“Global Travel Retail is like its own island,” Katz notes. “It’s not New York or Buffalo or Paris-based. It has its own audience, for a finite period of time.” And those duty-free shoppers are there for one specific reason, to pick gifts (possibly even for themselves). “So it’s about what would make something a unique gift, or make it stand out.”
Duty-free shops came into existence shortly after the end of World War II, when European countries were sorely in need of revenue. At Ireland’s Shannon airport, an active hub for stop-overs between North America and Europe, Brendan O’Regan, an employee of the airport, wanted to use tax-free shopping to lure travelers into spending just a wee bit more on their way. So he asked Ireland’s government to declare the Shannon airport technically outside of the country, and thus the first duty-free shop opened in 1947. (The argument was that having passed passport control, a passenger had already left the country, and therefore the duties/taxes of that country became invalid – a radical idea.) It took until the 1960s for duty-free shops to arrive in the US, starting in Hawaii.
I looks like O’Regan’s idea worked, especially for alcoholic beverage companies. Today, the GTR market is on the ascent, according to data and intelligence firm IWSR: in 2018, spirits volume grew 2.5% in the channel, reaching a total value of $9.2 billion sold. Another 2% uptick is predicted over the next five years as well. And by 2023, the retail value of spirits in duty-free is estimated to reach almost $10.4 billion.
Many spirits producers regard GTR as one of the most important sales channels. Tequila maker Patrón, for example, says duty-free is the second-largest source of sales volume for the brand globally, comprising 500 outlets around the world. In other words, if duty-free were a country, it would be the second-largest market for Patrón, behind the United States.
Knowing this, spirits producers go out of their way to give duty-free the white-glove experience. What can you expect? For Patrón, it’s about offering limited releases and “innovations” in small volumes, says Adrian Parker, Global VP of Marketing. Right now, that includes Patrón’s Añejo Lot 221 bottling (a blend of tequilas aged for more than a year in French, Hungarian, and American oak – a different bottling will be offered in 2020) and Cask Collection Sherry Añejo, a tequila aged for two years in ex-Oloroso Sherry barrels.