DFS is pulling its tobacco and alcohol business from Changi Airport in June 2020 – this is the reason why

The DFS store at Terminal 3 in Changi Airport.
The Straits Times

This article was updated at 1.09pm on August 27.

If the highlight of your work trips overseas is to visit DFS for a bottle of duty-free wine or spirit, take a deep breath – your Changi experience is about to change.

That’s because the DFS Group, which many Singaporeans have come to associate with Changi Airport, is taking its tobacco and liquor business out of the world’s best airport after close to 39 years.

DFS’ luxury shops will remain, and its operations at T Galleria by DFS and Singapore Cruise Center are unaffected by the decision.

In a statement, DFS Group’s chairman and chief executive officer Ed Brennan said the duty-free retailer had decided not to bid for a new concession at Changi Airport, and will thus withdraw from the airport when its current term ends in June 2020.

Brennan added that the decision was made “after careful consideration” and “based on our unique understanding of the business environment as the current operator of this concession at Changi”.

He cited changes to regulations for liquor and tobacco sale and global geopolitical uncertainty as reasons the group found that staying in Changi Airport was “not a financially viable option”.

DFS did not specify which regulations it had taken into consideration.

Last month, the Ministry of Health announced that all tobacco products sold in Singapore would have to comply with the SP Measure – standardised packaging with no logos, colours, images and promotional information, as well as enlarged graphic health warnings – by July 2020.

Brennan said: “DFS has held the concession at Changi Airport since 1980, and during this time we have exceeded all expectations for what travel retail can offer in an airport environment.

“We are proud of our achievements and deeply appreciative of the efforts of many talented people who have contributed to our success,” he added.

Last month, the Hong Kong-based group collaborated with Changi Airport Group to launch the iShopChangiWines.com e-commerce store selling tax and duty-absorbed alcohol.

Business Insider reported then that the store was selling over 140 types of wine, champagne and sake at prices starting from S$25.

The site even offers free delivery for customers who spend over S$150 on the site. Each customer can buy a maximum of 30 liters (about 40 bottles) of alcohol per day through the site.

Responding to a an email query, a DFS spokesperson said that as Changi Airport is the owner of iShopChangiWines.com, the decision to carry on the programme with a new operator will lie with them after June 2020.

Staff will have ‘a number of options’

A DFS spokesman told Business Insider that there are currently about 500 people directly employed to service DFS’ liquor and tobacco concession operations at Changi Airport.

When the time comes for a handover, there will be “a number of options” available to these staff, including working with other operators and redeployment within DFS Group, the spokesman said.

“As with all airport concession handovers, a number of options are available to staff. These include working with the new operator depending on their aspirations and needs, and working with other operators in the airport community.

Staff may also be offered deployment at the group’s other concessions and operations within Singapore.

Changi Airport Group’s latest duty-free liquor and tobacco concession tender started on June 4 and closed on August 26.
The Straits Times

New concessions operator to be chosen by end 2019

Changi Airport Group’s latest duty-free liquor and tobacco concession tender started on June 4 and closed on August 26.

When contacted, the airport operator said it had received “several submissions” and will start evaluating the proposals. The tender is expected to be awarded by the end of this year, it added.

Lasting six years from June 9, 2020, the tenancy terms will cover 18 stores, spanning over 8,000 sqm of retail space across Changi Airport’s four terminals.

On DFS’ decision not to make a bid, Changi Airport Group’s group senior vice president for airside concessions, Teo Chew Hoon, said: “DFS Group is a valued partner whom we have worked with at Changi Airport for the past 38 years.

“We are disappointed that they have opted not to participate in this tender but we will work closely with them to ensure a smooth transition to the new operator for the liquor & tobacco concession.”

He added that Changi Airport Group will continue to work with DFS to grow their other businesses in the airport.

According to DFS, in 2018, more than 164 million travelers visited DFS stores across the world.

The 59-year-old retailer has duty free stores in 11 major global airports and 20 downtown Galleria locations, as well as affiliate and resort locations. A privately-held company, it is majority owned by the world’s largest luxury conglomerate, Moët Hennessy Louis Vuitton (LVMH), alongside DFS co-founder and shareholder Robert Miller.

Read also: