Dead reckoning: the end of the road for duty-free tobacco

The industry needs to develop new categories that can grow

By: Peter Goodenough • email:   info@trunblocked.com

Isn’t it high time the travel-retail industry showed tobacco the door? It is true tobacco has been a cash cow for our business for many decades— a high-margin product that was easy to handle and eagerly sought after by bargain-seeking travellers. A cornerstone of the duty-free sales mix, it’s long been argued that tobacco is an invaluable footfall driver.

Tobacco’s importance to travel retail is on the wane, however. In 1987 tobacco accounted for over 16% of total duty-free sales, according to Generation. By 2015, its market share had shrunk to less than 12% and sales continue to slide year on year. In many markets the category is under regulatory siege with personal allowances being slashed and restrictions placed on the way tobacco can be merchandised and packaged.

Dead reckoning: the end of the road for duty-free tobacco

The industry should bite the bullet

Even the big tobacco firms realise the writing is on the wall. Many are buying e-cigarette producers and developing smokeless alternatives to cigarettes. Last year Philip Morris UK and Ireland managing director Martin Inkster even told Reuters: “We certainly see a future where Philip Morris no longer will be selling cigarettes in the market.”

Against this backdrop, why is the travel-retail business promoting a faltering product category which kills 6m people around the world each year, according to a new report by the World Health Organization? Wouldn’t the shrinking space retailers currently devote to tobacco be better allocated to a category with a brighter future such as health and wellness: a $3.7 trillion global business, which has grown by over 10% in the past two years?

trunblocked-Dead-reckoning--the-end-of-the-road-for-duty-free-tobacco-travel-retail-unblocked

Leave A Comment