$CTG DUTY-FREE (01880.HK)$The pandemic dealt a blow to the global tourism industry. The reduction in travel and mobility inevitably impacted the duty-free business. In 2020, global duty-free and travel retail sales amounted to $35.08 billion, representing a significant decline of 59.4% year-over-year. However, the fortunes of duty-free retailers varied. In the same year, while the performance of three former global duty-free giants plummeted, China Duty Free continued to grow, ascending to the top position globally with a market share of 22.6% in the global travel retail industry. In 2021, China Duty Free set a new annual sales record of 9.4 billion euros, surpassing Lotte Duty Free, the second-ranked company, by more than double, further widening the gap with other duty-free retailers.
The confidence behind China Duty Free's counter-cyclical growth comes from two areas: one is the billion-dollar market brought about by the repatriation of luxury consumption. China has the world’s largest group of luxury consumers. According to data from Bain & Company, between 2010 and 2019, the global luxury market size grew from 167 billion euros to 281 billion euros, reflecting an average annual compound growth rate of 6%. Chinese consumers ranked first globally in luxury spending, and this proportion continues to increase annually. However, due to factors like price differences between domestic and international luxury goods, nearly 70% of Chinese luxury consumption flowed overseas as of 2019, before the pandemic.
Without considering the natural growth brought by consumption upgrades, the repatriation of consumption alone will bring a new billion-dollar market for the domestic duty-free industry...