Duty Free Trade Industry Opportunities and Challenges
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Transcript of Duty Free Trade Industry Opportunities and Challenges
Duty Free Trade Industry Opportunities and
Challenges
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Duty Free Trade Industry Worth
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Generation Research
DF/TR Industry Worth in $US billions
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Comparison with Other Industries
• In 2007 the worldwide bottled water market was worth US$ 40 billion and is expected to reach $65.9 billion by 2012 (Boreal Water Inc.)
• The Airline Industry’s global economic impact is estimated at US$ 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)
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Which Products are Performing Best?
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Spirits Tobacco LuxuryGoods
Percentages for Product Groups that increased the most from 2009 to 2010
Cosmetics Food
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Which Regions are Performing Best?
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30Sales rate % from 2009 to June 30,
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AmericasAfrica Middle
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EuropeAsia Pacific
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DF/TR sales 2009
Best and Most from Generation Research
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DF&TR Makeup for the Americas• In 2009, The Caribbean was worth US$ 3.1 billion and was
down -6.3% from 2008
• South America’s 2009 worth was US$ 2.2 billion, a -7.3% difference from 2008
• North America was worth US$ 2.5 billion a decrease of -16% from 2008
• 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
Generation Research
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How is the Duty Free Industry Performing in the Americas?
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Traveler Statistics by Region
• 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
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Which Travelers are coming to the US?
• 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
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Infrastructure Challenges
• 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
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Infrastructure Challenges Continued
• 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
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ATAG
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Threats/Concerns
• The next crisis (SARS, terrorist threat, economic recovery, swine flu)
• 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