In recent years, discussions around the performance of aged spirits in global travel retail have to a great extent revolved around two p-words: premiumisation and pandemic. The former has been the long-term priority of most brand owners, but has come under pressure as a result of macroeconomic challenges and declining footfall.
As for the latter, might it finally be time to change the subject?
“It’s hard to keep referring to the pandemic,” says Diageo Global Travel’s marketing & innovation director, Sarah Shimmons. “The whole industry is in a different or more evolved mindset, and the traveller and all those involved in GTR have moved on and are now conscious of a number of evolving factors with travellers — motivations, budgets, locations and occasions promoting travel, and then spend in the retail environment.
“It’s less about moving on from Covid, and more about the renewed sense of opportunity and purpose in the travel retail environment as a unique selling space, combined with the category and interest areas like scotch, bourbon and more.”
Nonetheless, there is still a little to say about travel retail’s recovery from the harrowing lows of 2020-21 – not least because, while global numbers may have returned to pre-pandemic levels, that recovery has been patchy at a regional level.
“While the GTR channel has faced significant challenges, there are signs of recovery, driven by a combination of consumer demand for quality, innovation by brands and the gradual return of international travel,” says the global brand director of Brown-Forman-owned Diplomático Rum, Patrizia Damiani. “Adaptability and strategic planning are key for brands to navigate the post-Covid landscape successfully.”
For Liya Zhang, the VP of global marketing at Pernod Ricard GTR, the recovery of the channel has been “uneven”. She explains: “While Europe, the Americas, India and the Gulf regions have shown strong rebounds, China’s recovery has been delayed due to economic and geopolitical challenges, impacting high-end cognac and whiskey/whisky sales across Asia.
“However, there are positive signs, as Chinese travellers are beginning to return. Despite the substantial gains in GTR high-end brown spirits, the market still has room for further growth in certain parts of Asia.”
Whyte & Mackay’s GTR channel marketing manager, Louise Easton, reckons that East and South-East Asian travel is already returning to pre-Covid levels, but – quoting Paxsmart data from last month – adds that it will be “mid-October” before passenger numbers return to 2019 levels across key cities in Europe and North America.
Regional differences
Recent experiences in the sales channel vary noticeably by brand owner, as well as region. “Our travel retail sales have grown significantly in the past four years and are now back to pre-Covid numbers and above in Europe,” reports Camus Wines & Spirits global commercial director Anne Blois.
“In Asia, the situation varies from one destination to another. In Thailand, we have seen double-digit growth for our ultra-premium segment.” This has been driven by Asia travel retail-exclusive Camus Royal Banquet, a Borderies single cru cognac with 100-year-old liquid included in the blend that has received “excellent feedback” from airport stores in Bangkok and Phuket.
“Chinese passengers, the main buyers of these cognacs, have started travelling outside China to Thailand and Japan,” Blois explains. “The favourable exchange rate makes Japan a hot shopping destination for Chinese shoppers, while traffic has slowed considerably in Hainan.”
The success of Royal Banquet reflects the continued importance of GTR exclusives, offering shoppers something unique and impossible to obtain in their domestic markets while fuelling premiumisation for brand owners. And in Asia in particular, it is clear that premiumisation is still alive and well, for all the well-publicised challenges around rampant inflation and cost of living pressures.
“In 2023, the prestige-plus category in China GTR was almost five times bigger by value than it was in 2019,” says Easton, quoting IWSR figures. “Asia travel retail remains incredibly important for ultra-premium whisky, with the region responsible for over 50% of category value sales.”
Whyte & Mackay has attempted to harness this potential with a number of single malt innovations in the channel, including the launch of a new, ultra-premium, channel-exclusive Fettercairn range (below), and a series of launches for the company’s chief luxury brand, The Dalmore.
These include The Dalmore Portfolio Series – a prestige-plus, GTR-only line of three limited-edition single malts that attempts to build on the Highland distillery’s association with the world of design. The series will have an exclusive global launch at London Heathrow in September, before rolling out to international hubs in October, including Dubai and Frankfurt. Later this year, the second of The Dalmore’s four-year Cask Curation Series will be released.
Such a sustained period of brand activity reflects Whyte & Mackay’s confidence in the future of the segment in GTR. “Single malt Scotch has outperformed the spirits category between 2019 and 2023, and is forecast to continue to outpace the category in GTR,” explains Easton, quoting IWSR data.
“Future category growth is forecast across all price tiers in GTR, with both prestige and prestige-plus forecasting double-digit growth. India/Pacific and Asia duty free continue to charge ahead, with prestige-plus fuelling single malt growth. With such strong category growth predicted in the channel in the single malt scotch category,” surmises Easton, “our retail partners can be confident in the future commercial opportunity the category presents.”
The refrain is similar at Suntory Global Spirits, where brand marketing director for GTR Manuel González observes: “Demand for premium and craft products has increased significantly in recent years. This growth is projected to continue, particularly within the single malt category, where we have a very strong presence with brands such as Bowmore, Laphroaig, Auchentoshan and, of course, our leading Japanese whisky portfolio from the House of Suntory.”
Meanwhile, Diplomático’s Damiani reports: “Super-premium-and-above brown spirits in GTR have approached, and in some cases surpassed, pre-Covid levels, according to IWSR analysis in 2023. This is driven by pent-up demand, increased spending by affluent travellers and targeted marketing efforts by brands to capture the recovering market.”
‘Premiumisation trend remains robust’
There’s no denying the long-term trajectory of these higher price points. Pernod Ricard’s Zhang asserts: “The trend of premiumisation in GTR remains robust, with significant growth in the high-end spirits segment. According to IWSR 2023 data, super-premium-plus spirits now contribute 69% of total spirits by value in GTR, up from 65% in 2018. This growth is primarily driven by the prestige category, which has increased its share from 25% to 30%, and is projected to reach 34% by 2028.
“To capitalise on this trend and drive additional value, our strategy in GTR is focused on encouraging consumers to trade up through targeted NPD and enhanced travel retail exclusives. By launching exclusive, limited-edition offerings and creating immersive brand experiences – the Martell Cordon Bleu City series and Royal Salute innovations spring to mind – we are positioning our portfolio to meet the evolving demands of luxury consumers.”
This approach spans companies large and small. Bacardí has unveiled a slew of innovations, including Dewar’s Double Double 21-year-old Stone Toasted, incorporating a two-bottle ‘Discovery Pack’ initially launched as a China Duty Free Group exclusive in May, before rolling out across Asia Pacific, India, the Middle East and the Americas a month later. The US$440 blended scotch whiskies are part-matured in American and French oak casks gently and slowly toasted in a method pioneered over the past decade for high-end wines.
Casks are also at the forefront of the company’s Aultmore Cask Finish Collection, a four-strong single malt range comprising 12-, 18-, 21- and 25-year-old expressions of the distillery’s signature light, herbal character. The age-statemented whiskies are finished respectively in second-fill oloroso sherry, madeira and calvados casks and first-fill oloroso casks, and are priced at $58–$500 per bottle.
The launch also includes a switch to a 50cl format in a move that’s designed to make the whiskies more portable, giftable and collectable.
“According to recent research from travel retail research consultancy m1nd-set, nine out of ten travellers are likely to purchase duty-free exclusive spirits for themselves or as a gift, while over half of travellers identified a ‘unique spirit’ such as a cask finish as the most important aspect of a travel retail-exclusive spirit,” notes Bacardí GTR MD Leila Stansfield.
Meanwhile, Rémy Cointreau’s recent GTR exclusives include Rémy Martin’s XO Dragon Limited Edition and 300th Anniversary Coupe, both unveiled to mark the cognac house’s tricentenary – as well as Islay single malt Bruichladdich’s two new channel exclusives, The Bruichladdich Twenty One and The Classic Laddie Sherry Cask Edition (below).
At Quintessential Brands, the emphasis with the Liberties Irish Whiskey range is on unusual age statements – such as 13-, 16- and 27-year-olds – and different cask finishes. “Our main focus for our high-end Liberties range has always been in Asia, mainly because of the scarcity of our liquids,” says Quintessential’s GTR commercial director, Oliver Storrie. “We have seen significant growth in this region, but China still lags behind the other Asian countries.”
For Storrie, promotional methods in the channel need to fit with the overall image of the product. “Brand credentials and luxury are key,” he says. “The consumer is looking for a point of difference, so exclusives will also have a main role to play. One-litre and larger formats do not lend themselves well to the high-end and exclusive ranges we offer, in my opinion.”
Caution among consumers
Nonetheless, the post-pandemic travel retail channel offers a new reality of relative wariness and value-seeking, even among the higher price tiers. “The current economic climate has created more cautious consumers, who expect the channel to deliver good value at all price points,” says Suntory’s González. “Immersive/interactive experiences and events that tell a story and create engagement are increasingly important in terms of driving sales.”
Pernod Ricard’s Zhang agrees. “For those purchasing higher-priced spirits, perceived value is key – they want assurance that the premium they pay is justified by quality, rarity or exclusivity,” she argues. “Promotions are indeed part of the strategy, but they are designed to enhance rather than discount. Limited-time offers on rare editions, value-added packs and exclusive tasting experiences are ways to attract consumers while maintaining brand equity.”
There’s a sense that savvy brand owners remain sensitive to consumer expectations while never losing sight of the unique nature of the GTR experience. “While price is always important – and some shoppers are focused on price over and above anything else in duty free – premiumisation and luxury limited editions will always be and continue to play strongly in GTR,” says Diageo’s Shimmons, highlighting the launch last year of Johnnie Walker Blue Label Xordinaire in an eye-catching one-litre bottle.
“Gifting – treating self, gifting for a trip or a special occasion – collecting something exclusive as a memento or something you just can’t get elsewhere – these are the key drivers that help maintain a premiumisation specific to travel retail. Airport shops are high-end retail spaces – the likes of Changi, Incheon, T5, etc – they are environments where shoppers are looking at items differently – they are not in an off-licence or a supermarket.”
