DFS leaving Singapore Changi Airport liquor and tobacco retail. The DFS group, who runs duty-free shops at airports all over the world, is leaving Singapore Changi Airport on June 2020. Even though the Changi Airport Group announced that DFS would sign a new concession last December. That concession, for 8000sq meter of retail space divided over the 4 terminals, would run until April 2022.
DFS decided not to agree to the terms and pulled out of the tender for a six-year lease of retail space for liquor and tobacco. The other luxury shops that DFS owns at Changi International airport will remain at what’s considered to be the best airport in the world.
No more duty-free tobacco & liquor?
The departure of the liquor and tobacco division of DFS leaves the question on the future of duty-free. Singapore is notorious on tobacco restrictions. It is one of the handfuls of countries in the world with a zero duty-free allowance on tobacco for incoming travelers. The taxes for both alcohol and tobacco are high. Tobacco tax is 427 SGD per kilo of tobacco, and there is a maximum of 400 grams allowed. Plain packaging is coming for tobacco. It could be that the liquor and tobacco duty-free shops will close. But that’s uncertain.
Another option is that other organizations are bidding for the tender. Interested parties had until August 6th to bid on the 6-year lease. One of those contenders could be King Power. King Power is a Thai duty-free organization, with a monopoly on all Thai airports. The chairman and CEO of the company, Vichai Srivaddhanaprabha, passed away in a helicopter crash in 2018. He was the owner of Leicester City FC. Under his leadership, the club won the English Premier League much to everyone’s surprise. The Leicester City FC stadium is called the King Power Stadium.
Other possible replacements are Lotte Duty-Free or Shilla Duty-Free. Both are South Korean companies. Shilla Duty-Free already operates shops at Changi Airport, and wants in on the tobacco and liquor sales too. Or the German-based Heinemann. It has been confirmed that these three companies have made bids. Changi Airport Group has high demands for the lease. It’s either a set amount per traveler going through the airport or a percentage of the sales above a set rental price. The percentages set by Changi Airport Group are a minimum of 46% on spirit sales, 35% on wines and champagnes, and 40% on tobacco sales. It is estimated that DFS generated close to 600 million SGD last year. Two-thirds of which on departures, the rest on arrival.
DFS sales on arrivals are pure alcohol-related. About three quarter, approximately 150 million Singapore dollar from liquor and the rest from wines and champagnes. As for the departure, close to a third comes from liquor, a third comes from tobacco. Only 7% of the departure turnover comes from wines and champagnes.
So what will happen now that DFS is leaving Singapore Changi Airport is uncertain. We will know once the Changi Airport Group reveals the results of the bids. But between now and June 2020, travelers at Changi Airport might be able to find closeout sales at the liquor and tobacco shops.