Generation forecasts 10% duty-free growth

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In its latest Forecast report just published, duty-free analyst Generation is predicting average annual growth of 10% or a doubling of duty-free sales in the decade from 2000 to 2010. Growth will be mainly due to an expansion in sales of luxury goods, confectionery and fine foods. Demand in Asia/Pacific is expected to return as a major boost to sales, with sales growth in other regions forecast to be steady. 

By 2005 Asia/Pacific is expected to become the largest region in terms of duty-free sales although there remain a number of uncertainties that could affect steady growth. An ambitious forecast for Asia depends partly on how soon we see a recovery of the economic situation in Japan. "The prospect of an early recovery of the Japanese economy is very unlikely," says the Generation report. However the current trend for Japanese shoppers to take holidays in nearby destinations is expected to continue to boost sales in Asia.

Current statistical trends also confirm the slow decline in market share of core duty-free product categories: wines and spirits and tobacco albeit within the context of steadily rising sales. By 2010 the global duty-free market share of liquor is forecast to reach 13.0% from 20.1% currently. In the same period sales are expected to add $1.2 billion to the current sales volume of $4.0 billion. Similarly for tobacco, its market share is forecast to slip to 7.2% from 11.5% currently.

"There is every indication that the duty-free and travel-retail industry has reached a degree of maturity in some areas of the world," says the report. It is moving into a phase where the market characteristics are becoming similar to domestic markets, where consumption is largely driven by the same key factors. Only by keeping the two markets "travel-retail and "domestic" distinctly separate, with the travelling consumer in focus, will it be possible to develop the duty-free market.

• To order a copy of the Generation Forecast No 6 email best.n.most@generation.se or telephone +46 660 10320