At their annual exhibition in Cannes this month, airport retailers might have wondered whether the UK’s impending exit (or not) from the European Union would be good for duty free shopping. But they have learned not to worry too much about political events.
It is 25 years since the Single European Act tore down customs barriers across what is now the EU and, theoretically, signalled the end of duty free shops at shipping terminals and airports. It prompted predictions of the demise of retailing at European airports. The predictions could not have been more wrong. All that happened is retailing of all kinds (including tax-free products to inter-continental travellers) was ramped up to exploit a trade that might depend as much on the ‘feel good’ optimism of its travelling customers as on prices. Airports, at least 50% of whose revenues now come from retailing, increasingly push sales by forcing passengers to trudge through duty-free shops on their way to departure gates.
It’s a successful strategy to judge by the $79bn of travel retailing in 2018 – 13% up on 2017 – with more than 50% accounted for by the fastest-growing region, the AsiaPacific. The world’s largest travel retailer the Swiss-owned Dufry (World Duty Free) accounted for more than 10% of all sales and the top five retailers for 36%. Global revenue is forecast to almost double within six years to some $154bn. More than 50% of all this comes from sales of perfumes, cosmetics and alcohol. Leading brands like Estee Lauder, L’Oreal and Revlon are opening outlets at every international airport with exclusive ranges to tempt travellers with time and money on their hands.
The early days of duty free expansion also spawned the late 20th century boom in inflight magazines stuffed with luxury product ads that were juiced by the emergence of duty free shops for passenger arrivals as well as departures. In 1973, the year the UK joined the EU, financial journalist William Davis launched High Life magazine on behalf of British Airways, following the previous year’s launch of the industry’s first B2B magazine, International Tax Free Trader (ITFT).
ITFT had been the brainchild of Vivian Raven, publisher of World Tobacco magazine for B2B publisher Industrial Newspapers. He spotted the emergence of the duty free sector as a global sales channel in its own right and saw the B2B publishing opportunity. Early issues of the magazine frequently had much more advertising than editorial. Raven was on a roll and launched the first international tax free conference and exhibition, in Amsterdam, which attracted more than 300 conference delegates and some 40 exhibitors.
In future years, the event moved to Cannes where it generated annual profits of millions of pounds for a decade before it was derailed by an ill-fated decision to move to Montreux – coupled with growing unease about the soaring costs of the exhibition itself. The upshot was the launch of the industry’s self-owned event, the Tax Free World Association show which has continued at Cannes ever since, along with sister events in Singapore , China, and the Middle East.
That cost Vivian Raven his job. But he bounced back with Duty-Free News International magazine (published by Raven Fox) – which he sold to Euromoney for £10m in 1995. A nice reward for his pioneering efforts.
Today, “travel retail” publishing is dominated by former Raven Fox managing director Martin Moodie, a New Zealand-born journalist who established Moodie International in London in 2002.
Its Moodie Davitt Report (with former Raven Fox colleague Dermot Davitt) claims to be the travel retail industry’s most widely-read information service. It also organises the 16-year-old Trinity Forum, on commercial revenues in airports, The Airport Food & Beverage Conference, and publishes The Airport Commercial Revenues Study, and The Foodie Report.
Its web site is bursting with news, data and video, and attracts more than 500k monthly page views. Its weekly newsletter and PDF magazine has a claimed readership of 11,000. The Moodie Davitt Report now even has a print edition. This is nothing if not a thoroughly journalistic enterprise where advertising revenue has followed readership, with minimal PR puffery.
The combination of high-standard journalism delivered (mainly) in digital and events to a highly-concentrated audience of global decision-makers in a high-margin, high-growth global industry makes Moodie a great B2B media business.
Its lessons are clear enough for all those B2B (and perhaps even some B2C) publishers whose audiences are hooked on digital while advertisers (insofar as they are hooked at all) stick to print. Digital is clearly a quick-fire channel for all media and is, intrinsically, lower cost than print, paper and postage. But trying to sustain print “until” digital gets enough revenue from advertising and/or readership is a fool’s game – unless you make the digital channel truly competitive. ‘Do the best journalism for the market and push it all online as quickly as possible’ is the winning message.
Moodie International is a stunning success. It employs just 13 people and made profit of some £1m from revenue of £3.4m in 2018-19. The revenue is neatly spread across Europe (53%), North America (15%) and the AsiaPacific (22%). Some 20% comes from events.
Martin Moodie (who is 75% owner of the company he founded) attributes the success to a decision to be “fast, factual and free” from the start in 2002. His former bosses at Euromoney had predicted he would fail. Instead, he effectively forced them to sell-off Duty Free News International, which had once been the runaway market leader, to UK-based Metropolis for less than 20% of the price they had paid for it. The Moodie Report became the industry leader within two years.
The company seems set for a new step-up and is planning a paid subscription service for special reports in a global market where there is statistical information and analysis ready to be mined and marketed. Moodie recently heard the new president of the Tax Free World Association lament “our collective failure to agree on a standard, internationally-consistent benchmark for measuring the market.” Some invitation.
The cash-rich Moodie International’s profit and net assets have each increased five times in just four years. It’s another example of a tightly-focused media specialist beating larger broad-based companies – by being an insider.
But, having previously sold and bought back his company (during 2012-15), the only question is whether Martin Moodie will be tempted to sell it again, presumably for more than £10m and rising. Logically, US-based travel information publisher Northstar could well expand into media for the operation of airports and, with it, the world’s most attractive retailing. Join the dots.
