Shop talk

India's emerging middle class, strong consumer culture and rising number of passengers -both domestically and internationally - will drive growth, experts believe.

The air travel market is being buoyed by the development of low cost airline carriers, as well as the reconstruction or extension of antiquated airports. Around 100 airport schemes are planned, following on from new airports in the key cities of Bangalore and Hyderabad that opened last year.

Low cost carriers are still in their infancy of development in India, but have huge potential to make air travel more affordable and increase footfall at airports.

The thriving Indian economy will also boost demand for business travel, both within the country and internationally from western companies that outsource operations. Together these factors are expected to lift retail spending at Indian airports from $127 million in 2007 to $318 million in 2012.

Alan Brennan, regional sales manager for Nestle International Travel Retail explains how the company's partnership with Dubai Duty Free has evolved.

"Some 93% of Nestle's sales come from food and beverage and our product portfolio is very diverse. We sell everything from pet food, waters, nutritional products, ice cream and premium confectionery.

We are a global company and employ over 276,000 people worldwide. To bring the focus a little closer to home, Nestle International Travel Retail was first set up in 1999 and we have offices based all over the world, including Dubai.

Confectionery is a huge market for us in the Middle East, and KitKat is the region's number one snack brand. Smarties are our leading children's brand. Quality Street is also a strong regional brand.

Since pursuing a partnership with Dubai Duty Free we have seen some successful figures. In 2007, we doubled our business in comparison to 2003. In this region, our dried milk powder brand is something of a phenomenon and sales of Nido have been hugely successful.

Now we are seeing a 50/50 split in sales of Nido and KitKat in terms of our core business with Dubai Duty Free.

Last year we sold over 700 metric tonnes of milk powder, which is the equivalent of nearly 2 tonnes per day. Equally the figures for KitKat are even more impressive.

Last year we sold 6.5 million, four-finger bars of KitKat. With 34 million passengers passing through Dubai international, that means one in five bought a KitKat, or every minute we sold 12 units.

This shows the partnership has achieved great success, but we need to be adaptable. Economic changes, rapid growth and keeping up with the supply chain is constantly monitored, as is assessing our consumer profiles.

The product range has to be in line with new shopper profiles. In 2010 we predict that our core shopper profile at either Dubai international or Al Maktoum international will fit that of a blue collar worker travelling from annual or bi-annual leave.

However we also have to factor in that passenger numbers are increasingly made up of tourists in this region, both from the west and east. So our shopper profile is fragmenting. We have to assess if Nido and KitKat, fit the needs of our shopper profile.

Shopper profiles today show more impulsive buying behaviour. Around 70% of confectionery is purchased on impulse and brand owners and retailers can control this behaviour.

Trends are also changing and people have become more sophisticated. Sales of dark chocolate are increasing and consumers want more functionality from their confectionery.

All of this culminates in making our products a purchasing need to passengers passing through Dubai airport. We have developed a KitKat Destination Pack, which is 450g in weight and priced at US$10, which is a premium.

We make no apologies that it is a souvenir purchase for people travelling to Dubai. It has done well in terms of sales and has opened up new marketing channels for us with Dubai Duty Free.

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