Tobacco & RRP Report
Dubai Duty Free maintains strong commitment to a key category
Dubai Duty Free Senior Vice President for Purchasing Sharon Beecham talks about the “critical” role of tobacco & reduced risk products for the leading travel retailer. This feature leads our coverage of the category over the pages ahead, in which we also speak to leading brand owners about its prospects, and about their own innovation agendas.
As a category, tobacco & reduced risk products contributes around 9% of Dubai Duty Free sales, making it the fourth largest product sector. Simply put, says Senior Vice President for Purchasing Sharon Beecham, “the category remains critical to our business”.
Within this total, reduced risk products contribute 13.27%, which is an increase on its share from last year, and underlines how this sub-category is now emerging. Dubai Duty Free has dedicated good space for reduced risk products, with Philip Morris International’s IQOS brand in particular enjoying high visibility.
IQOS is helping to maintain momentum behind the RRP category at Dubai Duty Free
But this is not the only part of the tobacco & RRP business showing good growth.
Beecham says: “Cigars and shisha are recovering faster than the rest of the tobacco category. Aside from the price benefit of duty free, the chance to get hold of Cuban cigars pushes consumers to stock up as we have experienced a worldwide shortage from the beginning of the year.”
Cigars, along with shisha products, have performed well this year, says the retailer
The retailer continues to seek innovative solutions from its brand partners, as the category retains a solid share of space and sales despite facing external challenges.
Beecham says: “We are seeing improvement in technology in reduced risk products and brands are continuously doing market research to elevate the consumer experience. Some have already started looking at their sustainability agenda and commitment to protect our planet and future, but big tobacco companies should be at the forefront of it.”
Tailored treatment for premium cigars at Dubai Duty Free
The category continues to face regulatory and other hurdles – arrivals remains a particularly challenging channel. The tax authorities in the UAE require product certification and picture-based health warnings to cover 50% of packs front and back, in line with regulations for products sold in the domestic market. Producing packs that comply is not cost-effective for brands, making the future for the category in arrivals duty free “uncertain”, says Dubai Duty Free.
Nonetheless, tobacco & RRP remains a sizeable and important source of revenue for Dubai Duty Free. Encouragingly, the retailer remains committed to building choice and diversity of offer in traditional tobacco alongside pioneering new ways to communicate with the emerging reduced risk products consumer.
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The Moodie Davitt eZine Issue 316 | 31 October 2022
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