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  • Published On : Feb 2022
  • Code : CMI4934
  • Industry : Consumer Goods
  • Pages : 70
  • Formats :

Duty Free and travel retail is a type of retail that caters to overseas travelers. It is a substantial source of revenue with several marketing possibilities. One of the key elements fueling the expansion of the Duty Free and travel retail markets is the growing popularity of the travel and tourist industry. Duty Free and travel retail provides temporary venues that allow end users to be delighted and indulged with the ambiance and experience of shopping for overseas products following the security check-in. Passengers benefit from the distribution channels since they improve their travel experiences and contribute value to economic operations. Due to factors such as the lack of promotion campaigns and high product costs, poor customer interest in shopping at airports is expected to limit the growth of the market.

Caribbean duty free retailing market is expected to surpass US$ 4,017.0 million by the end of 2028 and exhibit a CAGR of 21.7% during the forecast period (2021 to 2028).

Drivers

Caribbean Duty Free retailing market growth is attributed to the rising number of international travelers across several Caribbean countries such as Cuba and Bahamas. For instance, according to The World Bank’s data, around 4.684 million international tourists arrived in Cuba during 2018, as compared to 4.594 million in 2017. Some of the preferred products such as cigars, rum, perfumes, and whiskey by tourists are readily available at discounted prices in retail stores across airports located in the Caribbean region. Thus, an inclination of international tourists towards Duty Free shopping is increasing as additional taxes are incurred on the same products in other countries.

Market Restraints

Caribbean Duty Free retailing market is hampered by various purchasing limitation enforced by the Caribbean airlines that have implemented certain regulations regarding the purchase of tobacco and cigarettes. For instance, Customers in the Bahamas can buy up to 200 cigarettes and 225 gram of tobacco from any duty-free retail establishment, according to Alternative Airlines Ltd. Moreover, customers are reluctant to purchase at Duty Free stores, owing to cabin and luggage baggage restrictions imposed by many air carriers. For instance, Caribbean Airlines has permitted a carrying capacity of 23 Kg *2 luggage bags per passenger along with 1 cabin bag. Carrying an overweight, oversized, or extra luggage bag incurs an additional charge of US$ 150 per bag. This is expected to restrict tourists from purchasing Duty Free products, thereby hampering the market growth to some extent.

Market Opportunities

Shifting lifestyle patterns and the rising popularity of international tourism are expected to offer immense growth opportunities for market players over the forecast period. According to the data of the Caribbean Tourism Organization (CTO), the number of tourist arrivals in the Caribbean region increased by 9.7% from the first half of 2018 to 2019. A surging preference for premium imported products prevailing among the millennial population such as perfumes & jewelry, confectionery and toys among kids, and alcohol and beverages is estimated to fuel the market growth. Moreover, to cater to the surging demand for premium and specialty products, Top Brands International, a distributers and marketer of duty free product revealed its plan to open a 2,000 sq. m. Duty Freestore at Silvio Pettirossi International Airport  Paraguay in February 2020.

Additionally, in October 2019, Habanos, S.A., a Cuban manufacturing company of tobacco launched a jar of Cuban cigars under the brand name, H. Upmann Magnum 56, especially for duty-free sales channel across the Caribbean region. The jar includes 20 units of Magnum 56 cigars (ring gauge 56 x 150 mm length). Such product launches are expected to drive demand for duty-free products.

Figure 1. Caribbean Duty Free Retailing Market – Opportunity Analysis

Caribbean Duty Free Retailing  | Coherent Market Insights

Market Trends

Emerging factors that are expected to have a direct impact on market growth include foreign passengers' preference for popular Caribbean island destinations and ports. Duty Free shops can be found at almost each airport in the Caribbean, while specific island locations and ports are known for a high concentration of Duty Free shops, where visitors can find jewelry, watches, perfume, liquor, and other items at a substantial discount.

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Caribbean Duty Free Retailing Market Report Coverage

Report Coverage Details
Base Year: 2020 Market Size in 2020: US$ 832.2 Mn
Historical Data for: 2017 to 2020 Forecast Period: 2021 to 2028
Forecast Period 2021 to 2028 CAGR: 21.7% 2028 Value Projection: US$ 4,017.0 Mn
Geographies covered:
  • Caribbean: Cuba, Trinidad and Tobago, Barbados, Bahamas, Dominican Republic, and Rest of Caribbean
Segments covered:
  • By Product Type: Fragrance & Cosmetics, Wines & Spirits, Fashion & Accessories, Tobacco, Watches & Jewelry, Confectionary & Fine Foods, and Gifts and Others
  • By Sales Channel: Air Terminals, Ports, and Others
Companies covered:

Dufry AF, Duty Free Caribbean Holdings, Evelop, Cave Shepherd & Co. Ltd., Pure Grenada, Habanos S.A., and Duty Free Pointe Seraphine

Growth Drivers:
  • Rising number of international travelers across several Caribbean countries
  • Expansion of airports in Caribbean countries
Restraints & Challenges:
  • Low customer interest in shopping at airports
  • Purchasing restrictions enforced by Caribbean governments

Figure 2. Caribbean Duty Free Retailing Market Revenue Share (%), By Sales Channel, in 2020

Caribbean Duty Free Retailing  | Coherent Market Insights

On the basis of sales channel, air terminals segment dominated the Caribbean duty free retailing market in 2020, accounting for around 49.5% of market revenue share, followed by ports and others, owing to the rising number of duty-free retail shops in the airports. Various mergers & acquisitions by major players in the region also support the market growth. For instance, Nassau Airport Development Company that manages and operates Lynden Pindling International Airport (LPIA), which is a Bahamian company and owned by the Government of The Bahamas and managed by Vantage Airport Group, in January 2018, was seeking a partner to design, build, finance, and manage duty free retail stores at Lynden Pindling International Airport. With the help of this merger, NAD aims to achieve high standard of excellence and customer service in the Lynden Pindling International Airport.

Caribbean Duty Free Retailing Market - Impact of Coronavirus (COVID-19) Pandemic

The COVID-19 has a negative impact on the Caribbean duty free retailing market. The imposition of lockdown and international travel ban have significantly reduced the number of travellers visiting the Caribbean region. A report by IATA (International Air Transport Association) published in November 2020 stated that during the pandemic, Latin America and the Caribbean region witnessed a decline of around 64.0% in the air traffic that resulted in the loss of US$ 5 billion. This decline can be attributed to the reduction in the number of tourists, expenses incurred at travellers’ end to get quarantined, and mandatory testing policy imposed by the statutory governing bodies. Moreover, high risk of virus transmission associated with air transportation and norms prescribed to maintain social distancing have restricted growth of the Caribbean Duty Free retailing market.

Moreover, shifting inclination of government authorities towards health and well-being has reduced the value of funds and policies for the promotion of duty free retailing market. Thus, the lack of moral and financial support by governing authorities has substantially hampered the Caribbean duty free retailing market growth.

Competitive Section

Key players operating in the Caribbean duty free retailing market include Dufry AF, Duty Free Caribbean Holdings, Evelop, Cave Shepherd & Co. Ltd., Pure Grenada, Habanos S.A., and Duty Free Pointe Seraphine.

Few Recent Developments

In December 2018, Dufry AG, a retailer which operates duty-free and duty-paid shops and convenience stores received the contract from Flughafen Zürich AG, the owner and operator of Zurich Airport, for starting five new convenience stores at Zurich Airport (Switzerland). The new stores will offer food & beverages, books, newspapers, magazines, souvenirs, and travel essentials. The stores are expected to help the company expand its footprint at Zurich Airport.

Duty-free shops sell various products to overseas travelers and thus offer items free from some local and national taxes and levies. However, taxes may be imposed if the buyer reaches their destination country or the value or quantity of the products exceeds certain limits. Such retailers can be located in international airports, border towns, seaports, train stations, and even onboard planes and ships. Cigarettes, chocolates, electronics, and accessories, as well as perfumes, cosmetics, and alcohol are among the products sold in duty-free shops.

Market Dynamics

The expansion of airports is driving the Caribbean duty free retailing market. Due to rising footfall at airports, airport authorities are looking for ways to increase their revenue from non-aeronautical streams. Many airports are planning to increase their retail space, as the demand for duty-free products is increasing. For instance, according to the data of the World Bank, 21.19 million travelers were carried in and out across Chile in 2019, as compared to 19.51 million in 2018. Moreover, favorable governmental policies for the expansion of airports are propelling growth of the duty-free retail market across the Caribbean region. In May 2020, the Board of Executive Directors at the World Bank provided a fund of US$ 159 million for carrying out Caribbean Regional Air Transport Connectivity Projects across four countries including Dominica (US$ 13 million), Grenada (US$ 17 million), Haiti (US$ 84 million), and Saint Lucia (US$ 45 million). The completion of these projects is expected to enhance the air transport industry growth and attract many international tourists. This is expected to increase duty free retailing at these airports.

The increasing brand awareness among the millennial population and initiatives undertaken by governing authorities such as ACI-LAC (Airports Council International – Latin America and Caribbean) and ASUTIL (South American Association of Free Stores) for increasing the sales of locally manufactured products are expected to contribute towards the growth of the Caribbean duty-free retailing market.

Due to the rapid drop in tourism caused by the COVID-19 epidemic, the Caribbean duty free retailing market was heavily damaged in 2020. The tourism industry has already begun to feel the effects of the pandemic on its performance. Travel restrictions and precautions began in January 2020. Due to the fear of contracting the COVID-19, domestic and international visitors limited their trips, reducing the number of local and international clients for this retail channel.

Key features of the study:

  • This report provides an in-depth analysis of the Caribbean duty free retailing market, market size (US$ Million), and compound annual growth rate (CAGR %) for the forecast period (2021 – 2028), considering 2020 as the base year
  • It elucidates potential revenue opportunity across different segments and explains attractive investment proposition matrix for this market
  • This study also provides key insights into market drivers, restraints, opportunities, new product launches or approval, country outlook, and competitive strategies adopted by the leading players
  • It profiles leading players in the Caribbean duty free retailing market based on the following parameters – company overview, financial performance, product portfolio, geographical presence, distribution strategies, key developments, and strategies, and future plans
  • Key companies covered as a part of this study include Dufry AF, Duty Free Caribbean Holdings, Evelop, Cave Shepherd & Co. Ltd., Pure Grenada, Habanos S.A., and Duty Free Pointe Seraphine
  • Insights from this report would allow marketers and the management authorities of companies to make informed decision regarding their future product launches, Product Type up-gradation, market expansion, and marketing tactics
  • Caribbean duty free retailing market report caters to various stakeholders in this industry including investors, suppliers, hair styling product formulations manufacturers, distributors, new entrants, and financial analysts
  • Stakeholders would have ease in decision-making through various strategy matrices used in analysing the Caribbean duty free retailing market

Detailed Segmentation:

  • Caribbean Duty Free Retailing Market, By Product Type:
    • Fragrance & Cosmetics
    • Wines & Spirits
    • Fashion & Accessories
    • Tobacco
    • Watches & Jewelry
    • Confectionary & Fine Foods
    • Gifts and Others
  • Caribbean Duty Free Retailing Market, By Sales Channel:
    • Air Terminals
    • Ports
    • Others
  • Caribbean Duty Free Retailing Market, By Region:
    • Caribbean
      • By Country:
        • Cuba
        • Trinidad and Tobago
        • Barbados
        • Bahamas
        • Dominican Republic
        • Rest of Caribbean
  •  Company Profiles
    • Dufry AF *
      • Company Overview
      • Product Portfolio
      • Financial Performance
      • Key Strategies
      • Recent Developments
      • Future Plans
    • Duty Free Caribbean Holdings,
    • Evelop
    • Cave Shepherd & Co. Ltd.
    • Pure Grenada
    • Habanos S.A.
    • Duty Free Pointe Seraphine

 “*” marked represents similar segmentation in other categories in the respective.

Frequently Asked Questions

Caribbean duty free retailing market is expected to surpass US$ 4,017.0 million by 2028 and exhibit a CAGR of 21.7% between 2021 and 2028.
Caribbean duty free retailing market growth is driven by the rising number of international travellers across several Caribbean countries and the expansion of airports in Caribbean countries.
Foreign passengers' preference for popular Caribbean island destinations and ports and the increasing adoption of digitization and e-commerce portals for shopping are the trends observed in the market.
Caribbean duty free retailing market growth is expected to be hampered by low customer interest in shopping at airports and purchasing restrictions enforced by the Caribbean government.
Major players operating in the Caribbean duty free retailing market include Dufry AF, Duty Free Caribbean Holdings, Evelop, Cave Shepherd & Co. Ltd., Pure Grenada, Habanos S.A., and Duty Free Pointe Seraphine
Caribbean duty free retailing market was valued at US$ 992.8 million in 2021.

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