Ready for Touchdown in India

In late 2024, you announced that Heinemann Asia Pacific will reorganize and consolidate its business in the region as part of a new direction. Can you explain what drove this decision?

Johannes Sammann: In the first six months of 2024, we got a clearer picture of how Asia had recovered after Covid-19. Expectations were based on the traffic and spending behavior that we saw in pre-pandemic times. However, while traffic has returned, spending behavior is fundamentally different to what we anticipated, particularly when it comes to the Chinese traveler. Spend per Chinese passenger is about half of what it used to be.

What does this mean for the existing contracts in the region?

Rajshree Dugar: As the reduced spending of Chinese travelers is driven by government and regulatory changes in China, this is not just a short-term measure but rather the new normal. However, all of our commercial agreements across the region are based on pre-pandemic spending behavior that no longer exists. Given this new reality, we need to discuss with the airports on how to move forward together. To say what everyone in the industry knows: The MAG, the minimum annual guarantees, based on pre-pandemic conditions is taking away our breathing space. When the market changes so drastically, we also have to talk about these contractual elements if we want to continue to be successful together. To create future-oriented, innovative retail approaches, we need to be agile and able to make decisions that allow space for trial and error. We need partnerships that provide room for investment and innovation – and where risks and profits are shared equally. This is not possible with financial frameworks based on pre-pandemic spending behavior.

In addition to direct retail operations, Gebr. Heinemann has a significant distribution business supplying airports and other duty-free operators. This is also the case in the Asia Pacific region. What is the outlook for that side of the business?

Johannes Sammann: One of Heinemann's key global assets is our well-established distribution network, whether it involves shipping products or offering extended services like marketing planning and category management. Our distribution customers within the region face similar challenges to ours, given the changes in spending behavior. However, they will continue to receive full support from us moving forward. Distribution remains a key pillar for us in the region and will continue to do so. We are looking to grow our distribution business and are actively seeking opportunities.

Winning the concession of Noida Airport was an important milestone. What are your expectations for this new market and the Indian traveler that everyone is speaking about?

Johannes Sammann: We are very positive about our market entry into India with Noida International Airport. After the pandemic, India has consistently ranked among the top five nations in all marketplaces, making it an emerging market in travel retail. We see the Indian consumer gaining momentum everywhere across our customer portfolio. In 2023, 153 million passengers in India took to the skies, and the Indian government aims to double this number by 2030.

Noida is a greenfield airport located near the National Capital Region of India, one of the most affluent areas in the country. Together with our Indian partners, we will be operating master concessions across both duty-free and domestic duty-paid. While we are expecting domestic to give us the volumes somewhat faster, duty-free is set to grow as the international travel volume picks up. Eventually we are hoping that this will match up to the top airports in India like Mumbai and Delhi.

The Indian shopper, while affluent, is fundamentally different from the Chinese shopper or any other nationality, which requires us to reassess our assortments and offerings. They have a completely different focus in terms of what they look to buy, so it involves a combination of Category Management and Purchasing to ensure we have the right product offering at the right price point.

Why did you decide to enter the Indian market together with a partner?

Rajshree Dugar: India is particularly interesting because the increase in Indian travel retail spend is driven by both an increase in passenger numbers and an increase in spend per passenger. This is where the growth in the APAC region lies in terms of spending. For us, this is the right timing, along with the right partners in Zurich Airport, Noida Airport's operator, and the BBM Group, our Indian partner, to enter the Indian market. BBM Group has over 100 years of experience in the Indian market as a family business, so there are a lot of similarities to Heinemann in terms of DNA. We also know Zurich Airport in Europe very well. As Heinemann Asia Pacific, we found the right partners to help us grow and navigate through the Indian landscape. We believe in long-lasting partnerships on equal terms. Each party brings its own strengths, and we want to develop the market together and create added value for travelers. It's a good match at the global, regional, and local levels to really bring that change and that portfolio of products to Indian consumers as they evolve.

Looking ahead now, what are your main priorities for 2025?

Johannes Sammann: Even though spending behavior has changed, we can see that people are traveling again within the region. The travel retail market is intact; however, we need to continue adapting and resetting our ways of working within the region and with our partners, adjusting to the new normal. In addition, a key focus will be the Noida transition. It marks the beginning of a fascinating journey to start business at a new airport of massive proportions. The airport will be opening in phases during 2025. We are working with continuity and commitment in the Asia Pacific region and look forward to this exciting new element that will be a source of growth.