As Lagardère Travel Retail prepares to embark on its new duty-free contract at Auckland Airport, Director of Buying and Category Management, Pacific Donncadh Kelly outlines the wines & spirits opportunity. This article first appeared in our Category Insight supplement to The Moodie Davitt Magazine in May. Click here for access (page 15).
Lagardère Travel Retail is pledging to enhance its offer and appeal across the vital wines & spirits category as it prepares to begin a new eight-year duty-free contract at Auckland Airport.
After the airport announced the result of a tightly contested tender on 18 March, Lagardère Travel Retail Chairman and Chief Executive Officer Dag Rasmussen commented: “We are honoured and thrilled that Auckland Airport (AKL) has put its trust in Lagardère Travel Retail to begin a new chapter for duty-free retail at AKL.
“This new concession marks a fresh start for duty free in Auckland, and travellers will benefit from a thorough transformation of the retail offer, based on a unique retail experience and a heightened sense of place. This important contract gain underlines Lagardère Travel Retail’s commitment to New Zealand and to developing our footprint in Asia Pacific.”
The LagardèreAWPL joint venture, trading as Aelia Duty Free, is the incumbent. However, Lagardère Travel Retail bid alone for the four-store departures and arrivals shopping concession.
Over the course of the new concession, Lagardère Travel Retail said it will undertake a full refurbishment of all departures and arrivals stores to provide a “world-class shopping experience”.
Wines & spirits is front and centre of the expansive duty-free offer, which has been managed solely by Aelia Duty Free after the dual operator system (at the time alongside ARI) moved to a more logical one-retailer model in June 2023.
Lagardère Travel Retail Director of Buying and Category Management, Pacific Donncadh Kelly says the new contract presents opportunities that the two-year single-operator extension could not.
“Winning this tender allows us to completely redefine the floorplan and finally create a unified store,” he explains. “We’ll place even greater emphasis on sense of place with a strong focus on New Zealand products and immersive experiences. We’ll also have more flexibility to capture emerging trends and drive higher penetration.”
In considering the role of the category, Kelly outlines three main trends shaping the business in wines & spirits today.
Premiumisation is one, with consumers drinking less but with more of a focus on provenance and experience.
“Younger shoppers, in particular, are entering the category through single malt Scotch whisky, craft gin and premium tequila. Spirits like tequila and whisky are thriving due to their heritage and authentic appeal. In today’s social media-driven world, experiences are valued over possessions, and duty free offers that unique edge beyond mere consumption. Niche items and travel retail exclusives, along with curated experiences, will be essential to capitalise on this trend.”
In New Zealand, as elsewhere, value perception is another driver, with the business driven by local travellers alongside Australians.
“Price savings versus downtown stores are a major competitive advantage, and the duty-free promise is as important as ever,” says Kelly.
“Our bundle offers (two-for, three-for) can deliver savings of up to -40% compared to the domestic market, outperforming even the biggest and best-established downtown liquor retailers in Australia and New Zealand.”
Campaigns such as the ‘Lowest Prices in Australasia’ promotion (above) underline the value available even on high-end products like single malts, and have driven a +20% increase in spend per passenger.
“Shoppers are trading up, looking for brands with strong stories, heritage and craftsmanship. Boutique wineries and premium spirits like tequila and Japanese whisky are seeing growing demand. Maintaining this strong value proposition will be key as we redefine the retail space in Auckland.”
A further trend lies in travellers’ continuing search for local experiences, a trend accelerated by the gin boom and the rise of premium, artisanal products.
Kelly says, “Accordingly, we will place a strong focus on local spirits and the globally acclaimed wine regions of New Zealand. Travellers are keen to discover authentic local products, and New Zealand’s reputation for premium wines and craft spirits plays perfectly into this trend.”
Elaborating on that theme, the retailer is doubling down on its emphasis on local products.
“Currently, we feature four dedicated local alcohol pads (inspired by our Perfume & Cosmetics approach), and our goal is to expand this footprint to increase visibility,” says Kelly. “Additionally, we plan to cross-merchandise local products in our gift and souvenir section to target a different shopper profile and further boost sales.”
Communicating the availability of local and regional items is a key task. Here, elevating in-store presentation is vital, as is equipping brands with the tools to tell their stories, through experiences and ‘meet the maker’ events.
Kelly also assesses how the major drinks sub-categories are performing, something that will inform the updated store layouts and product mix.
“Gin is slowing globally, but in New Zealand it maintains a high base and remains a significant seller. However, we are seeing consumers increasingly shift towards tequila, which is gaining importance and expanding its footprint. Malt and Japanese whiskies also continue to perform exceptionally well, showing sustained growth. ”
Finally, notes Kelly, promoting value is a shared responsibility with brand owners as the business targets loyal shoppers and an emerging generation.
“Once shoppers are in-store, our brand partners can play a pivotal role in driving conversion and upselling by creating even more exclusive experiences and travel retail exclusives. These initiatives will also be key to capturing the attention of the new Generation Z traveller,” he concludes.
