Foreign liquor firms bet big on Indian travellers

Foreign liquor firms bet big on Indian travellers
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First Published: Thu, May 22 2008. 01 08 AM IST
Updated: Thu, May 22 2008. 01 08 AM IST
Mumbai: The changing face of duty-free outlets in the country’s new or revamped airports has prompted global liquor companies Diageo Plc., Pernod Ricard SA, Beam Global Spirits and Wine Inc. to strengthen their portfolios to tap this emerging opportunity.
The ambience at international airports in New Delhi, Mumbai, Hyderabad, Bangalore and Cochin, with clearly demarcated walk-through stores for core duty-free categories—liquor, tobacco, confectionary, perfumes, cosmetics and electronics—had drawn international travel retail companies such as Hong Kong-based luxury retailing firm DFS Ltd, Alpha Airports Group Plc. and Nuance Group AG. This has helped these liquor firms expand their duty free-business.
Diageo India Pvt. Ltd has already extended duty-free channel tie-ups with most of these retailers. “We have almost realigned our management portfolio to explore this exciting opportunity, which we hope, will fetch around 60% of our revenue,” Diageo India’s managing director Asif Adil said. Diageo India, whose duty free channel is headed by Ray Martin, a spirit industry veteran, has tied up with Alpha for duty-free sales at the New Delhi airport, Nuance for Hyderabad and Bangalore, and DFS for Mumbai. It has also introduced a host of promotional schemes including brand sampling. The improved duty-free ambience and the rich product range at new Indian airports will help shift a significant portion of foreign duty-free purchases to India, Adil said.
Duty-free shops at foreign airports, such as in Singapore and Dubai, have always attracted Indian travellers. “We expect the new Indian travel retail scenario will be extremely important for us as well as others in the sector,” said Arun Sheth, senior vice-president at Beam Global, which owns the Teachers whisky brand. “All our premium international brands are now available at these new duty-free outlets (in India).” These views on business prospects for the liquor industry reflect in estimates of Indian airport developers.
“Worldwide, airports make 70% of their revenues through non-aeronautical sources, including duty-free retailing. Indian airports are now positioned at 60:40 revenue mix of non-aeronautical and aeronautical revenues,” said Subbarao Amarthaluru, chief financial officer (corporate integration) of GMR Group, which owns and operates the New Delhi and Hyderabad airports. The two airports are looking at a 75:25 revenue mix, he said.
As for the Cochin International Airport Ltd, or Cial, retailing initiatives contributes to almost 30% of gross revenues. Duty-free revenue at Cial rose 48% to Rs32.5 crore in 2006-07, said a Cial executive, who didn’t want to be named.
“India is one of the fastest-growing duty-free markets for liquor firms,” said an analyst at a foreign brokerage. “The large size of duty-free stores and the experience they provide are key to the success of the duty-free business of liquor firms.”
Surjit Verma, head, duty-free channel retail at Pernod Ricard India, said, “The company, in addition to the tie-ups with the large travel retail companies, is also planning to introduce a host of new promotional schemes to explore this new opportunity.”
ch.unni@livemint.com
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First Published: Thu, May 22 2008. 01 08 AM IST