Generation figures show global sales up 22% in 2004

Gavin Lipsith

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The Swedish analyst's annual figures suggest that the industry recovered strongly from a tough 2003, posting a $4.5bn sales increase last year

Global duty-free and travel-retail sales surged to $25bn last year, according to market analyst Generation's Best & Most 2004, with sales up by $4.5bn on 2003. The figure represents a 22% year-on-year increase in US dollar sales, or 14.5% increase in local currency units (LCU)—the basket of currencies used in the Generation analysis. The discrepancy between dollar and LCU rates is attributable to the weakness of the dollar throughout 2004.

Beauty products and luxury goods achieved the biggest increases of the year, with sales up 27.1% (LCU 19%) and 26.4% (LCU 18.4%) over 2003. They were the only categories to gain market share, with fragrances and cosmetics' share growing 0.9% to 27% of the total market, with sales of $6.75bn. Luxury goods' share increased by 1.5% to 36.3% of the market, with sales of $9.07bn. Tobacco, liquor and confectionery all lost market share while posting sales growth of 14.2% (LCU 7%), 14.3% (LCU 7.1%) and 15.2% (LCU 7.9%) respectively.

Europe remains by far the largest travel-retail market with sales of $11.2bn in 2004, although its share of the market dropped as Asia/Pacific rebounded strongly from the consequences of SARS, posting sales growth of 33.8% (LCU 28%) to $7.52bn. The Americas, representing just under a quarter of global sales, grew dollar sales by 18.8% (LCU 20.3%) to $5.95bn.

Airport shops achieved stronger growth in 2004 than any other channel, with sales reaching $12.84bn, up 24.5% (LCU 16.7%) on 2003.

The top three country markets for travel-retail remain the UK, South Korea and USA, while the loss of valuable duty-free ferry routes contributed to Finland's drop from fourth place, where it was replaced by France.

Details of the research methodology and how to order your copy of Best & Most can be seen at www.generation.se

See DFNI July 15, out this week, for more analysis of the Generation figures.