IRELAND. The return of duty free sales between Ireland and the UK has fuelled a surge in spends on spirits in particular at Dublin and Cork airports, Aer Rianta International (ARI) has said.
ARI Director of Retail Ireland Paul Neeson told The Moodie Davitt Report that the combination of returning traffic, consumer demand for shopping and the new-found value in duty free to the major destination market, the UK, have been paying off over recent months.
He said that the spirits & wines category in particular is showing “spends significantly above overall growth”.
“We have a €13 duty free price to the UK on key lines, ranging from Smirnoff to Captain Morgan to Gordon’s gin, which has proved very strong. In Ireland taxation on alcohol has always been a challenge. People measure value not so much by what happens overseas but by what they see every day. And when many supermarkets are selling their alcohol at single-digit margins or as loss leaders, it has a negative impact on value perceptions of the airport.
“Now with duty free returning we have pricing on larger bottles that is better than the supermarkets can ever do, so that is positive.”
Sales have also been buoyed by a recently introduced four-litre duty free spirits allowance for travellers on UK-bound routes.
Shoppers are also trading up to more premium categories, Neeson added. “We have seen the effect on the likes of Redbreast, other Irish whiskies and premium gins, sales of which have been lifted by people who are trading up, taking advantage of their allowances.
“We maintain a broad range, and those spends have become so significant that we are having to forecast more and more with the brands for future demand, especially on those premium Irish whiskies.”
With the addition of the UK, the traveller base that can avail of duty free is now much broader. In 2019 just 21% of departing passengers could purchase duty free. That figure has rocketed to 39% (year to date) with the addition of the UK, but will come closer to 50:50 as more US and Middle East flights return, according to ARI. The company says that its value marketing message is therefore now relevant for a much wider audience.
The Ryanair traveller, which dominates traffic and spends in Dublin T1 as travel has returned, has played a vital role. Neeson says: “The Ryanair impact has been amazing. Last week we were at 96% of comparable 2019 sales from Ryanair passengers, driven mostly by the UK.”
Business has not only been strong in spirits: fragrances have outperformed as a category too since the return to travel [mainly since 19 July when Ireland reopened for non-essential travel -Ed].
“The fragrance market has exploded well beyond the overall trend,” says Neeson. “Across the board in beauty what we see is that those brands that have reintroduced Brand Ambassadors are performing well above the rest of the market. That does have an impact.
“Makeup has not performed as well but we have seen that with cutbacks among the brands, newness is no more than half of what it would have been in the category two years ago. So brands as well as retailers have cut ranges, and makeup has been a casualty. But we’ll review that and I’m sure in time our makeup ranges will creep up again.”
*The full interview with Paul Neeson appears in The Moodie Davitt eZine, out shortly.
