Breathtaking Beirut Duty Free - The Moodie Report

January 2006 RETAIL FOCUS • Beirut Duty Free
Breathtaking
Beirut Duty Free By Martin Moodie
In most international airports, smokers are treated like outcasts. But not at Beirut –
at least if the smoke in question is from a Cuban cigar. Come on a tour with The
Moodie Report to the magnificent La Casa Del Habano, duty free Lebanese style.
Walid Saleh gestures with a sweep of his hand at
the VIP Smoking Lounge within Beirut Duty
Free’s World of Cigars. “Do you like it?” the
Phoenicia Trading Afro-Asia Managing Director asks
with a smile.
Like is an understatement. I’d be happy to live here. The
lounge, La Casa Del Habano Cigar Lounge & Club, is a
gorgeously sumptuous environment where travellers can
enjoy 24-hour personalised service, free drinks from coffee
to Cognac, Internet access, and leather chairs and sofas.
Epicur magazine called the lounge ‘The miracle of
Beirut’, adding: “Nowadays those of us who travel regularly
and are aficionados of good cigars find it almost
impossible to enjoy and savour a good cigar in an airport.
However in Beirut we are offered the possibility not only
to do this but also to obtain the finest vitolas [shapes] and,
of course, our favourite Habano [Havana].”
It’s a splendidly elegant setting featuring some lovely
Cuban cigar memorabilia, including a magnificent humi-
dor signed by Fidel Castro. Befitting its upscale tone, a
limited-edition decanter of Diageo’s fine ultra-premium
blended Johnnie Walker Blue Label whisky is on sale – at
US$3,399. A plasma screen shows continuous films about
cigar production, and beautiful prints and photographs
line the walls.
Only nominated VIPs can enter. Phoenicia Trading and
Walid Saleh and
Denis Hourigan
(left to right, top
picture) outside one
of the magnificent
walk-in humidors
Walid Saleh:
“We have loyal
customers coming
in by private jet
to buy here”
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RETAIL FOCUS • Beirut Duty Free January 2006
Beirut Duty Free offer a Privilege Card member programme
which grants yearly access to the lounge, where
staff will handle any traveller’s cigar purchases for them.
The retailer has even developed its own Montecristo
Visa Platinum credit card in honour of one of the most
famous Habanos of all.
Next door is a stunning walk-in VIP and Limited Edition
Bringing the winery to the airport
One of Beirut Duty Free’s newest highlights is its
fine wines area – and once again the retailer has
cast itself in a pioneering role.
Determined to maximise sales to a high-spending,
sophisticated, knowledgeable and repeat client base,
the company employed a French-trained Lebanese
winemaker, Paul Choueiri. He heads a team of six
dedicated staff who can advise passengers on all
aspects of wine, from vintages to varieties, cellaring
to selection.
“The day before yesterday a gentleman from a bank
reserved US$65,000 worth of wine,” notes Managing
Director Walid Saleh.
Such a purchase is testament to the range on offer
and the way it is presented. “There is huge potential
for fine wine business here,” notes Choueiri. “The
average price was only US$13–17 when I arrived.
Yet we have many wealthy customers arriving for
business and for leisure, and an allowance of five
bottles per person. So last October I selected 20
fine wines from Bordeaux. The customer reaction
came as a very nice surprise.
“Connoisseurs are very happy to find their wine
-40% cheaper than on the local market.”
Effectively that has created surely the duty free
world’s first case of a Château Margaux ‘two for
one’, while an equally magnificent wine such as
Château Pétrus retails duty free for US$1,120
compared to around US$2,600 domestically.
Choueiri says: “We started with French and Italian
wines. The first mix was mainly French with
30–35% Italian. Now we are starting to introduce
fine New World wines, including some from as far
away as New Zealand.”
Hourigan comments: “Having Paul on the team
makes great expertise available to connoisseur and
novice alike, and his knowledge and enthusiasm is
cascading down through the staff.”
humidor – where the cigars are individually dusted – and
another for regular cigars. High-end accessories are also
on sale. A table outside features a cigar roller, and the
walkway displays some lovely sepia photographs of
famous political and show-business identities smoking
Cuban cigars.
In product terms there is a magnificent selection, magnificently
displayed – and it’s paying rich dividends. “We
have loyal customers coming in by private jet to buy
here,” enthuses Saleh. “We see this as a flagship for
Cuban cigars. Usually cigars represent around 1% of
turnover – here it’s between 20% and 25%.”
“The VIP area doesn’t make money” – everything served
is free – “but it does wonders for our image,” Saleh
rightly points out. “Believe me,” he adds, “first class and
premium passengers don’t go to the Departure lounge –
they come here.” The World of Cigars covers an impressive
450sq m. “But it’s not the space, it’s the selection,”
insists Saleh. “We have all sizes, all brands, all products.”
They do indeed, and the area is undoubtedly the highlight
of the offer at Beirut Duty Free, first opened on 14
May 2003. But it’s not the only one; the airport features
a memorable emphasis on local fruits, nuts, olive oil and
other foodstuffs, complemented by a first-class traditional
duty free offer.
“The Lebanese are incredibly proud of the new airport –
it’s an icon of the new Lebanon,” notes Beirut Duty Free
General Manager Denis Hourigan. An Irishman who
has been here for two years, he heads the Aer Rianta
International–Middle East management operation,
Phoenicia’s partner in Beirut Duty Free.
Tasteful trimmings: Beirut Duty Free features a
memorable emphasis on local food items
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January 2006 RETAIL FOCUS • Beirut Duty Free
Befitting his MBA and FCCA (Fellow of Chartered Certified
Accountants) qualifications, Hourigan adopts a
highly disciplined approach to the business, analysing
consumer and sales trends closely and continuously finetuning
the offer as a result.
With around 3.2 million passengers last year – down by
around -2% on 2004 due to the political uncertainty
sparked by the assassination of former Prime Minister
Rafik Hariri on 14 February – Beirut International lacks
the traffic throughput of its high-profile Middle East
neighbours. But there’s nothing wrong with the spending
profile.
“76% of our traffic is Lebanese,” Hourigan says. “They
have a very high average spend. If you don’t get it right
you can erode your good work very quickly. So the key
measure for us is consistency.
“The selling process can be quite long as the Lebanese are
very sophisticated and demanding shoppers. But if you
can exceed their expectations you really get momentum.
There’s only a tiny transit base here, which amplifies the
frequent flyer dimension. But because we have such a
high degree of frequent flyers and pan-regional travellers
there is resilience to some shocks, such as that of 14
February.”
He adds: “We have those customers for 1.5 hours so our
destiny is in our own control.” To ensure maximum return
the retailer puts considerable focus on the quality of its
staff and their training. “We’re very blessed with the calibre
of our staff,” Hourigan notes. “They’re all Lebanese,
including a lot of graduates and top quality people.
Lebanon has an
outstanding
wine industry,
appropriately
showcased by
Beirut Duty Free;
the airport also
features the first
Middle Eastern
airport Virgin
megastore
“We’re always trying to push the envelope. And the key
is the staff. We don’t want an aggressive sell – we focus on
integrity, professionalism and relationships in moving
travellers from commuters to consumers to clients.”
Analysis is all-important, not just in tracking growth but
in explaining it. “Everything is focused on spend per
head,” Hourigan explains. “We track our spends on a
rolling week-by-week basis.”
2005 was a difficult year as tourism slipped in the wake of
Hariri’s death. It’s a day Hourigan recalls with a shake of
his head and a grimace. “There were people in tears that
morning. The sheer horror of it, and the glimpse of
going back to the old situation, hit everyone here.”
The July terrorist atrocities in Sharm El Sheikh were
another ‘punch in the stomach’ as the Egyptian resort was
very popular with Lebanese holidaymakers.
Pricing is a key dynamic at the airport, thanks to an
ultra-aggressive local market. “Prices are very low locally,
so duty free price points have to be very competitive,”
Hourigan notes. “The VAT and duty saving is real, so it’s
about choice, offer and quality. It’s also about taking that
saving and getting them to trade up. That’s where our
growth comes from. It’s about choice and about a qualitative
focus.”
The company doesn’t publish its sales mix, but cigars and
perfumes & cosmetics are core categories – each representing
over 20% of sales.
The local offer is also prominent, ranging from Lebanese
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RETAIL FOCUS • Beirut Duty Free January 2006
wine to confectionery. “The emphasis is on local products
supported by traditional international categories,” Hourigan
comments.
The retail offers stretches into both east and west wings
from a central area that features a customer service desk
and a luxury car on display. Unlike the raffle-based promotions
at other Middle Eastern airports, this car is promoting
a driving simulation game, testing drivers’ skills
to anticipate the correct time of impact against an obstacle.
It has proved very popular.
The perfumes & cosmetics store gained an extra 120sq m
in November as space formerly occupied by toys was given
over to this all-important category. “Perfumes & cosmetics
are a substantial part of the mix and posting strong
growth,” says Hourigan. “With the enlarged space we can
now accommodate new brands. There’s a high degree of
personalisation here which allows brands to be built.
The key issue is visibility. We have very nice sight lines
and we offer very good prices compared with downtown.
“We’re moving towards premium brands such as La
Prairie [skincare] so people will take advantage of the saving
and trade up. Skincare is growing all the time.”
Lalique is one of
several high-end
luxury names
on offer
Melham Birak,
the experienced
Public Relations
Director, shows
off the liquor
selection
Cigarettes
are nicely
merchandised
and presented
The rest of the retail complex includes a luxury zone –
watches, jewellery, fashion and accessories – covering
around 1,100sq m and featuring several shop-in-shops as
well as fully-customised areas for hot brands such as
Swarovski and Bonja Group.
The watch & jewellery department is key, given the customer
profile, and a number of upscale names are featured
including Cartier, Omega, Baume & Mercier,
Raymond Weil, Tissot, Longines, Rado, TAG Heuer,
Philippe Charriol, Christian Dior, Facconable, Gucci,
Bruno Banani, Montblanc, Omorfia, Lalique, Michaela
Frey, AT Cross and Misaki.
The 650sq m liquor and tobacco section is overshadowed,
inevitably, by the sheer splendour of the World of Cigars
– but it is still impressively neat and extensive in its own
right. It houses cigarettes, tobacco, liquor, confectionery
and wine, including a dedicated area to showcase the world
famous Lebanese classic vineyards such as Chateau Musar.
There are many other notable aspects to Beirut Duty
Free, including the Middle East’s first airport Virgin
Megastore. But it’s the overall impression that lingers
long after departure.
Here is world class retailing combining what The Moodie
Report thinks is a critical but often overlooked formula
– marrying a quality offering of international duty free
staples with that extra something, be it local flavour
and/or a unique treatment of a specific category that
makes the airport stand out.
Beirut Duty Free and Phoenicia Trading have achieved
that rare mix. The result is one of the most compelling
consumer experiences in the travel retail world. ■
100 The Moodie Report