TFWA President reflects on forty-year history of the association and lessons learned on how to move into the future

Opening the 39th annual TFWA World Exhibition & Conference in Cannes, TFWA President Erik Juul-Mortensen shared his perspectives of some of the rich history of TFWA. 

From humble beginnings, TFWA has grown into what we see today 

“The first edition of this event was held in 1985, along the coast in Nice. 2024 marks the 40^th anniversary of the founding of the Tax Free World Association, so before turning to our industry’s current state and future prospects, I want to look back briefly at our origins. 

“TFWA was the brainchild of two bright, ambitious men who decided to replace an existing commercial exhibition and shape the future by creating the Tax Free World Association on a not-for-profit basis. Its ethos was, and remains, ‘by the trade, for the trade’. Those two men were Patrick Moniotte who worked for Parfums & Beaute International, part of L’Oréal, and Jean-Philippe Haumont of PPI. I am delighted to welcome Patrick here today, and Catherine Haumont, representing her husband Jean-Philippe who died in 2015. 

“Patrick and Jean-Philippe shared their vision with others in the industry and the first management committee was formed, representing the different product categories. The committee members became ambassadors, persuading brands and retailers to participate in TFWA’s first trade event, that 1985 exhibition in Nice. So strong was their belief in this venture that six of them gave personal financial guarantees to allow the formation of the Association. 

“Four original management committee members are here with us – Ian McLuskie representing A.T. Cross, who later became Vice-President, Alain Bonardo of Nestle, Massoud Esfandiary of RJ Reynolds and one Erik Juul-Mortensen, today addressing you for the final time as President of this extraordinary association. I have had the honour of serving TFWA for many years, initially as Vice President - Marketing Communication on the first Management Committee, before becoming President for the first time in 1997 and playing that role for around 22 years over two periods. 

“In those days before mobile phones and the internet, much of the publicity for TFWA’s first event was the work of Doug Newhouse, then editor of ITC/Tax Free Marketing magazine, and his colleague Sarah Branquinho, who went on to work full time for TFWA and criss-crossed the world, recruiting brands and retailers to the cause. Sarah has been a tireless advocate for the industry ever since, thanks to the support of her employers Avolta and its previous entities. She also became my wife, which was an added bonus. 

“For many brands, the key factor in favour of TFWA’s new exhibition was the timely endorsement it received from the famous industry night haunt, RJ Reynolds’ Camel Club. This caused a last-minute rush of exhibitors, meaning that more floor space had to be found. The solution was a tent, hardly ideal in the hottest weather Nice had seen for years. But despite the melting chocolates and wilting lipsticks, the industry kept faith.” 

Moving on to trace the history of TFWA into the modern day, he continued “Retailers joined the movement from all corners of the world – Alberto Motta Sr and his son Pancho from Panama, David Bernstein and the co-owners of Duty Free International from the USA, Sachio and Takako Asaki from Blancs de Blancs in Japan, Mahendra Patel from Fiji, and from Europe, Bas Parson of Kappé along with Gebrüder Heinemann’s Gunnar and Klaus Heinemann, and of course Harry Diehl, an iconic industry figure. Colm and Breeda McLoughlin first attended this event in 1986, handing out leaflets about the new Dubai Duty Free venture. Many more followed. 

“TFWA World Exhibition & Conference in its current form, would not exist without the vision and tenacity of those who believed in its founding principle and championed its cause. This event started small but grew fast, thanks to the 178 companies and 312 people elected by their category peers to serve on the board and management committees over the years, as well as to the TFWA team and the many stakeholders on whom this event relies.” 

Addressing those in the room directly, he said; “Most importantly, it would not be what it is today without all of you who meet here, and in Singapore, and at the other industry events around the world to which TFWA has lent its practical support and friendship. 

“Over the last 40 years, duty free and travel retail has grown its turnover from 5 billion US Dollars to over 60 billion. It has weathered financial crises, armed conflict, volcanic eruptions, hurricanes and pandemics – SARS and COVID – while helping to build a more connected world. 

“Our industry has been boosted by waves of tourism as the Japanese, the Koreans and then the Chinese discovered travel. But it has also been driven by socio-economic change – the first package holidays, the opening up of travel to the masses by low-cost airlines, and the popularity of cruises for the old, the young and everyone in-between. We have seen Silver Surfers and Baby Boomers, Millennials, Gens X, Y, and Z, and now we are preparing for Gen Alpha.” 

We are making good progress, and there is much to be hopeful about 

Juul-Mortensen moved on to speak about the current state of the duty free and travel retail market. 

“Air passengers are the lifeblood of duty free and travel retail, so recent figures published by Airports Council International World give us reason to be optimistic. The data foresees total passenger numbers rising by 11.5% this year versus 2023, putting passenger traffic above 2019 pre-Covid levels. In the 6 months to the end of June this year, international passengers were up 1.4% on 2019, while domestic passengers were 1.3% higher. 

“As we know, the recovery is not evenly spread geographically. The Middle East and Africa bounced back strongly in the first half of this year, followed by Latin America, with North America and Europe showing more measured growth at just over 4%. Asia Pacific remains below its pre-pandemic level, although the deficit had reduced to 5.6% in the first half of this year, and passengers were up 18% on the first hal of 2023.” 

Looking to the future 

Juul-Mortensen then described the future as bright “ACI World’s long-term outlook is encouraging. The current projection, updated in August, shows a sustained resurgence by air travellers, rising from 4% above pre-Covid traffic this year to 29% above by 2028. ACI World also have an optimistic scenario, which assumes that positive factors like improving route connectivity and lower inflation will boost the resurgence to 35% and forecasting that 2024 traffic will double to 19.5 billion passengers in 2042 and nearly 25 billion by 2052.” 

He then balanced this by saying; “Alternatively, negative influences such as the increasingly worrying geopolitical tensions and constrained aircraft deliveries could limit traffic growth to 21% by 2028. 

“Less positively, several European and North American airlines have reported weaker-than-expected results as revenge travel comes to an end and demand softens. We are also hearing of lower spend per head among certain passenger nationalities. Retailers and airports in the Middle East and Europe have suggested that sales growth is sometimes slower than passenger growth, reflecting reduced per capita spend among travellers reluctant to shop in uncertain economic times.”

He then went on to share how the industry is adapting to the ever-changing terrain by saying; “Research shows that two aspects vital for attracting today’s travellers are value and personalisation. When the cost-of-living pushes consumers to economise, value can be a powerful tool. But beyond accessible pricing and promotional discounts, shoppers may also perceive value in qualities like functionality and convenience. Personalisation, on the other hand, resonates especially with younger travellers whose rising individualism and self-oriented lifestyles make customised products extra-appealing. These are just some of the conclusions from a new TFWA-commissioned study by Euromonitor International. 

“One part of duty free and travel retail finally starting to receive the attention it deserves is the cruise sector. Although smaller in passenger terms than air traffic, cruise lines attracted over 30 million people last year and are forecast to account for 40 million travellers by 2027. Cruise passengers of course tend to browse duty free stores for far longer in total than airport passengers, typically visiting outlets several times during their stay on board. Consequently, average spend levels are much higher than at airports. Brands are beginning to take advantage of the potential for immersive traveller experiences that cruise ships offer, also releasing cruise-exclusive products. And with more than one in four passengers over the last two years being new to cruising, and over one in three under the age of 40, this is a high-growth sector with a promising future.” 

Tomorrow’s traveller 

Turning his attention to meeting the needs of future travellers, Juul-Mortensen said “Gen Alpha comprises all those born between 2010 and 2025, and although they are still young, there will eventually be around 2 billion of them, according to Pragma Consulting. As the consumers of tomorrow, they will shape retail strategy for years to come. 

“Pragma describes Gen Alphas as ‘the most digitally savvy generation yet’, with a technology device as much a part of their play as building blocks. Almost half of them have a tablet before the age of 6, and over 60% own a smartphone by their 10th birthday. They view the world through YouTube, TikTok and Instagram, with influencers and their own peers central to their decision-making. 

“Although it is tempting to think these youngsters inhabit a superficial world, both Gen Z and Gen A are highly aware of social and environmental matters. They expect to see diversity and inclusion in the media and advertising they encounter. Their heightened climate consciousness makes sustainability a key criterion in their consumption choices. 

“Taken together, all these factors mean that brand experiences in duty free and travel retail must now move beyond core physical products to tell a story that is relevant to their consumers’ lifestyle. That is not easy in a market where retailers and brands have limited space, and where sales per square meter are closely monitored.” 

Speaking of the brands that compose the Tax Free World Association, Juul- Mortensen posited “Unquestionably, however, brands lie at the heart of this industry. Without brands, there would be no duty free and travel retail. Brands’ ability to innovate and entice is what drives our development, which is why events like this one are so important, providing an opportunity for brands and retailers to explore the best options for our industry to grow. 

“As important as growing our industry, is defending it from heavy-handed or misguided legislation. In tough economic times, governments are always looking to close tax loopholes. Our industry, which is often misunderstood by politicians, represents a tempting target. The most blatant example was the UK government’s arbitrary removal of tax free shopping in 2021, with the cancellation of VAT-free shopping for passengers leaving British airports and sea ports. Elsewhere, arrivals duty free has also come under government scrutiny recently. As an industry, we must remain true to the principles of duty and tax free sales – sales to travellers departing on an international journey, and in some cases offering the alternative of purchase at a duty and tax free store on arrival. We must remain vigilant, present travellers with a clear proposition, and provide no grounds for others to question our status. 

“The World Health Organisation continues to look for reasons to abolish duty free tobacco sales, which are a core part of any duty free and travel retail range. The WHO claims that duty free is a major contributor to illicit trade in tobacco. We need to work together to champion our credentials as one of the world’s most trusted, transparent and secure supply chains, and clearly demonstrate our zero- tolerance approach to illicit trade. The declaration launched by TFWA and the Duty Free World Council here in Cannes last year includes a commitment to do business only with companies that have clear anti-illicit trade policies in place. I thank the many retailers and suppliers who have already signed this declaration, and urge others to join the campaign.” 

He then concluded; “As this is my last Conference speech before stepping down as President in December, I want to finish by paying tribute to my colleagues at TFWA, and on successive management committees and boards. They have played a vital role in helping the industry grow through our trade events here in Cannes, Singapore and elsewhere, and through our webinars, workshops and research. Their dedication and commitment have made my job as President not only easier, but also more enjoyable, than it would otherwise have been – so a big thank you.” 

He then issued this call to action to all those in attendance: “Duty free and travel retail is a marketplace that changes constantly, and the Tax Free World Association must change with it. I firmly believe the Association is in good shape to do that, responding to members’ needs and providing the industry with a platform to prosper that is, 40 years on, still ‘by the trade, for the trade’. 

“I wish you all every success in the years to come, and a pleasant, productive week here in Cannes. I look forward to seeing you in the Palais or at one of our social events over the next four days.”