Beauty and Fragrance Spend in US Airports (duty-free)

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Duty-free Spend on Beauty & Fragrance products, US Airports

The approximate duty-free spend revenues on beauty & fragrance products in US airports was $348 million in 2018. Of the total global duty-free and travel retail sales, the United States accounts for about 6% market share. In 2018, 3.9% of the total visitors/tourists entering the United States was Chinese nationals, while 2.9% of these was from Brazil. Based on these statistics, the estimated revenue/spending share of these nationals in 2018 was $13.60 million and $10.10 million respectively.

RESEARCH METHODOLOGY

Firstly, there were no published reports available in the public domain specific for the required niche market on the annual spend for beauty & fragrance products purchased from duty-free in US airports.

To determine the above, we used a top-down analysis and methodology. We curate sources and latest statistics available from market reports, publications and research, government-issued statistics, articles, and from other reputable data on the duty-free and travel market both global and specific for the United States or North America region.

While we used reports released not more than 2 years ago, most of the statistics used on these reports were based on 2016 figures. These figures was likely used by the Duty Free World Council on their comprehensive report on 'Economic Impact of Duty Free and Travel Retail in the Americas' released in July 2018. These figures were also used by the CAPA - Centre of Aviation for their latest publication in January 2019. Thus, the figures and percentages used in this research were likely based on 2016 data and we've estimated their values for FY 2018 using the 2016 benchmarks.

To obtain the annual spend for beauty and fragrance products purchased from duty-free in US airports, we looked at annual retail sales and revenues and we've assumed that these values equate the total annual spending. To start, we first calculate the global duty-free/travel retail sales in 2018, then we next determine the United States duty-free/travel retail sales in 2018. From these values, we further estimated and calculated the duty-free revenue and the specific airport's duty-free revenue in the United States in 2018. Lastly, we looked into the product segment and calculated the fragrance and cosmetics revenue from the airport's duty-free revenue in the United States in 2018. We've provided our detailed findings below.

FINDINGS

  • The global duty-free and travel retail sales in 2018 was $77.36 billion.

[Calculation]
In FY 2017, the global duty-free and travel retail sales amounted to approximately $68.6 billion and were expected to reach $125.1 billion by 2023. By using a CAGR calculator, these values will post an annual growth rate of 12.77%. Using this growth rate to calculate for 2018;

2018 = $68.6 billion * 1.1277 = $77.36 billion


  • The United States' duty-free and travel retail sales in 2018 was $4.64 billion.

[Calculation]
From the study released by the Duty Free World Council in 2018, the United States' total market share of the global duty free/travel retail sales based on 2016 figures was at 6%. Assuming that this percentage share was similarly applicable in 2018, then we were able to calculate the US market share as below:

US duty-free/travel retail sales in 2018 = $77.36 billion * 6% = $4.64 billion


  • The specific duty-free (all outlets and terminals) revenue in the United States in 2018 was $2.37 billion.

[Calculation]
From the same study released by the Duty Free World Council in 2018, an average 51.0% of the total revenue in North America accounts for Duty Free revenues based on 2016 figures. The North America region consists of revenues from the United States and Canada and since the figure is provided as an average, it is safe to assume that the above percentage can be also used specifically for the United States market. We also assumed that the percentage share was similarly applicable in 2018, thus, it's value in 2018 was:

Duty-free outlets revenue in the United States in 2018 = $4.64 billion * 51% = $2.37 billion


  • By terminal, the total airport's duty-free revenue in the United States in 2018 was $1.16 billion.

[Calculation]
Of the total duty-free and travel retail sales, the airport's segment market share in North America was $1.9 billion (about 49% of the total in North America) based on 2016 figures. Again, we assumed that this percentage share was similarly applicable in 2018 and using the calculated duty-free 2018 revenue, thus:

Airport's duty-free revenue in the United States in 2018 = $2.37 billion * 49% = $1.16 billion


  • By product segment, fragrance and beauty cosmetics revenue from the United States airport's duty-free in 2018 was $348 million.

[Calculation]
Based on the product segment, it was reported that in the duty-free and travel retail sales in the Americas, the fragrance and cosmetics market posted an average share of 30% based on 2016 figures. We used this percentage to calculate specific for the United States and applied this to the above-calculated airport's duty-free revenue in the United States in 2018.

Fragrance and beauty cosmetics revenue from United States airport's duty-free in 2018 = $1.16 billion * 30% = $348 million

SPEND BY BRAZILIAN AND CHINESE NATIONALS


While there were no studies found on duty-free purchaser's demographics in the United States, we've calculated an assumption based on the number of visitors/tourists entering the United States airports in 2018. According to the latest report issued by the National Trade and Tourism Office, the Chinese nationals account for 3.9% of the total tourists entering the United States while Brazillian nationals account for 2.9%. Assuming that this percentage is likely applicable in the duty-free market;

Chinese nationals estimated revenue share= $348 million * 3.9% = $13.60 million
Brazillian nationals estimated revenue share = $348 million * 2.9% = $10.10 million

CONCLUSION

From the above-detailed calculations and findings, we've estimated that the approximate duty-free spend (based on revenue) on beauty & fragrance products in US Airports was $348 million in 2018.

Sources
Sources