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DUFRY: GUSTAVO FAGUNDES


Brazil visa loosening means new customers in uncertain climate


Brazil’s decision to grant 90-day visa exemptions to travellers from the US, Canada, Australia and Japan is good news for future tourism and spending. ASUTIL President and Dufry Brazil and Bolivia CEO Gustavo Fagundes talked to Luke Barras-Hill during the recent Duty Free and Travel Retail Summit of the Americas.


L


atAm declined by 3.5% (organic)


in 2018 to CHF1.6bn in Dufry’s full-


year 2018 results. How did the duty paid and duty free business perform in Brazil? LatAm had the most pronounced change in terms of growth performance. The main reason for the decline was the strong currency devaluation in Brazil and Argentina. In the second semester, the Brazilian real devalued by 21% versus the US Dollar, while the Argentinean peso lost 98%. These types of movements typically reduce the purchasing power of customers given we sell our products in hard currencies and Brazilians and Argentinians are our main customers. Thus, they are directly impacted by the local currency devaluation. This also started to have some knock-on effects in other South American countries.


During your address at the Executive Conference, you mentioned Brazil’s 90-day visa waiver for visitors from the US, Canada, Australia and Japan. But you also called for smarter attitudes, as travel volumes are growing exponentially against declining spending. Do you believe the market can reconcile these two (declining spend per head and rising pax) to rebound? The visa exemption is just one example of how pax growth has further potential to continue enlarging. Just a few days after the announcement, the search for Brazil as a destination increased +36%. This can be translated into new potential customers. But at the same time, we


APRIL 2019


need to be able to better understand their profile to offer products and services related to their needs. The response has to come from the adaptation of the business model: Assortments, increasing shopping experiences and deploying our digital strategy.


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You also pointed out that the majority of our business is constrained by allowances and if we don’t address this, we will lose relevance. With that in mind, how much will the industry suffer if Brazil does not follow the likes of Argentina and Uruguay and lift its inbound allowance ceiling? This is not a matter of how much the industry will suffer, but the potential for business growth and better shopping experiences. Having said that, the possibility to improve Dufry´s portfolio mix, including different categories such as more luxury goods (watches, electronics and home appliances), could create additional value and improve spend per pax.


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Airport privatisation in Brazil continues, but Dufry’s René Riedi has pointed out that costs often rise when this occurs. Is this a challenge to improving duty free price perceptions? The first round of privatisation happened in 2012 and covered the most relevant traffic in Brazil, especially international. Dufry was able to capture all of it. More relevant than the cost impact is the capability to improve and create new commercial areas. Also, the relationship with landlords becomes even more relevant nowadays,


Do you see Dufry LatAm – and particularly Brazil – returning to growth in the short term? We are still facing some volatility, especially due to the much-awaited approval of pension reform in the country. This is expected to be voted on by the end of the first half of the year. We keep confident that the reforms will be approved and Brazil´s economy will start to develop again, which will be a positive drive for a more stable and less volatile currency. «


“Just a few days after the exemption announcement, the search for Brazil as a destination increased +36%. This can be translated into new potential customers.”


Gustavo Fagundes, President, ASUTIL and CEO, Brazil and Bolivia, Dufry Group


TRBUSINESS 21


The Terminal 2 arrivals store at RIOgaleão Tom Jobin International Airport.


working together in order to understand their needs and at the same time, the customers.


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