$10bn in 10 years

Nestle ITR announces new grand plan for confectionery and fine food sales in global travel retail

Confectionery and fine food sales in travel retail can be doubled to US$10bn in 10 years. That is the bold assertion made by Nestle International Travel Retail following major category research undertaken by the company. 

Speaking to delegates at this week’s ACI Commercial and Retail Conference in Reykjavik, Iceland, NITR general manager Stewart Dryburgh said: “This ground breaking research provides a platform for everyone involved in the category: brand owners, retailers and airports. We look forward to bringing this to life with our retail partners and reigniting category growth.”

Based on the research findings, NITR says it has a fresh take of the drivers that are necessary to rejuvenate the confectionery and fine food category.  Used in conjunction with NITR’s SOUL framework (Stories, Occasions, Unique, Local), Dryburgh believes: “We can create the opportunities to kick-start a vigorous new growth curve for confectionery and fine foods.”  While chocolate will remain at the core of the sector, Dryburgh believes there is also significant potential to further develop the offering in other food sectors. “Within the Nestlé group we have a number of brands that we’re now looking at within this context,” he says.

It’s not the first time that NITR has thrown down the gauntlet to double this industry sector.  In 2004, Dryburgh asserted that the confectionery category, then worth US$1.4bn could be doubled in five years. “We knew then that there were huge, untapped opportunities for confectionery in travel retail and, thanks to the support from retailers and other brand owners, we achieved that goal*,” he says. “If we all put our mind to it I know that we can do it again.”

The ten-year period given to double sales reflects the much larger and more complex travel retail market in 2019. “In 2004 the industry was valued at $25bn by Generation, compared to most recent figures now of $68.6bn,” continues Dryburgh. “The travel retail industry has enjoyed monumental growth over the past 15 years – much of that in-line with increases in passenger traffic and, of course, the Asia Pacific travel explosion. Given the size, diversity and challenges of the market now, it will be a challenge – but we do believe it is achievable within ten.”

“Whilst the confectionery and fine foods category has enjoyed truly dynamic growth and ahead of passenger traffic in the past, that has not been the case in more recent years,” explains Dryburgh. “At NITR we’ve stopped and asked ourselves: Why is this? What’s changed?  But most importantly - What are we going to do about it? How are we going to reignite the growth of this exciting category?”

Based on the research, conducted by m1nd-set, NITR has identified three key purchasing motivators, each with their own individual set of reasons to buy:

Elevated Experiences: including Travel Souvenir, Give Me a Boost and Experience & Indulge

Deeper Connections: including All Year Round Gifting, Share and Connect, Celebrate the Seasons and Uplifting Breaks

Better for You: including Health Snacks, Better Treats and Happy Parents-Happy Kids.

“These findings show that there are untapped motivations for us to leverage and under-exploited need states for us to commercialize. We can provide shoppers and consumers with more of what they want. As ever it will be critical to deliver these offerings in context with the commercial strategies of our retail partners,” Dryburgh concludes.

* In 2010 confectionery sales reached $2.8bn according to Generation and was the third largest product subsector after women’s cosmetics and women’s fragrances.  Together with fine foods, the category achieved sales of $3.6bn.

FURLA EXCEEDS 500 MILLION

Turnover of the storied Italian leather goods brand increased to 513 million euros. Over the course of the fiscal year, the company made significant investments to strengthen its supply chain and technology – and began 2019 with the launch of its new sneaker collection

Furla Group continues to grow: over the past four fiscal years, it has doubled its turnover, hitting 513 million euros in 2018, a 5.2% increase at constant exchange over 2017 (or a 2.8% increase at current exchange).

Analyzing sales by geographic area and at constant exchange, the Asia Pacific region shines, with an 18.2% year-on-year increase in 2018; it now accounts for 26% of total turnover. The United States, meanwhile, saw an increase of 13.2%, and now accounts for 8% of total turnover. Japan remains the brand’s leading market (22% of total sales), and sales there were up 3.6% compared to 2017. The EMEA region, which represents 44% of global turnover, maintains its market position.

Furla Group continues to seek direct control of its brand distribution through a strengthening of its mono-brand stores, which produced 70% of turnover in 2018. Direct distribution, combined with multi-brand sales points and franchising, allows Furla to have a far-reaching presence in 98 countries worldwide: its 490 mono-brands (285 directly owned, 163 franchisees and 42 travel retail doors) are in the most prestigious international shopping locations. Over 1,200 select multi-brands and department store corners complete the company’s distribution network.

Of particular note is the travel retail sector, which is in continuous evolution and in 2018 registered a 16.2% increase over 2017, accounting for 7.3% of the Group’s turnover through its sales at 293 doors, from boutiques, corners, shop-in-shops, aircraft and cruise ships, across 64 countries.

The company paid special attention to its direct e-commerce platform, where, thanks to repeated investments, there was a substantial turnover increase in 2018: 45.7% over the previous year, at constant exchange.

Furla Group is focused on solidifying the wild growth it has experienced over the past several years. The company has directed major resources toward strengthening the supply chain, as well as systemically integrating countries with direct and indirect distribution networks into Furla’s corporate culture and technology.

The supply chain, which is key to guaranteeing the quality and timeliness of manufacturing, has recently benefited from the company’s adoption of a more evolved and high-performing computer system, as well as financial tools that free up resources so that suppliers can invest in bettering the manufacturing cycle.

After years of geographic expansion across the globe, the Group is now focused on a more selective development and on categories of merchandise that are complementary to its core business: in February of this year, during Milan fashion week, Furla introduced its new sneaker collection, supported by a series of important 360° marketing activities.

Furla has further strengthened investment in its marketing operations, underlining its particular attention to digital communication and social channels, which have shown an important increase of followers (+64% versus 2017 on Instagram and WeChat), while maintaining one of the highest engagement rates (1,59%) within the fashion luxury category.

Furla Group’s continuing investments in human resources have long allowed it not only to add jobs, but also to provide a better quality work life at the company and incentivize employees through its corporate welfare system “Furla for You.” This initiative has been recognized two years in a row for its excellence, with Furla listed among Italy’s Top Employers.

“We are highly satisfied with these financial results, which we achieved at a challenging time for the international market,” said Alberto Camerlengo, Chief Executive Officer of Furla Group.  “We’ve invested significant financial resources in managing the unrestrained growth the company has experienced over the last several years, from acquiring total control of our retail distribution network in China, Hong Kong,Macau and Singapore, to strengthening our supply chain. Our single, fundamental goal has always been to guarantee continuity and excellence in all of Furla’s creations.”