APAC reigns over global duty free and travel retail market

The Asia-Pacific region will continue to be a major driver of global duty free and travel retail sales, growing at an estimated 8.7% annually up to 2022, according to a new study commissioned by the Duty Free World Council (DFWC) and the Asia Pacific Travel Retail Association (APTRA).

That projection from the Economic Impact Report of Duty Free and Travel Retail in Asia Pacific study is based on the Asia-Pacific travel retail industry having generated an estimated US$36.2 billion in 2017, or 45% of total global duty free and travel retail sales.

Asia-Pacific is the market leader in global duty free and travel retail market, with South Korea emerging as the world’s largest duty free market; Lotte Duty Free shop in Gimhae International Airport in Busan, South Korea pictured

“Asia-Pacific is registering exceptional growth in duty free and travel retail sales. We are also seeing the regulatory landscape become more complex and dynamic across the various product categories. This report is an important investment on the part of DFWC and APTRA in getting the data that will help us engage policymakers and regulators in protecting the sustainable growth of our industry,” said Frank O’Connell, president of DFWC.

The report identifies the following key trends in duty free and travel retail across Asia-Pacific:

East Asian markets are driving growth
South Korea is the world’s largest duty free market, accounting for nearly US$12 billion in sales, with China and Japan also being globally significant markets. Mainland China is anticipated to strengthen its position as the second biggest duty free and travel retail market in the region.

Growing diversity in product demand
Fragrances/cosmetics, wines/spirits, and fashion/accessories accounted for approximately 67% of total sales in the global duty free and travel retail sector in 2017. In Asia-Pacific, these product categories made up 75% of all duty free and travel retail sales.

Duty free is becoming increasingly digital
Duty free shoppers in the Asia-Pacific region are increasingly looking to digital platforms to facilitate their purchases. Typically, this involves the use of mobile apps which are becoming increasingly common payment methods for consumers.

Channel diversification beyond aviation
Total estimated duty free and travel retail sales by land channels were US$14.2 billion in 2017. Downtown duty free in Asia-Pacific comprises a significant portion of sales for all land channels. Cruise tourism is an emerging sector in Asia, with capacity growing at an annual rate of 41% over the last five years as the fastest growing sub-region in the world.

“The report highlights the significance of the Asia-Pacific region to global duty free and travel retail, and on a macro level, to economies in the region through job creation and contribution to GDP. As the industry body that supports, protects and nurtures the growth of the travel retail industry, we are encouraged by the positive trends indicated by the report findings,” commented Grant Fleming, president of APTRA.

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