Retail Power
Chloe Gold speaks to key retailers within the travel-retail industry about the local and international selling of tobacco products and finds out what can be done to keep the industry alive
IT HAS been a bumpy ride for retailers within the duty-free tobacco industry of late. In recent years they have faced growing restrictions: new anti-smoking initiatives are continuously rolling out across the globe with no signs of slowing down, oil prices are rising, and the smoking bans and shrinking selling space in airports are adding to the air of uncertainty regarding the future survival of tobacco in travel-retail. The pressure on retailers to keep the blood flowing in this sector is high yet counterbalancing this is the fresh wave of innovation which is also sweeping the industry as key retailers are exploring new commercial realms and taking fresh concepts to another level. The Nuance Group –
currently the world’s leading retail operator in travelretail with 350 outlets at airports, on ferries and in
downtown locations, along with interests in in-flight sales, mail order and e-shopping facilities on four continents, is adamant that this is the only way forward.
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“We may face some hard times in the future for the tobacco industry,” warns Mathieu Rebjock, tobacco
buyer, The Nuance Group Europe, “therefore we need to be innovative in order to keep the category alive. With anti-smoking laws and bans increasing, it is vital to anticipate trends and always be at the forefront of this industry.”
There is no room for complacency according to Rebjock, who predicts that it is only a matter of time
before the impending anti-smoking legislation unfolding worldwide hits Europe.
“Law is always stronger and has to be respected,” he says. “What we are witnessing in Australia – where tobacco is sold in specific and closed areas preventing those underage from entering these zones, which is not necessarily a bad thing – will soon reach Europe. This will place the tobacco section in a corner so we are already thinking about how to create specific closed areas that will still be attractive to the customer.”
Limited edition cigarettes packaged exclusively for travel-retail with new designs and new tobacco mixes are bringing an additional value to tobacco products and attracting a new generation of smokers. Brands which are profiting from a new approach are Vogue Éphémère and Dunhill Spotlight – both from BAT, who Rebjock believes are leading the way in terms of research and development. (See pages 24-25 for more on BAT’s latest travelretail projects.)
“Travel-retail has to be a showcase for the future of the tobacco category. Creativity, new brands, new products, designs and packaging are necessary to continuously attract customers and show them
that the tobacco category is very much alive and not falling asleep,” says Rebjock, who at the same time
does not think tobacco retail should be provocative.
“In terms of marketing, things are changing a lot in travel-retail – more and more suppliers want to have
personalised wall-bays, not simply to display the products, but to deliver a message to the customers
about the brand identity.”
By this Rebjock refers not only to the extension of product development but to concept development,
such as store concepts and smoking lounges in order to offer travellers a dynamic environment and a memorable retail experience.
“JTI Smoking lounges in both Geneva and Zürich Airports have brought more dynamism to the category,
and we are now working together with JTI in going one step further to enhance interaction between the lounges and the shops,” notes Rebjock. “We aim to build, in cooperation with our key suppliers, some
specific and innovative promotions, not only on cigarettes but in the cigars and cigarillos category too.”
“Generally, we can say that the local brands are very popular with young leisure customers, so these are
selling better during the summer months,” he continues. “At the opposite end, we have seen a trend towards premium cigarettes in travel-retail, which are mostly sold to business travellers and are over-performing,” says Rebjock referring in particular to Davidoff and Dunhill.
The Nuance Group is presently observing its biggest growth in Sweden, mainly due to the massive
success of snus tobacco, a Swedish speciality. Local brands such as Parisienne in Switzerland, Blend and Level in Sweden and SG in Portugal, are still playing a huge role close to the global brands, such as Marlboro, Kent and Camel, which are performing strongly as well. Rebjock attributes The Nuance Group’s success to being the first in the industry to launch new and rare products in its range.
“We have some very limited and rare cigars, which are also very affordable. We have already sold more than 100 boxes of the Ramon Allones Eminencia – a cigar only available in Switzerland where 1,200 boxes have been produced for CHF279 each. You will as well find a smaller but complete cigar range in all our smaller airports or in all our gate shops.”
Airport retailing has developed in line with the tobacco industry and together they work hand in hand. As well as passion for the product, Rebjock reveals that a strong partnership is crucial in bringing the
tobacco industry to life as it can open many profitable opportunities.
“Good communication and a common vision about the strategy are the key points to a strong and effective partnership. We have been able to set up longterm agreements with our key partners, thus building confidence for the future of this category,” says Rebjock. “We still believe tobacco is a category that will grow in the future. It is quite easy to recognise our passion for the tobacco simply by looking at our cigar range at Zürich and Geneva airports. This is a wide, large range, and the prices are extremely competitive. We want to be first in class in this category by offering to our customer not only good prices, but also a large choice, information on the product and a special shopping experience, and this will definitely help us to grow our performance.”
Another key player embracing its role in reviving interest in the duty-free tobacco segment in airport
retail is Aldeasa, the fifth largest international duty-free retail operator, which operates in 16 countries
and four continents with bases in Spain, the Middle East and America – all growing markets, particularly
South America and the Middle East.
Aldeasa believes in developing unique and customised commercial environments to cater not only for
different types of passengers and their needs, but also to the culture and spirit of each destination.
“Travel-retail is a front door to the domestic market – the airport is the initial showcase of presentation
of this product,” says an Aldeasa spokesperson. “The shops have a design of a clean and diaphanous
store in continuous renovation. We continuously adapt our assortment according to the necessities and
demands of the passenger, and we offer a wide range of products with more than 300 references.”
According to Aldeasa the key issues facing airport retailers around the world regarding the tobacco sector are differentiation with the domestic market and the different markets of origin of their clients, which in addition also affect the destination of the passengers, their volume and their nationality.
“It is a consolidated market, the client knows what he wants and whatever he is willing to pay for that,” the retailer says. “Aldeasa continuously works in new designs and packaging to facilitate the purchase to the client. We plan to consolidate and extend our position in the markets where we have more presence such as Spain, Asia and the Americas and to cover the demands of the
passengers according to their necessities.”
Within the tobacco category, Aldeasa reveals, the best-selling products are both normal cigarettes and
lights, although the latest trends suggest that tobacco tins are also coming back into fashion.
“Keeping the industry alive within travel-retail depends on a number of factors such as the number of passengers and external crisis, which undoubtedly impact on the industry. However, one way around
the problem regarding anti-smoking laws is the introduction of snus. Due to the legal limitations on the consumption of cigarettes, the snus – which being smokeless allow consumption in places restricted
for the smokers – can be seen as a potentially revolutionary development within the duty-free tobacco market as it is one of the best anti-smoking ban alternatives, offering the possibility to consume
tobacco at the office or on the plane,” says the spokesperson.
Aldeasa boasts two fundamental strengths, which have contributed significantly to its success: innovation and exploration of new commercial strategies that are adaptable to airport environments and consumer preferences, and also its incorporation of technology to support sales and the skills of the company’s staff – ensuring the highest levels of quality service.
The Aldeasa spokesperson concludes: “The main factors which are moving the duty-free tobacco
industry forward are first and foremost the sale price, followed by gift purchases, and finally the new features which are making their mark on the industry.”
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