Türkiye and Israel will lead Heinemann’s 2023 travel shopping surge

Retail joint ventures at Turkish and Israeli airports topped $1.1 billion and $500 million respectively last year, with one of the world’s largest duty-free operators on track to generate annual revenue of $3.9 billion (3.6 billion euros) in 2023. It gave me the momentum to record it.

Despite some significant economic and geopolitical challenges, Hamburg-based travel retailer Gebr. Heinemann was able to slightly exceed 2019 sales for the first time since the pandemic, posting year-on-year growth The rate was 25%.

The company, which has been family-owned for five generations, is very positive about 2024 after a strong first quarter performance that was 24% higher than the same period last year and also exceeded budget expectations. On Thursday, co-CEO Raul Spanger said 4 billion euros was on the horizon. “Strategic investments in the Group’s business portfolio from 2023 will take full effect this year, and in 2024 sales should reach a new record high and exceed 4 billion euros,” he told the assembled media. he said.

These investments primarily include the acquisition and 100% control of an Israeli joint venture in Tel Aviv Airport and some border stores, as well as a regional office in Dubai to lead distribution and ultimately store operations. This includes the establishment of a place. in the Middle East and Africa.One of the targets is probably Angola. new airport In the capital Luanda.

The company also secured Saudi Arabia’s first retail concession at Jeddah’s King Abdulaziz International Airport in collaboration with joint venture partner Jordan Duty Free and diversified retailers. astra group; Signed a store contract for the first ship of the newly established cruise line Cruise Saudi, the Arroya.

Partnership model proves its value

“We are entering into carefully selected new partnerships, expanding existing partnerships, and making strategic investments in other business segments and channels,” said Max Heinemann, Heinemann’s other co-CEO. “And we will continue to be more international.”

Joint venture transactions have long been a feature of Heinemann’s expansion strategy into new markets. Heinemann is taking steps to protect its market position as global travel retail channels rapidly consolidate, recently exemplified by the major Avolta-Dufry-Autogrill merger.

The travel retailer’s business is dominated by Europe, which accounted for 59% of its sales (€2.1 billion) last year. The region, where Amsterdam, Copenhagen, Frankfurt, Oslo and Vienna are the company’s main airport hubs, also recorded the fastest growth (24%), mainly due to increased passenger numbers.

But Norway, historically one of Heinemann’s biggest sales hotspots, much lower limit Regarding tobacco allowances and the devaluation of the Norwegian krone.

Stability in geographic diversity

Geographical diversification provides greater resilience to national legislation, currency fluctuations, and even regional influences. Last year, for example, the continuing fighting in Gaza, which triggered a deadly Hamas attack in southern Israel on October 7, came suddenly and hit Tel Aviv Airport’s travel and retail sales in the last quarter.

Bernard Schlafstein, Heinemann’s sales director for the Middle East and Africa, said Tel Aviv would have had a record year if the war had not started. Naturally, this affected the overall growth of the Middle East and Africa business, which ended the year with an 18% increase, although in reality it would have grown even more.

On the plus side, revenue is recovering quickly due to the nature of shopping at Israel’s largest airport. The decline in tourism is not a major factor in store sales because most of the shopping is done by Israelis who have left the country and retrieved their purchases upon their return.

This year’s results confirm that we are not dependent on foreign tourists. Schlafstein commented: “Despite the significant drop in passenger numbers, our numbers are almost back to 85% to 90% of last year.” He said one of the main factors for the purchase is that prices at the airport are significantly lower than in the domestic market. This has led to very high average transaction value (ATV) at the core duty free store, which has around 80 pay points to meet huge demand.

But the standout location is Istanbul Airport, where Heinemann operates with joint venture partners Unifree and ATU Duty Free. Sales there exceeded €1 billion, which Schlafstein described as “unstoppable.”

As the war continues between Russia and Ukraine, wealthy Russians are using this gateway, and Dubai International Airport (the second most important nationality for Dubai Duty Free), as a connecting route to other destinations. There is. Their presence meant that 40% of his fashion sales in Istanbul last year came from Russians. So far this year, revenues at his airline’s hub in Turkey have exceeded Heinemann’s budget.