Moody Report On Travel Retail

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The Martin Moodie Interview
An industry transformed
FAB Awards 2014
Qatar Airways CEO Akbar Al Baker on a Dufry reshapes travel retail with The best in travel-related
new benchmark at Hamad International its swoop for The Nuance Group food & beverage worldwide
July 2014 | www.TheMoodieReport.com
THE WORLDS
TOP
TRAVEL RETAILERS
Our unique annual guide to the industrys market leaders
Dermot Davitt
Editors Desk
onsolidation, concessions growth and

the Chinese consumer: these are some
of the key influences shaping the latest
rankings of the industrys market
leaders. In this edition we bring you
our unique annual guide to the worlds top 25 travel
retailers, based on full-year 2013 turnover. DFS
maintains its status at number one, followed by
Dufry, LS travel retail, Lotte Duty Free and Gebr
Heinemann (page 10).
Dufry of course has been the great engine of industry
consolidation over the past decade, and its influence
on this list has been profound. Both InterBaires and
Hellenic Duty Free Shops featured in our Top 25 in
previous years, for example, but both are now
integrated into the Dufry Group as the Swiss
powerhouse homes in on the number one spot.
Thats a position it will assume in next years set of
rankings, with the addition of The Nuance Group
following its dramatic capture of the worlds seventh
biggest travel retailer, announced on 4 June
(comment and analysis on page 46).
Concession gains and losses have also had a big
impact on our list. DFS Group began its three core
category Hong Kong International Airport (HKIA)
concessions in late 2012, with a full year of sales
there contributing to these 2013 numbers. The flip
side of this can be seen in Sky Connections lower
ranking for the year, following the loss of its HKIA
liquor & tobacco concession though it remains a
firm fixture on our list, mainly because of its
cross-border duty free operations in Hong Kong.
Then theres the Chinese consumer. This key
nationalitys influence can be seen from top to
bottom of our list of the major industry players. DFS
has been targeting the Chinese traveller for well over
a decade, but within our Top 25 at least half of the
companies can cite this group as a core contributor
to sales. That includes not only those based in Asia
from China to South Korea to Thailand but also
Dubai Duty Free (which is recruiting heavily to
better engage the Chinese) or Europes big travel
retailers (LS travel retail in Paris invests a wealth of
resources in marketing to these travellers).
17
15
16
3
7
6
14
4
8
25 22
13 20 21
12
24
9
10
1
The worlds
top travel
retailers
in focus
10 | THE MOODIE REPORT | July 2014
19 23
11
The Moodie Report

brings you the latest
rankingss of the world
worldss
top travel
el retailers by
turnover,
r, based on final
2013 figures.
ures. The list
confirmss the position
of many of the leading
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notably those
in the topp ten,
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have maintained
intained their
status through
rough a mix
of consolidation,
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kings this year.
1. DFS
2. Dufry
18
3. LS travel retail
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4. Lotte Duty Free
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5. Gebr Heinemann
ann
6. World Duty Free
ree
7. The Nuance Group
8. The Shilla Duty
ty Free
9. Dubai Duty Free
ee
10. Ever Rich Group
up
11. King Power International
ternationa
al (T
(Th
(Thailand)
haila
and)
12. Sunrise Duty Free
13. Duty Free Americas
ericas
14. China Duty Free
ee Group
15. Aer Rianta International
ernationall
16. WHSmith
17. Tallink Group
18. JR/Duty Free
19. King Power Group
oup (Hong Kon
Kong)
ong
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20. DFASS
21. Starboard Cruise
se Servicess
22. Japan Airport Terminal
erminal Co
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23. Sky Connection
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24. Qatar Duty Free
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25. NAA Retailing
July 2014 | THE MOODIE REPO
REPORT
ORT | 11
And the Chinese influence on our list is

only set to grow, as retailers investment choices
demonstrate. King Powers new downtown store in
Bangkok was designed with this nationality in mind,
and will feed through into its future numbers; so too
will Ever Rich Duty Frees opening of Asias biggest
duty free store, the Kinmen Ever Rich Golden Lake
Plaza on Greater Kinmen Island, in May. Add in
DFSs roll-out of its T Galleria brand with the
Chinese the focus in certain locations and the
ambitious retail expansion plans of Lotte and Shilla
in Korea, and you have an industry placing its faith
firmly in the future of China.
Inspiration and
aspiration at FAB 2014
(FAB) Conference and Awards took
The fourth annual Airport Food & Beverage
many of the worlds key players in
place in Copenhagen last month, gathering
on a high-quality event, and on
travel-related F&B. In these pages we report
annual FAB Awards.
page 135 we bring you highlights of the
mbition, achievement and insight

were on display in equal measure at
this years Airport Food & Beverage
(FAB) Conference and Awards as
delegates from around the world
vision for the
convened in Copenhagen to share their
future of the travel food & beverage sector.
The Moodie
The two-day conference organised by
high-level
Report and The Foodie Report featured
and most
discussion between some of the biggest
innovative airports and concessionaires.
the event,
Copenhagen proved a superb venue for
Airports to
from the hospitality of host Copenhagen
at the iconic
a fantastic Opening Cocktail reception
Tivoli Gardens (courtesy of Autogrill and
hosted
HMSHost). Then, at a glittering Gala Dinner
some of the
by SSP, the FAB Awards 2014 celebrated
and
concepts
F&B
impactful
and
successful
most
programmes of the past year.
In this special report we present a comprehensive
travel food &
review of an event which exhibited the
beverage industry at its very best.
|
July 2014 | THE MOODIE REPORT 109
Theres plenty more besides our Top 25 in this Print

Edition. We go on location to Toronto Pearson
International, where Nuance has delivered a
high-class new arena for retailing amid the airports
major investment in commercial activities (page 62).
We also feature a special report on the vital Nordic
travel retail market. Our focus this time is on
Helsinki Airport where World Duty Free Group
and F&B providers HMSHost and SSP are helping to
transform the environment and on Tallink Group,
whose investments in its Silja Line fleet take its retail
standards to a new level (pages 78 and 87).
Rounding out this issue are highlights of last months
annual Airport Food & Beverage Conference in
Copenhagen (organised by The Moodie Report),
including a full review of the annual FAB Awards
which heralds high achievement in travel dining
around the world. Its a feature that underlines just
as our Top 25 Travel Retailers report does the
persistent appetite for excellence among the
industrys very best companies today.
July 2014 | THE MOODIE REPORT | 3
Inside
The Moodie Report
July 2014 | VOLUME 12ISSUE 4
10
46
62
87
3 Editors Desk:Top-ranked retailers

underline appetite for excellence
9 Martin Moodie:Hamad International
Airport: a must see for every travel retailer
62 Top-class in Toronto:Nuance
North America reveals a striking new retail
arena at Canadas largest airport and is one
of the retailers best executions worldwide
10 The worlds top 25:The Moodie

Reports definitive guide to the industrys
leading travel retailers, ranked by their latest
annual sales, with comment and analysis
78 Nordic newness:A wave of

investment at Helsinki Airport will change
the face of retail and F&B there in the months
ahead, as we discover on a recent visit
46 Transforming travel retail:We

turn the spotlight on Dufrys US$1.72 billion
swoop for Nuance, the biggest consolidation
play in industry history
87 Maritime make-over:Tallink
Group reacts to new consumers and changing
tastes by introducing a new retail brand and
design onboard its Silja Line ships
100
Founder & ChairmanMartin Moodie
+44 (0)20 8231 7201

Martin@TheMoodieReport.com
President Moodie International SA
Jaclyn Wampler
+41 32 967 9526
Jaclyn.Wampler@TheMoodieReport.com
Vice Chairman & Editorial Director
Dermot Davitt
+353 91 583840
Dermot.Davitt@TheMoodieReport.com
Executive Director & Chief Operating Ofcer
Bob Wilby
+44 (0)20 8231 7203
Bob.Wilby@TheMoodieReport.com
Executive Director Business Development
& InnovationMatt Willey
+44 (0)20 8231 7205

Matt.Willey@TheMoodieReport.com
Executive Director EditorialRebecca Mann
92 Consumer focus:We present highlights

of research into the Nordic ferry traveller,
courtesy of travel retail specialist M1nd-set
109
+44 (0)1277 624595

Rebecca.Mann@TheMoodieReport.com
Editorial Director e-Zines and New
BusinessGavin Lipsith
+44 (0)1202 558812

Gavin.Lipsith@TheMoodieReport.com
Asia Bureau Chief Melody Ng
95 Taking ight:Inflight Sales Group (Hong

Kong) is eyeing further expansion beyond its
Greater China core markets after a series of recent
contract gains in Southeast Asia and Europe
+65 6358 2001

Melody.Ng@TheMoodieReport.com
Senior Editor Asia Pacic, Latin America
Peter Dowling
+64 9 8148993 peter@oratiamedia.com
Research Manager Victoria Bowskill-Shanks
+44 (0)20 8231 7204

Victoria.Bowskill@TheMoodieReport.com
100 A benchmark for airports:

Hamad International, which opened fully in May,
sets a new standard for commercial and for
airport facilities around the world, says Qatar
Airways Chief Executive Akbar Al Baker
Production Editor Jon Elphick
+44 (0)1580 761145

Jon.Elphick@TheMoodieReport.com
Designer Ray Heath
+44 (0)7771 717172

Ray.Heath@TheMoodieReport.com
Multimedia Manager Edward Lake
109 FAB 2014:Highlights from the fourth

annual Airport Food & Beverage Conference,
which took place in Copenhagen in June
+44 (0)20 8231 7208

Ed.Lake@TheMoodieReport.com
Vice President Sales & Events
Sarah Genest
+44 (0)7515 011881
Sarah.Genest@TheMoodieReport.com
135 A show of excellence:The full list

of winners from the annual FAB Awards a
celebration of the very best in the world of
travel-related food & beverage
Commercial Director Mandy Sime
+971 4 394 3293

Mandy.Sime@TheMoodieReport.com
Advertisement Director Claire Wates
+44 (0)1428 717045

Claire.Wates@TheMoodieReport.com
145 Partners index:The companies that

help The Moodie Report to help you
Advertisement Director Connie Magner
+44 (0) 7905 070644

Connie.Magner@TheMoodieReport.com
Publishers Assistant Helen Pawson
+44 (0)20 8231 7210

Helen.Pawson@TheMoodieReport.com
Web Development Director Dilantha Fernando
dilantha@revomobile.com
Ofce Administrator Rebecca Earley
+44 (0)20 8231 7200

Rebecca.Earley@TheMoodieReport.com
Subscriptions Manager Sinead Moodie
+44 (0)20 8231 7200

Sinead.Moodie@TheMoodieReport.com
The Moodie Report is published by Moodie International
SA and is a registered trademark. All rights reserved.
Nothing may be reprinted or reproduced in whole or in
part without written permission from the publisher.
135
Moodie International Limited

Unit M3, The Old Pumping Station, Pump Alley,
Brentford TW8 0AP, UK
www.TheMoodieReport.com
Martin Moodie
elcome to The Moodie Report.

Over the past 12 years running
this publication Ive spent
roughly half of my time out of
the UK. Ive lost count of the
number of cities Ive visited. Ive become a true citizen
of the world; but much of that citizenship has been
earned onboard airplanes and in airports, hotels and
offices. My normal routine runs something like this
depart Heathrow, arrive at overseas airport; take
transport to local hotel; visit airport retailer downtown
or on-airport; depart overseas airport for Heathrow.
Those glimpses of cities, regions, and countries
have given me an insatiable appetite for the tastes,
traditions, heritage, history, crafts and cultures of the
world. Just before this edition went to press I stayed
true to type, flying from Heathrow to Doha on a
Monday evening, arriving at Hamad International
the next morning, heading a couple of hours later to
meetings with Qatar Duty Free Vice President Keith
Hunter and then Qatar Airways CEO Akbar Al Baker.
Subsequently I took an all-too-brief airport tour, dashed
back to the excellent Ornyx Rotana Hotel (run in
association with Qatar Airways), had dinner with the
Qatar Duty Free team, worked till the small hours online
and then did a final farewell tour of the airport before
flying home courtesy of the outstanding Qatar Airways.
Door-to-door in 48 hours, with a 20 hour break before
I headed off again to Milan. You get the picture
But oh what I learned over those 48 hours about
projects, passion and personalities my favourite
three Ps of travel retail. There is nothing I enjoy more
in this business than sharing time with a commercial
team that has forged a new retail proposition. I wonder
if there can be any more exciting project in travel retail
than creating the commercial offer at a new airport.
That is exactly what has happened in Doha as Keith
Hunter and his team (see feature, page 100) conceived
and crafted what they knew had to be outstanding, if
possible world-beating, retail and food & beverage.
With a boss like Akbar Al Baker anything short of that
would simply not have been on the agenda, but it
wasnt just about pressure from above. Keith Hunter,
inspired I think by his huge respect for Al Baker, has
that same zero-tolerance attitude to mediocrity; that

same obsession with excellence and detail; that same
ability to lead from the front.
When leaders care, teams care; when leaders inspire,
their lieutenants inspire. You will read much about
Al Bakers tough management style; you will hear the
cheap (mostly English) critics, with their finely tuned
sense of schadenfreude, delighting in the delayed
opening of Hamad International (or for that matter the
temporary economic troubles of Dubai a while back);
you will be regaled with industry tales of how leading
international concessionaires could do it better.
My advice? Turn down the sound. Instead visit Doha
and Qatar Duty Free. Understand the complexity of
what they have created. The vision. The obstacles. The
passion. The excellence. The execution. The buy-in.
The brilliance. The sense of commitment to country, to
progress, to something altogether bigger. And then
think that London may finally get an additional
runway sometime post-2020 (if its lucky).
So youll forgive me an (ageing) small town boys
delight at my Doha discoveries. I think what has
happened at Hamad International should be a case
study for every student of our industry. More
particularly, I would urge every senior airport
executive around the world to come and see.
The great, great challenge of the Trinity (airports,
concessionaires, brands) ideal is to get industry
stakeholders on the same page (if not always in agreement).
The fools and (differently) the diehards of the industry
dismiss that concept as a nave utopia, and of course
theyre demonstrably right and emphatically wrong.
Right because, of course, the industrys various
stakeholders spend so much time obsessively
committed to MAG, margin and what I term misery
debate. But wrong wrong, wrong, wrong in that
great ideas are never built by naysayers, narrowminded sceptics and Neanderthals. Give me an Al
Baker or a Keith Hunter any day of the week. You
watch see who our industrys leaders are over the
next decade. Watch how Qatar Duty Free flourishes,
not just in Doha but around the world, and youll see
who creates the paths to progress.
17
15
16
3
7
6
13 20 21
The worlds
top travel
retailers
in focus
The Moodie Report

brings you the latest
rankings of the worlds
top travel retailers by
turnover, based on final
2013 figures. The list
confirms the position
of many of the leading
players, notably those
in the top ten, which
have maintained their
status through a mix
of consolidation,
concession gains and
strong sales growth. The
Top 25 also underlines
the growing strength
of Asia Pacific-based
companies in the market
and features some shifts
in the rankings this year.
14
4
8
25 22
12
24
10
1
19 23
11
18
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
DFS
Dufry
LS travel retail
Lotte Duty Free
Gebr Heinemann
World Duty Free
The Nuance Group
The Shilla Duty Free
Dubai Duty Free
Ever Rich Group
King Power International (Thailand)
Sunrise Duty Free
Duty Free Americas
China Duty Free Group
Aer Rianta International
WHSmith
Tallink Group
JR/Duty Free
King Power Group (Hong Kong)
DFASS
Starboard Cruise Services
Japan Airport Terminal Co
Sky Connection
Qatar Duty Free
NAA Retailing
Analysis The worlds top 25
The Moodie Reports Top 25 travel retailer rankings 2013 (by turnover, million)
4,065
DFS
Dufry
2,911
LS travel retail
2,900
Lotte Duty Free
Gebr Heinemann
World Duty Free Group
The Nuance Group
The Shilla Duty Free
Dubai Duty Free
10
Ever Rich Group
2,441
2,400
2,079
1,707
1,421
1,314
1,226
1,122
11 King Power International (Thailand)

882
12
Sunrise Duty Free
13
Duty Free Americas
14
China Duty Free Group
799
15
792.5
16
WHSmith
17
Tallink Group
507
18
JR/Duty Free
493
19
King Power Group (Hong Kong)
481
20
DFASS
455
21
Starboard Cruise Services
450
22
Japan Airport Terminal Co
368
23
Sky Connection
348
24
Qatar Duty Free
25
NAA Retailing
840
553
319
272
Source: Moodie Research
ach of the top ten travel retailers in the

world posted healthy growth in sales
(some in double digits) last year, while
the sustained strong performance of
many Asia Pacific-based companies
enabled a number of that regions powerhouses to
boost their industry rankings. These are among the
conclusions to be drawn from our analysis of final
2013 figures from the channels leading travel retailers.
For the past three years Moodie Research has issued

a comprehensive and unique guide to the worlds top
25 travel retailers a list that, uniquely, takes account
of both duty free and duty paid sales, as well as
speciality (not just core category) stores.
In this issue we repeat our analysis, with full
rankings in the chart above. As well as duty free and
duty paid sales the numbers also include news &
Luxury to a T: Market
leader DFS is investing
in a comprehensive
rebranding of its
downtown Gallerias
(pictured is T Galleria
Singapore)
books an important category for multi-channel

retailers such as Dufry and Lagardre Services, for
example. Our figures represent a combination of
reported results from retailers and The Moodie
Reports own extensive and well-sourced analysis.
As with previous reports, we chose the Euro as the
standard currency as it was the most commonly
reported, although as in previous years currency
fluctuation played a part in determining the
rankings. [Note: Conversions were based on
currency values as at 31 December 2013.]
Compiling this list presents certain challenges, and
not only because of currency issues. Comparing
the worlds leading travel retailers is a complex task
because of the many different operating models
and reporting periods. Some of our figures include
joint ventures and managed turnover, for instance
in the case of Aer Rianta International (ARI). As
in previous years, though, we excluded sales
from ARIs management agreement (recently
terminated) with Qatar Duty Free, which has its
own entry.
We have also chosen to focus on direct sales to the
travelling consumer, and excluded wholesale
numbers, which in the case of Gebr Heinemann and
some others are significant.
So how does the list of leading companies for 2013

shape up? Lets find out.
The worlds leading luxury goods travel retailer DFS
maintains its number one ranking, with close to
US$5.6 billion in sales (though Dufrys acquisition of
Nuance will thrust the Swiss multinational into the
top spot next year). Thats a healthy increase on the
figure of US$4.3 billion we reported for 2012, which
itself showed strong growth over 2011 and 2010
(US$3.7 billion and US$2.8 billion respectively).
DFSs performance benefited from the continuing
growth of Asian travel and tourism in 2013, with
Hong Kong and Macau in particular maintaining
their strong momentum. The first full year of core
category operations at Hong Kong International
Airport a business the company captured after
a tender in 2012 delivered a major boost to
revenues (though the investment phase weighed
down profitability early in the concession, noted
co-parent LVMH).
Crucially the company also began the rebranding of
its downtown stores under the T Galleria name and
design, initially in Waikiki and then later in Hong
Kong and Macau, with further stores to follow. It also
began the roll-out of a fresh new look and design for
its airport duty free stores, beginning at Los Angeles
International, another key contract renewal. In

addition DFS gained a five-year extension to its Abu
Dhabi Duty Free concession in 2013, cementing its
position at the fast-growing Middle East location.
Against these positives, the weakness of the Yen
reduced the spending power of Japanese travellers,
notably in Hawaii, during 2013. That trend has
continued into 2014, but is more than offset by the
continuing powerful contribution of Chinese
shoppers to the business.
DFS may be about to be overtaken as the industry
leader in sales terms, through Dufrys swoop for
Nuance, but its status as the channels leading luxury
retailer remains unchallenged.
Dufry maintains second place on our list, as 2013
turnover soared by +13.3% to CHF3,571.7 million
(2.91 billion) through a mix of organic growth, new
concessions and acquisitions. Its capture of Nuance
will propel the group into the top position in our
rankings next time, but acquisitions also had a part
to play in boosting turnover in 2013.
The company took a majority stake in Folli Follie
Groups travel retail business from April with its
figures integrated from that time.
Other key developments in 2013 included several

deals in Brazil, notably at the key airport of So
Paulo Guarulhos, along with Brasilia and
Viracopos, which combined have helped double
Dufrys retail space in the country (most of it
coming into play in 2014).
The company maintained an aggressive push into
Asia too, winning duty free concessions in Bali, Sri
Lanka, South Korea (Gimhae) and China
(Shenzhen). It also struck an agreement with Taiwan
Land Development Corporation to operate duty free
retail at the Wind Lion Plaza on Kinmen Island a
move that could deliver access to huge numbers of
Chinese travelling consumers in a location
designated a duty free island.
The move for Nuance of course is a game-changer
not only for Dufry, but for the industry. The
company has been the great consolidator of the past
decade in this still fragmented market and is now
set to take on the mantle of leadership. What kind of
market leader will Dufry be? How will it integrate its
new acquisition? How will it buy and sell? How will
it manage its relations with airport partners, and how
will it approach the major tenders that arise in the
years ahead? Seeing how the answers unfold will be
fascinating to observe (see also Nuance entry below).
Dufry is strengthening
through acquisition and
concessions including a
vital new deal at So Paulo
Guarulhos (pictured)
Maintaining its third place in the rankings is

LS travel retail, which posted a +5.4% increase
(+3.5% like-for-like) in turnover for 2013, to 2.9
billion. This was driven in particular by a +14% surge
in duty free division sales. Thats a key factor as the
nature of the company changes, and as it moves away
from its long-time reliance on news & convenience.
Duty free was just 30% of sales in 2003, but by 2013 it
was 41%; travel essentials (principally Relay) was 66%
a decade ago but is 51% today, and declining.
After Dufry, the Lagardre Services retail arm has
probably been the major industry force in
consolidation through acquisition, certainly in
Europe, with its capture of ADR Retail in Rome and
Gerzon at Schiphol among the key deals.
Beyond Europe, new openings in China (Shenzhen
duty paid) and Malaysia (KLIA2) as well as the
roll-out of Aelia Duty Free at selected Australasian

airports lend impetus to its Asia Pacific ambitions.
The next question is how well it can compete for the
current blue-chip contracts at Sydney and Auckland,
where it has signalled its ambitions.
LS travel retail:
Maintains its top ve
ranking as it seeks a
transformational
acquisition
Looking ahead, LS travel retail is forecasting sales

growth of +5% to +10% a year through to 2016, and
plans to lift EBITDA margin by one percentage point
in the same period (from 4.9% in 2013). Dont rule
out a transformational acquisition either, as the
Lagardre Group focuses more and more on travel
retail for growth.
In last years rankings, South Koreas two major travel
retailers, Lotte Duty Free and The Shilla Duty Free,
thrust their way into the top ten, amid the surging
business delivered by Chinese visitors. And both had
another banner year in 2013.
Lotte Duty Free maintains fourth place in our list

after it posted sales of KRW3,550 billion (2.44
billion), up by just over +10% year-on-year.
Sales to Chinese shoppers soared by close to +70% in
2013, with a strong performance in online sales too:
these increased by +30%. The weakened Japanese
Yen, however, eroded sales sharply by Japanese
shoppers, the company said.
Lottes growth momentum has continued into 2014,
with sales in the first half leaping by double digits.
This years figures are boosted by the opening of Lotte
Duty Frees new retail operation at Guams A.B. Won
Pat International Airport in early January, and by its
Jakarta Airport operation which opened last year.
The Lotte drive to internationalise continues as

it seeks to make a major breakthrough at one of
Asia Pacifics hub airports. If it can translate that
ambition into reality it will be well on the way to its
stated target of becoming a top two ranked travel
retailer by 2018.
Lotte Duty Free: The drive

to internationalise beyond
South Korea will help
dene its fortunes
The top five is completed by Gebr Heinemann, with

2.4 billion in direct retail turnover for 2013
(including its powerful distribution arm, total
turnover was 3.2 billion).
The core of the Heinemann business remains in
Europe, where it estimates that it controls a 1516%
market share in travel retail. Its top three markets are
Norway (where the company has enjoyed
Blending tradition and

modernity: Gebr Heinemann
puts 80% of earnings back
into the company; pictured
are Board directors (lr)
Gunnar Heinemann, Raoul
Spanger, Stephan Ernst,
Claus Heinemann, Kay
Spanger and Peter Irion
The Books, News and Convenience

Travel Retail Specialists
With over 200 years experience, WHSmith operates in 20 countries with 160 international
stores open or won, including almost 100 stores in 36 airports globally, including:
MELBOURNE SYDNEY KUALA LUMPUR DELHI ABU DHABI
DOHA COPENHAGEN LONDON
Along with our core Books, News and Convenience format, our additional brands
include Zoodle (Childrens store), GadgetShop (Electronic Accessories),
WHSmith Express (Grab-and-Go convenience), and WHSmith Cafe.
We have a wide range of business models and approaches, each of them tailored
to the local market, and include directly managed, joint venture, and franchise.
To discuss the range of possibilities, please contact:
Europe, Africa, America
Ali Aliev
+44 (0)207 406 6346
ali.aliev@whsmith.co.uk
Asia
Patricia Poon
+65 31520216
patricia.poon@whsmith.co.uk
Middle East, India

Jonathan Robinson
+974 70526604
jonathan.robinson@whsmith.co.uk
Australia Pacic
Craig Pring
+61 4 1034 2082
craig.pring@whsmith.com.au
International Director Louis de Bourgoing louis.debourgoing@whsmith.co.uk

UK Ian Sanders +44 (0) 207 406 6469 ian.sanders@whsmith.co.uk
astonishing success at Oslo Airport in particular,

with 575 million in 2013 sales), followed by Turkey
(545 million), driven by Istanbul, and Germany
(400 million), led by Frankfurt.
Critically, too, some 80% of Gebr Heinemanns
turnover is secured until 2020 or beyond through
long-term concessions. By then the company plans
to have expanded its current 70,000sq m of retail
footprint to 100,000sq m and its concession base
from 61 locations today to 90.
Extending that contract base means accelerated
expansion into new markets, with Asia Pacific and
the Americas top of the list (it now also has a Middle
East office, in Abu Dhabi). By 2020 we want to be
the leading global player, said the company in
February as it opened up for the first time ever on its
sales, strategy and targets.
Heinemann Asia Pacific has already recorded a
number of successes, with new operations in
Indonesia, Malaysia and Sydney to add to its
existing Singapore business. Next on the agenda
are some of the regions big blue-chip duty free
concessions, Sydney the first of these (bids were

filed in early June), for which competition from
other players on this list will be white-hot.
Even with the pressure of that competition, though,
its unlikely that well see the company veering from
its long-held mantra Out of debt, out of danger.
Heinemann prides itself on being debt-free, and on
sticking with the principle that 80% of all earnings
should be ploughed back into the company to
maintain a solid financial base. The focus therefore
will be on organic and concessions growth in new
markets, a big investment behind digital and social
media, and exploiting what the company believes is
the huge potential of its Out of Shop (home
delivery) strategy in Europe.
World Duty Free Group since October 2013 listed on
the Milan Stock Exchange ranks sixth in our list with
2013 consolidated revenues of 2,078.5 million. It was
one of a number of companies whose turnover was
affected by currency fluctuations: revenues grew by
+3.8% at current exchange rates, but +7.1% at constant
rates. The start-up costs of the groups Spanish airport
duty free contracts dampened EBITDA growth.
World Duty Free

Group at Barcelona T1:
Heavy investment in
its Spanish heartland
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Weak passenger traffic levels in Spain (including

sharp declines at Madrid) along with construction
work affected the business in what is one of the
groups core European markets. In the other, the UK,
a solid performance was held back by a higher
proportion of lower-spending intra-EU passengers,
a factor which persisted in early 2014.
A new start-up in Helsinki with 3,200sq m of
space currently being refurbished and a vital
extension in Santiago de Chile until 2022 are among
the recent highlights.
Strong sales in Peru, Mexico and Jordan have also
proved to be bright spots in the business beyond
Europe, while the new Saudi Arabian business
(which opened in 2013 in partnership with Al
Musbah) also provides a solid basis for Middle East
growth in future years. As with a number of other

top ten players on our list, the question is how it can
translate a strong core business into sustained
expansion elsewhere, notably in Asia Pacific.
Captivated in Canada:
Nuances ne new
stores at Toronto Airport
underline its retail skills
(see also page 62)
The Nuance Groups CHF2,095 million (1.7 billion)

in consolidated turnover for 2013 maintains the
companys firm position in the top ten in our list,
though by next year it will be integrated within
Dufry as the biggest consolidation play in travel
retail history takes shape (full analysis on page 46).
Nuance brings the turnover noted above plus
EBITDA of CHF131 million to the party, though
adjusted for its Australian loss-making business the
figures are CHF1,608 million and CHF156 million.
Also to be factored in are around US$400 million in
sales from the Nuance-Watson (Singapore) P&C
concession at Singapore Changi, which will be lost

from October when Shilla (see below) takes over
that business.
Combined, according to Dufrys analysis, the two
groups had a share of just under 15% of the global
airport retail market in 2013. The new super-group
will be market leader in the Mediterranean (with the
addition of Turkey, Portugal and Malta) in addition
to existing Dufry dominance in Latin America, the
Caribbean and North America (where Nuance adds
a healthy duty free component in a market where
Dufry/Hudson has a major duty paid presence).
In Eastern Europe, Nuance at St Petersburg adds to
Dufrys position in Russia; and in Northwest Europe
the group will be the dominant travel retailer in
Switzerland and have activities in Sweden as well as
the UK, most notably at London Heathrow Airport.
In Asia, Nuances concessions in Mainland China,
Hong Kong and Macau complement Dufrys
operations in China, South Korea and Taiwan. In
Southeast Asia the combined entity will have a
presence in Cambodia, Indonesia and Sri Lanka,
and Nuance will add airport retail activities in India
and Malaysia.
With Dufrys added volumes in play, expect the
company to seek margin improvements with
suppliers, too. Beyond that, one of the big challenges
for Dufry is to balance its superb financial modelling

with retail expertise and presence. Encouragingly we
hear reliably of plans to create a centre of retail
excellence to realise the two companies best
practices for the benefit of the new group. That is
good news for brands, airports and consumers.
Whatever the outcome, the landscape of travel retail
has changed forever with this transformational deal.
Next in the rankings comes The Shilla Duty Free,
another retailer whose recent concession gains look
set to propel it even higher in future years. Its sales of
more than 1.4 billion in 2013 were up by +12% over
2012, driven principally by Chinese travellers to
South Korea. Of sales to overseas visitors, the Chinese
contributed a staggering 75% share, Shilla says. By
contrast, sales to Japanese shoppers declined by -15%.
As at its great rival Lotte, the sales performance
at Shilla shines a light on the dramatic growth
momentum of Chinese inbound travel in 2013.
The numbers of visiting Chinese surged by +52.5%,
compared with a -21.9% decline in Japanese arrivals
in the year.
That picture has continued in 2014. In Q1 Shillas
revenues from its downtown duty free shops surged by
+32.7% year-on-year in local currency to KRW348.7
billion. Airport sales, hit by the rapid decline in
Japanese visitors and a slowing of growth in Korean
spending, rose just +2.3% to KRW227.9 billion.
Consumer watch: Shilla

is adapting its offer to
the spending habits of
the Mainland Chinese in
its Korean stores
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The contribution of the Chinese also plays a role in

the different channels performances: they account
for 30% of airport sales but close to 60% of
downtown sales.
Shilla also stands to become a business transformed
in international terms, with its capture of the key
P&C concession at Singapore Changi Airport in
early 2014 (the contract begins in October).
Although both Shilla and Lotte have won overseas
concessions previously, this is the first blue-chip
core category operation at an international airport
for either.
Beating off stiff global competition for the
concession is likely to deliver not only financial but
also reputation benefits too as other leading airports
re-evaluate Shillas status as a global player.
In its excellent analysis of the implications of the
Changi deal, KDB Daewoo Securities forecasts
revenues of KRW135 billion (US$126.3 million) this
year and KRW443 billion (US$414.5 million) in
2015, its first full year of operations at the Southeast
Asian hub.
More than that, though, the bank predicts that the
benefits of international expansion, notably greater
purchasing power and protection from currency
fluctuation effects could become the new drivers of

Shillas duty free business.
Those factors allied to the continuing push
delivered by Chinese tourism to Korea could see
Shillas duty free revenues hit KRW2,360 billion
(US$2.21 billion) in 2014 (+14%) and KRW2,622
billion (US$2.45 billion) in 2015.
Dubai Duty Free remains a firm fixture in the top
ten of our latest rankings after another stellar year.
Sales of US$1.8 billion, a rise of +11.4%, meant
another record year for the Middle Easts leading
travel retailer as it celebrated its 30th anniversary in
style. In terms of the detail, those top-line figures
translate into a staggering 25,973,819 sales
transactions in the year, or an average 71,161 per day.
Some of its 2013 investments also laid the
groundwork for the next stages of its growth. These
included the opening of Concourse A, dedicated to
Emirates fleet of A380s, and the opening of the
passenger terminal at Al Maktoum International
Airport collectively providing Dubai Duty Free with
more than 28,000sq m of retail space. The companys
investments in space, staff, skills and logistics mean
its well placed to hit new heights in 2014. Already in
the first half sales reached a new high of US$934
million, putting Dubai Duty Free on course to surpass
AED7 billion (US$1.92 billion) in the year.
Dubai Duty Free: Strong

rst half puts it on course
for a new annual record
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Rounding off our top ten for 2013 is Ever Rich Duty
Free Shop, which posted sales growth estimated
at around +10%, in line with Taiwanese tourism
growth. This remarkable retailer, which is not yet
20 years old, continues to plough ahead with a
number of big investments which could drive it
even higher in our rankings in the future.
Last year Ever Rich opened its ambitious Duty Free
Plaza in Taipeis Neihu district. In May 2014 it
went a step further with the opening of Asias
biggest duty free store, the Kinmen Ever Rich
Golden Lake Plaza on Greater Kinmen Island.
Targeting the cross-strait China, Taiwan, Hong

Kong and Macau markets, Golden Lake Plaza is
expected to attract a large number of visitors to
Kinmen not just to shop but also for dining and
entertainment. According to figures from Kinmen
County Government Department of Tourism, the
number of visitors to Kinmen in the first quarter of
2014 rose +30% year-on-year, underlining the
islands tourism potential.
From its Taipei base, and this high-class Kinmen
expansion, Ever Rich is building towards its stated
goal of becoming the leading duty free brand in Asia.
Ever Rich recently

opened Asias biggest
duty free store, the
Kinmen Ever Rich
Golden Lake Plaza, on
Greater Kinmen Island
Building in Bangkok: King

Power (Thailand) has been
investing for the future at
its airport (pictured) and
downtown locations
Sitting just outside the top ten is King Power

International Group (Thailand), which posted a
+32% year-on-year surge in sales in 2013 (following
a similar rise in 2012) to around 1.12 billion. The
impetus behind that drive came from its targeting of
the increasingly important Chinese visitor, along
with strong spends from Thai nationals travelling
overseas notably at the companys downtown
operations but also at the airport.
The Thai tourism business has been affected by
political crisis in the country in 2014 and visitor
numbers have been hit hard but King Power has
managed to offset the worst of the impact by raising
average spend and transaction levels among key
nationalities and at key locations.
tourist groups, in particular the Chinese. That

segmentation of the tourist visitor base has paid
rich dividends to date.
King Powers retail redevelopment has not been
confined to the new downtown operation; there
has also been a continuous programme of
refurbishments and renovations at Suvarnabhumi
Airport over the past two years. This has included
the renovation of King Powers largest east side
liquor shop, which is being followed by the west side
equivalent this summer.
In the first four months, for example, Chinese travel

numbers fell sharply (by around -30%); but their
total sales still grew, as did spend per invoice.
Spending by Thai nationals grew at an even faster
rate in early 2014, the company reports.
All 25 brand boutiques at Suvarnabhumi have been

renovated over the past 18 months a period that
has also seen the introduction of four new brands to
the King Power line-up: Tiffany, Prada, Loro Piano
and Lacoste. Additionally the retailer has changed
the brand mix and space allocations in a number of
its specialist multibrand shops, in line with the
evolution of the passenger profile and perceived
category growth potential.
King Power is investing for the future too. The

companys highly impressive Downtown Duty Free
Complex on Rangnam Road, opened in 2006, is now
twinned with a second store, called the King Power
Srivaree Downtown Complex, built to better serve
That flurry of activity is taking place as the group gears

up to celebrate its 25th anniversary later this year. Its
investments in new space, both on- and off-airport,
should also help it maintain or even improve its
position within our Top 25 in the years ahead.
Sunrise Duty Free maintains a strong position in

the rankings from its duty free shops at Beijing
Capital International (BCIA), Shanghai Pudong and
Shanghai Hongqiao airports with sales estimated
at close to US$1.2 billion last year. The company
continues to ride high on the soaring numbers of
outbound Chinese travellers, which were close to
100 million last year; numbers will exceed that in
2014, and by 2016 are estimated to hit around
140 million.
Sunrise has looked for expansion beyond its core
airport base (it bid unsuccessfully on all three core
category concessions during the Hong Kong
International Airport mega-tender in 2012), but has
yet to extend its duty free footprint to new markets.
The retailer is now well into its second ten-year
concession in Shanghai, which is due to end in 2019.
More critically, the retailer is nearing the end of its
ten-year extension at BCIA. An extension, or
retention by tender, of that contract will clearly be
critical to Sunrises future.
Duty Free Americas remains a firm fixture in the

rankings with turnover of around US$1.1 billion,
derived from its US airports business, its land
border activities north and south, and from South
America, Central America and the Caribbean. It
has expanded in all of these regions and across
multiple channels with new concessions over the
past two years.
Sunrise Duty Free:

Riding high on the wave
of outbound Chinese
The company also underlined its belief in the Asian

market last year with a major redevelopment of its
operation at The Venetian Macao-Resort-Hotel.
Among other units there it runs the largest Dior
boutique within the travel retail channel worldwide.
China Duty Free Group (CDFG) was one of the big
movers in our list last year, buoyed by the huge
success of its Sanya Duty Free Shop on Hainan Island
and the investments it has made both on- and
off-airport across China. That momentum has
continued into the full-year 2013 numbers, as the
group reported a +20% leap in sales year-on-year to
CNY6.5 billion (799 million).
The Sanya business continues to deliver: sales

climbed from CNY2,027 million in 2012 to
CNY2,825 million in 2013, a remarkable surge
of +40%.
On Hainan Island the best (and certainly the biggest)
is yet to come, promises CDFG. There, the eagerly
awaited Haitang Bay International Shopping
Complex the worlds largest duty free shopping
centre is due to open in August. Its 70,000sq m of
space will feature 21 product categories, and more
than 200 brands double the current amount at
Sanya Duty Free. Among the new product categories
represented there will be confectionery, toys and
health products.
Sales at Haitang Bay will be between +30% and
+50% higher than at Sanya, pledges the retailer.
Given the scale of that business, it means theres
every chance well see CDFG leap even higher up our
annual rankings in the years ahead.
Aer Rianta International (ARI) features with 792.5
million in managed turnover in 2013. The figure
includes its Irish airports business but as in previous
years excludes its management contract with Qatar Duty
Free, which features separately further down our list
(and on which the Doha-based retailer has given notice
recently). The fall from the managed turnover figure of
925 million in 2012 is mainly due to the companys
exit from its Russia/CIS operations during 2013.
Despite this, ARIs sales at continuing locations
outside Ireland rose by more than +1% last year,

with some strong performances from its Middle East
operations, despite the impact of political unrest
and conflict in some markets. Beirut Duty Free in
particular had another stellar year, Bahrain Duty
Free performed solidly in difficult circumstances,
and the groups Cyprus operations have weathered
the woes of the local economy well. At Delhi Duty
Free, ARIs joint-venture operation in Delhi,
turnover exceeded US$120 million in 2013, after
three full years trading.
In Ireland, sales at ARI Irelands own-operated retail
stores increased by +5% across Dublin and Cork
airports, despite a challenging retail environment
in Ireland generally. Average spend per passenger
also rose by +1%.
Looking ahead, ARI has placed its faith in the future
of the Cyprus business with the purchase of the
remaining 50% stake in CTC-ARI held by its joint
venture partner for 54 million. At home in Ireland
the companys 8 million refurbishment of its Dublin
Airport Terminal 1 stores should reap dividends
from 2015 once the project is completed.
ARI is also eyeing tender opportunities in
established and new markets worldwide as it seeks
to build its concessions base. Chief among these in
2014 are the tender at Muscat Airport, where the
company operates in partnership with Oman Air
today, and the Abu Dhabi International Airport
duty free bid.
ARI continues to eye

overseas opportunities
(pictured is the retailers
new-look MontralTrudeau Airport operation)
UK news & books retailer WHSmiths Travel

division posted a marginal dip in revenues last year,
from 462 million to 460 million, with like-for-like
sales down by -4%. Against that, the divisions
trading profit was up +5% to 66 million in the year
(to the end of August 2013).
Within the UK airport segment like-for-like sales
were down -3%, with the company citing
challenging passenger numbers, which were still
-15% below pre-recession levels in the year. But it is
the international market that WHSmith is targeting
for growth.
During the 2013 financial year it won 40 new units
in the international channel, with aggressive moves
into some new markets. Among the key locations
where it has new stores are Sydney, Perth and
Adelaide airports in Australia, Dublin Airport,
Hamad International Airport, Abu Dhabi
International Airport, along with new ventures
in India and Malaysia.
The companys strategy revolves not only around
travel essentials and news & convenience but other
concepts too. Around the WHSmith core business
there is now a range of stand-alone stores such as
The Gadget Shop selling travel accessories and

consumer technology, toys and other childrens
items concept Zoodle, and destination merchandise
brand Memories Of . The company also offers a
combined NBC/coffee shop proposition which it
hopes can gain traction in the airport market as it
seeks further growth in Southeast Asia, India, the
Middle East and Australia.
WHSmith Travel:
Creating new concepts
to grow beyond its core
news & books offer
With just over 507 million in sales in 2013 (down

slightly on 2012), Tallink Group is the largest
cruise & ferry operator by tax and duty free
turnover. Retail (along with food & beverage) is
critical to the companys incomes, with shops and
restaurants accounting for 53.9% of total turnover
in the year (this includes port shops as well as
onboard revenue).
Passenger growth slowed last year, falling by -1.6% to
9.1 million, prompting the dip in revenues. The
companys EstoniaFinland routes account for about
half of all passenger traffic, but just one-third of
revenues, due to the short crossing and its use as a
commuter service by many travellers.
The other major route connection, between Finland
and Sweden, delivers more than 36% of revenues
Tina Aloupos
Make Up Artist,
Cyprus Airports Duty Free
Experience a
Rewarding Career
At ARI we believe that great customer journeys are defined
by memorable experiences and the people who provide them.
For this reason we invest in continuous training, mentoring and
global exchange programmes to build our employees skills.
Its more than retail. Its creating those special moments
that make all the difference.
Experience is Everything
from the overnight cruise service served by the

groups Silja Line ships. And it is here that Tallink
Group is making its big infrastructure investments. It
has already increased retail space by +50% and
rebranded its Tax Free Superstore on board the Silja
Serenade, with the Silja Symphony to follow soon.
These should help lift spend per passenger sharply,
the company says.
The steady performance of Tallink Groups 18-strong
fleet in 2013 helped it stay ahead of Starboard Cruise
Services (also on our list with close to US$600
million in sales) as the top maritime travel retailer in
the rankings.
JR/Duty Free, the duty free arm of James
Richardson, is also well placed again this year with
annual sales of around US$680 million. A number of
significant contract gains and start-ups during the
year will enhance its placing in future, too.
operate a ten-year concession at the location, where

it has 3,300sq m of retail space and sales of more
than US$350 million annually.
Caption here
King Power Group (Hong Kong)s duty free and

travel retail business also features prominently this
year. The Antares Cheng-led company has a core
base of operations at Singapore Changi Airport; a
thriving Macau business comprising airport,
downtown, seaport and ferry stores; a healthy
portfolio of retail outlets at some of Mainland Chinas
domestic airports; a fledgling business in Australia
(through a new subsidiary) and a growing number of
inflight concessions in the region through King
Power Traveler.
The company harbours big ambitions to expand
further, and has consistently competed for Asias
blue-ribbon airport duty free contracts in recent
years. Expect that push to continue as other
opportunities arise.
The retailer began trading at its new Perth Airport

operation (Arrivals and Departures) in 2013, which
will feed into future years figures; so too will its
capture of the Brisbane Airport duty free concession
in late 2013.
DFASSs US$600 million-plus retail business

(including airport stores) retains a prominent place
in our latest list, with revenues on a par with those
in 2012.
Of even more importance in sales terms was the

companys victory in the tender for the Tel Aviv Ben
Gurion duty free contract in 2013. The company will
That presence is driven by its 25-plus airline accounts,

bolstered in the past year by new or extended
concessions with Hong Kong Airlines (and sister
Australian expansion:
JR/Duty Free began trading
at Perth Airport last year
carrier Hong Kong Express), Jetstar Asia, V Air,

Hawaiian Airlines and, notably, the capture of the
Virgin Atlantic contract, effective from April 2014.
This is a hugely important contract gain for the
company, which re-enters Europe after a long
absence. Virgin brings not only sales value to DFASS
but also considerable kudos with its reputation for
innovation and creativity. The concessionaire also
believes there is a significant upside revenue
opportunity. Benny Klepachs company has won
several major accounts in recent years, but this ranks
high on the list.
As the concessions above suggest, DFASS is on a roll
in Asia (where it also handles the blue-chip
Singapore Airlines concession) as well as its
traditional Americas heartland. Its comeback in
Europe suggests that a much greater push in the
region is imminent.
Japan Air Terminal Co (JATCo) produced sales
growth in its retail business of just over +11% last
year, through its stores at Tokyos airports and at
Osaka Kansai. It maintained its Top 25 ranking
despite losing concessions for five stores it
previously operated at Kansai International T1 in
April 2013 (now operated by a division of the airport

company). Its strong presence as a fashion and
speciality retailer there (as at other airports)
continues to boost its performance.
Qatar Duty Frees new

Hamad International
operations will drive its
sales growth even more
sharply in the years ahead
Sky Connection relinquished its Liquor & Tobacco

contract at Hong Kong International Airport in
December 2012 a factor that naturally had a sharp
influence on its 2013 figures (US$480 million).
The company still has a significant travel retail
business with the Mainland Chinese traveller
through its land border, port and rail station
operations, and continues to build these steadily. It
has also stated its continued ambitions to pursue
other core category concessions in the region, with a
focus on destinations that serve the Chinese traveller.
Also firmly positioned in our Top 25 list is Qatar
Duty Free, with an impressive +18% surge in sales in
2013. That growth came against the backdrop of
fast-rising passenger numbers at Doha International
and the expansion of Qatar Airways route network,
which now numbers more than 140 destinations.
The retailers figures are sure to be boosted
significantly by the opening in May 2014 of Hamad
International Airport, with its 25,000sq m of retail

space (with a further 15,000sq m devoted to food &
beverage). With the vast new space on offer, plus the
expected continuing surge in passenger numbers,
Qatar Duty Free is a good bet to rise even higher in
our Top 25 in the years to come.
from which a number of highlights emerge. One is

the tremendous continuing growth of many of the
Asia-based companies in the rankings, from DFS as
number one, to Lotte and Shilla in the top ten, but
also strong performers such as Sunrise Duty Free,
King Power (Thailand) and China Duty Free Group.
Another Japanese travel retailer, NAA Retailing, also

features on our list this year, with sales of around
272 million. The company has benefited from
parent Narita International Airports decision to
consolidate control of duty free in-house after
previously relying on outside operators or
partnerships. In April 2012 NAA Retailing absorbed
the previous joint ventures: NAA & ANA Duty Free,
and NAA & JAL-DFS.
Each of these delivered double-digit surges in

turnover last year to cement or improve their
positions in the list. Its also no coincidence that all of
them boast a sizeable and growing proportion of
Mainland Chinese travellers within their core
consumer base (as do others in the Top 25).
Through this consolidation, along with the roll-out

of the Fa-So-La brand across its estate, the company
has extended its portfolio from 13 shops in financial
year 2004 to 55 in 2013. Duty free sales have grown
by more than 14 times in that period.
Like other travel retailers NAA Retailing has had to
face up to the weakness in demand for outbound
travel among the Japanese but it is reaping the
benefits of healthy inbound tourism. Foreign visitors
coming to Japan numbered just over 5 million in
2003, but had more than doubled to almost 11
million a decade later. The growth has been driven in
recent years by Koreans, Taiwanese, Chinese, Hong
Kong residents and Thais. The Chinese in particular
are a major force in the market today they
contributed 22% of sales to NAA Retailing in 2010,
but that share has leapt to 33%, and is growing.
So that is our Top 25 Travel Retailers list for 2013,
A future number one:

Dufrys capture of
Nuance will thrust it
into top position in next
years rankings
The Middle Easts two biggest travel retailers each

at a single location underlined their status as
powerhouses of the channel with healthy year-onyear growth. Dubai Duty Free and Qatar Duty Free
are leveraging the strength of their home airlines
rapid expansion, soaring passenger numbers and
investment in new infrastructure as the Middle East
bolsters its claim to be the centre of world aviation.
In 2015 well see further shifts in our rankings. The
combined Dufry and Nuance business will secure
number one status once that acquisition is completed
later this year. That means a new entrant into the top
ten, likely to be King Power (Thailand) based on the
latest figures, with Sunrise a possible challenger as it
captures higher levels of spend from the vast
numbers of Chinese travellers through the countrys
two biggest international airports.
Organic growth through new concessions will of
course alter the picture too, as will further acquisitions
by the top players, as travel retails fragmentation
gradually gives way to consolidation.
Julin Daz: Architect of Dufrys

consolidation drive in the
channel for the past decade
Analysis Dufry/Nuance
Dufrys great
consolidation
play
The biggest consolidation play in travel retail history was revealed last month
as Dufry moved to acquire 100% of The Nuance Group. Its a deal that utterly
changes the industry landscape, and creates a new number one player in
the market. The Moodie Report assesses the implications in detail.
transformational deal not only for

Dufry but also for the travel retail
industry. In one line, Dufry CEO
Julin Daz architect of the deal
sums up the significance of his
companys swoop to acquire The Nuance Group,
initially revealed by The Moodie Report on 4 June.
Dufrys CHF1.55 billion (US$1.72 billion) capture of
Nuance is not just the deal of the decade, its the
biggest consolidation play in travel retail history. The
industry now has a new and clear market leader,

with an estimated CHF5,560 million (US$6.2 billion)
in turnover (based on 2013 numbers), though these
include Nuances Changi perfumes & cosmetics
concession, valued at around US$400 million in
annual sales, which expires in October.
The new super-force will account for just under 15%
of global airport retail sales according to Dufry (and
12% across all travel retail channels). And it pairs
together the number two and number seven travel
Dufry and Nuance combined turnover split (2013*)
Dufry and Nuance combined EBITDA split (2013*)
23%
31%
CHF5,180
million*
CHF667
million*
69%
77%
Q DufryQ Nuance
Note: Combination based on sum of Dufry standalone plus Nuance stand-alone.
*Adjusted for Australian concessions.
Source: Dufry
Roberto Graziani: Has

secured an excellent deal
for his shareholders
retailers worldwide, according to The Moodie Report

Researchs latest statistics (see our Top 25 Travel
Retailers report on page 10).
The new group will operate 1,750 shops in 239
airports across 63 states, and its 23,000 staff will serve
150 million customers a year, according to Dufry.
Behind those raw numbers, though, theres much to
consider. Whats the future for Nuances existing
concessions portfolio, notably loss-making contracts
such as Sydney (currently being tendered)? Does
Dufry stay true to type and avoid the heavyweight
airport tender battles, or is this a perfect opportunity
to rubber-stamp its global supremacy? How will the
integration the biggest Dufry has ever attempted
work between two retailers that are very different
in style and philosophy?
How will the new group bring its buying power to
bear in negotiations with suppliers (a question many
brand owners have been asking)? Can Dufry turn a
full price paid for its biggest acquisition into a superb
deal for its shareholders? And what does this move
mean for Dufrys major competitors?
First, the concessions portfolio delivers a series of
new countries and territories for Dufry. It also means
the combined group will hold market-leading
positions in Latin America, Central America, North
America, Africa and the Mediterranean, as well as
bolstering its operations in Europe (with entry to key
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Transaction impact on Dufry and Nuance business operations split by region
1%
7%
25%
3%
9%
2%
33%
Dufry
net sales:
CHF3,465
million
23%
Nuance
turnover:
CHF2,095
million
43%
18%
Combined:
CHF5,560
million*
46%
12%
19%
22%
Q EMEA + Asia
Q America I
Q America II
24%
Q USA and Canada

Q Other
14%
Q EMEA
Q Asia Pacific
QAmericas
Q RS&D
Q Australia
*Nuance EMEA and Asia Pacific allocated to EMEA + Asia, Nuance Americas allocated to USA & Canada, Nuance RS&D allocated to Other.
Source: Dufry Group
countries such as Turkey, the UK, Portugal and

Sweden) and parts of Asia (including entry to Hong
Kong and Macau).
announced, Daz was upbeat about the strength of

the new portfolio, but firm in his expectations that
each location should perform.
Crucially, in profitability terms, Europe is key

with Nuances Swiss and Turkish duty free
operations understood to be the major drivers of
EBITDA for that region. For Nuance in Asia Pacific,
Australia has dragged down profitability, with its
impact an estimated CHF25 million in 2013,
according to Dufry.
The [Nuance] concession portfolio is very stable,

with an average of six-and-a-half to seven years, he
said. We plan to reorganise some of the concessions
if they are not profitable.
Speaking to analysts and media after the deal was
The nancial deal in detail

The deal is valued at CHF1.55 billion (US$1.72 billion), on a debt- and
cash-free basis. It will be nanced with CHF1 billion in equity and
CHF550 million in new debt.
The transaction-related funding is secured through a committed bridge
nancing, which will be renanced by equity of CHF1 billion (US$1.11
billion) and CHF550 million (US$612 million) secured from debt capital
markets. Dufry is also planning to renance its existing bank debt
facilities and extend their maturity prole a total nancing package of
CHF4 billion (US$4.45 billion).
Dufry has announced the launch of an offering of up to CHF275 million
in mandatory convertible notes, due on 18 June 2015. The offering is
being made to institutional investors only, outside the USA, Australia,
Canada and Japan, in offshore transactions. The notes will be issued at
100% of the principal amount in denominations of CHF200,000 per note,
and are expected to pay in the range of 2.0% to 2.75% per annum.
In these cases we will try to reach the level of

profitability that we expect, and if we do, we will keep
the concessions. If the concessions do not participate
in the levels we expect, we will close them down.
Importantly, Daz noted the impact of the lossmaking Sydney Airport concession on the business,
both in his presentation and in the Q&A with
investors. Adjusted for Australia, turnover at Nuance
turned from CHF2,095 million to CHF1,608 million,
while adjusted EBITDA was CHF156 million from
CHF131 million.
Speaking about Sydney Airports duty free contract,
Daz said: We will participate in the tender and try
to do it [renew] but not at the same level as today. It
will only be possible to continue if we can reach the
level of returns we are targeting for the business and
improve the [financial] conditions. The multiples we
have worked out are based on the assumption of
new terms.
Thats a clear message: Sydney is a target, but
profitability comes first. It also signals that Dufry will
stay true to its strategy of often avoiding the
high-stakes tenders at the biggest airports, where

Nuance has been both winner and loser in recent
years.
Dufry Group and The
How will the integration work? Daz didnt shirk the

fact that this will be a challenging project. There is
a complexity with this acquisition that does not
exist with other middle to small acquisitions we
have done, mainly due to the complex integration
we face.
The remaining CHF35 million will be generated by

combining global and regional headquarters of the
two companies (with global HQ to remain in Basel,
Daz confirmed), and a lower general and
administrative cost base. We have identified CHF35
million of savings that will be completed within the
first 12 months of operations, he added.
The integration will be delivered in a number of
phases with the aid of consultancy partner AT
Kearney, and will affect the group from the bottom
to the top over the next 1218 months, said Daz.
In the first three months Nuances operations will be
integrated into the existing Dufry business units and
regional structure; then processes and procedures
will be standardised across the new entity. Once
completed, the entire global structure will be
redefined to reflect the new shape of the business.
A steering committee from Dufry will lead the
integration, led by Luis Marin (financial control
and review of the take-over), Jos Antonio Gea
(standardising global functions such as
procurement, logistics and operations), Jordi
Martin-Consuegra (restructuring of Nuance and
support function standardisation) and Andreas
Schneiter (financial integration).
What of Nuances management, centrally and in the
regions? Their contribution to the group has helped
Nuances shareholders realise excellent value for their
investment, but there is natural uncertainty about
Employees
357
5,372
Space (sq m)
74,700
One of the challenges is that in many of our

functions we are centralised while Nuance is more
decentralised, especially in terms of its negotiations
with suppliers. [Addressing] this will be [key] in
achieving the synergies we want.
Those synergies amount to CHF70 million (US$78
million) from 2015 through to 2016. Half of this will
come from improved gross profit margin, through
enhanced purchasing power in negotiations with
suppliers, along with a consolidated logistics
platform and an optimised supply chain (a key area
of focus for Dufry today).
Stores
North America
705
stores
Americas
40
stores
Latin America
300
stores
Nuance Group global store network

Stores
Employees
1,392
16,000
211,503
Q Nuance
Q Dufry
Q Nuance and Dufry
Space (sq m)
EMEA
224
stores
Asia Pacific
EMEA & Asia
76
stores
372
stores
Australia
17
stores
Dufry opened its new

operation at Bali Ngurah
Rai International Airport in
the rst quarter of the year
amid developments in
several Asian markets
the future among many. Inevitably some will leave,

especially as Dufry moves to create synergies across
central functions, particularly in Switzerland.
But Daz did say there would be a role for senior
management from Nuance in the new group. He
The Nuance Group

ownership 19962014
1996: Swissair Group buys Allders International from listed UK retailer
Allders for 160 million (US$240 million), changing the name of the
company to The Nuance Group (initially Nuance Global Traders).
April 2002: Italian retailer GECOS, part of diversied holding group
Generale di Commercio e Servizi, buys Nuance for an undisclosed sum
and immediately enlists Milan-listed retail group Stefanel in a 50:50 joint
venture to control Nuance.
February 2011: Stefanel sells its 50% stake in Nuance holding company
Noel International to French private equity group PAI Partners for 106
million (US$154.4 million), valuing the retailer at CHF676 million
(US$758.1 million).
June 2014: Dufry Group acquires 100% of The Nuance Group for CHF1.55
billion (US$1.72 billion), creating the worlds biggest travel retailer by turnover.
hailed the know-how and expertise of many of

them, and added: Nuance management represents a
great asset and could in my view contribute to the
new organisation. We have to be clever in combining
the best of both.
As Daz noted, this acquisition is the most complex
yet in Dufrys ten years of driving consolidation in
the industry. But it can point to a strong track record
in identifying and securing corporate targets and
also in making them work. Bringing the best out of
each component here will be key.
With Dufrys added volumes in play, expect the
company to seek margin improvements with
suppliers (both for the collective operation and the
Nuance accounts) after this deal. As the comments
from brand owners in these pages suggest (and many
broadly, if cautiously, welcome the deal), they are
already preparing to have those conversations.
Daz has been open in citing the drive for margin as
a core target. [This] increases significantly our
exposure to the brands, with the added sales volume
improving our global negotiations with suppliers, he
said. [As an aside, in 2003 Dufry operated with 46%
gross profit margin and completed Q1 2014 with
close to 60% gross margin Ed.]
Dufry and Nuance share of sales by product category 2013
6%
3%4%
4%
7%
28%
4%
11%
8%
5%
4%
33%
9%
41%
8%
Dufry
Nuance
6%
4%
9%
7%
Combined
7%
18%
19%
16%
Q Perfume and cosmetics

Q Confectionery, food and catering*
Q Wine and spirits
17%
7%
Q Jewellery, watches and accessories

Q Fashion, leathergoods and luggage
Q Tobacco goods
14%
QLiterature and publications

Q Electronics
Q Other
*Includes Dufry food & beverage sales

Source: Dufry Group; The Nuance Group; Moodie Research
Those remarks wont surprise anybody: bigger volumes

through the addition of CHF2 billion in turnover
makes this a new era for everyone. Beyond that, one of
the big challenges for Dufry is to balance its superb
financial modelling with a retail expertise and presence
to match. It is still a long way short of that.

Encouragingly, we hear reliably of plans to create a
centre of retail excellence to realise the two companies
best practices for the benefit of the new group. That
is good news for brands, airports and consumers.
Nuances business at Antalya

Airport in Turkey makes a strong
contribution to the retailers
protability, and gives Dufry access
to an attractive travel retail market
Brand owners react to

the sale of the century
Rebecca Mann canvasses reaction from a
selection of leading suppliers in the wake
of last months super-deal.
The consolidation trend had already
started a few years ago, and Dufry was
one of the main drivers behind it. It was
also part of its business strategy. Dufrys
purchase of Nuance is, however, a
major [event] in the industry due to the
size of the operation. The integration
process will be complex, will take time
and will certainly affect the operation.
A new chapter is now starting and I am
convinced that, on a long-term basis,
the industry will benet from having a
few global players.
new company can really adopt the

think global, act local mentality, that
would be to everyones advantage.
supply chain issues; so going forward

something has to change.
That said, I believe most suppliers

will welcome this move as they do share
a lot of values and are somehow a good
The industry is becoming more and
t. It will take some time for the new
more [concentrated] in the hands of
company to set up the right structure,
fewer and fewer retailers. The question
but Im sure that it will be more
is, does this give them better
efcient once it is up and running.
negotiating powers so that everyone
benets, or does it not? Most brands
are not in the same airport with two
Dufry needs to staff up and improve
different operators so [in that sense] it
its processes and structures vastly. It is
should not affect anyones business.
now a global player but doesnt have
enough quality personnel around the
The successive loss of Hong Kong and world. Not the best news of the week!
then Changi probably made [Nuance]

easy prey To us it is challenging news.
An online reader response to the
I reservedly welcome this news, as
Nuance was a great supporter of our
above comment: The comment above
Dufry has the power to shake up the
segment [P&C}; Dufry not so much.
comes across a little harsh. I counter
travel retail industry as we know it. My
concern is that cutting the number of
Nuance is a European/Asian specialist, that Dufry now has quality Nuance
personnel around the world, arguably
players in the industry decreases
while Dufry really focuses on Latin
perhaps among some of the best in
competition and could potentially
America where it runs the show
the industry. There are many who will
limit diversity in the long term.
hands down though neither
continue with Dufry in the industry
business is major in Europe, where
For suppliers this could mean greater
they love and have dedicated their
Autogrill, Heinemann and Aelia have
exposure, although I fear this may lead
careers to. To the very best of
the upper hand.
to lower margins and less negotiating
business, Dufry!
power. Rather than a one plan ts all
My interest is to nd out its strategy
model, lets hope that each region is
mid-term. Does a worldwide giant
considered individually and
centralise listings and negotiations or
This truly is the most signicant
customised to suit the needs of the
not? We do a great job being centrally
acquisition in our industrys history,
pax in that area.
sourced by Nuance in Europe, and
with positions strengthened in
locally in Asia (airport by airport). For
almost every part of the globe for the
Dufry, the purchase of Nuance is not
new group. It is a masterstroke by
Big is not always beautiful! It is very
like building an extension to your
Julin Daz and Dufrys Board;
hard for any big company not to lose
house, but rather like buying a holiday however it spells trouble for the
its nimbleness and entrepreneurship.
home; Nuances operations being so far, suppliers, with margin demands galore!
Big companies naturally favour big
most of the time, from Dufrys almost Battle gloves on!
global brands and this means that
on the other side of the planet. Will
airports could become like most global Dufry build on Nuances know-how?
high streets and malls, very samey,
I think it is a very smart move by
with little or no localness about them.
Dufry. However as a supplier I would be
It is going to be very interesting to see concerned by these large acquisitions,
This would be sad for travel retail. A
how they approach the unication, and as the rst thing they do is target
lack of competition is rarely a good
where they believe Nuances operating improved trading terms. This is not
thing for brands or consumers. The
model is better than Dufrys. It is clear
always possible, as you can only
need to differentiate lessens when big
today that Dufry is struggling with
squeeze so many pips from an orange.
market shares are a given. But if the
The valuation in context: Acquisition multiple vs selected comparable transactions*

Date
Buyer
Target
EV/EBITDA multiple
Post-synergies
(excl. Australia)
6.9
Dufry Group
Pre-synergies
(excl. Australia)
9.9
Oct 2012
Dufry Group
Folli Follies travel retail business
Aug 2011
Dufry Group
InterBaires, IOSC, Duty Free

Uruguay and others
10.0
Jan 2010
Dufry Group
Dufry South America
10.0
Sep 2008
Dufry Group
Hudson Group
9.8
Mar 2008
Autogrill
World Duty Free
May 2008
Folli Follie
Hellenic Duty Free
Mar 2006
Dufry Group
Brasif + Eurotrade
Jan 2005
Autogrill/Altadis
Aldeasa
8.9
14.5
13.0
12.5
10.4
Note: *Based on LTM EBITDA at time of transaction (pre-synergies).

Note: *Based on share price of CHF148.0 as at 30 May 2014.
Source: Dufry
How will those brands see category share shift at the

new group? Dufry has offered some fascinating clues.
Fragrances & cosmetics accounts for 41% of Dufry
turnover today (based on 2013 numbers) but just
28% of Nuance sales; at the new company that figure
will become 33%, and its an area in which Dufry has
ambitions to become even stronger, said Daz.
Other categories with potential to play a bigger
role include food & confectionery (14% of
combined group sales) and luxury goods: these
Daz identified as the main areas for product
development. Watches, jewellery & accessories
will be 7% of the business, with fashion &
leathergoods a further 7%. That combined 14%
compares to a share within Nuance of 17%
today, but just 10% for Dufry.
Spirits contribute 19% of Dufry sales but 16% of
Nuances: combined this will become 17% at the new
group. Of the remainder, tobacco will be 9%,
electronics 5%, news & books 4% and other sectors
will make up the balance.
So what value does the deal represent? For Nuance

shareholders, first, its a superb deal. As Raffaele
Vitale of 50% owner PAI Partners said: The
acquisition confirms the strategic value of Nuance in
the global travel retail industry. No wonder he was
so effusive: the private equity firm bought 50% of
Nuance at 106 million in February 2011 (according
to Private Equity News): its stake is now valued at
around 650 million.
For GECOS, its long investment in Nuance has
finally paid off big time. The original purchase price
from Swissair was CHF405 million (CHF200 million
plus CHF200 million in debt), split with Stefanel.
The sale price of CHF1.55 billion tells its own story.
Given that multiple, President & CEO Roberto
Graziani has well and truly delivered for his
shareholders with the business he has built through
many ups and downs over the past decade.
On the Dufry side, Daz was unequivocal. This is
the most attractive acquisition [yet] in terms of
Zrich Airport represents a

protable agship location
for The Nuance Group in
its and Dufrys home
market
value creation for our shareholders. Creating value

is the most important reason for this acquisition
and we believe it will be EPS cash accretive in 2015,
and double-digit cash accretive in 2016 and after
that.
The financial consideration translates into a 6.9 times
EV/EBITDA multiple based on EBITDA adjusted for
the Australian business and including synergies.
Pre-synergies, the multiple is 9.9 times EBITDA.
That puts it on a par with a number of recent deals
done by Dufry and others in the business including
Hellenic Duty Free Shops in 2012 (x8.9), its
acquisition of InterBaires and Duty Free Uruguay
(x10.0) and the 2005 swoop by Autogrill for Aldeasa
(x10.4).
Finally, where does this consolidation power-play
leave Dufrys major rivals in the airport retail market
[90% of the combined groups sales will come from

airports]? Importantly, Dufry believes the deal will
generate improved buying power, not only aiding
profitability but translating into an enhanced
competitive position at tender time. How and where
it chooses to use that will be interesting to watch
given Dufrys contrasting approach to certain
tenders from that of Nuance. Sydney, as noted
earlier, promises to be an intriguing early test case of
the re-sized Dufrys approach.
Among the other leading players, Lagardre Services
(parent of LS travel retail) has made no secret of its
wish to claim a transformative acquisition. After
Dufry, it has been the most active player in
consolidating the business over the past three years,
with its capture of, among others, ADR Retail and
recently Gerzon though these are dwarfed by
Dufrys Nuance deal. As one analyst noted, this move
Covering an
industry super-deal
Big stories breathe life and excitement into journalists, and at 5.45am on
Wednesday 4 June a charge surged across The Moodie Reports network
as Dufry made its announcement. After Martin Moodie and Dermot
Davitt broke the news just minutes later rst on the web and then via a
Breaking News Alert, ahead of all mainstream and trade media the rest
of the team were soon called into action, preparing a day of analysis and
reaction across our new instant reporting platform Moodie Live.
As The Moodie Report e-Zine went to press our initial Breaking News
Alert had been opened almost 8,500 times, with a further 4,100 opens of
the second mailing which followed Dufrys rst conference call. With its
powerful combination of web, e-alert and Moodie Live, the story ranks as
the most read in The Moodie Reports history.
Moodie Live transformed coverage of breaking news (below) with
minute-by-minute analysis and reaction across multiple formats,
including video and podcast (above).
puts pressure on LS to deliver now that its main

competitor has moved.
Several analysts also noted that the move could put
pressure on World Duty Free Group, whose name
features in any speculation in the investor
community about travel retail M&A activity.
For all the industry heavyweights, opportunity for
further acquisitions in the channel remain. Travel
retail remains highly fragmented (the top ten players
account for just 49% of sales worldwide, Dufry
reckons), as underlined by the fact that even the
emerging new super-group will account for just 15%
of the airport retail market.
The big question for the likes of Lagardre, Lotte and
World Duty Free is not just to identify the targets but
to secure them before Dufry does.
Trr a v e l R e t a i l E x c l u s i v e
EXPR E SSIONS OF SHIR AZ

One re
egio
on, fou
ur disstin
nctly difffe
erent wines.
The investment
community responds
Dufrys capture of Nuance may have
surprised some, but there has been
intense speculation for some months,
both in the industry and in the
nancial markets, about Dufry Groups
next target.
Once the deal was announced, analyst
leading operator in the travel retail
reaction was overwhelmingly positive
industry, said Assistant Vice President
a fact reected in Dufrys share
Analyst Lola Cavanilles. We expect
movements on 4 June. Dufry has
that the review will lead to an upgrade
taken a major step in accelerating
of Nuances ratings by two notches to
travel retail consolidation at airport
Ba3, in line with the credit quality of
locations globally, one nancial sector
the combined Dufry/Nuance entity.
According to Grupo Santander

source told The Moodie Report.
researcher Rebecca McClellan the signs
pointed to its likelihood as early as
This is a fantastic transaction
February when Dufrys acquisition of securing a high-quality company that
Moodys also noted with some caution

Dufrys high post-acquisition leverage,
with gross debt/EBITDA ratio expected
Nuance was considered among several
will provide signicant synergy
to reach 5.7=. It is a position of which
consolidation moves in an investment
potential to the combined group. The
Dufry Group CEO Julin Daz is acutely
note published by the bank.
willingness to pay a full price has to be
aware, and in conference calls after the
seen in the context of synergies and
deal he announced the creation of a
achieving an undisputed leadership
specialist team aimed at increasing
position in the sector that brings
cash generation.
That likelihood grew stronger in April.

Nuances plan to prepare for an IPO
was one trigger. After reading The
Moodie Reports coverage at the time,
one analyst said: One could read it in
further development potential in new

and existing regions.
Amid the focus on Dufry, other

analysts contacted by The Moodie
the sense that [Nuance President and
Another happy investor was of course
Report brought attention back to the
CEO Roberto Graziani] actually wants
PAI Partners. The French equity rm
retailers competitors notably fellow
to test what is available if there was
bought 50% of Nuance for 106 million
listed retailers World Duty Free Group
in February 2011. The Dufry deal
and LS travel retail.
an approach before the IPO.

In fact we understand reliably that
values that stake at around 650

million.
Exane BNP Paribas was prescient with
top-secret, highest-level dialogue had
its analysis of WDFGs stock. On

begun as long as eight months ago. But The acquisition conrms the strategic Lagardre Group, parent of LS travel
the picture became clearer when
retail, the bank said: Lagardre has
value of Nuance in the global travel
Dufry, during its annual general
said it is looking for a transformative
retail industry, said PAIs Raffaele
meeting on 29 April, tried to agree a
Vitale. Nuance has proven to be a
acquisition in travel retail.
US$1.5 billion raise with shareholders.
pivotal asset in the consolidation of
Management argued that scale
the travel retail sector.
matters in that industry.
That move was narrowly voted down;

shareholders wanted to know what the Others noted different benets for
money was for, suggests McClellan.
Dufry. A-once-in-a-lifetime
Given its high emerging markets
Now they know.
opportunity to clean up your
suitable candidate. In our view,
concession portfolio, said one
Lagardre is under more pressure to
investment market observer.
act now that its main competitor has
Nuance was big but also vulnerable

it has lost two key locations [at
exposure, Nuance appeared as a
moved.
Singapore Changi and Hong Kong
There was validation from ratings
International airports] which although
agency Moodys too, which reacted by
not margin generating are important,

McClellan noted. The acquisition of
issuing an upward adjustment alert on deal for Dufry, and an important one
for travel retail. It is a deal that is
Nuances recent bond issue in light of
its joint venture stakes in Asia [from
the acquisition.
The analysts consensus then: a great
likely to prompt some signicant

discussions among other retailers
former partner AS Watson in May]

was housekeeping. Something had
The deal has clear industrial logic as
hoping to play a role in the industrys
to happen.
its completion will create the worlds
future consolidation.
Nuances
dash of elegance,
surprise and newness in
Toronto
With a powerful Sense of Place, some stunning design touches and a dramatically
new product offer, Nuances new-look stores at Toronto Pearson International
Terminal 1 bring retailing alive at Canadas biggest gateway, writes Dermot Davitt.
On Location Toronto Airport
his is the best Nuance environment by

far in North America yet and in the
global industry there are few that are
better. Thats how Nuance President &
CEO Roberto Graziani hails the
opening of the retailers new duty free environment
at Toronto Pearson International Terminal 1.
At the official opening in June there was a clear surge
of pride among the groups management and its local
team in this execution. No wonder: its certainly the
companys best store in North America, perhaps
even in the world.
It ticks many of the right boxes, from Sense of Place
to interactivity, from good category segmentation
to newness in the offer. The environment has
elegance in the double ceiling heights, the grand
sweep of the walkways and, crucially, through the
addition (for the first time here) of a luxury

boutique zone. Thats no accident; it underlines
the key role the Asian traveller now plays in the
commercial life of Toronto Pearson.
Luxury appeal: Nuance

takes its Duty Free Store
concept to new heights
in Toronto
Here we have a monobrand environment that in

the past would not have been possible, but the
changes in the passenger mix have made it so,
says Graziani.
The roll-call of boutique brands says much. The
7,600sq ft space includes the largest Burberry airport
retail boutique in Canada, as well as many firsts, from
the likes of Michael Kors and Coach, in Canadian
travel retail. There is also the first stand-alone
Longchamp store in North American travel retail,
and the Salvatore Ferragamo boutique is the first of
its kind in Canada. Also situated in the fashion area
are Tumi and Victorias Secret boutiques.
Boutique brand: Coach is one of

a number of new names in the
fashion & accessories line-up
The dedicated watches and jewellery area features

boutiques from Bulgari, Omega, Montblanc,
Longines, Tissot, Rado and Swarovski. Customers
will also find a Gucci boutique, with Toronto the first
location in Canadian duty free to carry both watches
and jewellery from the brand.
In a telling note on the performance since
opening, fashion & accessories has quickly
overtaken beauty as the number one category
across the Nuance business at Toronto, driven
by high spends and transaction values among
predominantly Asian passengers.
Theres newness in the vital beauty business too
(across 4,600sq ft). La Prairie, SK-II which is the
first SK-II store in Canadas domestic and travel retail
portfolio Kiehls, and a nail and lip care beauty
offer from Tom Ford are all new to the airport.
With 3,100sq ft of space, liquor is now situated at the
front of the store (it was previously towards the rear)
and is led by a Canadian whisky offer which aims to
appeal to the departing passenger seeking local gifts.
Other zones include Nuances Boutique concept
tailored to Cognac, whisky, vodka and liqueurs; and
within these categories there is personalisation
aplenty. We know the Chinese love their blends in
whisky, for example, so weve given space to some of
the major brands to emphasise this, says Nuance
North America Vice President Buying &
Merchandising Andrew Rattner.
Making its debut in Toronto is a tasting bar at the
heart of the spirits category, with informative tablets
accompanying the luxury Scotch section. As at other
Nuance locations, digital tablets featuring
educational content have been incorporated in the
store to drive interaction and interest.
Thats a key point: take a walk through the core
category store and youll find interaction
everywhere. Every few yards there is something
happening, whether its a liqueur or spirit tasting,
digital signage hailing a new promotion or an
artisanal local producer showing off its craft. Unlike
some airports, theres no grand rush through the
space; people we observed here last month were
taking their time, enjoying the conversation with the
Peller staff at the icewine bar (a stand-out feature) or
sampling the locally made chocolates from
Ontario-based producers.
These are situated in probably the highlight zone of
the entire operation: Tastefully Canadian. It was
developed as a concept by Nuance years ago, but has
never been executed like it has here. Theres the
wood panel design, the striking branding (visible
Duty Free Store for Nuance, Toronto Pearson International, Terminal 1.
With over 20 years of expertise in the airport retail sector,

The Design Solution offers retail planning, environmental
design, duty free store & furniture design services.
For more information please contact Khilna Shah:
khilna.shah@thedesignsolution.co.uk
+44 (0)20 7908 5200 / www.thedesignsolution.co.uk
Nuances dash of eleggan

a ce,
surprise and newn
w ess iin
n Nu
Toanro
ntneow benchmark
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North America
ON LOCATION
Moodiert
Repo
The
Issue 127
19 June 2014
With
W
ith a powerful Sense of
it
Place, some stunning design
dramatically
d
touches and a
ram
m
new product offer, Nuances
new-look stores at Toronto
International
In
nteer
Airport Terminal 1 bring
Pearson
retailing alive at Canadas
gateway,
gaateew writes Dermot
biggest
Davitt.
in
rs upscale
estment delive
Toronto T1 invpowerful Sense of Place
avour and
his is the best N

uance
eenvironment by far in
North
America yet and in the
global industry
there are
a few that are better.
Thats
how Nuance
Nu
President & CEO Roberto
Graziani hailed the opening
of the
retailers new duty free
environment at
Toronto P
Pearson International Terminal
1 when he saw it this week.
The roll-call of boutique

brands says
much. The 7,600sq ft space
includes the
largest Burberry airport
travel retail
boutique in Canada, as
well as
firsts, from the likes of Michael many
Kors and
Coach, in Canadian travel
retail. There is
also the first stand-alone
Longchamp
store in North American
travel retail,
and the Salvatore Ferragamo
boutique is
the first of its kind in
Canada. Also
situated in the fashion
area are
and Victorias Secret boutiques. Tumi
At the offic
official opening on Tuesday
there
was a clea
clear surge of pride among
the
groups management
man
and its local team
in this execution.
execu
No wonder: its certainly
The dedicated watches
the compan
companys
and jewellery
n
best store in North
area features boutiques
America, perhaps
perh
from Bulgari,
h
even in the world.
Omega, Montblanc, Longines,
Tissot,
Rado and Swarovski.
It ticks manyy of the right
Customers will
boxes, from also find
a Gucci boutique, with Toronto
Sense of Pla
Place
c to interactivity, from
the first location in Canadian
good catego
categor
o y segmentatio n to
duty free
to carry both watches
newness in thee offer. The
and
jewellery
environment from the
brand.
has elegance in the
double ceiling
heights, the grand
sweep of the In a
telling note
walkways and, crucially,
through the since opening, on the performance
addition (for thee first time
fashion & accessories
here) of a has overtaken
luxury boutique
beauty as the number
boutiqu
u zone. Thats no
one category across
accident; it unde
the Nuance
underlines
e
the key role the business
at Toronto, driven by
Asian travellerr now
high
plays in the spends
and transaction values
commercial life off Toronto
among
Pearson.
predominantly Asian passengers.
Toroonto Pe
Toronto
Pearson
earsson
n Airport
A
passenger
Passengers
Domestic
The upscale fashion zone

is
elements of the new Torontoamong the stand-out
T1 environment
Transborder (USA)
International
Total
14 The Moodie Report

e-Zine
Source: GTAA
A
19 June 2014
19 June 2014
The Moodie Report e-Zine of 19 June featured

multi-media content from the Toronto ofcial store
opening; to access video and audio from that
event, go to TheMoodieReport.com and access the
e-Zine archive.
traffic Q1 2014 vs Q1 2013
Q1 2014
3,100,000
2,600,000
Q1 2013
Change on year
3,000,000
2,500,000
+3.3%
+4.0%
3,100,000
r
2,900,000
+7.0%
essing the powe
8,800,000
8,400,000
: The Harn
to
+4.8%
Muse
The Moodie
passenger apps
d travel of
revenue
rationale behin
drive inflight
The on
Moodie Report ee-Zine
lidati
Zine 15
retail conso
from the store front) to draw the traveller in, as well

as a mix of the popular Canadiana such as maple
syrup, mugs and high-class museum pieces from
Art Gallery of Ontario. Its easy space to spend time
in not something that every travel retail
environment can boast.
Nuance has made much of its partnership with
Greater Toronto Airport Authority (GTAA), not
least as it agreed a five-year contract extension last
year which allowed the retailer the time and
opportunity to invest here. Graziani notes GTAAs
approach, saying that it was more progressive than at
many other airports.
He says: When we started out on this journey it was
clear that our contract was not long enough to realise
s curated
Harrods bring
pt to
watches conce
row T2
London Heath
a return on the heavy investment we planned. But

GTAA shared our view from the beginning and
provided the conditions that supported us in making
this investment. GTAA considers the value in having
financially stable partners, which should be normal
practice in every business but unfortunately is not
in our industry.
A lot of airports talk about Trinity, talk about
partnership, but few of them walk the talk when it
comes to financial decisions. We value a partner that
does embrace that partnership and rest assured that
we will do our best to deliver on all our promises.
Nuances regional CEO Richard Rendek adds:
Partnership is not only about coming together to
create the right economic terms, its about coming
Marking the moment:

Nuance President & CEO
Roberto Graziani and
Greater Toronto Airports
Authority President &
CEO Howard Eng ofcially
open the striking new
retail environment
The new layout ts neatly

with the terminals
centrepiece, a sculpture
by Richard Serra
together to create something extraordinary. And

thats what we have done here.
The airport verdict
So what is the airports view of the project? GTAA
President & CEO Howard Eng is a man who knows
a bit about airport luxury retail from his 17 years at
Hong Kong International. He says: Everybody

arrives at the airport a little earlier these days, and
our passengers like to have something to do once
they are through the processes, which we try to make
as fast as possible. This gives them the chance to
experience a little differently what an airport can be.
Retail is part of that experience.
What they say

about Nuance at Toronto T1
Nuance CEO North America Richard
Rendek: Our new stores provide an
excellent foundation for us to drive
customer satisfaction and grow our
sales. We have a tremendous Sense of
Place, and that is testament to the
partnership with the airport. The other
vital item has been the work of our
design partner The Design Solution.

We took what was very difcult space
and created something beautiful.
Nuance North America Vice President
Buying & Merchandising Andrew
Rattner: Weve had plans to reimagine and recreate the Tastefully
Canadian concept for years, and this

was our opportunity. The artisans we
work with also lend authenticity and a
great sense of Toronto to the area. Then
theres the icewine zone, which is
stunning. We believe we are the biggest
icewine seller in Canada, which makes
us probably the worlds biggest too.
The world is changing. When you see the impact

of the BRIC nationalities when they travel, no
wonder every airport CEO says I need more
space. These people buy when they fly. We are
talking about a global traveller now. But you have
to have the right environment, and that is what
Nuance has delivered. This offer helps attract
Nuance President & CEO Roberto

Graziani: We have worked very
closely with the airport in order to
develop an upgraded retail offer,
setting a new benchmark for North
American travel retail.
Nuance North America Senior Vice
President Business Development
John Menchella: One of our goals was
to increase the level of luxury here,
which weve achieved. But we also
wanted to raise the level of excitement
and surprise with new lighting, design,
tasting bars, digital screens and
tablets. All of these elements
people and improves the reputation of Toronto,

Ontario and Canada.
GTAA Commercial Development Director Mike
Ross adds: We have long had a rich and diverse
passenger base, including from Asia, but they didnt
have the opportunity to buy as they do now. That
combined have helped create a buzz

around the space.
Greater Toronto Airports Authority
President and CEO Howard Eng:
Travellers have been asking to see the
luxury brands that they know and love
available at the airport, and its great to
be able to deliver on that through our
partnership with Nuance. These stores
are a wonderful addition to the
landscape of Terminal 1.
Greater Toronto Airports Authority
Commercial Development Director
Mike Ross: We have long had a rich
and diverse passenger base, including

from Asia, but they didnt have the
opportunity to buy as they do now.
The Design Solution Director Nick
Taylor: Our primary objectives for
this project were to create a space
that both respects the design of the
terminal and delivers an unparalleled
experience for passengers. We used
a pared-back design and palette of
nishes to showcase the brands,
allowing them to express their
signatures through personalised
furniture and generous space
allocation.
base is growing; we have larger numbers of Chinese

passengers as well as connecting passengers, a part of
the business we are encouraging.
Some key figures emphasise just how vital the
Chinese are today, and will remain in the future. Of
Torontos record 1.42 million overseas visitors last
year (according to Tourism Toronto), 181,000 came
from China but their numbers swelled faster than
any other nationality, at over +15% year-on-year. To
put the growth in context, since 2010 Chinese visitor
volumes to the city have leapt by +58%.
By 2020 there will be 200 million Chinese travelling
overseas, Eng notes. Where will they go? We hope
some will come to Canada, and Toronto is the
gateway to Canada. We want them to relax, enjoy the
experience and spend some money.
The emphasis on fashion, on new brands in P&C
such as SK-II and on an improved destination
range at T1 is part of Nuances response to this
phenomenon. But beyond that, the passenger
experience at the terminal has taken a big step
forward, says Ross.
Three years ago this was a traditional hold room,
and retail was not very good. In both retail and F&B
we unlocked previous agreements; in F&B we turned
what was non-commercial space into commercial
space. The new F&B in this space (operated by OTG)
delivers dollars in an area that did not perform at all,
yet it has not cannibalised our other operators. We
love what they have done to transform their part of
the terminal, just as Nuance has done in retail.
He adds: We expect to see double-digit revenue
growth from these latest projects. That is underpinned
by our traffic growth but its also our strategy to grow
non-aeronautical as a part of our overall revenues.
And theres more to come, both in duty free and in
other channels. Duty free remains a focus, says
Ross. We have plans with Nuance to develop the T1
transborder operation, and we want to mirror what
has happened in T1 over in T3 [which handles all
non-Star Alliance carriers Ed].
Nuances duty free space at

Toronto has been extended from
15,000sq ft
20,000sq ft
to over
Fragrances & cosmetics is a key

category, housed in generous space,
with a range of new brands
Terminal 3 is a big project. It was designed with a

lot of pre-security retail; we are closing that store by
store, but it demands a major overhaul. By 2016
much of that space will flip to post-security, with
new designs for retail.
It will feature similar space to T1, though it is
configured differently. Thats very exciting. It will
include a well-integrated duty free, speciality retail
and F&B node.
We are fortunate to have a mandate from our Board

to bring change; we managed to renegotiate some
deals that made sense [in both retail and F&B Ed].
Nuances new contract offers both parties a good
deal, and allows for capital to invest in a mid-term
refresh too.
By that time, of course, Nuance will be integrated
within Dufry. Theres natural uncertainty about the
future as a result, making the Toronto opening a
Light and air:
Facing the design challenge

In what was a challenging area for
retail originally, Nuance has created an
inviting, open environment for
shopping at Toronto Pearson Terminal
1. At the ofcial opening on Tuesday
the company was quick to pay tribute
to the role of design partner The
Design Solution.
Nuance North America CEO Richard
Rendek told guests at the opening:
The Design Solution helped us take
what was very difcult space and
create something beautiful.
The Design Solution Director Nick
Taylor said the design had to t with
the interior architecture of the
terminal not least the Richard Serra
sculpture around which the facility is
built and ensure that the new retail
zones looked like they belonged, rather
than like theyd been added as an
afterthought. That was no easy task, as
the shopping areas are split into two
areas. One, which now houses the
fashion boutiques, features doubleheight ceilings with lighting a
particular challenge; the other, the
core category store, has low ceilings in
some areas but not in all.
In the luxury area we wanted to create
a partially glazed enclosure with
generous portals, said Taylor. By doing
so the offer is clear, and passengers are
enticed to enter rather than feeling
the spaces are too exclusive.
The biggest challenge in this space

was a result of the large volume and
lack of ceilings, meaning that lighting
the spaces would require a special
solution. Together with London-based
Lighting Design House we designed
a network of beams, which are
supported from the free-standing
walls and portal structures.
The solution allows plenty of natural
light into the space, and passengers
arriving in the Departures
environment can clearly see the
stores as they approach.
This area is all about the signature of
the brands, Taylor continued. We
wanted them to be able to express
their brand values as much as possible,
as we know that passengers respond
well to this. To enable this level of
personalisation we had to create a
palette, and a set of structures which
could act as a backdrop and separator
to the [different] nishes. That means
there is an overall personality to the
zone, but each brand has its own
signature designs notably ooring
to set itself apart.
In the main store the open entrance
and wide walkways guide the
passenger through, with Nuances duty
free store DNA at its heart. Even
within that, though, there is a distinct
feeling of Toronto, notably in Tastefully
Canadian, one of the big highlights.
Here weve used a combination of

local timbers to create a feature wall
behind the product, which underpins a
strong Sense of Place in this space,
said Taylor. We used a number of
species, from light timber such as pine
and white maple, through to red oak;
darker tones were achieved using red
cedar and natural walnut [these are
the ve woods of Canada Ed].
This was all layered to create a
three-dimensional wall rising up high
into the ceiling void for impact. The
oor is solid cherry timber planks, with
feature furniture using each of the
species of timber from the wall. This
very woody environment sets off
perfectly the central display for
icewine a crisp white display with
feature lighting above.
For The Design Solution team a
number of major features stand out.
The destination zone is terric, and
offers a real taste of Canada; we are
proud to have been involved in
redesigning the Tastefully Canadian
product range too, said Taylor. P&C
works well, with the feel of a
department store even if that
environment hasnt changed a lot in
this project. Theres great theatre here
too, through the podiums and stages.
And in the luxury areas, what could
have been a heavy, inaccessible
environment is lightweight,
transparent, fresh and contemporary.
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bitter sweet moment, as one Nuance executive noted

at the event. Whatever happens in the months ahead
though, Toronto T1 is a development in which
Nuances North American team will rightly take pride.
For its elements of surprise and engagement, for its
radically new (but also broad) offer, and for its fine
Sense of Place, this sits comfortably alongside the
very best travel retail executions at North
American airports.
Toronto Airport concessions & rentals revenue climbed by
+6% C$44.3
million
to
in Q1 2014 following recent big

investment in retail and F&B
(Above) The teams from NuanceNorth

America and GTAA hail the opening;
(below) A avour of Canada in spirits
Helsinki Airport
signals a new commercial era
With a new duty free retailer, increased competition in food & beverage and a
multi-million Euro overhaul of commercial space, Helsinki Airport is creating the
platform for a new phase of growth. Finavia Vice President Passenger Services
Jukka Isomki spoke to Dermot Davitt during a recent visit.
ake a walk around Helsinki Airport

today and youll see a facility in
transition. A new security search area
in Terminal 2 has already opened,
changing the passenger flow into
Departures. Old retail anchor stores are being
gradually replaced by new as World Duty Free Group
(WDFG) installs its new walk-through environments,
allied to fresh fascias, signage and digital promotions.
In food & beverage, long-time partner SSP is investing
in upgrades of its operations, while HMSHost has
entered the market recently and is now putting in
place the first of its 16 units, introducing competition
in F&B at a level not seen before at Helsinki.
Finavia Vice President Passenger Services Jukka
Isomki, who guided The Moodie Report on a tour
of the facility recently, says this project is the first in a
longer-term expansion. We aim to have 20 million
passengers by 2020 [from 15.3 million in 2013] and
there is a major infrastructure plan to develop the
airport by then, he says.
This phase will be complete during 2015, with the

new duty free shops, new boutiques and a lot of new
food & beverage. Its all about upgrading the quality
of commercial and, of course, raising sales. The
transformation is beginning now.
Overall some 70 new or refurbished retail and food
& beverage units will open this year and in 2015.
With 3,200sq m of space in total, duty free is a
central feature.
WDFGs new operations will cover four core
category stores, including two walk-throughs (one
each in the Schengen and non-Schengen areas), and
seven speciality outlets. The new entrant has taken
over the shops operated by the airport company, but
will continue to operate in competition with Finnairs
tax free stores elsewhere in the terminal.
The walk-through stores will have wide, open
entrances inviting passengers to enter, says WDFG,
and fixtures will maximise product showcasing, an
Fast forward: Helsinki Airport

will open or upgrade 70 units
in 2014 and 2015, with Jukka
Isomki (below) leading the
commercial services drive
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Nordic Report Helsinki Airport
open plan layout plus the retailers contentainment

digital media and events platform. There will be a
Beauty Lounge offering consultations, a Connoisseur
Collection offering vintage and rare liquor ranges.
And there will be a strong Sense of Place in the
design of the environment.
We expect a very positive uplift in sales from having
a new duty free operator, says Isomki. There is a
reason we dont do it ourselves any more, and having
a specialist makes sense today. Duty free is very
important to us.
Theres more happening in retail too, notably in
fashion. Hugo Boss has just opened its first 85sq m
store at the airport, and a Ralph Lauren store, a
multi-category unit and a watches & jewellery
boutique are also to come soon in the main
walkways through T2s Schengen area. Other leading
brands that will have a presence at the airport
include Porsche Design, Armani Jeans, Versace

Collection, Bally, Loewe, Etro and Montblanc.
Finavia is keen to centralise and offer exposure to
leading fashion brands that were previously missing
from the mix.
Nordic niche: Local brands

such as Marimekko will
blend with an increasing
number of international
names
The non-Schengen zone similarly will see major

change, with much of the construction beginning in
July and running through to year-end. Here there
will be new watches & jewellery and premium
confectionery outlets, among others.
These will sit alongside local brands such as
Marimekko, Lindroos, Finngold, Stockmann and
Moomin, which offer a neat flavour of Helsinki in
the shopping offer.
The goal is not only to premiumise the retail offer,
which we will do, but also to serve all the different
niches in our wide passenger market, says Isomki.
Fast forward for F&B

Food & beverage is set to change dramatically, with a
new ten-year deal for SSP and 16 outlets opening or
planned by new entrant HMSHost over the next two
years. We will alter almost all of the F&B outlets,
says Isomki. We are trying to create a more
interesting environment for passengers and for
people who work here.
The project includes not only new brands but also
an expansion of space, for example with the
addition of an Arctic Bar in a soon-to-be-built
terminal extension.
Other new brands to be introduced by HMSHost
include Grab and Fly, Urban Food Market, Freshly
Made, Johan & Nystrom and Two Tigers Sushi
and Noodle.
Once T2 is completed, attention will turn in 2015 to
an upgrade of T1 across retail and F&B. T1 handles
principally Star Alliance flights.
The commercial upgrade is partly targeted at the
growing numbers of Asian passengers through
Helsinki, as the company trumpets its status as the
city with the shortest flying time from Europe to
Asia. Passenger numbers on Asian flights climbed by
+5% to 1.9 million last year, ahead of total passenger
growth of +2.8%.
Urban Food (top) and Hello Caf:

Two of the new F&B outlets that
will open soon at Helsinki Airport
Helsinki Airport fact file 2013
2013
2012
Passengers
15,300,000 14,900,000
Passengers on Asian flights
1,900,000
1,800,000
Number of flights
169,921
173,966
Number of airlines with regular services on Dec 31
25
29
Number of route destinations on Dec 31
86
82
Leasable sales premises
14,342sq m 14,342sq m
Change
on year
+2.8%
+5.0%
2.3%
13.8%
+4.0%
Source: Finavia Corporation
There were some significant route openings in 2013

too. In June, Finnair began flying to Xian in China
and Hanoi in Vietnam. In July, Japan Airlines started
daily flights between Helsinki and Tokyo. Amid this
development Finavia has invested resources in
services aimed at international passengers, in
particular Asian transit passengers.
Asian passengers are an important group for us
today, and we need to understand how to serve
them, notes Isomki.
These passengers are a big draw card for retailers
too. WDFG International Operations Director
Pedro Castro notes Helsinki Airports importance
as a location.
The unique geographical location of the airport
makes it a major hub between Europe and Asia, with
nearly two million Asian travellers passing through
each year, he says.
Within the next 20 years half of the global increase

in air traffic volumes will be generated in Asia. The
estimated passenger volume growth from 15 million
to 20 million is also very attractive to us.
Competitive channel:
Nordic fashion specialist
Airport Retail Group is
among the airports many
current tenants
As noted, the investment in T2 this year is just the

beginning of an overall 900 million redevelopment
programme across its network. From 2014 to 2016
that investment will reach more than 30 million at
Helsinki. These projects will result in nothing short
of a transformation of the airport: one that when
complete should drive commercial sales by +40%
compared to current annual levels, says Finavia.
Our commercial services have remained relatively
similar over many years, notes Isomki. Now we
are attempting to change the whole environment in
one move. You could say its a once-in-a-lifetime
opportunity. Its about the passenger experience. If
you make the service a better one, you create a
better business.
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Nordic Report Tallink
Serenade
hits the high notes for
Tallink Group
Tallink Group, the worlds biggest maritime travel retailer, has set a new
benchmark for its commercial offer with a high-class refurbishment of its
Silja Serenade, which sails between Stockholm and Helsinki. Tallink Duty
Free Sales Business Development Director Magnus Skjrshammer talks
to Dermot Davitt about the changes in approach and offer.
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Magnus Skjrshammer: The diverse

passenger base drove the need for
newness onboard Silja Serenade (right)
he Nordic cruise ferry market is

among the most competitive in the
world. Many routes feature multiple
operators; passenger growth is steady
or stagnant rather than spectacular;
and the battle is for the hearts, minds and wallets of
frequent travellers who know the channel not to
mention each ship inside out.
For the leading lines such as Tallink Group, Color
Line and Viking Line the difference therefore comes
through the provision of services chief among
them retail, but also including food & beverage and
entertainment options.
With its investment in upgrading Silja Serenade in
Q1 2014 and Silja Symphony later this summer,
Tallink Group aims to make a statement to those
consumers. That investment comes against the
backdrop of what was a challenging environment
in 2013. The groups passenger numbers dipped by
-1.6% in 2013 to 9.1 million, prompting a 10.2
million slide in restaurant and shopping sales to
507.3 million (representing more than half of
total revenues for the group). Tallink blamed those
declines on a weaker economic environment in the
Nordic countries, its rivals drive to upgrade their
own ships, and competition from other channels
such as online shopping.
Tax free transformed:

The core category store
is bright and open, with
a range of new brands
The company has increased retail space by +50% and

rebranded its Tax Free Superstore onboard the
Serenade with a bright, open new look replacing the
dark, cramped former core category store. Visibility
throughout is much improved, as is the segmentation
between the categories.
As well as that the company has installed a new-look
luxury shopping zone on the promenade deck above,
featuring a series of boutiques for fashion, jewellery,
watches and gifts, plus enhanced units dedicated to
consumer electronics and childrens goods.
We had two reasons for the investment, says
Tallink Duty Free Sales Business Development
Director Magnus Skjrshammer. First, frequent

travellers want to see something new, and the two
Silja ships needed refurbishment, something we have
wanted to do at Tallink since we took over Silja in
2006. That is difficult, as we have to find off-peak
time, which does not really exist, and taking a ship
out of service for six weeks is a big cost.
The second reason is that we now have a more
diverse passenger profile on Silja ships, from the
value-for-money Swedes and Finns to higherspending Russians and Chinese who want very
different products. Thats a difficult balance to strike.
So we divided the shopping zone into two parts
one devoted to luxury, on the promenade deck
above, which we call our Fashion Street; the other

is the new Tax Free Superstore below.
The latter is unrecognisable from what went before.
It is more like an airport walk-through store now,
with wide walkways, touch screens to indicate where
each category is located, and live advertising for
promotions. All of the categories are well segmented,
so weve created distinct worlds for each.
Tallink Groups retail and F&B turnover dipped to
507.3 million
in 2013
Skjrshammer adds: We have really built on our

P&C presence in the store, while Champagnes and
wines have also been much extended. We now have
a big section for gourmet foods, which is a
highlight too.
end of the Tallink Group offer in retail and F&B (the

restaurants have also been upgraded), with the
value-for-money end of the market principally
handled by the Tallink branded ships within the
groups 18-strong fleet.
Among the new brands in the luxury zone are Gucci,

Rotary, TAG Heuer, Victorias Secret and jewellery
house Aarikka.
The goal of the investment is to lift onboard spends

sharply among regular travellers from the region
and also among the new travellers from Asia and
Russia. With a classy new look, vastly improved
and extended space and a focus on developing
new categories, that ambition looks in sight for
Tallink Group.
Next comes work on the Symphony, which will go

into dry dock later in the year for a similar overhaul.
These two vessels will then represent the premium
Open plan: Wines &

Champagnes are among
the categories to benet
from the extra space
Inside the Nordic

We present edited highlights of a specially commissioned piece of research into
Nordic travellers attitudes to ferry retailing, courtesy of M1nd-set. By Dermot Davitt.
ordic ferry retailers could benefit

from more gifting opportunities
and promotions, fewer SKUs (for
improved category management),
more sales advisors, more
inexpensive ranges and more travel retail exclusives.
Thats according to Peter Mohn, Partner at specialist
research company M1nd-set, speaking to delegates at
the Nordic Travel Retail Seminar in May.
Peter Mohn: Two-thirds of

travellers said shopping is
a key part of the ferry
experience
At the event Mohn outlined the results of a specially

commissioned survey of 500 ferry travellers and
shoppers undertaken during April and May.
Perceptions were mixed, he noted, though shoppers
were broadly positive about the ferry experience
today. Two out of three buyers on the ferries said that
Perception of ferry shopping

Prices in ferry
shops are always
cheaper than
at home
Q Totally agree (5) Q 4 Q 3 Q 2 Q Do not agree at all (1)

32
18
18
19
13
Mean: 3.4
50%
Ferry shops are

a great place to
buy gifts
28
18
28
46%
19
32%
Q Totally agree (5) Q 4 Q 3 Q 2 Q Do not agree at all (1)

28
19
28
18
Mean: 3.4
47%
Source: M1nd-set
Of those surveyed, half also agreed that prices on

ferries are cheaper than at home, though a
significant proportion (32%) said they were not.
Many people also said ferries were a great place to
buy gifts but again, a large number (26%) disagreed,
offering room for improvement for retailers in the
channel. Some 43% noted that ferries offer exclusive
products that I enjoy buying while 39% said the
channel offered the chance to find new brands.
Notably, though, a worryingly high 40% disagreed
with this assertion about new brands.
On the experience in the shops, more than 50% rated
it as excellent or very good, while 42% had a
positive perception of value for money. The highest
satisfaction levels with the stores were for the
convenience of the shop locations and the ease of
finding brands or categories in the stores. Crucially,
the numbers of those who travel and purchase are
high, as anyone familiar with the shopping culture of
the Nordics will recognise. Of those surveyed, 68%
said they purchased on every ferry trip and a further
21% on every second trip.
32%
Mean: 3.4
Prices in ferry
shops are always
cheaper than
at home
shopping was a key part of their travel experience;

close to half (46%) agreed that the variety of
products make it a great place for shopping.
25%
Confectionery and liquor, followed by tobacco and

beauty, were the most purchased products among
these Nordic shoppers. Gifting was the number one
motivation for buying confectionery, though among
every other category saving money was the major
driver of consumer purchases. Not surprisingly, most
shoppers compared prices assiduously with those in
their home markets.
Even with a roundly positive attitude to ferry
shopping, Mohn noted that there is much room for
improvement in consumer perceptions. Among the
areas that retailers scored poorly on were the
availability of local products, the quality of
promotions and the ability to test brands in the
stores. Some noted that there were too many SKUs
on offer in the range in certain categories.
Nordic Report Consumer insight
consumer mind
Summing up the key messages, the research
indicated that gifting as a motivation could be
further tapped through improved offers and
promotions, that larger numbers of sales staff could
boost sales, and that the offer could feature more
travel retail exclusives and new items.
Frequency of ferry shopping among Nordic travellers
The Nordic market already boasts some of the

highest penetration and spend per head levels
of any region in the world, with ferries among
the forces driving that but as this research
suggests, there is room to make the offer even
more compelling.
About the M1nd-set survey

To compile these results M1nd-set
researched the views of 500 ferry
shoppers in April and May 2014. The
survey covered a range of nationalities
using ferries departing from Denmark,
Norway, Sweden, Finland and Estonia.
Source: M1nd-set
Q Purchase on every trip

Q Purchase on every 2nd trip
Q Purchase on every 3rd trip
Q Purchase less often
68%
21%
4%
7%
Tracking the needs of the Nordic nations

At Mays Nordic Travel Retail Seminar,
where M1nd-set presented its research
into the ferry market (see main feature),
Inight Service Europe Sales Director
Karin Rynning (pictured) offered a
fascinating insight into the purchasing
habits of the various Nordic nationalities.
they are the leading nationality for

spend on cosmetics, wine and
chocolates and savings are key as
drivers of purchasing.
Norwegians have an even spend across

categories, and are the number one
nationality for purchases of
Danes, she noted, spend as much on
accessories, Cognac and tobacco. They
fragrances as on alcohol, and are
also search for exclusive, high-end
number one in the Nordic countries for products such as Champagne.
spending on fragrances in travel retail;
Swedes spend mostly on alcohol
they also search for strong brands and
mainly whisky with a focus on prices
focus strongly on price.
and savings; they are also loyal to the
Finns, she said, distribute their spend
pre-order concept, pioneered by Inight
mainly between alcohol and cosmetics; Service in the Nordics.
Airlines Report ISG
New
concessions
open a
fresh chapter
for ISG
With a flurry of recent contracts, Inflight Sales Group (Hong Kong) has underlined
its intent to grow the companys footprint well beyond its core Greater China
region. Managing Director Tony Detter (pictured) outlines the approach to its
newest concessions and the broader strategic goals. By Dermot Davitt.
Airlines Report ISG
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Fragrances and watches are among the big drivers of

sales among most Southeast Asian carriers, and these
will figure in the Tigerair ranges; but ISG will place
an emphasis on growing categories such as
electronics and accessories, Detter says.
The approach onboard Tigerair flights will be a
different one to that used with Malaysia Airlines,
another recently added account. Malaysia is a legacy
carrier, with a lot of long-haul and a lot of
opportunity, says Detter. There are a lot of SKUs to
manage, and we have to be more creative than under
other programmes.
They have no liquor or tobacco, so well focus
heavily on opportunity categories such as electronics
and confectionery. It will be a different approach.
APRI LJU NE
2014
2014 4-6
SHOP TO W
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ISG is also planning to revamp and upgrade the

existing platforms on which Tigershop is promoted.
This includes the printed onboard catalogue, the
website (incorporating a pre-order solution for
customers who pre-plan their duty free purchases)
and working to increase awareness of Tigershop as a
relevant retail option for Tigerair customers.
football jer
& discount co seys
upons
PACIFIC
We have an operation in Singapore already, which

well consolidate. Well support Tigerair from there,
and well have an expanded team that can also
support our activities in Kuala Lumpur.
NCE
C AT H AY
Of the Tigerair concession, which began on 1 July,

Detter says: As a low-cost carrier Tigerair is focused
on efficiency, so we need to keep our systems as clear
and simple as possible. Every transaction must be
easy to understand and quick to carry out for crew.
G EXPER
IE
HK$2 million
in prizes
Win signed
The addition of Tigerair, first revealed by The

ow
Moodie Report during the TFWA Asia Pacific show
s.
in May, takes the groups portfolio to 22 accounts.
hat
We want to branch away from the perception that
na,
ISG is a company that specialises in Greater China,
says Detter. We are now in the Philippines,
sia
Indonesia, Malaysia and Singapore: Southeast Asia
is a strategic region for us today. We plan to be ass
competitive as we can be there, and to break out
further still including to Europe.
T SHOPP
IN
D I SCOV E R
focus on Southeast Asia and

expansion into new territories
beyond its core region: those
are among Inflight Sales Group
(Hong Kong)s ambitions for
2014 and beyond. The companys recent contractt
gains with Tigerair, Malaysia Airlines and
Aeroflot lend weight to those ambitions, says
Managing Director Tony Detter.
20% bonus
Asia Miles
for inight pu
rchases

20
Well be efficient in managing

orders and returns, so within a
few months suppliers should see results there with
fewer returns to them than previously, for example.
Malaysia Airlines Golden Boutique Temptations
brand will remain in place, at least for now, as ISG
works with the carrier to determine its future
direction. We are also looking at how we retain the
talent involved in running the operation previously.
There will be some rationalisation in areas such as
buying and finance; but well need certain functions,
such as liaison with Customs and other operationsfocused areas.
Turning a new page: ISG

has broadened its range
of shopping options,
including home delivery,
with the Cathay Group
Among the strongest routes for duty free sales are

Europe, the USA and North Asia. Im confident we
can grow sales by +30% and more, says Detter. We
have access to many more products, and we have a
good product pipeline coming through.
Last year ISG extended its concession with Cathay
Pacific (and sister carrier Dragonair), its largest
regional contract. Since then the company has been
working with the Cathay Pacific Group to build that
business through a series of measures.
Together we have got behind the sales crew and
expanded their incentives and targets, says Detter.
We doubled the size of our annual crew event in
December, to give them more access to suppliers and
the knowledge they can bring.
Weve also jointly developed and launched an app
aimed at cabin crew, Shopedia, which gives them all
the information they need in one place. Its a sales
aid thats accessible as part of a closed network, and
they can download information to their personal
devices to study before they board or inflight.
at om
ow 4.c
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ste ty
g i ni
Re Tri
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2014
THE
TRINITY
FORUM
1719 September 2014 | Grand Hyatt Taipei
The global airport commercial revenues conference

Platinum partners
Organised by
Hosted by
The
Moodie
Report
-
For registration visit
www.Trinity2014.com
Airlines Report ISG
It includes product descriptions, selling suggestions

and Customs and LAGs information; it can estimate
duty levels for home delivery, and broadly bring
technology into play to help guide staff.
Beyond that, home and regional delivery are the
focus for ISG in the Cathay programme as the
company grows its wine programme, for First and
Business Class guests in particular.
Among the key categories onboard, ISG says it is
seeing tremendous growth in skincare and
electronics. The latter is one of our strongest
business areas, with wearable technology such as
the new Pebble Watch an outstanding performer,
says Detter. Its all about innovation and what is
coming next. We devote a lot of resources to
understanding those trends and ensuring we can
capture them in future ranges.
To bolster its support for Cathay the company has
taken on Ivan Giovanni Tassaro as Account Director,
based in Hong Kong. He will oversee the core
business with the Cathay Pacific Group.
We are taking more of an MBA approach to the
business, as Cathay has grown so much since we first
began this concession, says Detter. Ivan can bring a
lot to what we do, through his experience in the
fashion and luxury supply chain. Its a new voice in
our senior team.
Within Asia, one negative in recent months was the
decision by China Sales Group (CSG) to take direct
supply from early 2014 of many product categories
previously handled by ISG. The company had been
CSGs major supplier of duty free products for the
latters Chinese airline accounts Air China
International, China Eastern Airlines, China
Southern Airlines and Hainan Airlines.
business is key. We are building a team in Moscow,

and we want to be more present in Europe, notes
Detter. Its a signal that we can operate in Europe
that we are not so Asia-focused. This move helps
make clear that we have ambitions beyond our
traditional region.
The Aeroflot programme on international flights
began on 1 April a miracle programme Detter
calls it, due to its implementation within a month of
its agreement. A new combined domestic and
international programme began on 1 June.
The domestic programme is significant, says
Detter. Its around 1520% of the business. Beyond
that, among international routes Asia is strong. By
the time we put the September programme together
well have a much more focused approach to the
different regions.
The presence of major beauty houses in the
programme is expected to be increased noticeably.
Crucially Aeromar (as concessionaire for the
programme, with support from ISG) began
accepting credit card payments in June, which
will boost sales considerably from the previous
cash-only model.
With continued expansion on the agenda, the
company is intent on competing for some of the
major inflight duty free concessions in the market
across all regions among them British Airways and
Iberia, currently out to bid.
We have shown with our recent contract gains that
we are creative and experienced, and that we can do
a great job beyond Greater China and even beyond
Asia. Now we plan to take that experience
and creativity to reach a new level.
JetBoutique
This was a key contract, which gave ISG access to

many Chinese consumers. We still handle key
beauty and spirits brands [these categories account
for around 30% of the business Ed], but it does have
an impact on our warehousing operations and other
areas of the business, says Detter.
It means we have to be creative elsewhere, and
take a refreshing new look at how we do business.
We have many talented people, some of whom weve
already moved to handle other accounts, so its an
opportunity too. But theres no doubt its a transition,
and it changes our focus to an extent from Greater
China towards other regions.
Beyond Asia, in the drive for expansion, ISGs
partnership with Aeromar to handle the Aeroflot
Branching out: ISG is

keen to demonstrate its
expertise beyond the core
Greater China market
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A benchmark
for airports of
the future
Qatar Airways CEO Akbar Al Baker is the driving force

behind the opening of Qatars stunning new gateway, Hamad
International Airport in Doha. Shortly after its full opening
Martin Moodie visited the Qatari capital to meet an irrepressible
human dynamo, unstoppable in his determination to create an
airport that transcends all others.
Montblanc Star Classique

and Hugh Jackman
Crafted for New Heights
Manufactured in Switzerland,
the Star Classique Automatic,
with its slim 8.9 mm 18 K red gold
case and its ergonomically shaped
case back, is a ne companion
for an elegant appearance.
Visit Montblanc.com
Interview Akbar Al Baker
ts the eyes that take you into the soul of

Akbar Al Baker. As you interview him they
look straight back at you, lit up, sparkling, by
the relentless sense of conviction that burns
within him. You can almost see the
intellectual ferment going on in his brain, the
swirling whirlpool of ideas, the unrestrainable
energy straining to move on to the next challenge.
One can only imagine the frustration such a man must
have felt as arguably his greatest challenge to date,
the building and opening of Hamad International
Airport as Dohas new gateway, was delayed and
then delayed again. The reasons, constructor-related,
were beyond his control; but for such a perfectionist
they must have been simply maddening.
It was frustrating and also it was affecting our
bottom line, because the airport was a very
important tool for our expansion which did not take
place according to plan, he says matter-of-factly.
[But] now that the airport is open we need to see
how to maximise the benefit of this large facility. We
are already working on the final phase, which will
take another three years to complete.
Doha dynamism: Qatar Airways CEO Akbar Al Baker outlines the vision
behind Hamad International to Martin Moodie (top); one of the impressive
art installations that give the facility its character (below)
In other words, the frustration is behind him and its

full speed ahead once again. On 27 May the airport
opened fully for business. This architectural wonder
is designed to accommodate 30 million passengers

annually, rising to 50 million on full completion; it
covers some 29sq km and is 60% built on land
reclaimed from the Gulf.
Eventually it will deliver close to 25,000sq m of
commercial space through Qatar Duty Free and its
partners, housing more than 70 stores and over 30
food & beverage outlets.
Speaking to The Moodie Report in Doha in early July
in his first travel retail industry interview since the
opening, Al Baker says: Once we have got over the

teething problems of this great facility we will definitely
create a benchmark for airports of the future.
The concept that we have is really not of an airport
duty free but of a shopping mall. We are very
pleased with the [early consumer] response. He
notes that as passengers become familiar with
wayfinding and the general layout of the airport,
reaction and results will continue to improve. It
will take us at least a year to see the full potential of
what we have done.
Food & confectionery is

executed with style
through brands such as
Fauchon (top); beauty
(above) is open, accessible
and classy
Hamad International
houses one of the airport
worlds outstanding Caviar
House & Prunier outlets
Although the commercial offer is already on a vast

and impressive scale, Al Baker points out that it is far
from complete. Several stores (including some major
luxury names) and restaurants are still to be unveiled
in the existing South Node, and the vast North Node
will be opened soon. We are building another retail
The views of
Al Baker insists that the principle of running the

commercial business in-house, through Qatar Duty
Free, has been key to the successful delivery of a
Akbar Al Baker
On the in-house retail model: As long as we get correct

rate of return on our investment we like to do it in-house,
because we are more in control of the product we want for
our people and our passengers and also the quality.
On having the airline, airport and commercial team under
common ownership: It is very important because by
doing that you have more streamlined decision-making. It
is also easier to communicate the vision you have for your
company when all these teams are working together.
On his philosophy to the travelling consumer: We are
trying to make sure that when our passenger arrives its
a Wow moment for them.
On the giant yellow teddy bear that anchors the airport:
You know, we thought in the beginning that it would be
something that would be criticised. But now this has
become the centre of attraction that is drawing people
to the area. It has become a trademark of the airport.
facility in the North Node which should be

completed in the next four to six months, he says.
On getting the retail balance right between luxury and

accessibility: Its very important that we reach out to
all sectors of our travelling public, because people have
different purchasing power. More and more people are
buying luxury goods at airports, but we also have labourers
who make up a large percentage of our passengers.
On the resistance of certain countries and traditional
legacy carriers to Qatar Airways expansion: We are
creating ten times more jobs in the industry and in
businesses than their airlines are creating. Why they are
objecting to us is because they dont like competition. They
want to keep the business for themselves, so that through
the lack of competition they can charge their passengers
very high fares just because they are inefcient carriers.
On what makes him excited at the beginning of each day:
I have to come back to my ofce and see what more I can do
for the benet of my country.
world-class retail and F&B business. Qatar Airways

recently terminated its link with long-term retail
consultant Aer Rianta International the business
will continue to be expanded by Qatar Duty Free
Senior Vice President Keith Hunter and his team.
We are very proud of this and, of course, we have a
good manager [Hunter] here looking after it. It [the
in-house team] has absolutely raised the bar when
you compare this to any other airport in the world,
Al Baker claims. The spread of the shops, the food
& beverage outlets, the last-minute shopping areas
are all exactly strategically located where the
passenger wants them unlike where everything is
bunched in one place and thrown in a congested
cul-de-sac. We didnt want to do that.
Instead we wanted to create a concept where a
passenger would feel that he is in a high-class
shopping mall instead of being in an airport. And we
havent finished yet. We have a lot of sculptures and
works of art that still have to go round the airport
they will really make it unique.
Taking The Moodie Report on a tour of the new
facility, Hunter also hails the commercial
achievement at Hamad International. He says: Im
not going to sell it short. I think it is great, amazing.
But the really exciting thing is that theres so much
room to take it forward. I am really proud of what
my incredible management team have achieved. I
dont believe there is a problem we cant get over
and theres much more to come.
Looking ahead, the companys ambitions are not
confined to Doha. Intriguingly, Al Baker emphasises
that Qatar Duty Free is considering expansion at
other international airports a move first flagged by
Hunter (speaking on behalf of Al Baker) at last years

MEADFA Conference in Doha.
Weve looked at a couple of them very recently, he
says. We will look at opportunities, but the
opportunities should be a two-way street. We will
not go to operate somebody elses duty free just so
that they benefit at our cost.
Al Baker also says that the long-touted IPO for
Qatar Airways is still on the table, but not for
another decade.
We had an opportunity at the end of the last decade,
but due to the financial crisis we had to delay it, he
explains. Now the group is in its second phase of
growth, he notes, saying that this would require time
to develop before pursuing the IPO opportunity.
Meanwhile the focus will continue on the ambitious
expansion of Hamad International. We used to
deliver a very high-quality product inflight, but we
didnt match it on the ground when people came
here, says Al Baker. Passengers have very high
expectations, especially when there are other [highly
competitive] facilities in the region.
As an airport we were far behind, but now we are
foremost in what we provide to our passengers. The
facilities that we have in this building are
unprecedented in any other airport.
It would be hard to argue otherwise. And those eyes
are in no mood for argument, anyway.
Further pictorial highlights, an extensive interview with Keith Hunter and a profile of
Hamad International Airport can be found at www.TheMoodieReport.com
Welcome change: The

new airport is home to a
treasure trove of surprises
and experiences for
the traveller
Airport F&B Offer of the Year

Also
Best Digital or Social Media Initiative
Winner: Sharing the conversation@CPH
Airport Coffee/Non-Alcoholic Beverage Outlet of the Year

Winner: Joe & The Juice
Airport F&B Marketing Campaign

Highly commended: CPH Nordic Dining
Airport Casual Dining Restaurant of the Year

Highly commended: SSP, MASH
Thank you
cph.dk
Follow us
Inspiration and
aspiration at FAB 2014
The fourth annual Airport Food & Beverage (FAB) Conference and Awards took
place in Copenhagen last month, gathering many of the worlds key players in
travel-related F&B. In these pages we report on a high-quality event, and on
page 135 we bring you highlights of the annual FAB Awards.
mbition, achievement and insight

were on display in equal measure at
this years Airport Food & Beverage
(FAB) Conference and Awards as
delegates from around the world
convened in Copenhagen to share their vision for the
future of the travel food & beverage sector.
The two-day conference organised by The Moodie
Report and The Foodie Report featured high-level
discussion between some of the biggest and most
innovative airports and concessionaires.
Copenhagen proved a superb venue for the event,

from the hospitality of host Copenhagen Airports to
a fantastic Opening Cocktail reception at the iconic
Tivoli Gardens (courtesy of Autogrill and
HMSHost). Then, at a glittering Gala Dinner hosted
by SSP, the FAB Awards 2014 celebrated some of the
most successful and impactful F&B concepts and
programmes of the past year.
In this special report we present a comprehensive
review of an event which exhibited the travel food &
beverage industry at its very best.
Copenhagen
Airports
food & beverage
revolution
ver the past three years the food &

beverage programme at
Copenhagen Airport has been
transformed, to the point that the
once underperforming business was
this year recognised as the Airport F&B Offer of the
Year at the FAB Awards 2014. As the host of this
years Airport Food & Beverage Conference and
Awards, Copenhagen Airports shared just how it has
driven that rapid evolution.
Welcoming delegates to the conference, Copenhagen
Airports CEO Thomas Woldbye put this progress in
the context of the airports wider vision. He outlined
the key elements of its World Class Hub strategy: a
plan to enable the airport to serve up to 40 million
passengers a year, up from 24 million today.
The strategy is focused on three themes
extraordinary customer experiences, competitiveness
and operational efficiency which are directed towards
the airports partners as much as its passengers.
Success for an airport is not something that happens
in isolation, said Woldbye. If we want to be
successful we need to make sure that the people
around us, our stakeholders, our society and all our
partners are successful.
Woldbye noted that the Shopping Center at
Copenhagen Airport has seen turnover increase by
+25% over the past three years, with satisfaction
among concessionaires improving from 53%
to 75%. That is not world class for me yet, he said.
But it is going in the right direction.
Copenhagen Airports Director of Sales Lise Ryevad
provided a deeper look into how the airport had
achieved that growth. She explained that nonaeronautical revenue is cheaper to generate than
aeronautical revenue with non-aeronautical
operations representing 43% of airport turnover but
73% of EBITDA last year and hence crucial to the
airports ability to invest in its development.
Food & beverage represents 20% of turnover at
Copenhagen Airports Shopping Center, up from
around 10% five years ago. Turnover from F&B in
that time has increased by +55%, and spend per head
has grown by +19%. Ryevad detailed how the airport
had improved the value, quality and communication
of the F&B offer at Copenhagen Airport, moving
Encouraging excellence: Thomas Woldbye

(this page), Anders Barse (top right) and Lise
Ryevad on bringing class and consistency to
the Copenhagen Airport F&B offer
away from unknown brands to a mix of recognised

international favourites and local heroes.
Mixing F&B within the retail offer was another
important strategy, as opposed to creating a
dedicated dining area. It gives a lot of atmosphere,
and it gives higher flow to the retail stores, with a lift
from impulse buying, Ryevad explained.
Other important initiatives included a new key
account structure bringing in F&B experts, as
opposed to negotiators, to liaise with concessionaires
and the CPH Retail Academy, offering support and
training courses to staff in order to further drive up
service levels among operators.
The result has been an increase in passenger
satisfaction with F&B from 70% to 80% since the
new strategy was introduced, said Ryevad. Now
Copenhagen Airports aims to continue that
strategy, with the next steps including the
introduction of service level agreements to secure
and incentivise value and performance within the
F&B units.
Copenhagen Airports Category Manager Food &
Beverage and Convenience Anders Barse provided
an insight into how the airport keeps pace with
innovation and new trends in its F&B offer. Noting
the exponential pace of change in the airport
business as well as in consumer demands Barse
shared some of the ways in which the company has
kept ahead of the innovation curve.
We try to work with the leading edge of tomorrow,

working with international companies like the
Future Laboratory in London, he said. We work
with local first movers to gain knowledge from
them. We set the next goal before we reach the one
in front of us.
We have a vision that we should be the best airport
F&B scene in the world, and we are very committed
to reaching that goal.
Barse explained how the airports digital loyalty
programme allowed it to capture data on its
passengers, in combination with information from
flight ticketing company Amadeus. The airport now
plans to harness that data through the use of iBeacon
technology, pushing relevant F&B offers to its
customers. Copenhagen Airport will also start
benchmarking F&B concessions against each other,
sharing the results along with other passenger data
with its partners.
Discussing the airports other moves towards new
means of engaging with its passengers, Barse
concluded with a warning. Looking at innovation,
you need to consider what happens if you dont
do it, he said.
What happens if you dont introduce mobile pay?
Im sure that today or in the next couple of months,
nothing will change. But Im pretty sure that within
the next two years youll be lucking out
because thats how the customers want to pay.
Copenhagen Airports
greeted guests to this
years event with banners
across the airport estate
Its all about
INNOVATION
Its innovation that transforms a dining experience
from the ordinary to extraordinary, and at SSP
creativity comes as second nature.
Our new Flying Hippo diner at Newcastle airport
is just one example of SSPs pioneering approach.
Smoking ovens especially imported from the US
that allow us to smoke and avour our own meats,
Asti Spumante on tap, and iPads featuring games
created by SSP to keep the children entertained
while mum and dad dine, are imaginative little
extras that make all the dierence.
To nd out more about our latest innovative
ventures, sign up to receive our newsletter,
The Food Travel Update, at
www.foodtravelexperts.com
Inspiration
from a local
openhagens gastronomic culture

has burst on to the global stage in
the past decade. Leading the charge
has been Claus Meyer, gastroentrepreneur and co-founder of
Noma, famed as the worlds best restaurant.
Meyer was at the Airport Food & Beverage (FAB)
Conference and Awards to provide inspiration from
beyond the travel food & beverage sector and he
did so in style.
Commenting on the emergence of Noma and the
new Nordic cuisine movement, Meyer reflected that
a spirit of true partnership had been a key part in the
success of both. He described how, in 2003, the
founders of the new Nordic cuisine movement had
held a symposium to unite chefs, farmers and all big
stakeholders in a new way of looking at food. We
wanted to define a common journey and also
develop a sense of co-ownership to this vision.
The result of Meyers vision is clear today: focused on
local and regional produce, Noma is now the best
restaurant in the world (according to Restaurant
magazines list of the Worlds 50 Best Restaurants).
Everybody wants to eat vegetables, and rye is the
new black, said Meyer (pictured above).
How did this happen without formal investment?
All chefs initially thought of the new Nordic cuisine
not as an organisation but as a benign virus. People
were propelled by the joy of learning more and
hero
building true value together. Openness, democracy

and inclusion have been keywords.
A similar approach over the past five years has driven
the creation of Meyers bread business. Today it
generates annual revenues of US$20 million, with
ten bakeries, a baking school and an organic flour
retail brand. But the real work generating authority
and trust was done before the business even
started, Meyer told delegates.
In a fine example of movement building, the
entrepreneur explained how his business had raised
US$2 million to open a charitable initiative in La
Paz, Bolivia. The Melting Pot Foundation initially
employed 30 youths from the slums of La Paz at a
restaurant called Gusto. Today it operates 13 canteens
and cookery schools teaching 13,000 impoverished
Bolivians to cook and Meyer and his new partner
are to open a 12,000sq m food hall, based on the
Bolivian concept, in downtown New York.
Meyer concluded his FAB address with an on-stage
discussion with Martin Moodie, during which he
issued a challenge to airport concessionaires: to turn
their resources to developing concepts that are as
healthful as they are delicious.
Its easy to make a delicious concept with lots of fat
and sugar, said Meyer. But I am sure with all the
competencies in this room it would be very easy to
develop different food concepts that are successful,
without sacrificing healthiness.
Global
perspectives
from global
operators
wo of the worlds biggest F&B

concessionaires presented their
strategic views of the market. Both
have very different approaches to their
business, but their views on the
challenges faced by airport F&B were often strikingly
similar especially in the way they approach
technology.
HMSHost CEO Tom Fricke (pictured left) explained
how the operator, which serves around ten
customers a second and operates some 200 brands,
was focusing on a holy trinity of concessions: food,
service and technology.
In the core element of food, Fricke noted four areas
of focus:
OImproving execution of national (and
international) brands to at least the same level as
the high street;
ORetaining active and long-term involvement
from chefs for its chef-led/fine dining concepts;
OCommunicating the value proposition
something Fricke noted the industry in general
has been poor at;
OImproving menus by investing in culinary staff
and changing menus seasonally, as a high street
restaurant would.
Fricke also addressed the issue of technology a
subject he admitted HMSHost had been slow to
respond to. The concessionaire has opened a new IT
lab, Fricke told delegates. It brings all of the new

technologies, particularly software, into one room so
that we can start to learn from them.
Whether its the creation of apps or the use of facial
recognition, weve got all sorts of things going on as
we figure out the technologies to put in place.
HMSHost is opening its first gatehold lounge, Fricke
said, and has already developed a menu pad with
limited functionality to enable ordering. When
weve got these working sales are up, customer
satisfaction is up and interestingly enough tips
are up, Fricke revealed.
Most important of all though, Fricke noted, is service
both to airport customers and to passengers. He
explained how HMSHost had invested in upgrading
its culinary team to improve the quality of its
concessions, and in a live broadcast initiative through
which the executive management can communicate
new initiatives and recognise stand-out customer
service from individual staff members.
Our customers are not captive, Fricke concluded.
It is our job, our responsibility, and certainly our
focus to engage with them on a daily basis to make
sure that were offering the right kinds of products
and service so that they will continue to come back
to our units.
SSP Group Chief Commercial Officer Mark Angela
(pictured right) shared many of the same concerns
as Fricke. After a brief description of his role a
newly formed position within the company
Angela offered some insights into the state of the
F&B sector.
There can sometimes be a difference between the
needs of airport clients and of passengers, he noted.
Ive seen in some cases where a client may want
what I would call a trophy asset [that] may not
be absolutely right for the customer. So, how do we
navigate a path between having what the client wants
and needs, and what the customer wants and needs?
I think the only way is a very tight relationship with
the client, working as a partner.
Its important that the right line-up of brands is
in an airport brands that make a sufficient return
both for the client and for us. We dont want to end
up in a situation where we have a number of brands
or operations that arent making money. Because
over time the operator will start to under-invest in
that unit, because its not making returns.
Angela turned to technology, noting the amount of
noise that needed clarity. On pre-ordering, he said:
I think pre-ordering works in some areas,

particularly fast-casual. I dont think it works in
others. Digital technology is relevant, but in certain
specific applications.
Mark Angela (above) and

Tom Fricke (facing page):
Tapping into the big
opportunities in the
travel sector
One area in which technology will definitely alter the

travel F&B environment is mobile payment, Angela
predicted. Starbucks now takes 3 million mobile
payments a week, he said. That 3 million exceeds
the total mobile payments of the ten closest
companies to Starbucks. Thats a dramatic increase,
and I think thats the only way it will be going.
The nature of partnership was again an important
part of the agenda. Angela explained how he saw
SSPs role and capabilities as a major concessionaire,
and how that could benefit airports.
We operate in over 130 airports, and we have an
opportunity to bring all that data to our clients in
other airports and help them understand where they
are performing or not. Its effectively an FMCG
marketing tool, where you become a business
partner and often you recommend the line-up that
may or may not include all of your offers. It actually
may include some competitors offers. Thats true
category management.
Quality
control
broad range of airport perspectives

on the F&B sector were presented
to delegates through three incisive
panel discussions at the Airport
Food & Beverage (FAB) Conference.
Airports from across the world presented case
studies of impressive transformation, creating a
Sense of Place and how they listened to passengers
to improve their programmes.
London Gatwick, Copenhagen and Dubai
International airports have all driven radical reforms
to their F&B offers in recent years, and
representatives took to the stage in a panel that
explored the factors that airports must consider
when rethinking their dining options.
Making the grade in

Minneapolis: Eric Johnson
on the airports quest for
better ASQ rankings
Gatwick Business Development Manager Catering &

Services Charlotte Christiansen explained that the
airports big changes since 2011 it has opened two
new restaurants and redeveloped five were driven
by listening to consumer needs. Working with new
restaurateurs, notably celebrity chef Jamie Oliver for
his outlet in Gatwicks North Terminal, has led the
airport to challenge some of the old obstacles to
high-quality airport dining.
Traditionally, airports do not allow gas for cooking,

she said. It took 18 months of hard work to get a
gas supply approved and installed but it has been
worth it, because all our new restaurants can now
benefit from our approach.
The result has been a dramatic improvement in
passenger satisfaction ratings. Consumer demands
were also front of mind when Dubai International
Airport opened its new Concourse A early last year,
said Senior Vice President Commercial Eugene
Barry and will continue to inform planning as the
airport prepares to unveil Concourse D next year.
Food operations can make an emotional connection
with travellers, Barry explained. They can reassure
travellers. If done well, food & beverage at airports
can even encourage potentially higher spending
travellers out of lounges.
Barry outlined an approach to F&B that has driven a
+226% increase in revenue since 2009, compared to
a +61% increase in passengers. This is based
entirely on the operational success of our partners
and their investment in our airports, he said.
Airport managers must actively encourage
performance and innovation and actively remove
barriers to performance and growth.
In another panel session MinneapolisSt Paul

International Airport CCIM Director Commercial
Management & Airline Affairs Eric Johnson
outlined a very different path to growth, but one
that ultimately resulted in an improved focus on
consumers. The airport actively targeted the status
of having the best customer service in North
America, with different divisions driven towards
individual aspects of ACIs Airport Service Quality
(ASQ) rankings.
London Gatwicks
Charlotte Christiansen
on increasing choice in
the airport offer
Johnson explained how the airport had captured

passenger data through free Wi-Fi registration to
garner an audience for consumer surveys, employed
MBA students to interview passengers, and spoken to
local companies to determine their air travel needs.
Combined with strong social media feedback and a
long-standing mystery shopper programme, those
conversations with passengers have driven strong
improvements along with MinneapolisSt Pauls
ASQ retail ranking, which now fluctuates between
first and second in North America for F&B.
Greater Toronto Airport Authority Associate Director
Retail & Food Programs Janine Gervais joined
Johnson on stage for a discussion about improving
passenger satisfaction with F&B programmes.
Calling all:
Do you want
to improve
your
income per
passenger?
Yes?
Then we can
help you!
We are experts in planning, developing and implementing

customer focused creative solutions for Food & Beverage,
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Our approach is to work closely with you to deliver a bespoke customer
experience which delights passengers and drives revenues.
Our services are tailored to meet your needs and include:
:Development of Brands in Travel Hubs
:Concession planning
:Writing and conducting tender processes
:Contract structuring and negotiation
:Consumer Insight & Mindset research
:Space Planning, design and implementation of Retail, F&B, FOREX,
Advertising & Media commercial activities
:Commercial due diligence
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+44 (0) 7711 454 864
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We are three years into our strategy, she said. With

our partners HMSHost, OTG and SSP we have built
15 new restaurants, renewed an additional 14, and
our sales per enplanement have gone up by +37%.
We do still leave money on the table though, and we
need to communicate our offer better.
Boasting more restaurants per head than any North

American city except New York, Montral has a huge
gastronomic reputation. In its recent redevelopment
Montral Trudeau Airport tried to capture some of
that local flavour, Aroports de Montral Director of
Commercial Services Hugues Brassard told delegates.
Gervais said the airport plans to redevelop its

website this year to tackle the issue. We have menus,
we have maps but it needs to be interactive and
accessible; people need to know more, she said.
Domestic passengers are looking for a fair price and

brands they know, said Brassard. International
passengers want fantastic service, but they also want
a taste of something local, although they may not
know the brand. So we hired a company to scout the
city and the province for the best chefs,
microbrewery and bakery that would be able to
operate in an airport.
Beyond communication, Gervais also noted the need

for joined-up thinking, with other airport
departments buying in to the vision to improve the
commercial offer. Its all about the customer
experience from the moment they arrive to the
moment they board.
Our customer service programme has become a
benchmark across the airport. Retail is considered
in every step of planning now we are no longer
in the way.
Dynamic dining: Toronto

Pearsons Janine Gervais
At present only 30% of Trudeau Airports revenue is

generated through non-aeronautical operations.
Brassard showed delegates some of the local
concepts that the airport has developed over the past
two years to cater to those local trends, as part of a
strategy intended to drive up the commercial
revenue.
Driving passenger
satisfaction
Ingram delved into DKMAs

research to identify steps
to improving passenger
satisfaction
ith all the investment poured

into non-aeronautical
operations, you would expect
them to be among the most
appreciated parts of the
airport experience. Not so, according to DKMA
Director James Ingram (pictured). The companys

Airport Retail and F&B Study 2013 surveyed 30,000
travellers at 15 of the worlds biggest airports,
finding that people were more satisfied with their
experience at security and immigration than at food
& beverage outlets.
Airports are sitting on a potential goldmine in

terms of F&B, said Ingram, pointing to the 60% of
passengers who buy food or beverage at an airport.
But without an improvement in passenger
satisfaction, he warned, airports would struggle to
reach their full F&B potential.
Dwell time and spend in decline

Time spent in F&B (minutes)
2012
Last year the global average satisfaction rating for

F&B was 3.4 out of five, with only 45% of passengers
saying they were satisfied with the F&B experience at
the airport. The average time spent in outlets
declined by two minutes compared with the 2012
study (to 25 minutes), while average spend per head
dropped by US$0.40 to US$15.90.
27
People are purchasing for different reasons.

Passengers will go into a restaurant or a bar to kill
time, Ingram explained. Its not really a decision
of choice. When you operate in that way, you open
yourself up to the risk of changing travel habits.
Thats what happened between 2012 and 2013 in
the survey.
2013
Ingram noted the benefit of increasing passenger

satisfaction a +0.1 increase on the five-point
rating equates to an additional US$0.80 revenue
per passenger and of increasing pre-planned
purchases.
Passengers who plan to buy F&B are three times
more likely to spend than others, and spend +24%
more on average. But last year only 37% of
passengers decided to visit an F&B outlet in advance.
25
The survey also revealed that passenger satisfaction

was lowest for factors of the F&B offer that were
most important to travellers: menu selection, choice
of restaurants, and quality of food & beverage. Key to
all of these, and to improving passenger satisfaction,
is choice.
You need to craft an offering that covers the basic
needs of your different passenger segments, said
Ingram. But you also need to think about what you
do a little bit differently what could you do to make
your airport a bit more special?
The two main barriers to F&B spend are time and
value, Ingram concluded. If you really want to
optimise your F&B experience, you need to work out
what you can offer that would make passengers want
to go to the airport and spend more time there.
How do you create a greater sense of choice and
diversity? How can you project a sense a value?
Once youve decided on that, its a question of
making sure that passengers are aware of what
you have on offer.
Average spend per passenger (US$)
2012
16.3
2013
15.9
Source: DKMA commercial research based on analysis of publicly available data from airports all over the world.
Redefining
A
cross several Airport Food &

Beverage Conference sessions
speakers discussed how best to
engage passengers in the airport
and beyond. F&B operators
communicate with their passengers both in their
outlets and, increasingly, through social and digital
media channels. And though consumer engagement
is critical, maintaining a productive relationship with
staff is arguably even more so.
With 19 years experience at Amsterdam Airport
Schiphol, trading through a variety of F&B brands
developed by the company, Glendale Group
Schiphol Horeca is well placed to discuss how to
engage consumers through innovative concepts.
General Manager Robert Schulze put the challenge
to delegates in a very straightforward way: Its all
about attention attracting attention, and giving
attention.
Using examples from Glendales portfolio
including the Juggle Juice Bar, Dutch & Delicious
and Caf Rembrandt Schulze explained how
certain concepts had worked well, and why others
hadnt. Key among the learnings from Schulze were
to maintain the focus of a concept; to listen to what
customers are asking for; and, crucially, to empower
staff to improve a concept.
The notion of staff empowerment was a key feature
in an informative presentation from Dubai Duty Free
Manager Recruitment and Employee Development
Rachael Green. The retailer has become renowned
for its service levels as well as its recruitment prowess
rarely recruiting outside for senior roles, thanks to
its ability to develop talent in-house and Green
shared some of the latest initiatives through which
the company is further developing its workforce.
engagement
Dubai Duty Free faces many of the same challenges
as F&B operators; training, developing and
incentivising a multinational employee base
across a rapidly growing and complex multi-outlet
operation. Green explained how Dubai Duty Free
had tackled some of the main challenges arising
from its growth, focusing in particular on the
challenges of maintaining consistent service and
avoiding dilution of knowledge.
As airports and operators seek new ways to engage
with both staff and consumers, social and digital
media strategies are becoming increasingly
important elements of their business. An insightful
session featuring Mighty Media Chief Enabling
Officer Stephenie Rodriguez and The Moodie
Report Executive Director Business Development
& Innovation Matt Willey shed light on some of
the best practices across important social and
digital channels.
Rodriguez highlighted some key points for companies
to bear in mind in their digital strategies.
She reminded delegates that they no longer truly own
their brand unless they are influencing consumer
conversations, that loyalty is just the start of a
customer relationship which should aim to deliver
advocacy, and that social engagement can provide
both revenue opportunities and operational efficiency.
Rodriguez pointed to an app she had developed
with Club Med, which included the ability to
pre-book activities. The app was good, but what
else? We found that by way of data on what people
were pre-booking, [Club Med] could actually begin
to look at hot times and key areas for staffing. That
was a beautiful by-product of something that was
more marketing.
Dubai Duty Frees Rachael Green

(opposite) discusses recruiting in
a rapidly growing business;
Stephenie Rodriguez reveals the
secrets of social media
Many thanks to all our FAB 2014 partners
Organised by
The
Moodie
Report
Bringing
streettofood
the airport
D
elegates and speakers referred time

and again over the course of the
two-day FAB conference to the need
for excitement and spontaneity in
the airport F&B offer. One company
that has done just that is Indian concessionaire
Travel Food Services, which operates at four of the
five largest airports in India.
Director Varun Kapur explained how the operator
had transformed Sense of Place from a concept to a
revenue-generating reality. Our inspiration has been
India, said Kapur (pictured above).
We have learned from a melting pot of cultures and
religions. We started with the concept of street food,
which you see all the time in India, and noted some
of the challenges in taking that to the airport.
Initially when we tried these concepts there was
something missing. We looked again and realised
the methods of cooking were different. So we
changed, and have had fantastic sales.
Kapur noted that even moving street food concepts
into unmodified outlets had driven outstanding
performances. The future for Travel Food Services,
Kapur said, lies in attracting a mix of even more
specifically local brands brands that are iconic in
their cities. He stressed the importance of keeping
street food at street prices, but acknowledged that
that might be a constraint at some airports.
OTG on innovation
Innovate and connect:

OTGs Justin Blatstein and
Karen Mirante (opposite)
ver the past few years North

American travel restaurateur OTG
has emerged as one of the most
innovative F&B concessionaires
recognised mainly by its iPad
installations at several airports and also as one of the
most adept at creating tailored destination concepts.
During two sessions at the Airport Food & Beverage
Conference and Awards the company shared its
approach to these crucial components of its business.
Senior Vice President of Global Business

Development Karen Mirante discussed the
framework within which innovation occurs, noting
the need for strategic planning, capital investment
and like-minded partners.
She explained how in 2010 the company had spent
US$3 million developing its own software for the
iPad operating system; today the company employs
30 iOS developers (compared with three people in
and Sense
of Place
the business development team, Mirante pointed

out) to dream whats next and build whats next.
Partnerships are essential, she said. Airport
commercial programmes have many objectives,
some of which may conflict with a commitment to
innovation; and, she noted, a rigid, prescriptive
tender process can also quash new ideas.
The good news is there are like-minded partners,
Mirante concluded. [Our airport partners] have
not only been supportive but have really challenged
us to think about how we implement. As a result we
end up with a better product, that we can learn from
and grow from.
Translating that drive for innovation into a unique
approach to Sense of Place, OTG Director of Aura
Justin Blatstein described how an F&B offer should
build connections to a customer through
technology, but equally through design.
Our industry has come to understand Sense of
Place as local, he said. That is true, but not entirely.
Sense of Place includes those characteristics that
make a place special or unique, as well as fostering a
sense of authentic attachment and belonging.
Delivering Sense of Place is all about making
connections through technology, design,
atmosphere and a great experience.
Blatstein explained how OTG developed those
connections, learning more about its customers
through its software and responding to those needs.
Design also plays a crucial role, he said.
If you see high-quality design, if you see fresh food,
anything that you previously thought about the airport
from any previous experiences is going to go away.
Because you see that we care about the atmosphere.
Sense of Place then, in OTGs definition, is
something that not only reflects the locale of the
airport, but also encourages passengers to become
more connected with the airport and its F&B offer.
A typically fresh approach from one of the sectors
most radical pioneers.
Rethinking the
Talking tenders: Industry consultant

David King (left) and HMSHost
International CEO Walter Seib
status quo
MSHost International CEO

Walter Seib and The David King
Partnership Founder David King
concluded the Airport Food &
Beverage Conference 2014 with
an incisive look at the airport tender model. Seib
underlined what the industry stood to gain from
finding a better way of working together, pointing
to the 4045% of passengers who do not buy any
food or beverages at an airport.
should work together to increase the opportunity

and then we could share the success.
We never see this in our P&L statements, said Seib.

I dont have a line labelled missed opportunity. We
need to think about different concepts, service styles
and moments to capture more people.
Should we rethink our model? Seib concluded. I

would encourage all of you to be flexible. I think if
youre flexible, if you like each other, you will always
find a solution.
One of the factors restricting that progress is the

current tender model, Seib argued. HMSHost will
spend anything from 60,000 to 1 million on a
tender submission. Why dont we use that money to
work together instead of spending it on a tender?
Why dont we use it to create more meaningful
facilities, to do more for the customer?
King took up Seibs notion that the tender model is

far from perfect, identifying some key elements for
consideration in relationships between landlords and
concessionaires. The time spent at the airport is a key
factor here, said King; airport management should
make efforts to maximise passengers time for F&B
activities, while concessionaires need to align their
offer to suit the time constraints of passengers.
The tender process is not only expensive, said Seib; it

is not always reliable, can often be opaque, and
usually comes too late. The tender documents
arrive, everything is decided and we all miss a big
opportunity to evolve the concession plan at an early
stage, he said. In the concession planning, thats
really when you can make a difference maximise
the commercial revenue for the airports, and drive
customer satisfaction.
Airports focus on profit and minimum annual
guarantees in contracts can also be counterproductive, said Seib. I understand why it happens.
But success is not always shared. Its a shame we
Despite his thoughts on the tender model, Seib said

he had faith in a strong future for food & beverage.
He argued that F&B does not face the same pressures
as airport retail, particularly competition from
online retailers, and pointed to some impressive
results where HMSHost had strong partnerships
with airport management.
Like Seib, King noted that sales not profits or

percentages are the lifeblood of airport
concessions. Airports are often obsessed with
percentage rents, said King.
But 40% of nothing is nothing. We should stay
focused on money coming into the tills, not what
percentage rent is being paid.
He concluded: The whole process relies on integrity.
There will no doubt be a contract, and partners are
not likely to be equal in size, but there must be a fair
and equitable relationship underlying that.
(Left to right) HMSHost International CEO Walter Seib, Dubai Airports Senior Vice President Commercial Eugene Barry,
SmartDesign President & CEO Nick Baker and The Moodie Report Vice Chairman Dermot Davitt
A wonderful
welcome in
Copenhagen
There can be few more pleasant places to spend a fine June evening than
Copenhagens famous Tivoli Gardens. Delegates to the FAB Conference and
Awards were treated to a visit to Tivoli and much more, courtesy of Platinum
partners Autogrill and HMSHost, at the FAB 2014 Opening Cocktail. From a roof
terrace high above the gardens guests took in the spectacular views and some
sensational local cuisine at one of the citys iconic destinations.
Colleagues from two of North Americas most dynamic

airports for food & beverage reconnect at the Tivoli Gardens:
Toronto Pearsons Suzanne Merrell (left) and Janine Gervais
(second from left) with MinneapolisSt Pauls Eric Johnson
and Elizabeth Grzechowiak
Celebrating
10 years
of successful
brand building in
Asia Pacic.
Premium Brand Management
51 Goldhill Plaza, #12-02, Singapore 308900. Tel: +65-6356 4835, jonathan.holland@jh-associates.com
The FAB Awards
The best of travel-related food & beverage

The worlds best airport and railway food & beverage operators were recognised last
month at the fourth annual FAB Awards in Copenhagen. Here we feature the full
list of finalists and winners, and the thinking behind the judges selections.
rom Madrid to Minneapolis and Dublin

to Delhi, the FAB Awards 2014 attracted
more than 200 nominations from every
corner of the global travel F&B sector.
The winning companies and concepts
were revealed at the annual Airport Food &
Beverage (FAB) Conference and Awards in
Copenhagen.
The many superb entries this year offered a snapshot
of the vast and diverse world that is travel food &
beverage.
As in previous years the judging methodology was
self-nomination, followed by extensive diligence
from our judges including some site visits,
references to consumer media platforms, and so on.
The process was designed to be thorough, neutral
and based on absolute impartiality, through a grid

scoring system based on a set of allocated criteria.
Due to the sheer quality of the nominations, the
judges decided to give one and sometimes more
highly commended accolades in a number of
categories. The margin between first and second was
often so close, and the latter so outstanding, that
awarding a number of Highly Commended
certificates gave rightful recognition for excellence.
Once again in 2014 the FAB Awards show an
industry striving for innovation, excellence and the
ultimate passenger experience.
In this section we feature the winners and shortlists,
category by category, accompanied by comments
from the judges.
Airport F&B Offer of the Year

Winner: Copenhagen Airports Copenhagen Airport
Shopping Center
Highly commended: Toronto Pearson International
Airport Greater Toronto Airport Authority F&B
programme
The judges said: We were seeking airports that not only embraced
a diversity and quality of F&B offer, but which also stood for innovation
the judges key focus this year as well as strong partnership
relations, consumer commitment and of course financial success.
Copenhagen Airport has demonstrated an appetite not only for fine
food but for change. It has demonstrated a willingness to back that up
by innovating, by taking risks, by throwing out the old and bringing in
the new. It has been demanding of its concessionaires, but also
supportive of them.
The airport has entered into conversations with its travelling guests
as well as any airport on the planet via social and digital media; its
Facebook page in particular is best of class worldwide. Some of its
promotional activity has touched on genius, and its insistence on and
investment in staff training is arguably second to none among the
worlds airports.
Copenhagen has come on quite a journey and, though there are areas
still to be improved, the transformation in a handful of years and
accelerating over the past 12 months has been remarkable.
The journey continues, said Copenhagen Airports

Director of Sales Lise Ryevad, accepting the top award of
the night; above with The Moodie Reports Martin Moodie
and Dermot Davitt are Copenhagen Airports CEO Thomas
Woldbye (second left), Lise Ryevad and Category Manager
F&B Anders Barse (second from right)
The Judges Award for Driving

Innovation in Food & Beverage
The Judges Award for Thought

Leadership in Food & Beverage
Winner: Rick Blatstein, Founder & CEO, OTG
Winner: Autogrill
The judges said: Innovation is the lifeblood of this and any other
business sector. This award is presented to someone who is the
anti-thesis of a follower, a man who attacks the status quo.
The judges said: After studying more than 200 entries for this
years FAB Awards the judges wanted to recognise a company which
had consistently demonstrated a thoughtfulness about its approach to
landlords, to consumers and to issues.
He is a man and a company that has put innovation at the very

heart of everything they do, using modern technology and modern
media to fundamentally challenge the airport way of delivering
(sometimes literally) the airport food & beverage proposition.
Tell our awardee that customers heading straight to their gate rooms
is a problem and hell find an innovative solution. Tell him that a huge
chunk of the travellers at an airport dont speak the same language and
hell find a way to speak to them in theirs.
Autogrill illustrated an intriguing blend of the intellectual and the

pragmatic. It sought to understand its consumer base wherever it might
be, or wherever it might come from. And much of its focus, particularly
in its recent innovation, has been on a non-parochial challenging of
sector practices and on raising the overall bar.
He is, we believe, the industrys great innovator, across both food &
beverage and retail. Our judges award for driving innovation in airport
food & beverage came about after we read entry after entry after entry
from his company for this years FAB awards and the concept of
innovation poured from every page.
(Left) Driving innovation in airport F&B: OTG Chief Executive

and Founder Rick Blatstein; (right) Accepting Autogrills Thought
Leadership award were Laure Vincent and Walter Seib
Best Airport F&B Expression of

Sense of Place
Winner: Incheon International Airport Korean
Cultural Street
Highly commended: HMSHost Malgudi Tifn
Centre, Bengaluru International Airport; OTG Delta
LGA Experience, LaGuardia Airport; Elways/DIA
Steakhouse, Denver International Airport
The judges said: This is an award that recognises a concept that
is of fundamental, crucial importance for our sector. Theres no excuse
for an airport, small, medium or big to not reflect the tastes, traditions,
culture and cuisine of a country, a city or a region. Sense of Place has
become something of a buzz phrase in our industry, but how often is it
truly delivered on?
Incheon International Airport Corp has gone to extraordinary lengths
to capture and express a culture of huge richness and a cuisine of
heritage and diversity. The sense of history is expressed in many ways,
from the startlingly authentic architecture and environment to the
tastes beautifully presented across a number of outlets. This, our judges
believe, is what Sense of Place at its purest means, expressed by an
airport operator that places its countrys culture at the centre of
everything it does.
(Left) Cultural showcase: Incheon Airports Young-Shin Kim
accepts the Sense of Place award; (right) Tapping into
technology: OTGs Samantha and Justin Blatstein with the
prized innovation award
Best Airport F&B Innovation

Winner: OTG PIE system, Philadelphia
International Airport
Highly commended: OTG Recommendation engine
(MinneapolisSt Paul, Philadelphia, New York JFK,
LaGuardia and Toronto Pearson airports)
The judges said: This innovation addresses the fundamental
issue of time and how to manage it to the benefit of both the passenger
and the F&B operator.
The technology-based solution facilitates efficient use of a servers time
by reducing the walking distances to and from the kitchen and bar, and
allows real-time interaction when something goes wrong.
The results have been stunning, with a reduction in dining times of
nearly -50%. The guest experience is significantly improved along with
the number of cover turns, which has dramatically improved
commercial performance.
Best Overall Railway Station Food &

Beverage Offer
Best Individual Food & Beverage

Outlet at a Railway Station
Winner: Network Rail Kings Cross Station
Winner: Network Rail The Parcel Yard, London

Kings Cross
The judges said: Network Rail has achieved what would have
been seen as impossible just a few years ago. It has transformed a
run-down station with a poor food & beverage offering into something
extraordinary with a quality and originality that has received critical
acclaim and significant commercial success.
Highly commended: SSP France Montreux Jazz

Caf, Paris Gare de Lyon
Kings Cross has emerged as a thriving F&B destination thanks to the

restoration and renovation of one of Londons great landmarks, a
visionary architectural design and a determined commitment to create
a high-quality and relevant F&B experience. With more than 47 million
passengers using the station each year, community engagement is high
and many F&B operators have enjoyed record sales and substantial
year-on-year growth.
The judges said: Network Rail has beautifully restored a remote

and disused area of the station and transformed it into a stunning,
extremely popular and commercially successful food & beverage
outlet. The Parcel Yard appeals to locals as well as the tens of thousands
of travellers who use the station each day. Offering a unique range of
drinks and food along with a hybrid service style that is enhanced by
its own app, the outlet has become a food, beverage and hospitality
hot spot.
Network Rail believes it has created a pub utopia an offer that has
pushed the boundaries and set a benchmark for travel pub offers,
serving the best of F&B in a unique setting with tremendous character.
(Left) Outstanding offer: Network Rails Hamish Kiernan

with the top rail award on a night of double success for the
UK operator; (right) The Parcel Yard: A food, beverage and
hospitality hotspot
Best Digital or Social Media

Initiative
Winner: Copenhagen Airports Sharing the
conversation@CPH
Highly commended: Autogrill Take a Look
The judges said: Sharing the conversation@CPH was a clear
winner. In the words of one judge: Its all about creating conversations
with passengers and helping to turn them into customers as well as
travelling advocates of the airport and its commercial offer.
Copenhagen has taken a holistic approach designed to convey the
sense of an airport with personality; one that allows people to engage
with others in describing their holidays, their overall experience and
their F&B memories. The judges believe it represents a classic study of
best practice in our industry.
(Left) Mighty media: Copenhagen Airports Anders Barse

and Karen Bender with the Best Social/Digital Media
Initiative prize; (right) An ambitious programme with
tremendous reach: HMSHost CEO Tom Fricke with the
groups CSR award
Best CSR Initiative

Winner: HMSHost Food Donation Programme
The judges said: CSR is a critical element in establishing not only
a companys stature but also its employee and community engagement
and, ultimately, its success.
HMSHost has its own programme which collects surplus high-quality
food from more than 300 of its branded food operations in airports
across the USA and distributes it to those in need. In 2013 the
company donated and distributed more than 3 million food items. It
is an ambitious programme with tremendous reach into the
communities it serves.
Airport F&B Marketing Campaign

Winner: Stockholm Arlanda Airport Arlanda Food
Trucks
Highly commended: Copenhagen Airport CPH
Nordic Dining; Hong Kong International Airport
Savour Your Journey with Coffee
The judges said: This award looked at how airports and operators
have best set about drawing consumer attention to their offer, their
pricing, their special promotions, in an effort to drive awareness,
footfall, penetration and sales. In past years the fields have been slim,
the winners easy to pick. Not so this time.
Stockholms Arlanda Food Trucks formed a unique promotion, based
on the premise that if you want your consumers to come to the food,
first you have to take your food to the consumers.
It was a brilliantly simple and simply brilliant promotion, in which the
airport itself took to the streets of its home city to promote its food &
beverage offer.
Airport Fast Food/Quick Service

Restaurant of the Year
Winner: 8oz Burger Bar HMSHost, Los Angeles
Highly commended: Qdoba Dallas/Fort Worth
International Airport; Subway Toronto Pearson
The judges said: This award focuses on serving the timepressed traveller with a fast but quality offer. The two should not be
a contradiction in terms and yet too often are.
8oz Burger Bar has partnered with a concessionaire which has enjoyed
meteoric success during the past nine years, initially in its own country
and more recently with some high-profile international openings.
Committed to only using the best ingredients and with a strong sense
of Corporate Social Responsibility, 8oz Burger Bar has taken the market
by storm in recent times and achieved huge commercial success. Its
airport execution in association with HMSHost has more than
continued the trend, driving impressive first-year sales and a
tremendous average transaction value for the style of food served.
(Left) A taste of Sweden: The Arlanda-Schiphol Development

Company team delivered a superb marketing campaign;
(right) Impressive sales and transaction values: Tom
Fricke picks up the award for 8oz Burger Bar at LAX
Airport Food Court of the Year

Winner: Mlaga Airport Mlaga Food Court (SSP)
Highly commended: Hong Kong International
Airport; Los Angeles International Airport Terminal
4 (HMSHost)
The judges said: This category is very much the mainstay of
many airports F&B passenger offer; excellent food courts provide a
wide variety of food for all ages, tastes and budgets in a timely and
flexible manner.
Our highly commended food courts provide popular appeal
underpinned by quality and an enticing array of accessibly priced
dining options.
The winner goes one step further by brilliantly combining a number
of well-known international brands while showcasing local cuisine,
delighting passengers and achieving significant commercial success
for all stakeholders.
(Left) Mlaga makeover: The SSP Spain team with the top
food court award for 2014; (right) Celebrity appeal: London
Gatwick Airports Charlotte Christiansen accepts the award
for Jamie Olivers outlet
Airport Chef-Led and/or Fine Dining

Offer of the Year
Winner: Jamie Oliver at Gatwick Airport London
Gatwick Airport
Highly commended: Dani Garcia SSP, Mlaga
Airport; Kirei by Kabuki reas, Madrid Barajas
Airport; Root Down Mission Yogurt, Denver
The judges said: Recent years have witnessed the emerging
phenomenon of celebrity chefs at airports. The trend is welcome, but
it doesnt always translate to the respective chef s downtown quality
coming to the airport. Weve seen too many examples of tokenism, of
a name rather than a man or woman, driving an airport restaurant of
the quality expected. Our shortlist, highly commended and winning
awards, though, are testament to what can be achieved.
Jamie Oliver at Gatwick Airport is intrinsically linked to a highprofile chef of international renown. The food offer is classically
simple, with great emphasis on quality ingredients and an absolute
focus on training.
Preparation methods have been specially adapted to ensure the same
high-quality food is served at the airport as in the downtown
restaurants, while taking account of the limited time available to
travellers. The environment itself is arguably better than just about any
airport F&B offer in the world and the vibrancy, buzz, service and
most of all food absolutely live up to the surrounds.
Airport Casual Dining Restaurant of

the Year
Winner: Legal Sea Foods Boston Logan
Highly commended: Comptoir Libanais TRG
Concessions, London Gatwick Airport; Archibald
Microbrewery Restaurant Montral Trudeau
International Airport; MASH SSP, Copenhagen
Airport
The judges said: This was our most hotly contested category with
no fewer than 28 entries and some fine examples of casual dining a
critical sector in a time-constrained environment.
Our three Highly Commended recognitions go to: first, an outlet (Le
Comptoir Libanais) that is as unexpected in the airport in which it is
sited (Gatwick) as it is bold and brilliant, a testament to the fact that
risk can bring reward; second, to one that successfully adapts an
American concept to a local setting (MASH); and third to one, newly
opened concept that combined a restaurant with a microbrewery
(Archibald) to startling effect.
Airport Wine Bar of the Year

Winner: Surdyks Flights Wine Market & Bar
MinneapolisSt Paul International Airport
Highly commended: Le Grand Comptoir SSP
America, New York JFK International Airport
The judges said: Its one of the real pleasures over the history
of FAB to see the rise in standards in this category. With peer group
pressure intense, growing wine consciousness all around the world, and
a mounting expectation that wine bars in wine-producing countries or
regions, should showcase the best local fare on offer, wine is on the rise
in global airport terms.
Our finalists all put a major premium not only on quality and
appropriateness of the wine offer, but also quality of environment, food
and service.
Surdyks showcases great local and international wines by the glass,
bottle or flight, alongside a compact range of dishes designed to be
served with wine. Served by knowledgeable staff in a lovely
environment, this commercially successful wine bar is a worthy winner.
Our winner is an old success story in New England: a name

synonymous with a type of cuisine and with a city. Legal Sea Foods
impressed the judges tremendously with the consistency of its offer
across multiple outlets of the same name at the same airport.
(Left) Legal Sea Foods: A story of sustained success from
New England; (right) Surdyks Flights Wine Market proved a
worthy winner of the wine bar award, noted the judges;
MinneapolisSt Paul Airports Eric Johnson and Elizabeth
Grzechowiak collected the award
Airport Bar of the Year
Airport Food To Go Offer of the Year
Winner: Coopers Alehouse Emirates Leisure Retail

(Australia), Sydney Airport
Winner: Cibo Express Gourmet Markets OTG

(LaGuardia, New York JFK, MinneapolisSt Paul and
Toronto Pearson airports)
Highly commended: Four Peaks Brewery SSP

America, Phoenix Sky Harbor International Airport
The judges said: [This award] provided a lot of competition and
a tough choice for the judges. Our Highly Commended certificate went
to a bar that superbly reflects the global trend towards craft brewing,
combining it with quality food and an outstanding environment.
Our winner, Coopers Alehouse, has won rave reviews from its
customers and the airport owner. A wonderful feeling, a great vibe,
said the airport. It has certainly improved the customer journey
and experience.
Rising to the airports challenge to provide an iconic and
destinational proposition, this outlet underpins a dual-operation
multimillion-dollar programme and it achieves that from a
position well outside the core food & beverage zone.
(Left) An iconic proposition: Coopers Alehouse at Sydney

Airport, operated by ELR (with ELRs Kevin Zajaz picking up
the award in Copenhagen); (right) On a big night for OTG
and the Blatstein family, Samantha and Justin Blatstein
collect the Food To Go award
Highly commended: Pappasitos To-Go Dallas/Fort

Worth International Airport; ink.sack HMSHost,
Los Angeles International Airport
The judges said: This category demonstrates innovation,
versatility and imagination in the vast range of F&B to Go that is
being offered to travellers in airports around the world.
Cibo Express Gourmet Markets takes the plaudits for its focus on
freshness, healthfulness and range around 1,000 different products.
That includes 57 varieties of sandwiches, wraps, sides and salads; nine
different brands of water; and more than 100 different flavours and
brands of bottled beverages.
With a strong sense of local provenance, the concept has become one
of North Americas true stand-out airport offers over the past decade.
THE MOODIE REPORT
PARTNERS INDEX
The Moodie Reports success over the past 12 years would not have been possible without the astonishing level of support we have had
from the industry, and a crucial element of that support has been the investment by our partners in this publication and our electronic
media. For easy reference to their visuals in this issue we present an alphabetical list of our partners and the relevant page numbers,
with their respective website addresses. Our ability to add value to the industry through our subscription-free web, e-mail and print
services would simply not be possible without the support of those named below.
Partner
Page number/s
WWW address
Accolade Wines
16
www.accolade-wines.com
40
www.ari.ie
Autogrill/HMSHost
112
www.autogrill.com; www.hmshost.com
Botran Rums
84
www.botranrums.com
Braun
88
www.braun.com
Copenhagen Airports
108
www.cph.dk
Coty Prestige
42, 74
www.coty.com; www.calvinkleinbeauty.com;
www.marcjacobsfragrances.com
Oettinger Davidoff Group
49
www.davidoff.com
The David King Partnership
120
www.thedavidkingpartnership.com
The Design Solution
68
www.thedesignsolution.co.uk
Dubai Duty Free
www.dubaidutyfree.com
Duty Free Americas
18
www.dutyfreeamericas.com
Ever Rich Duty Free Shop
Inside front cover
www.everrich.com.tw
Formia
96
www.formia.com
Fossil Group
12
www.fossil.com
Furla
82
www.furla.com
Greater Toronto Airport Authority
64
www.gtaa.com
Hanse Distribution
94
www.hanse-distribution.com
IDutyFree/Conexia
44
www.idutyfree.org
Imperial Tobacco Limited
34
www.imperialtobacco.co.uk
Inflight Sales Group
www.isghk.com.hk
Japan Tobacco International
Inside back cover
www.jti.com
Jonathan Holland & Associates
134
e-mail: Jonathan.Holland@JH-Associates.com
JR/Duty Free
20
www.jrdutyfree.com
King Power Group Hong Kong
26
www.hkkingpower.com
Marcolin Eyewear
15
www.marcolin.com
Mars International Travel Retail
76
www.mars-itr.com
Middle East & Africa Duty Free Association
104
www.meadfa.com
Montblanc
102
www.montblanc.com
The Nuance Group
www.thenuancegroup.com
The Patrn Spirits Group
86
www.patronspirits.com
Groupe Puig
38
www.puig.com; www.pacorabanne.com/million
Rado
33
www.rado.com
Revlon
51
www.revlon.com
Rotary Watches
36
www.rotarywatches.com
SPI Spirits
28
www.spi-group.com; www.stoli.com
SSP
114
www.foodtravelexperts.com
Tourvest Inflight Retail Services
24
www.tourvestinflightretail.com
Treasury Wine Estates
60
www.tweglobal.com; www.wolfblasswines.com
Trinity Forum
98
www.trinity2014.com
Umdasch Shopfitting Group
30
www.umdasch-shopfitting.com
Underberg
80
www.underberg.com
WHSmith
22
www.whsmithplc.co.uk
World Duty Free Group
Outside back cover
www.worlddutyfreegroup.com
Airport Coffee/Non-Alcoholic
Beverage Outlet of the Year
Winner: Joe & The Juice Copenhagen Airport
Highly commended: Caff Nero London Gatwick
Airport (Gatwick South Village); Starbucks Evenings
HMSHost, Los Angeles International Airport
The judges said: Joe & The Juice continues to redefine coffee
shop and other beverage consumer engagement, creating a vibrant
and brilliantly successful option. Its entry was one of the highlights of
FAB 2014.
Recruiting staff with great personalities and focusing on skills training
through its own academy allows Joe & The Juice to sell its unique F&B
experience combining theatre, fun, music, art and design. Critically
that does not get in the way of efficiency, with some 200-plus
transactions per hour being recorded at peak pressure times.
The results speak for themselves. The airport represents the strongest of
its nearly 50 locations to date generating sales double those of the
original forecasts, and quite extraordinary sales per square metre.
Copenhagen Airports Anders Barse and Joe & The Juice

CEO Kaspar Basse celebrate the award for Best Coffee/
Non-Alcoholic Beverage outlet for the second year running
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The mark

The Martin Moodie Interview

FAB Awards 2014

Our unique annual guide to the industrys market leaders

onsolidation, concessions growth and

The Moodie Report

And the Chinese influence on our list is

mbition, achievement and insight

Theres plenty more besides our Top 25 in this Print

The Moodie Report

July 2014 | VOLUME 12ISSUE 4

3 Editors Desk:Top-ranked retailers

10 The worlds top 25:The Moodie

78 Nordic newness:A wave of

46 Transforming travel retail:We

Founder & ChairmanMartin Moodie

+44 (0)20 8231 7201

+44 (0)20 8231 7205

92 Consumer focus:We present highlights

+44 (0)1277 624595

+44 (0)1202 558812

95 Taking ight:Inflight Sales Group (Hong

+65 6358 2001

+44 (0)20 8231 7204

100 A benchmark for airports:

Production Editor Jon Elphick

+44 (0)1580 761145

+44 (0)7771 717172

109 FAB 2014:Highlights from the fourth

+44 (0)20 8231 7208

Vice President Sales & Events

135 A show of excellence:The full list

Commercial Director Mandy Sime

+971 4 394 3293

+44 (0)1428 717045

145 Partners index:The companies that

Advertisement Director Connie Magner

+44 (0) 7905 070644

+44 (0)20 8231 7210

+44 (0)20 8231 7200

+44 (0)20 8231 7200

Moodie International Limited

July 2014 | THE MOODIE REPORT | 7

elcome to The Moodie Report.

that same zero-tolerance attitude to mediocrity; that

The Moodie Report

Analysis The worlds top 25

Lotte Duty Free

World Duty Free Group

The Nuance Group

The Shilla Duty Free

Dubai Duty Free

Ever Rich Group

11 King Power International (Thailand)

Sunrise Duty Free

Duty Free Americas

China Duty Free Group

Aer Rianta International

King Power Group (Hong Kong)

Starboard Cruise Services

Japan Airport Terminal Co

Qatar Duty Free

Source: Moodie Research