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Duty Free Trade Industry Opportunities and Challenges

Duty Free Trade Industry Opportunities and Challenges. Duty Free Trade Industry Worth. DF/TR Industry Worth in $US billions. Generation Research. Comparison with Other Industries.

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Duty Free Trade Industry Opportunities and Challenges

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  1. Duty Free Trade Industry Opportunities and Challenges

  2. Duty Free Trade Industry Worth DF/TR Industry Worth in $US billions Generation Research

  3. Comparison with Other Industries • In 2007 the worldwide bottled water market was worth US$ 40 billion and is expected to reach $65.9 billion by 2012 (Boreal Water Inc.) • The Airline Industry’s global economic impact is estimated at US$ 2,960 billion or 8% of the world’s GDP in 2009 (ATAG) • Car Rental Market Revenues to Reach US$ 52.6 Billion in 2012 (Global Industry Analysts, Inc.) • In 2009 corporate travel industry was worth US$ 85 billion (PhoCus Wright’s U.S. Corporate Travel Distribution Fourth Edition)

  4. Which Products are Performing Best? Percentages for Product Groups that increased the most from 2009 to 2010 Cosmetics Food Generation Research

  5. Which Regions are Performing Best? Sales rate % from 2009 to June 30, 2010 Americas Asia Pacific Europe Middle East Africa Generation Research

  6. DF/TR sales 2009 Best and Most from Generation Research

  7. DF&TR Makeup for the Americas • In 2009, The Caribbean was worth US$ 3.1 billion and was down -6.3% from 2008 • South America’s 2009 worth was US$ 2.2 billion, a -7.3% difference from 2008 • North America was worth US$ 2.5 billion a decrease of -16% from 2008 • Sales in the USA fell by -19.8%, Canada fell by -8.7%, and Mexico fell by -19.5% • Altogether, the Americas were down 10% • In the US Virgin Islands sales dropped by -4.8% • Brazil registered a +6.5% increase • Sales in Puerto Rico decreased by -5.9% • Panama’s sales decreased by -19.6% • Argentina experienced a -7.5% decrease Generation Research

  8. How is the Duty Free Industry Performing in the Americas?

  9. Traveler Statistics by Region • Worldwide air passenger traffic rose by 7.6% in March 2010 compared with March 2009 • In Mexico, passenger traffic at Grupo Aeroportuario del Sureste (ASUR) airports increased by 85.8% in May 2010 compared with May 2009 due to the H1N1 virus, which diminished traffic • In US, visitor volumes are expected to increase by 5% in 2010. A couple of the largest countries to post increases are Brazil at 22% and Argentina at 13% • Leading the growth in airport traffic is South America with a total increase of 11% in 2010, the highest rate of any region. This growth is expected to continue to 2014 with a 58% increase compared to 2009 • Meanwhile, North America traffic fell 5.9% in 2009 and cargo decreased 11.3% Trend News and the Moodie Report

  10. Which Travelers are coming to the US? • Travel by U.S. residents increased about 11% from 1984 to 1994, but over the same period, the number of foreign visitors to the United States increased by 60%. Over half of the visitors from foreign countries are from Canada and Mexico. Travelers from Japan account for about 9% of foreign visitors, those from the United Kingdom 7%, and those from Germany 4% Federal Reserve Bank of Philadelphia

  11. Infrastructure Challenges • Inadequate air transport infrastructure costs the world economybillions of dollars each year due to: • Airlines having higher operating costs • Delays mean less productivity • In Tourist Industry – loss of revenue because of curtailed growth • Fewer jobs in Travel Industry ATAG

  12. Infrastructure Challenges Continued • The airport industry is facing growing difficulties to fully meet the demands of today's traveling public and shippers of air freight • If future capacity does not match demand, not only will delays increase - so will the costs of using the system • Needed changes include the following: • the building of new runways • infrastructure developments in terminals and aprons • improved public transport access, such as rail links ATAG

  13. Threats/Concerns • The next crisis (SARS, terrorist threat, economic recovery, swine flu) • Duty Free as a target (WHO, tobacco, alcohol, EU Abolition) • Consumer confusion (who are we, duty free, travel retail, travel value, airport shopping mall? What’s our value proposition?) • Global harmonization of tariffs • Lack of airport infrastructure development, restricts growth and opportunity to showcase our products • Security concerns, impact on dwell time • Rising costs of add-on/special charges (luggage, special seats, country taxes, extra fees) negatively impacts discretionary spending by passengers

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