Case closed: Huge boost for travel retail as WHO deems duty-free tobacco ‘not a significant channel’ for illicit trade

A victory for the duty-free channel’s integrity

At a press conference on 27 November held in anticipation of today’s release, Duty Free World Council (DFWC) President Sarah Branquinho and her industry colleagues struck a measured rather than euphoric tone in acknowledging the importance of the MOP4 decision on duty-free tobacco.

But there was no missing the critically positive significance of the outcome for the travel retail sector.

The unanimous decision at the Geneva gathering to discontinue any probing of duty free’s relationship with illicit trade validated years of hard work by the travel retail industry in building and defending the integrity of the channel, Branquinho said.

Standing shoulder to shoulder

She paid glowing tribute to the collective contribution of the travel retail community worldwide.

“It’s been an absolutely humongous effort from everybody – a global effort, including stakeholders from all four corners of the world,” Branquinho commented. “We really want to thank the global industry for all their support. And to our partners at ACI World, who stood shoulder to shoulder with us in defending the industry. They have been amazing.

“We want to thank the regional associations who have done a tremendous job as part of DFWC, coordinating all the industry response. They have chivied retailers, they’ve chivied governments. They have done such a lot.

She continued: “We’ve stuck to the facts throughout. We’ve done our own research. The WHO study agreed with us – without wishing to look at our study, which we offered to give them. Our 28-market study showed there was no problem with illicit trade and ours was a much wider study than the one conducted by the World Health Organization.”

A stand for authenticity

“We are pleased that they’ve recognised our industry is not involved in illicit trade,” Branquinho said before reaffirming the industry’s relentless determination to defend its legitimacy and to stand against illicit trade.

“We reiterate… we will continue to support the WHO’s fight against illicit trade, not just the WHO but also the OECD (Organisation for Economic Co-operation and Development).

“We’re linked into everybody that is trying to fight illicit trade, and we really believe that is something we need to continue to do – to underline the authenticity of our industry and the unique authenticity of all our products… it is something we pride ourselves on.”

Customs and (good) practice

John Rimmer, part of the advisory team to DFWC on the illicit trade issue, added, “One of the most important elements of the campaign that really stood us in good stead was the conversations that have been had between retailers and customs authorities around the world.

“We had dozens of customs authorities… confirming, essentially, that in their jurisdictions, duty free was not even on their radar as a problem with regard to illicit trade.

“That got us to a position where we were able to really make the case very forcefully that the real sources of illicit trade were elsewhere. And that was ultimately accepted during the meetings.”

Remaining vigilant

Asked by The Moodie Davitt Report how the industry can avoid any complacency, having won the day over the illicit trade issue, Branquinho replied: “Off the back of this win, what the industry needs to do is make sure there are no transgressions.

“That’s super important, because if transgressions are picked up, then somebody might one day come back to it and say, ‘Well, we placed our trust in you, and it didn’t work.’

“This is really the moment where we need to live up to what we have been able to achieve and ensure there is no leakage at all, nothing untoward. We must carry on with the good things we’ve been doing about securing the channel and making sure that we are a legitimate and clean industry.”

Lessons learned, credibility gained, reputation protected

Thursday (27 November) was Thanksgiving Day, a joyous occasion celebrated across the USA, Canada and various countries worldwide, writes Martin Moodie.

The timing of the Duty Free World Council (DFWC) media conference on the same day could hardly have been any more apposite, given the DFWC’s clear though decidedly understated pleasure at the outcome and the warm thanks it bestowed on industry stakeholders that contributed to a hard-fought victory.

But thanks must also go to DFWC and its advisors, who collectively have waged a long, complex and often deeply frustrating campaign, largely behind closed doors.

In announcing the outcome, DFWC President Sarah Branquinho admitted: “As you can hear, I’m quite emotional. It’s just been such a long time, so there’s a bit of a quiver in the voice.”

Such feelings were hardly surprising. The redoubtable Branquinho and her DFWC colleagues have selflessly invested enormous time, conviction and a great deal of expertise and strategic savvy into delivering what arguably ranks as the biggest lobbying success in duty free’s near eight-decade history.

It is an outcome to savour not only for the tobacco category but for the whole duty-free industry. Tobacco is a proven driver of footfall into stores and of consequential incremental purchases. Additionally, if the tobacco fight had been lost, then many feared a domino effect on other categories, such as liquor and confectionery.

Those challenges may still surface but the lessons learned – and the credibility gained – from this campaign will surely stand the industry in better shape to counter them. ✈