KT&G takes its Incheon duty-free record to airports in Bahrain, Bishkek and Istanbul

KT&G's 2017 Incheon sales came in the last of three straight years in which it led all duty-free brands at the airport, and they were nearly double those of second-place Louis Vuitton, according to Incheon International Airport Corp. data ^[3]. The figures published with the new listings do not include sales at Muharraq, Bishkek or Istanbul.

The new shelves can go a few ways. They can stay a place to show the brand, with sales too small to register against a 557.7 billion won overseas quarter ^[9]. They can grow with the market, which the Business Research Company projects will rise from $8.04 billion in 2024 to $13.47 billion by 2029 ^[11]. That works out to about 10.9% a year compounded ^[20]. Or they can build into a sales base on the Incheon pattern, where KT&G has sold since the airport opened in March 2001 ^[1].

I'd expect the middle outcome. Travel retail would then be a real channel for KT&G but a secondary one, growing at about the market's pace while other overseas sales set the company's growth rate. The case against that view rests on what an airport listing does for sales elsewhere. "Major global hub airports, including Incheon Airport, are important meeting points where consumers and brands from around the world converge," a KT&G official said ^[7]. A traveller who tries Esse at Istanbul, an airport handling roughly 84 million passengers a year ^[6], and later buys it at home would show up in overseas revenue with no duty-free label. Esse already earns more than half of its roughly 2 trillion won in annual sales abroad ^[8][22], so there is a foreign market for that trial to feed.

KT&G describes the effort as trade-show work. That means TFWA in Cannes, which ran Sept. 27 to Oct. 1 this year, plus duty-free and industry events in Singapore and Germany ^[12]. The company plans more of the same. "We will continue engaging with the global duty-free industry, including through TFWA, and expand partnerships with overseas partners to strengthen our brand competitiveness in the global duty-free market," the official said ^[16].

My view is wrong if KT&G starts reporting travel retail as a separate line and that line reaches something like a fifth of overseas revenue. On the second quarter's base, a fifth is about 111.5 billion won in three months ^[18]. That is roughly 70% of KT&G's entire 2017 at Incheon, the year it outsold every other brand at the airport ^[19].