NEWS/ANALYSIS: JR/DUTY FREE
JR Duty Free to develop Israel business through key Heinemann partnership
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While James Richardson Duty Free is no stranger to winning duty free contracts at Tel Aviv Ben Gurion International Airport through its own efforts, last year it triumphed with the help of a strong partner in Gebr. Heinemann. Andrew Pentol speaks to JR Duty Free Chairman Garry Stock.
First year objectives JR Duty Free Chairman Garry Stock tells TRBusiness: “The objective for the first year is a little different from a ‘normal tender win’ because in this case James Richardson was the incumbent and we were running the business very effectively. “Where we were suffering was
from what turned out to be an extremely onerous contract because of the effect of open skies.” The signing of the Open Skies
Above: JR Duty Free extended its partnership with Ben Gurion International Airport in Tel Aviv, Israel last year, where it now operates in a JV with Gebr. Heinemann.
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aving operated the principal duty free license comprising liquor,
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tobacco fragrance, skincare and confectionery on its own at Tel Aviv Ben Gurion International Airport since 1988, privately-held family company JR Duty Free has formed a new alliance with fellow privately-owned company Gebr. Heinemann. It all started last June when Israel
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Airports Authority issued the tender for the duty free operations in T1 and T3. Participants could make offers
on the business in either or both terminals and a new seven-year
“Where we were suffering was from what turned out to be an extremely onerous contract because of the effect of open skies.”
Garry Stock, Chairman, JR Duty Free 22 TRBUSINESS
agreement with Israel Airports Authority (IAA) that there should be a new tender – the terms of the previous agreement were unfavourable to say the least – one of the first things it had to decide was whether to bid alone or form a joint-venture partnership. The second option was the
preferred choice and in early August, the JR Duty Free and Gebr. Heinemann joint-venture was awarded the contract. It was all official. JR Duty Free
would operate at the airport for at least another 10 years and welcome Gebr. Heinemann as a partner in the business. The previous lease term for its
duty free departures business ended on 31 December 2017 and the new lease started on 1 January.
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contract (with a three-year extension option) was up for grabs. For JR Duty Free, the intention
was always to remain at Tel Aviv Ben Gurion where it has such a long and proud history. When JR Duty Free reached an
agreement with the EU back in 2012, when the airport had 12m international passengers – last year it exceeded 20m passengers – was a landmark moment in Israel aviation, but one that has led to challenging operating conditions. Stock adds: “The real significance
of 1 January was that it was a new contract on different terms from the tender we won in 2013.” “We are now working on different
arrangements with the Israel Airports Authority which will obviously have an impact on business in 2018. “Hopefully, we will now have a
chance to get a decent return. With the growth in passengers only time will tell.” With Gebr. Heinemann entering
the business and having full access to everything, both parties are working together to determine where the business can improve. Stock explains: “Thankfully, we
have a great basis to work from in that JR at Ben Gurion is a strong business which has been well run and respected by suppliers. “We also have a strong and good
understanding of the market, which consumers can relate to.” Clearly relishing the prospect of co-existing with a company of
MAY 2018
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