SYDNEY/LONDON: The outlook for the duty free market in Asia continues to look upbeat, as a new study reports that it is growing at five times the global average.
Citing new research from the Tax Free World Association (TFWA), Inside Retail Asia reported that duty free sales increased 5% year-on-year in Asia-Pacific in the first quarter of 2016, compared to worldwide growth of just under 1%.
Overall, global duty free sales rose to $62bn, with the fragrance and cosmetics category registering the highest quarterly growth of 7.8%, while sales of wines and spirits were up by 4%. Meanwhile, sales on board ferries grew by 6.5%, and airport sales remained stable.
TFWA President Erik Juul-Mortensen pointed to projections from the Airports Council International, which expects air passenger numbers worldwide to more than double to around 19m by 2035, and he said this can be only good news for the industry.
"All the indicators would suggest that we have plenty to be upbeat about," he said. "This is a great sector to be in, and with growth rates that have been, in many years, the envy of many high street retailers, duty free and travel retail presents a wealth of opportunities."
The findings from TFWA chime with a separate report released earlier this month by Verdict Retail, which expected the global duty free market to grow to $64bn by 2020.
As reported by The Moodie Davitt Report, Asia-Pacific is again expected to lead the way, with Chinese duty free spending contributing significantly to the growth.
"Chinese now prefer new travel destinations to explore new culture and benefit from currency exchange, which became an important factor following the devaluation of Chinese Yuan," the report said.
"Major duty free markets are relaxing visa policies, expanding downtown duty free, and modernising airports, including retail, to entice Chinese travellers who are tech-savvy and like to shop at leisure."
Verdict Research forecast that China will record 11.3% CAGR (compound annual growth rate) by 2020, although India is expected to see the highest CAGR of 20.7%.
South Korea, the largest duty free market in the world, is meanwhile expected to record CAGR of 9.6% to reach $10.7bn by 2020.
Data sourced from Inside Retail Asia, TFWA, Moodie Davitt Report; additional content by Warc staff