Solid and healthy development in 2018, with preliminary controlled group turnover of Gebr. Heinemann and affiliates of EUR 4.6 billion
In light of the transition to the fifth family generation, Max Heinemann took over the role as Chief Executive Officer (CEO) of the Group and is now Speaker of the Executive Board
New structure of future company organisation focuses on global growth, sensible synergies and sustainability
Hamburg, 17April 2019 – Gebr. Heinemann achieved solid sales growth in 2018 and has once again benefited from the Group’s diversification. To strengthen and enable further growth and agility, the globally active Duty Free company has initiated major structural changes across its entire organisation at the beginning of 2019. As a result, and with regard to the transition to the fifth family generation, Max Heinemann took over the role as Chief Executive Officer of the Group. His father, Gunnar, and uncle, Claus Heinemann, continue to form the Advisory Board of the family business. The new structure of the company’s future organisation focuses on further global growth, sensible synergies and sustainability, as well as facilitating the overall direction of shaping the ‘next generation’ to be fit for the future and in turn, fit to shape Duty Free and Travel Retail. “We change with a growth mindset and, based on our history, with a strong foundation for rethinking and changing – and we act out of strength,” says CEO Max Heinemann.
2018 figures
In what was a very challenging business year, Gebr. Heinemann experienced a healthy and solid development in 2018. In a competitive environment, in which business in the core markets is being heavily influenced by global macroeconomic and political developments, the Group has performed very well overall and acted efficiently and flexibly, so as to take advantage of these market conditions. This is reflected in the preliminary controlled group turnover of Gebr. Heinemann and affiliates of EUR 4.6 billion. This equates to a growth of +11.4% from EUR 4.1 billion in 2017. Group-wide, the wholesale segment remained almost stable and increased by +0.2% to EUR 0.9 billion. The group-wide retail sales segment increased by +14.5% to EUR 3.6 billion.Breaking this down by category, LTCF (Liquor, Tobacco, Confectionery & Fine Food) is the strongest with a 56 per cent share, followed by Perfume & Cosmetics at 34 per cent. The Hamburg-based global enterprise was able to build on its strong position in many regions, particularly in Eastern European countries such as Russia, Ukraine or Lithuania, and saw a positive trend in the top retail locations, as well as in new concessions and openings (Tel Aviv, Hong Kong, Gold Coast or with Carnival Cruise Line).
Sales update: selected highlights
The new centralised, regionally structured sales area (with former distribution and retail) under COO Raoul Spanger saw a positive trend in 2018, in Gebr. Heinemann’s top retail locations. Distribution will also continue to be an important pillar.Following the early contract extension agreement with Copenhagen Airport to operate the Tax Free Heinemann Shops until at least 2023, Heinemann officially opened the completely refurbished and expanded (over 200 sqm) Main Shop in July 2018. Moreover, the partnership with the James Richardson Group at Ben Gurion Airport in Tel Aviv was very successful. The location has developed very well in its first full year and is already the third strongest retail location within the Group by sales volume (more than 400 million US dollars), behind Istanbul and Oslo. With the new IstanbulAirport, Heinemann has acquired a business with impressive dimensions in terms of format, with a size of 53,000 square metres, along with the unique centre management business model. The operation started successfully with a soft opening on
29 October 2018, which was followed by the opening of five further Duty Free Shops on 15 January 2019. All flights scheduled for Atatürk Airport have been finally switched to Istanbul Airport on 6 April and all Duty Free Shops operated by Heinemann and partner Unifree are now fully operative as well. Rental agreements have been signed with over 70 operators and brands such as Louis Vuitton, Dior, Hugo Boss and Prada. Istanbul Airport will offer a collection of luxury brands that cannot be found at any other international airport in the world.Gebr. Heinemann’s business in the Asia Pacific region has achieved particularly strong growth, and this solid foundation forms a basis for further development. Heinemann Asia Pacific (HAP) now has a presence of eight single-category confectionery shops at Hong Kong International Airport. Operations have also started at Gold Coast Airport – the second retail location in Australia after Sydney. Heinemann Australia secured the contract for two shops in both the departures and arrivals areas. Increasing numbers of passengers from Asia have visited Australia, leading the Sydney retail location to benefit from excellent development. It achieved strong growth in its third year, around 10 % more than in 2017. This is considerably ahead of passenger growth. The joint venture between DFZ Capital and Heinemann Asia Pacific had a good 2018, achieving satisfactory growth of both the border shop and airport business, in spite of the challenging economic climate in Malaysia. Plaza Bali opened the first arrival shop at Jakarta International Airport in January 2019; the Indonesian Duty Free, retail and F&B company is HAP’s second-largest distribution customer. 2018 also saw the launch of HAP as a retailer on-board the Carnival Spirit cruise liner. The global cruise market as a whole is growing at an incredible rate. Heinemann will therefore continue the excellent relationship with Carnival Cruise Line. Further to this, Heinemann Americas and Heinemann Asia Pacific won a new tender for three Royal Caribbean cruise ships. The new venture is due to set sail in 2020. In Europe, Heinemann will also add further vessels to the retail portfolio in 2019.Heinemann’s growth in Eastern Europe & Central Asia is largely a result of the joint venture activities at Moscow’s Sheremetyevo and Domodedovo airports. At Moscow Sheremetyevo Airport, together with partner IDF, the company opened ten new shops in Terminal B and introduced the new customised multi-brand concept for Fashion & Accessories and Watches & Jewellery in Terminal E. Another grand opening of a walk-through flagship store took place at Vilnius Airport. The conversion of the shop followed the six-year contract extension agreed between Vilnius International Airport and Travel Retail Vilnius at the beginning of 2018. The border shop channel is also a big sales driver for EECA.
Purchasing update:
The focus of the company’s purchasing division in 2018 – overseen by CCO Kay Spanger – was on developing product ranges, as markets are changing much faster than they did a few years ago. Purchasing must develop product ranges, act quickly and in line with market trends. It must find the optimal path between global negotiation power and local markets, and form the right construct in which the company can operate.
Perfume & Cosmetics was and still is a growth driving category despite price aggressive online and domestic competition. The market has become much more dynamic and traveller needs are more complex – from price-sensitive or luxury-oriented shoppers to those looking for sustainable, certified organic products. Furthermore, more and more customers are looking for their ultimate, unique “signature fragrance”, a scent that suits them perfectly. In 2018, Heinemann therefore began to expand the range and its associated presentation of niche fragrances.
With regard to LTCF (Liquor, Tobacco, Confectionery & Fine Food), differentiation from domestic is key. The company focuses on unique products, craftsmanship, tailor-made labels and exclusive promotions. Gin continues to be a massive trend and the trend of Japanese Whiskies also persists. Fine Food is now developing into a core category for Heinemann. Sales in the category rose by some 15 per cent in retail and by more than 20 per cent for distribution customers in 2018. The category achieved a retail volume of more than EUR 40 million for the year. The category Fashion & Accessories and Watches & Jewellery still has a high priority, as there is a clear trend worldwide towards it in the travel retail market.
The TRDIG (Travel Retail Data Innovation Group) for digital and automated data exchange between industry and travel retailers, initiated by Heinemann, held its first strategy meeting in Hamburg in June 2018. CEOs, IT heads and master data experts from around 35 top suppliers, as well as leading representatives from five different retailers from the Duty Free industry, took part.
Corporate responsibility
Heinemann will continue to work on the corporate responsibility strategy in 2019. In future, the company wants to take an even closer look at the economic, social and ecological impacts of the business. As a company which has a presence in many destinations around the globe, it needs to be mindful of its actions and their consequences. Heinemann is therefore already actively involved in a number of projects as part of their commitment to protecting the environment. In August 2018, Gebr. Heinemann joined the United Nations Global Compact (UNGC), the world’s biggest and most important initiative for responsible business practices. Furthermore, Gebr. Heinemann was officially certified as an “Ecoprofit Company”, in recognition of its environmental achievements by the Environment Authority of Hamburg.
2019 outlook
Gebr. Heinemann is again expecting a positive, strong sales growth across the Group for the 2019 financial year and to build upon its solid basis of regions and channels. In addition to the very robust wholesale business, the company’s numerous long-term contracts provide great stability and Heinemann will continue the approach of long-lasting partnerships and long-term investments. The family-owned enterprise always has been and remains a company with a global focus. This strategic approach means that all the activities as a retailer and as a distributor to over 1,000 customers are aligned to this global commitment. The company will focus on the right business opportunities in line with this defined strategy.
You may download the Gebr. Heinemann Annual Report "Review Insights Outlook - Business Year 2018" here.
Press contact:
Lara Vitzthum / Head of Corporate Communications
+49 40 3010 23 849
Julia Knors / Corporate Communications Manager
+49 40 3010 21 86
j_knors@gebr-heinemann.de
