ESTONIA. Baltic cruise-ferry company Tallink Grupp has reiterated its plans to enter the Asian travel retail market as it revealed a positive performance for its restaurant and shops segment in the nine months to September. Sales rose by +2.1% year-on-year, with an acceleration of +6.1% in the third quarter alone.
Revenue from restaurant and shop sales across the company’s Tallink and Silja Line ships reached €402.8 million for the nine-month period, and €157.4 million in the three months to September.
The growth came despite traffic being almost flat (-0.4% to 7.48 million passengers) over the nine months to September, although there was a slight third quarter rise of +0.9% to 2.97 million.
The big increase in retail sales in the third quarter was helped by Estonia lowering its alcohol excise tax effective from 1 July, which enabled Tallink to cut the prices of nearly 700 products on its ships between Finland and Estonia.
The excise drop has encouraged more Finns to travel on Tallink’s duty-paid Helsinki-Tallinn route – its busiest by far – to shop onboard and/or in Estonia. As a result, traffic on the route grew in the period by +2% to 1.53 million, significantly above the traffic rise of +0.9%.
On Tallink’s key duty free routes between Sweden and Finland, traffic was flat at 881,948 passengers. However, from a revenue perspective these remain the most important routes: they accounted for 29.6% of traffic in the third quarter but 37% of total company revenue.
According to Tallink, a record number of passengers travelled on its ships in July and August, although competition between Estonia and Finland put pressure on ticket prices.
Growth from the restaurant and shops division was significantly better than that for the overall company which saw flat unaudited revenue of €722.7 million (a marginal decline of -0.6%) in the nine months to September. As a result, the restaurant and shops segment of the business grew to a share of almost 55% in the third quarter.
Tallink, which celebrated its 30th anniversary this year, said that its third quarter net profit of €54.6 million was “an all-time high” for the period.
“We are taking part in Singapore airport tender processes…”
The third quarter also marked a change of strategy for Tallink as its seeks new markets. CEO of Tallink Grupp Paavo Nõgene commented: “In addition to serving record numbers of passengers, the third quarter was a busy one for the group from a business development perspective. We founded a subsidiary in Singapore, are taking part in Singapore airport tender processes [as we have previously revealed-Ed], and we are looking for other opportunities for expansion in Asia.
“We additionally acquired the franchise rights to operate Burger King restaurants in the Baltic states and we have appointed two strong senior managers to the group’s management team – a Head of International Shore Trade and Group Customer Experience Manager. We are also focusing strongly on further developing and implementing corporate and social responsibility practices in our business with the aim of pioneering responsible shipping in the Baltic Sea region.”
[A profile of Tallink Grupp spanning its 30-year history can be found in the October 2019 print issue of The Moodie Davitt Report, starting on page 155.]
