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A Solid Foundation to Capitalize on Opportunities for Further Growth.
The Middle East and Africa (MEA) is a diverse region that offers a wide range of opportunities for the travel retail market as a whole and for Gebr. Heinemann in particular with its unique business approach.
The MEA region is already a key pillar in Gebr. Heinemann's global business, with the top locations at the airports in Istanbul and Tel Aviv, as well as the business of the Gebr. Heinemann joint venture Big Five in South Africa, leading the way. The border-shop operations and the business with diplomats also play a significant role and contribute to the diversification of the company. Despite challenges affecting several markets in the region, such high inflation, currency devaluation, and geopolitical conflicts, Gebr. Heinemann's business performed very well in 2023. “We are very satisfied with the results for 2023, as we were able to achieve double-digit growth in the Middle East and Africa — both in retail and distribution,” comments Bernard Schlafstein, Director Sales Middle East and Africa, who is responsible for this region with his team. He adds: “In addition to our existing business, we are pleased to have signed 14 new clients in 2023 and are now preparing to enter the Saudi Arabian market with our partners.”
Investments into a growing Business
As the business is performing well, Gebr. Heinemann also invested further in the region — either on its own or together with reliable partners. A key investment was the acquisition of all shares in JR Duty Free in Israel.
Gebr. Heineman always saw great potential of the Israeli travel retail market and therefore decided already before the terrorist attack by Hamas on October 7, 2023 to start negotiations for taking over the shares of JR — after it became clear that the previous partner decided to withdraw totally from the travel retail business. Gebr. Heinemann stands fully behind its business in Israel and all its employees. “The events in October 2023 were dramatic for our colleagues, many of whom were personally affected, as well as for all Israelis, but we strongly believe in the future of our business,” states Bernard Schlafstein.
In addition, Gebr. Heinemann made several other investments to improve the shopping experience for travelers. To give just some examples: In Zambia, Gebr. Heinemann invested in new shops and, together with its partner Seychelles Trading Company (STC), a long-standing distribution customer, improved the shopping experience for travelers at the arrivals duty-free shop at Seychelles International Airport. In Turkey, Gebr. Heinemann, together with its partner ATU Duty Free, expanded its investments beyond Istanbul Airport and opened a Luxury Square and an Old Bazaar store at Dalaman Airport. Additional investments and new market entries are planned for 2024 and beyond. A key driver of these ambitious plans is the positive economic outlook for the Middle East and Africa — both in general and specifically for the travel retail industry.
Increasing Passenger Numbers and Purchasing Power in the MEA Region
According to Airports Council International (ACI) Asia-Pacific and Middle East, airports in the Middle East are expected to handle 1.1 billion passengers by 2040. This represents a significant increase of nearly 300 percent from the combined traffic they handled in 2019 (405 million).
Significant investments in infrastructure are required to accommodate this growth in the future. Already today, countries in the regions are making large investments in constructing new airports. This outlook, combined with an attractive spend per PAX from passengers in the region, will provide several opportunities for the travel retail sector. In addition, there is also room to grow business in other sales channels such as border shops.
For Africa, a key driver will be the significant increase in purchasing power expected by the UN for the continent's middle class in the years to come. This overall development, combined with the growth of the aviation industry across the continent, will provide great opportunities for the travel retail industry at airports. In addition, the African continent continues to provide great potential for further growth of the border-shop business. The biggest hurdle to overcome is regulations and matters of insurance allowances. But this does not diminish the opportunities Gebr. Heinemann sees for its business.
Gebr. Heinemann Is in a Strong Position
Overall, Gebr. Heinemann is in a very strong position to benefit from this positive outlook for the MEA region for three reasons:
- A Strong Basis
Gebr. Heinemann already has a strong presence in the MEA region and is an established player in the traditional retail business at airports such as Istanbul and Tel Aviv, as well as those in South Africa. In addition, the company is active in more than 30 countries in Africa and has a significant standing in the distribution business across the continent, for example in countries such as Mauritius. - Individual Approach
Like no other company in the industry, Gebr. Heinemann knows how to develop individual solutions for and with its customers and partners. This is often done together with local partners, so that knowledge of the particularities of the respective market can be combined with the strength of an internationally active specialist in the international travel retail market. Gebr. Heinemann provides a variety of tailor-made business models and is particularly strong in the area of logistics, from which many customers and partners benefit. - Being Close to the Markets
Close relationships with the customers and partners are highly valued at Gebr. Heinemann. Everyone in the company works hard to live this spirit and to invest in long-term partnerships on equal terms. To be even closer to the market, Gebr. Heinemann has decided to open a representative office in Dubai. This will allow for even closer contact with existing partners as well as being a driver for new business opportunities in the region.
“We believe that we are in a very strong position to grow our business in the MEA region in the years to come. But we are not only aiming for pure revenue growth. It is important for us to establish good long-term partnerships and to minimize risks by diversifying our business both geographically and in terms of business channels. That is why entering new markets — as we are currently working on for Saudi Arabia — as well as looking for new opportunities to expand the border-shop business will remain key for us in 2024 and beyond,” concludes Bernard Schlafstein.
We believe that we are in a very strong position to grow our business in the MEA region in the years to come.