Latest IWSR travel retail trends

What the passenger numbers are telling us

International tourist arrivals grew by 6% in 2018, according to UN World Tourism Organization (UNWTO). The Middle East was the fastest-growing region (+10%), with Africa, Europe and Asia-Pacific enjoying growth of 6% to 7%. Arrivals to the Americas rose more slowly (+3%). UNWTO cites favourable economic trends, strong demand for travel from key source markets and the continued recovery of major destinations previously affected by crises as the main factors driving the increase in traveller numbers.

UNWTO reports that Russian travellers posted the fastest rise in international tourism expenditure in 2018 (+15.6%), with French (+10.3%) and Australian travellers (+8.8%) also spending considerably more, followed by Americans (+7.2%) and South Koreans (+5.7%). Spending by Chinese travellers grew by 3.9%.

Demand for gin and Irish whiskey continues

The expansion of the gin category shows no sign of slowing down yet and new gin brands continue to enter the travel-retail market. Many of these are locally produced craft gins but established international brands have also been active in launching new lines, particularly flavoured gins.

Demand for Irish whiskey continues to grow, with the Nordic countries among the key markets where demand among travellers is still rising. Local whiskies from other less well-known whisky producing countries are also increasing in number, but activity in this sector is still on a smaller scale than in the gin category.

The last few years have seen a growing trend towards smaller bottle sizes, boosted by the rising popularity of craft spirits. 50cl bottles have become more common, for example, particularly for local gin and whisky brands.

Asia-Pacific: looking positive

2018 saw strong growth in a number of key Asian markets such as South Korea, Taiwan and Thailand. Sales in South Korea were boosted by double-digit growth in tourist arrivals from China, Japan, Taiwan and Malaysia. International tourist arrivals to Thailand rose by 7.5% in 2018 and there was a surge in spending by Chinese visitors in Thailand in December.

On 1 April 2019 the Singapore Government cut the duty-free liquor allowance from three litres to two for travellers spending more than 48 hours outside Singapore, excluding those returning from Malaysia.

According to Airports Council International, Asia-Pacific enjoyed some of the strongest growth (+8%) in international air passenger traffic in 2018.

Americas: market conditions deteriorate in Latin America but North America strong

Market conditions deteriorated in Latin America in the second half of 2018. A fall in the value of the Brazilian real and Argentinian peso hit duty-free sales in Brazil, Argentina and other Latin American markets last year. The situation in Brazil is expected to improve during 2019, but in Argentina the peso fell to a new low against the US dollar this month and high inflation also continues to have a negative impact on consumers’ disposable income.

Growth at airport duty-free stores in North America has been strong in recent months, although spending by Chinese passengers fell in the latter part of 2018.

According to Airports Council International, North America saw +6% growth in international air passenger traffic in 2018; Latin America and the Caribbean saw +5%.

Europe sees mixed results

In Southern Europe sales at Turkish duty-free outlets were boosted by the return of high-spending Russian passengers. The Greek market benefited from a 13% rise international arrivals at Greek airports in 2018, largely driven by increased arrivals from other EU countries. Spain was hit by a shift in tourism flows to other destinations in Southern Europe and North Africa and by a fall in British passenger numbers.

Growth in international tourist arrivals to Northern Europe was relatively flat in 2018. The Nordic market is stable but was adversely affected by the fall in the value of the Swedish krona against the euro and US dollar in the first half of 2018. Rising air passenger traffic is boosting the airport sector in the region, but sales on board ferry lines are steadily declining.

Trends are generally positive in Central & Eastern Europe, boosted by a return to growth in Russia.

According to Airports Council International, Europe saw +7% growth in international air passenger traffic in 2018.

Looking ahead

UNWTO forecasts international tourism arrivals will increase by 3% to 4% in 2019. Asia-Pacific (+5% to 6%) and the Middle East (+4% to 6%) are expected to be the fastest-growing regions, followed by Africa (+3% to 5%) and Europe (+3% to 4%). Slower growth is forecast to continue in the Americas (+2% to 3%).

The IWSR Global Database offers full value and volume data across travel retail markets and categories.

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