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Duty-free sales increase in global level

Global earnings from duty-free outlets increased reaching US$20.5 billion last year…

Global earnings from duty-free outlets increased reaching US$20.5 billion last year, according to the recent annual survey by Swedish research house, Generation.

Airport business dominated distribution channels with a 50.3% market share, followed by other shops (downtown and border stores) with 32%, ferries and cruise lines with 10.6%, and airlines 7.1%, of the total global duty-free market.

The Middle East accounted for US$ 889.5 billion of total sales. The market share according to category was 44.9% for luxury goods, 22.2% for perfumes & cosmetics, 12.6% for wines & spirits, 11% for tobacco goods and 9.2% for confectionery and gourmet food.

Increasingly, global retailers are eyeing the region with growing interest, giving sales in the luxury goods, duty free and travel retail sectors a major boost, a fact that will be reflected in Middle East Exclusive 2004, which will be held at Dubai`s World Trade Centre from November 29 to December 1.

According to Justin Boutros, Managing Director of Channels Exhibitions, organisers of Middle East Exclusive, more than 150 exhibitors are forecast to participate in the show.

Middle East Exclusive is one of the most important and exciting exhibitions we have ever staged. As a dedicated business to business event it allows companies, who have quality products of the type offered within duty free outlets, to penetrate new markets, support their products and business partners and network with buyers and decision makers responsible for the lucrative and developing Middle East, African, Asian Subcontinent and southern CIS markets.

The Middle East travel retail market, in particular, is vibrant, thanks to the global average growth in international passenger traffic numbers. For the 12-months ending July 2004, from July 2003, the region saw 16.2% annual growth, compared to the world average of 10.2%.

Not surprisingly, the rises in passenger numbers are reflected in higher duty free sales. In the first half of the year Dubai Duty Free posted sales 43% up on the same period in 2003; Kuwait 29%; and Jordan a massive 77%. Duty free outlets in Bahrain and Oman also reported significant sales increases.

Kuwait Duty Free attributes its strong performance to maximising space per square metre and spend per head with the addition of a number of specialised product areas to encourage greater dwell time in the stores. The retailer`s `hot promotional points` also played a significant role in lifting sales. Food category sales rose 19% due to multi-purchase and special offers; 1,000 cigarette packs were up by 300% and fragrance sales up 42% on 2003 figures.

The opening of a new 700 sq m duty free shop at the Jaber border crossing, at a cost of US$846,600 in July, contributed to Jordan Duty Free Shop`s (JDFS) exceptional performance.

JDFS has seen sales rise by 42% year-on-year. Meanwhile, expansion by Emirates helped to drive Dubai Duty Free`s growth in the first six months of 2004.

Middle East Exclusive already has exhibitors from 17 countries coming with leading brand names from the jewellery, fragrance, drinks, tobacco, fashion, consumer electronics and fine foods industries. I believe the Middle East duty free market is the most dynamic in the world, setting new standards of retail excellence and this will only continue to improve and evolve at key high profile airports in the region, said Alan Brennan, Regional Sales Manager, Nestle.

Sustained growth is forecast with destinations, such as Dubai, becoming a major tourism hot spot and with other countries looking to develop their indigenous tourism industries.

This can only be good news for the duty free industry as more passengers will pass through airports and retailers are constantly seeking to increase shop penetration and conversion, Brennan added. The key role being played by new airlines and regenerated airports in driving strong growth in the Middle East duty free and luxury goods market is also acknowledged by Cadbury Schweppes chief, Steve Brock. The expansion of both airlines and airports is bringing in more travellers and means the Middle East is now challenging Singapore as the stopping off point between Australasia and Europe. While the Middle East provides us with a small percentage of our global sales now, it is a crucial market for all confectionery companies in the future. Meanwhile, buyers from over 49 countries in five continents have pre-registered for the show. The show last year attracted 1,730 trade visitors from 79 countries.

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Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.