Liquor is the most sought after item in duty-free shops at Indian airports.
It accounted for 63 per cent of total sales across airports compared to 17 per cent globally, according to Centre for Asia Pacific Aviation (CAPA).
For example, malts and premiums, which used to account for 41 per cent of the volume of whisky sold at airports, now account for 57 per cent. This is a function of supply as earlier there were limited products on offer.
Indian nationals are more likely to shop on arrival. In fact, Indian airports are unique in that arrivals stores generally outperform departures in terms of retail revenue, particularly as the best selling category is liquor, which passengers prefer to purchase when they return.
The traditional duty-free segment, liquor is projected to remain the largest single category, although its share is expected to decline to 43 per cent from 63 per cent in the next ten years. Combined with a large share of duty paid revenue, Indian airports could see liquor sales of over $800 million a year by 2021. Beauty products and fragrances are projected to see a growth of 16 times.
Premium brands lead
A clear feature of recent duty-free spending patterns in India, particularly for liquor, is that the sales of premium brands have outstripped regular products, says the CAPA's India Travel Retail Report, which was released this week. The survey covered over 7,000 passengers across 12 airports.
CAPA estimates the value of airport-based duty free sales in India in 2010/11 at $215 million or less than one per cent of the global sales of $23 billion. This is despite the fact that India accounts for around three per cent of global airport passenger traffic. Clearly, retailing at Indian airports is lagging the rest of the world.
India's underperformance in the duty-free channel stems from a number of factors, including a lack of good airport retail infrastructure, distribution complexities and rigid investment policy of regime of yesteryears, the report said.
Passenger traffic
CAPA projects strong continuing growth in Indian aviation and across virtually all Indian airports. International traffic is expected to grow at 9.9 per cent annually over the next ten years. Domestic traffic is projected to grow even faster at 13.0 per cent. The Indian aviation sector is facing some short-term challenges at present, however, the underlying fundamentals remain strong, the report said.