South American duty free sales slide further, but “up to nine” new border stores offer hope

SOUTH AMERICA. No sign of an economic recovery in Argentina and far-reaching political change in Brazil have conspired to stifle spending, with the regional duty free business suffering in the first four months of 2019. But Latin American duty free association ASUTIL believes there will finally be new stores on the Brazil border within the next five months.

ASUTIL Secretary General, José Luis Donagaray told media in a webinar today: “It’s been a tough period for the industry. Brazil is not developing as the big growth engine to push the business.”

In the four months to April, duty free sales have slipped by 20-25% according to ASUTIL, against what was a relatively strong equivalent period in 2018. “We are waiting to see what will happen in May and June to have a more accurate comparison with last year,” Donagaray said.

Regarding the Mercosur-wide harmonisation of land border duty free regulations published last December, these needed to be ‘internalised’ within each country’s legal frameworks. Among the key border players of Argentina, Paraguay, Uruguay and Brazil, only the latter did this prior to a 1 April deadline.

ASUTIL Secretary General José Luis Donagaray briefed travel retail media earlier today by webinar.

ASUTIL is now working with the Brazilian government on restrictions that are currently in place on certain goods – for example tobacco products including cigarettes, and electronic appliances – which would limit the full potential of duty free border sales. “We are moving in a good way on this and I am optimistic based on our discussions,” said Donagaray.

The duty free association now expects to see up to nine new duty free stores opening on the Brazilian border in four of the biggest locations – Foz de Iguazú, Uruguaiana, Santana do Livramento and Yaguarao – within the next four to five months.

Donagaray told The Moodie Report that most of them (about 60%) will be new players run by local family-owned enterprises, but that major retailers such as Dufry, Duty Free Americas, Siñeriz and possibly Neutral would be among the full list of operators. All of them will have already presented the legal documentation to get the necessary approvals to open in this time frame.

To facilitate the new border business, ASUTIL is organising an event – Encuentro de Frontera 2019 – planned for the first week of November, possibly in Uruguaiana (to be confirmed). It will take the form of a two-day conference and networking gathering designed to bring the new small retailers, existing operators and suppliers together.

ASUTIL’s Encuentro de Frontera 2019 event is set for the first week of November, possibly in Uruguaiana on the border with Argentina (and also close to Uruguay).
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