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Tuesday 21st August 2007
A captive – and highly excitable – audience makes airports the ideal testing ground for new drinks products, discovers Patrick Schmitt
Fraser Dunlop - Head of Category for liquor, tobacco, food and tax items, World Duty Free.
The drinks industry, like any other, needs a testing ground – a place to trial an idea before committing to mass production. For most, style bars provide the perfect environment. Here, dimly lit shelving can flatter the packaging and knowledgeable staff can explain the finer flavour details.
But what if your brainwave is not destined for the upmarket cocktail sipping community? Its endorsement will hardly reflect on a product’s more mainstream appeal, or rather, their dismissal prove its likelihood for failure.
What you need is a setting similar to conventional retail without the associated logistical and volume commitments. An area where you can quickly list and if necessary delist a product without incurring crippling costs. Such a place exists in airports.
Not only is the audience captive and curious, but BAA’s retail subsidiary, World Duty Free, is, from head office down, actively encouraging innovation. “We are predominantly focused on exclusive products,” explains Fraser Dunlop, head of category for liquor, tobacco, food and tax free items at World Duty Free. “This is why suppliers will use World Duty Free as a playground to launch products,” he adds.
Further, for Dunlop, “There’s no point us having the same as Tesco or Sainsbury’s, as 65% of our customers through the door are British so the whole point of our offer is to be different.” Also, American customers, in particular, “look for exclusive lines – products they can’t get at home”.
Key to the suitablility of travel retail for launches and line extensions is the high number of staff available to explain and promote new products. Dunlop draws on the example of Lindt, who brought a chocolatier into Gatwick North, “and that produced double digit category sale growth. A supermarket could do it but not as quickly and efficiently as ourselves. And just having a professional person in there created a lot of incremental sales for the business”.
Of course the customer state of mind is crucial to the success of such measures. “It’s all about triggering the desire when they are in store. Hopefully they’ve got through security relatively quickly, and, for example, in Gatwick South, which is predominantly a holiday terminal, their mood is let’s purchase, let’s trade up.”
The propensity to spend more is particularly acute when it comes to whisky and Champagne according to Dunlop. “Take Champagne – a few years ago it was for the jet set, now it’s not so much prestige as masstige – customers don’t just go to entry point Champagne but high-end products like Krug.
“This means that Champagne is in double digit growth year on year and Krug, at £75, is in huge growth and not on promotion. Also, unlike malts, which benefit from a lot of service and communication in store, Champagne doesn’t get as much and doesn’t seem to need it.”
Could World Duty Free do something similar thing with Champagne? “It’s a good question and very topical,” says Dunlop, “and there might be space in the near future where we might put something in there and one of the proposals is a Champagne shop. And ideally have some tables outside where you can sit and drink it.”
Extensive scope for development will certainly come with the opening of Terminal 5, in March next year, where World Duty Free will have seven new stores. Helping drinks sales will be the fact that the main terminal retail space will be entered by a large escalator which neatly drops you off into a style bar, while there will be “a video wall giving a lot of media opportunities to suppliers to advertise products”.
Furthermore, once Terminal 5 opens, Terminals 1 and 2 will be merged together, refurbished and renamed Heathrow East. “By the time the Olympics are here you should see a very modern airport.”
What about the scope for increasing sales of fine wine at World Duty Free – why has Berry Bros & Rudd pulled out of airport retailing? On the latter point, Dunlop suggests that Berry Bros may have suffered because it “didn’t get good slots in the airport, and if you don’t get that then you don’t get sales and if you don’t get sales, you don’t get space… it’s a Catch 22”.
However, he adds, “I think wine is a huge opportunity, and our liquor buyer has been in France focusing on expanding the fine wine range. If you go into our stores, the average transaction ranges in value from £20 to £40 so fine wine fits into that.”
Finally, is there any scope for shifting beer in this environment? After all, Dunlop was once beer buyer for Sainsbury’s.
“It is something that I want to bring in. One of the concepts we are looking at is a souvenirs standalone store on British gifting and within that I am challenging the buyer to bring in some traditional real ales. However, we currently don’t do a beer offer, which surprises me, especially when it comes to premium, high ABV beers.”
Overall, Dunlop is on a mission to make British airports not merely a means for leaving the country but a destination in themselves. “People in the Far East say I need to get to the airport early because I’m going to shop and then fly. Here, they just say I’m going to fly today – and shop if I get time. That’s the difference and our challenge is to get customers to make airports a destination shop and World Duty Free the customer’s first choice for airport shopping.”
As for individual products, “the only way to get growth these days is with innovation. If you are doing what you’ve always done you won’t deliver the numbers.”
© db August 2007