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Heinemann: Despite ‘turbulence’ liquor still strong
The rouble crisis and external challenges in Africa have caused “turbulences”, but liquor still ranks as one of the strongest travel retail categories, says the Gebr. Heinemann management.
Despite “turbulences”, Gebr, Heinemann’s Peter Irion is positive about the future of the beleaguered Russian market
Speaking at the travel retailer’s annual press conference held in Hamburg last week, Peter Irion, executive director, said although all product categories had been affected by the rouble devaluation, the core alcohol, tobacco and confectionery category still accounted for the greatest share of company turnover, at 58%
“The top, top, top, high-end category is still impacted, but we’ve had to change our assortment downward,” Irion explained.
Discussing the Russia/CIS region more generally, Irion said regional airports had been hit hardest as the rouble halved in value.
“The main effect we have seen is on regional airports, because the airline industry has decided not to fly internationally from the regional airports anymore.” As such there has been a steeper downturn here than in Moscow, St. Petersburg and other large cities.
“In Moscow we have achieved our expectations for 2015,” he continued, adding that turnover at Domodedovo International Airport was lower than at Sheremetyevo due to the bankruptcy of airline Transaero.
Heinemann has opened new shops across the region in 2015, including at Boryspil International Airport in Kiev, Ukraine, and Vilnius International Airport in Lithuania. “When I look into the future we will invest further in this market,” Irion continued. He expects Heinemann’s market share in the region to increase from 40% to 50% in 2016, adding that the company won a ten-year contract at Zhukovsky Airport, Moscow’s fourth. Zhukovsky is expected to commence operations this year.
Africa – a “mixed bag”
While Africa saw “positive developments, it’s really a mixed bag,” Irion continued.
North and Central Africa had been particularly hit, with terrorism, the Ebola virus, the low oil price and restrictions on taking foreign currency out of countries including Nigeria and Angola causing “huge problems”.
“However we do believe in the market and we will look for opportunities in Africa.”
Gebr. Heinemann’s controlled group turnover had reached €3.6 billion (US$4.07 billion) in 2015, up 13% year-on-year. Retail operations accounted for €2.8 billion (US$3.16 billion), with the distribution side of the business contributing €800 million (US$904 million).