Interview: China Duty Free Group President Charles Chen welcomes the ‘perfect’ Maison Martell Boutique in Sanya

CHINA. In late January Pernod Ricard Global Travel Retail opened a Maison Martell travel retail boutique – the brand’s first in the channel – at China Duty Free Group’s magnificent Sanya International Duty Free Shopping Complex in Haitang Bay, Hainan. The 21sq m boutique, featuring an all-digital façade, is also the first Pernod Ricard-owned store on the island. The Moodie Davitt Report Chairman Martin Moodie asked China Duty Free Group (CDFG) President Charles Chen for his thoughts on the opening and on the performance and potential of wines & spirits since the category was added to the offshore duty free shopping policy last July.

Charles, the opening of Martell Maison’s first travel retail boutique is a landmark for the brand and a coup for CDFG. What are your expectations for the new offer?

I personally feel very excited and happy. Both the Pernod Ricard and the CDFG teams have made tremendous efforts to prepare for Martell’s first duty free boutique at the Sanya International Duty Free Shopping Complex. Working in a highly collaborative manner, they have communicated very well since the project’s early stages, improving the design, renderings, construction drawings and other aspects, always striving to achieve perfection.

Thanks to all their efforts, we have witnessed the opening of a perfect Martell boutique. Martell’s first duty free boutique also shows our confidence in the Hainan Island duty free market. Despite the impact of COVID-19, China’s duty free market is growing against a downward global trend, drawing focus from the whole travel retail industry to Hainan. Martell’s boutique opens against this backdrop; so it is thrilling news for the global travel retail business.

The Martell boutique will bring many new hi-tech elements. We very much look forward to the unique, new and thoughtful shopping experience with the touch of digital-tech that this boutique has brought to consumers.

[Click on the YouTube icon to view dazzling coverage of the Maison Martell boutique with its all-digital façade; For those unable to access YouTube, please click on the version below hosted on The Moodie Davitt Report website.]

How will you promote the boutique, both online and offline?

On 28 January we held the opening ceremony online and offline together with Pernod Ricard Global Travel Retail. That allowed millions of fans from the livestreaming platform of CDFG and CDF Sanya international Duty Free Complex, as well as all consumers who could not attend the opening ceremony in person, to experience it at first hand.

CDFG has 10 million high-end members covering major cities in China, and we have established the largest member big data platform in China’s duty free industry. Our next step will be to leverage the unique digital retail experience provided by the Martell boutique, and we will work together with Pernod Ricard to develop marketing activations tailor-made for Chinese consumers.

Through the application of digital technology, we will jointly promote online and offline to provide consumers with the best products and services and deliver the brand value and innovative ideas advocated by Martell to consumers.

At the same time, CDFG has been committed to continuous and in-depth research on China’s duty free market and travel retail consumer groups. With our years of experience in retail operation and service, we are confident that the Martell boutique will become a benchmark of the imported liquor category in Hainan and even in China’s wider travel retail industry.

Such an opening, as you say, requires close collaboration. How would you describe the relationship between CDFG and the Pernod Ricard Global Travel Retail and Martell teams?

Pernod Ricard is a long-term strategic partner of CDFG. Based on this partnership, the cooperation between our two companies has been very harmonious. The opening of the Martell boutique shows that the strategic cooperation has risen to a new level. So I would like to express my gratitude to Pernod Ricard for opening its first duty free Martell boutique with us in Sanya.

‘Win-win cooperation’ has always been the cornerstone of our strategic partnership. With the continuous development of CDFG’s business, the cooperation between our two companies will continue to progress in the future, from ‘cooperation community’ to ‘community of destiny’.

At the same time, I would also like to take this opportunity to appeal to all suppliers again. We welcome international brands to jointly develop the duty free market of Hainan Island with CDFG. China is ushering in a new era, and each of us has many opportunities that we can’t miss. If you miss China, you will miss the future!

Talking more broadly, how important was the addition of spirits and wines to the offshore duty free category to CDFG?

Against the backdrop of a new development pattern with domestic circulation as a priority, combined with domestic and international dual circulations, the Chinese government announced new duty free policies for Hainan Island in early July 2020 and expanded product categories on sale. We are very glad that the imported liquor and wine category has been included.

We are also very pleased to see that since the first day of the implementation of the new policy, newly-added duty free goods such as liquor and mobile phones have been highly sought-after and have become a highlight in consumer shopping. We expect this trend to continue growing.

With China’s introduction of a series of policies to encourage domestic consumption and the recovery of China’s domestic tourism industry, China Duty Free Group and our duty free business in Hainan Island has become the ‘lighthouse’ of the global travel retail market, the focal point of duty free channels all over the world.

In recent years, the sales of imported liquor in China have been increasing year on year. Young Chinese consumers, especially millennials, are increasingly accustomed to drinking and consuming imported liquor. China Duty Free Group has established direct cooperative relations with major global liquor and wine companies.

We are committed to providing Chinese consumers more diverse liquor products and better shopping environments, improving their shopping experience, and attracting more consumers to our duty free shops on Hainan Island.

“I can reveal that in December, sales had increased by +700% compared to early July when the new policy was introduced” – Charles Chen

We will further explore the incorporation of duty free shopping and policy, and adjust product and brand structures. We plan to carry out deeper cooperation with brands, optimise operation and management, and serve the demand of Chinese consumers for duty free shopping to the greatest extent possible. We also expect to rapidly increase China Duty Free Group’s market share within the international duty free market, and play an increasingly important role in terms of international competition.

Can you offer any insight to how sales of spirits and wine have been faring since last July? 

Considering data sensitivity for a listed company, I cannot disclose specific turnover data. However, with the increasing attention of brands for the Hainan Island duty free market, allied to sufficient stock and the development of various themed promotional activities, the attraction and influence of duty free imported liquor to consumers will grow accordingly.

Since the implementation of the new policy, sales of spirits and wines have exceeded our expectations, especially the demand for high-value and super-premium products. In terms of categories, we have also noticed that young consumers are pursuing single malt whisky, Japanese whisky, Champagne and liqueurs.

In general, Chinese consumers have a deeper understanding of imported liquor and their demand is diverse. We expect that this will be a very promising category. I can reveal that in December, sales had increased by +700% compared to early July when the new policy was introduced.

Footnote: Look out this month for an extensive interview with Pernod Ricard North Asia Travel Retail General Manager Simon van Moppes, who talks about the ambition that underpins the landmark Maison Martell project in Hainan and some of its unique and compelling aspects. The interview will appear in a special edition of The Moodie Davitt Report Magazine (see below for details).