As the Duty Free World Council rolls out its Code of Conduct for the Sale of Alcohol Products in Duty Free & Travel Retail, TFWA president Erik Juul-Mortensen explains why the guidelines matter for all spirits stakeholders.
Erik Juul-Mortensen, TFWA president, speaking at last year’s TFWA Asia Pacific Conference
Earlier this month, the Duty Free World Council (DFWC) announced it was taking its Code of Conduct for the Sale of Alcohol Products in Duty Free & Travel Retail global.
The guidelines, which focus on the responsible retailing of alcohol, will be accompanied by a register of compliant companies, will ultimately cement responsible retailing in the travel retail and duty free channel – essential as more and more legislative challenges gather on the horizon.
The Code itself is substantial, but at its heart are a series of working principles developed especially for duty free and travel retail – a channel unique in that it already has a number of inherent checks absent from domestic markets. For example, products in duty free and travel retail are sold for export, and cannot be consumed until after the passenger has passed Custom controls at their destination. In addition, stores can be open 24 hours a day, seven days a week, and children and minors make up a very small proportion of visitors and very rarely travel alone.
Of course, alcohol retailing rules vary by country, and to develop a Code to suit all operators is no mean feat – especially a thorough document which takes into account the likes of marketing communications, sales guidelines and sampling activity. But what does it mean for the industry, and what do spirits brands need to know? Erik Juul-Mortensen, president of the TFWA and DFWC board member, goes into detail…
SB: What are the key aims and targets for the Code of Conduct (CoC) roll-out? How will you measure its success?
Erik Juul-Mortensen: The key aims are for the retailers and brands globally to take onboard the CoC and to change any practices that do not currently live up to the text or spirit of CoC. The measure of success will clearly be the coverage and acceptance of the CoC across all regions combined with the overall compliance with the CoC.
To what extent did you have to adapt/change the Code to fit different regions? Can you give examples of this?
The CoC started out in Asia Pacific as mentioned, followed by an adapted version in Europe by the European Travel Retail Confederation (ETRC). Working the two together taking onboard input from various stakeholders resulted in one unique global Code of Conduct.
How challenging was the development process behind the expanded Code? Who did DFWC consult with, and were there any specific challenges?
Fortunately we were able to draw on expertise from the various stakeholders including different geographically-based stake holders which meant that we were able to overcome a few original concerns such as tastings and pregnant women, as well as minimum drinking age in different countries and regions and signposting. However, all were overcome and resulted in one global CoC, which is now in the process of being rolled out.
Airports are a unique sales environment
DFWC has also said it will adopt the Asia Pacific Travel Retail Association’s (APTRA) Responsible Retailing training for alcohol. How will you roll this out? Will retailers/associations undertake the training voluntarily? How will you encourage stakeholders to take part?
It is correct that the DFWC has accepted the kind offer from APTRA and adopted the Responsible Retiling Training for Alcohol (RRT), which has been agreed by the regional associations forming the DFWC. This programme has been made available to all members of the Council and will be rolled out as the different member associations see fit. It must be underlined that there is already a considerable amount of training on alcohol and the special requirements connected to selling alcohol undertaken by retailers and brands and this will, of course, continue, but perhaps the RRT programme can be a help in this.
Can you describe the current regulatory landscape around alcohol in travel retail at this point? What are the key issues/threats to the alcohol sector?
In many domestic markets, advertising of alcohol is prohibited and in this case this usually also applies to alcohol sales at airports in those countries. In some markets governments and regulators are looking at increasing the amount of information on alcohol labels, and in a very limited number of markets there is some focus on prohibiting anything that may be considered to increase the appeal of alcohol such as symbols or gold medal awards.
Is there enough urgency from industry stakeholders to address these issues?
The industry’s associations are working hard to ensure that governments understand the strict regulation around alcohol sold at duty free and travel retail stores and that passengers are limited in what they buy by internationally recognised customs allowances and by what they can reasonably carry on a journey. The industry contends that domestic market legislation is inappropriate for airport travel retail.
A House of Lords committee has called for tighter alcohol licensing laws in UK airports
Recently a UK House of Lords Committee said it “cannot understand” why UK licensing laws aren’t applied within airports. Is there a DFWC response to this? How much of an issue are reports like this to the industry?
Airports operate 24 hours a day and have to deal with all sorts of issues such as lengthy delays or cancellations. I don’t see any reason why travellers shouldn’t be allowed to enjoy a drink as part of their journey or indeed to buy duty free alcohol when passing through the airport no matter what time. Duty free is for export, not for immediate consumption, so introducing licensing laws that don’t take into consideration the uniqueness of the travel retail environment makes no sense.
That said, we do of course take our responsibilities seriously as alcohol retailers. The UK Travel Retail Forum, which represents the industry in the UK, recently joined with other industry partners (airports, airlines, F&B operators, local police authorities etc.) to agree a Code of Conduct on disruptive passengers. We believe that this Code of Conduct has the potential to reduce significantly the level of disruptive passengers and will be much more effective that simply bringing in UK domestic licensing rules. Unfortunately the House of Lords Committee refused to take this into consideration, but we are confident that the UK government will allow the time for the Code of Conduct to bed down and for the impact to become real.
Again this highlights the great work that industry associations are doing to defend and promote duty free and travel retail worldwide, and why we need more support from the many companies operating in the channel.
Are there any other reviews or reports currently ongoing which could present challenges to the alcohol category in certain markets?
It is highly likely that the question of developing stronger strategies to reduce alcohol related harm and even consumption will once again be on the agenda of the World Health Organisation’s annual meeting that takes place in Geneva next month. There have been ongoing demands from a number of countries, for example, India and Australia, for a UN treaty on alcohol similar to that which addresses tobacco issues. At the same time, Estonia, the forthcoming presidency of the EU in the second half of 2017, has made it clear that it intends to propose new policies calling for greater restrictions on the marketing and labelling of alcohol in the EU, while having introduced national legislative proposals that calls for the segregation of alcohol in larger shops (over 450sqm) and a ban on sampling outside of specialist stores only retailing alcohol. Both measures would impact on duty free retailers if there was no specific exemption.
What can the industry do to better represent a united and responsible front to legislative challenges?
Join and correctly fund the trade associations that defend the industry. Regrettably there are still too many companies in our industry who are not members, and who rely on other companies in the industry to fund the battles. Industry associations defend the industry, not individual companies. The whole industry, or entire categories benefit and it behooves every company that sells in the duty free and travel retail environment to make a contribution.
For a copy of the Code of Conduct or for further details, contact DFWC.