CANNES, France — Beauty's travel-retail business is flying high, with the Asia-Pacific region showing 19.4 percent gains last year and the global business appearing to be on track to yield an 8 percent to 9 percent increase in 2006, despite the gnarling complications from ongoing terrorist threats.
The industry's manufacturers attending the five-day Tax Free World Association trade show here, which ends today, seemed determined to carry on. They continue growing their brands in airports and in-flight with new ideas for merchandising techniques and ways to cater to consumers.
Vincent Boinay, L'Oréal's managing director of travel-retail worldwide, has been at the forefront of a relatively new movement to put more stress on brand-building and customer relations than on discounting. That effort is paying off, and the rewards should be reflected in this year's results for the French beauty giant, said Boinay, without breaking out specifics. However, he indicated L'Oréal is "trending above the market," which he estimates will grow 8 percent or 8.5 percent for beauty this year.
The travel-retail category stays on a roll. It is expected to register gains of 9.2 percent in 2006 — the best of any of the channels' core categories, according to Yngve Bia, president of Swedish industry tracking firm Generation. Last year, the global travel-retail business finished at $7.248 billion, a 12.3 percent on-year increase. By zone, the Asia-Pacific region clocked 19.6 percent growth; the Americas, 15.5 percent; Europe, 6 percent, and the rest of the world, 13 percent.
For some beauty firms, all the zones are performing. "There is a good balance between the regions of the world," said L'Oréal's Boinay, adding that, for instance, "Europe is in better shape than it was two to three years ago." Further, he cited his company's dynamic fragrance business. "It is on a par with cosmetics," he said. That's a key factor, since fragrance makes up 60 percent of the volume in travel-retail's beauty business and 65 percent in the local European markets.
However, Boinay noted that the travel-retail industry was seriously affected for two months by the Aug. 10 terrorism scare in the U.K. He estimated that the company lost 1.5 percent off its growth for the year.
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