Korean Tobacco Group Fights Duty Free Threat

Source from:  The Travel Retail Business 01/07/2016

Several media organisations in South Korea and beyond have reported criticism from the 100,000-strong 'I Love Smoking' online pro-smoking group towards 'alleged' plans by the South Korean government to halt sales of duty free cigarettes at Jeju International Airport's shops.

The pro-smoking group has told local media that if duty free cigarettes at Jeju are banned, the government believes these sales will simply migrate to the domestic market, where all cigarettes and tobacco products are subject to normal taxation.

Customers are currently allowed to buy and import one duty free carton of 200 cigarettes, saving around 60% of the comparative domestic market retail price.

At the same time, the I Love Smoking group in South Korea has suggested that if the Finance Ministry does have a public health agenda on this issue then it may have to ban duty free cigarettes altogether in South Korea - a move that would certainly prove hugely unpopular with many Korean and overseas customers, as well as duty free retailers and suppliers.

Any such ban, local or otherwise, would also be certain to trigger contract renegotiations between affected retailers and airport landlords.

Jeju International Airport is the biggest airport within the Korean Airports Corporation (KAC) portfolio. Hanwha Galleria Timeworld operates the 410sq m mixed category duty free store, having taken this over from Lotte Duty Free in mid-2014.

Currently, around 95% of the Jeju duty free shop's customers are Chinese, compared to an average for all South Korean duty free shops at about 60%, with tobacco sales four times bigger than liquor. Chinese cigarettes also dominate, accounting for more than 80% of all the store's tobacco sales.Enditem