Market Challenges And Opportunities

Market Restraints

Caribbean Duty Free retailing market is hampered by various purchasing limitation enforced by the Caribbean airlines that have implemented certain regulations regarding the purchase of tobacco and cigarettes. For instance, Customers in the Bahamas can buy up to 200 cigarettes and 225 gram of tobacco from any duty-free retail establishment, according to Alternative Airlines Ltd. Moreover, customers are reluctant to purchase at Duty Free stores, owing to cabin and luggage baggage restrictions imposed by many air carriers. For instance, Caribbean Airlines has permitted a carrying capacity of 23 Kg *2 luggage bags per passenger along with 1 cabin bag. Carrying an overweight, oversized, or extra luggage bag incurs an additional charge of US$ 150 per bag. This is expected to restrict tourists from purchasing Duty Free products, thereby hampering the market growth to some extent.

Market Opportunities

Shifting lifestyle patterns and the rising popularity of international tourism are expected to offer immense growth opportunities for market players over the forecast period. According to the data of the Caribbean Tourism Organization (CTO), the number of tourist arrivals in the Caribbean region increased by 9.7% from the first half of 2018 to 2019. A surging preference for premium imported products prevailing among the millennial population such as perfumes & jewelry, confectionery and toys among kids, and alcohol and beverages is estimated to fuel the market growth. Moreover, to cater to the surging demand for premium and specialty products, Top Brands International, a distributers and marketer of duty free product revealed its plan to open a 2,000 sq. m. Duty Freestore at Silvio Pettirossi International Airport Paraguay in February 2020.

Additionally, in October 2019, Habanos, S.A., a Cuban manufacturing company of tobacco launched a jar of Cuban cigars under the brand name, H. Upmann Magnum 56, especially for duty-free sales channel across the Caribbean region. The jar includes 20 units of Magnum 56 cigars (ring gauge 56 x 150 mm length). Such product launches are expected to drive demand for duty-free products.