Distell sales fly high in travel retail

Distell is South Africa's biggest player by far in the travel retail sector, he adds, and showing robust growth in this market. While the value of global duty-free and travel retail liquor sales, according to Generation Research, last year rose 6% on 2004, Distell's growth comfortably outpaced this figure, as the company extended its presence to new markets as far-flung as Denver, Dubai, Quebec and Queensland.

Whereas five years ago, Distell's duty-free activities were confined to South Africa's international airports and to stock sold to the country's national airline, Distell has extended its duty-free business to six continents. The company sells through duty-free retail outlets at international airports on all continents and on six international airlines - SAA, BA, Cathay Pacific, Singapore Airlines, KLM and Lufthansa. This is in addition to cruise liners ferries, as well as diplomatic channels.

Diplomatic business growing

Airport and airline sales still account for the majority of Distell's travel retail sales volumes, but diplomatic business through the United Nations and national embassies is growing dramatically. The same applies to cruise liner sales, Loebenstein says, given the growing trend toward ocean travel amongst the affluent.

Initially, the focus was on primarily Amarula Cream, one of South Africa's most widely distributed liquor brands, but in recent years, Distell's travel retail sales have also encompassed drive and boutique brand wines, following a surge in interest in New World and South African wines.

"The rise in our wine sales is mirrored by international trends. The Travel Retail Executive News Digest reported that in 2005, wine represented 28% of global duty-free and travel retail sales, up from 12.5%, 15 years ago."

Luxury spend

Loebenstein also says Singapore and Dubai are among the top five airports in terms of luxury spend by travellers. Stockholm airport is another high-value shopping destination, along with Frankfurt. "Among travellers using duty-free retail at these airports, price is less of a factor than quality. Shoppers want uniqueness, style and exclusivity and opt for our boutique brands, such as Plaisir de Merle, Stellenzicht and Le Bonheur."

These wines, as well as Nederburg, Durbanville Hills and Two Oceans, are becoming increasingly visible at other major airports, including New York and London.

Brandy is the next potential area for exploitation, he believes. "Internationally, the value of premium Scotch sales is rising. Last year's global sales represented a 13% increase on 2004. Against the background of this trend, news of the growing number of highly respected international awards won by Distell's premium brandies, like the Van Ryn's Collection Reserve range and the Oude Meester Reserve 12 Year Old, provides the opportunity to expand the portfolio of products we sell through travel retail.

"In the majority of instances, travellers trade up when they buy through travel retail and they are also prepared to experiment with new products. This gives us an ideal platform from which to introduce them to new lines."

Efficient supply chain management

Distell's reputation for a highly efficient supply chain management and the capacity to deliver within prescribed parameters, he adds, have helped forge a foothold with the leading companies that distribute to duty-free airport stores.

"Nevertheless, we are up against world-renowned global trademarks boosted by massive marketing spend. Currently there are over 800 liquor brands competing for consumer attention in travel retail. Consequently, we always begin by developing business relationships with Distell brands that already have some international visibility and a demonstrable quality track record so they are not entirely unknown to existing and potential customers. Tastings, promotions, promotional packs and sales staff training form part of our arsenal to grow visibility even further."

He says the power of branding has become even more important since increasingly stringent airport security has cut down on shopping time before boarding. "Consumers have to hurry their purchases and will go with what catches their attention first."