Lotte Duty Free wins Changi Airport’s tobacco and liquor tender

[Photo provided by Lotte Duty Free]

Lotte Duty Free under South Korean retail conglomerate Lotte Group has won a duty-free liquor and tobacco concession at Changi Airport in Singapore in a tight race against its Korean rival Shilla Duty Free and Germany's Heineman Duty Free.

According to industry sources on Thursday, the South Korean leading travel retailer will be taking over from the DFS Group, which announced in August that it will not retain its concession at the airport when its lease expires.

The tenancy contract awarded to Lotte, the world’s second largest travel retailer in terms of sales, is for a six-year term that will commence in June 2020 and covers all 18 liquor and tobacco stores across Changi’s four terminals, spanning more than 8,500 square meters of retail space. Changi Airport is the world’s sixth largest airport.

Given some 600 billion won ($510 million) in annual sales from its new concession in Singapore, Lotte’s worldwide duty-free revenue could increase to an estimated 8.3 trillion won, coming closer to the industry leader Dufry’s annual sales of 8.82 trillion won. Dufry has not taken part in the bidding.

Thanks to the latest win, a Lotte Duty Free official expected the company would become the largest travel retailer in liquor and tobacco sales with presence in just two airports - Incheon International Airport in Korea and Changi Airport in Singapore.

Lotte Group expects its growing purchasing power also will help make its price competitive for duty-free business, and the anticipated profitable growth in the travel retailing business is also expected to expedite the group’s governance reform efforts.

Lotte has been seeking to list its hotel unit Hotel Lotte to complete the transition to a holding company structure. It has turned aggressive in global campaign after its chairman Shin Dong-bin avoided the worst-case scenario of being imprisoned in connection with a graft scandal.

Lotte Duty Free aims to generate 1 trillion won in sales outside Korea by 2020.

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