free Trade Industry
Opportunities and
Challenges
Duty Free Trade Industry Worth
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DF/TR Industry Worth in $US billions
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2007
2008
2009
2010
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Comparison with Other Industries
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• In 2007 the worldwide bottled water
market was worth US$ 40 billion and is
expected to reach $65.9 billion by 2012
(Boreal Water Inc.)
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• The Airline Industry’s global economic
impact is estimated at US$ 2,960 billion or
8% of the world’s GDP in 2009 (ATAG)
• Car Rental Market Revenues to Reach US$
52.6 Billion in 2012 (Global Industry Analysts, Inc.)
• In 2009 corporate travel industry was
worth US$ 85 billion
(PhoCus Wright’s U.S. Corporate Travel Distribution Fourth Edition)
Which Products are Performing Best?
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Percentages for Product Groups that increased the
most from 2009 to 2010
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Spirits Cosmetics Tobacco Food
Luxury
Goods
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Which Regions are Performing Best?
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Sales rate % from 2009 to June 30, 2010
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Americas
Asia Pacific
Europe
Middle East
Africa
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DF/TR sales 2009
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Best and Most from Generation Research
DF&TR Makeup for the Americas
• In 2009, The Caribbean was worth US$ 3.1 billion and was down
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-6.3% from 2008
• South America’s 2009 worth was US$ 2.2 billion, a -7.3% difference
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from 2008
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• North America was worth US$ 2.5 billion a decrease of -16% from
2008
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• Sales in the USA fell by -19.8%, Canada fell by -8.7%, and Mexico fell
by -19.5%
• Altogether, the Americas were down 10%
• In the US Virgin Islands sales dropped by -4.8%
• Brazil registered a +6.5% increase
• Sales in Puerto Rico decreased by -5.9%
• Panama’s sales decreased by -19.6%
• Argentina experienced a -7.5% decrease
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How is the Duty Free Industry Performing
in the Americas?
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Traveler Statistics by Region
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• Worldwide air passenger traffic rose by 7.6% in March
2010 compared with March 2009
• In Mexico, passenger traffic at Grupo Aeroportuario del
Sureste (ASUR) airports increased by 85.8% in May
2010 compared with May 2009 due to the H1N1 virus,
which diminished traffic
• In US, visitor volumes are expected to increase by 5%
in 2010. A couple of the largest countries to post
increases are Brazil at 22% and Argentina at 13%
• Leading the growth in airport traffic is South America
with a total increase of 11% in 2010, the highest rate of
any region. This growth is expected to continue to
2014 with a 58% increase compared to 2009
• Meanwhile, North America traffic fell 5.9% in 2009 and
cargo decreased 11.3%
Trend News and the Moodie Report
Which Travelers are coming to the US?
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• Travel by U.S. residents increased about
11% from 1984 to 1994, but over the same
period, the number of foreign visitors to the
United States increased by 60%. Over half
of the visitors from foreign countries are
from Canada and Mexico. Travelers from
Japan account for about 9% of foreign
visitors, those from the United Kingdom
7%, and those from Germany 4%
Federal Reserve Bank of Philadelphia
Infrastructure Challenges
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• Inadequate air transport infrastructure
costs the world economy billions of dollars
each year due to:
 Airlines having higher operating costs
 Delays mean less productivity
 In Tourist Industry – loss of revenue
because of curtailed growth
 Fewer jobs in Travel Industry
ATAG
Infrastructure Challenges Continued
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• The airport industry is facing growing difficulties
to fully meet the demands of today's traveling
public and shippers of air freight
• If future capacity does not match demand, not only
will delays increase - so will the costs of using the
system
• Needed changes include the following:
 the building of new runways
 infrastructure developments in terminals and
aprons
 improved public transport access, such as rail links
ATAG
Threats/Concerns
• The next crisis (SARS, terrorist threat, economic recovery,
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swine flu)
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• Duty Free as a target (WHO, tobacco, alcohol, EU Abolition)
• Consumer confusion (who are we, duty free, travel retail,
travel value, airport shopping mall? What’s our value
proposition?)
• Global harmonization of tariffs
• Lack of airport infrastructure development, restricts growth
and opportunity to showcase our products
• Security concerns, impact on dwell time
• Rising costs of add-on/special charges (luggage, special
seats, country taxes, extra fees) negatively impacts
discretionary spending by passengers