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GTR spirits volume to recover by 2022

Spirits volumes plunged by more than 70% in global travel retail (GTR) in 2020, with recovery expected for 2022, according to data from IWSR Drinks Market Analysis and M1nd-set.

GTR spirits
The Asia Pacific travel retail market for spirits is forecast to return to 2019 volumes by 2025

Thorsen Hartmann, director of custom analytics for IWSR, and M1nd-Set’s CEO Clara Susset, presented data on the GTR market at the TFWA World Exhibition & Conference in Cannes last month.

According to the presentation, the previously expected recovery in 2021 was impacted by new virus variants, further outbreak waves, a ‘wide disparity in global rollout’ and travel restrictions.

Whisky, the GTR channel’s largest spirit segment, was more affected than other categories, the presentation noted. Furthermore, declines in Scotch sales in Asia Pacific GTR were distinct.

Brandy, predominantly Cognac, was less impacted in the channel, with a less-negative performance in the Americas (primarily US) and to a certain extent Hainan.

The data also noted that consumers were spending more overall in duty free in 2021, but there was a lower or similar average spend across most categories, as a result of more promotional spends.

For spirits, the average spend remained the same in 2021, compared to 2019, at US$81, down from US$82.

Furthermore, higher-value categories, which are highly pre-planned, performed better in 2021 than before the pandemic. Alcohol moved up to the second spot with 24% of buyers, after perfume. Alcohol previously took the fourth spot in 2019.

Market performance

In terms of areas, Asia Pacific suffered a higher impact in 2020, compared to other regions.

The Americas, mainly US/Mexico/Caribbean leisure travel, and functioning land border traffic in the US/Canada/Mexico and southern Brazil, is predicted to perform well in 2021.

However, Europe and Asia Pacific is forecast to remain ‘somewhat muted’ until early 2022.

The Asia Pacific travel retail market for spirits is forecast to return to 2019 volumes by 2025, with the market only just holding on to its second-place spot over the ‘similarly-sized Americas’. Within the region, Cognac and Scotch are expected to remain the best prospect.

In the Americas, agave-based spirits and gin and genever will be among the top performers.

Furthermore, Africa and the Middle East is expected to become more important for spirits.

In Hainan, alcohol is the second most-purchased category, up 31% to US$466, driven by Cognac. The alcohol sector has the highest conversion rate of all categories.

The presented noted that consumers in Hainan are likely to pre-plan the specific alcohol product they want to purchase. In addition, consumers in Hainan duty free stores are less likely to buy for gifting, compared to Chinese shoppers at airports.

The data noted that GTR is likely to change forever, with regional travel becoming more vital, benefitting border shops and ferry travel.

Furthermore, Hainan will remain an important travel retail market for Chinese consumers taking long weekend breaks.

Business travel will reduce in the short-to-medium term, while the middle price tier will be ‘squeezed’.

Alcohol sales in Asia Pacific are predicted to rise by more than 2% in volume by the end of this year, according to the IWSR.

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