Since the dawn of the millennium, the travel retail industry has had to endure a wide variety of external shocks, from volcanic ash clouds and the 9/11 terrorist attacks to the global economic crash of 2007/8 and, more recently, the 2020 pandemic. Sadly, the ­first half of 2025 proved to be yet another period testing its mettle, with rising geopolitical tensions, shifting passenger trends, soaring costs and regulatory changes all leaving their mark.

One silver lining is that demand for air travel remains strong. At the start of 2025, Airports Council International forecast 9.9 billion people would take a flight this year, nearly a 5% increase from 2024. On that score, the year hasn’t disappointed: according to the International Air Transport Association (IATA), demand for international air travel grew 5.3% in July, with Asia Paci­fic (+8.7%) and Latin America (+9.3%) performing particularly strongly.

However, North American airlines posted a more modest 2.4% year-on-year increase in July. This slower growth rate echoes the 8.2% decline in international overnight arrivals to the US over the ­first half of 2025. Canadians, in particular, have boycotted travel to the States in large numbers in protest of the tariffs imposed by Donald Trump. Sales of US drinks brands in Canadian duty free border and airport stores have also suffered.

More passengers, but less spend

A key challenge this year is that increased passenger traffic has not translated into increased retail spending, especially in markets dependent on outbound Chinese passengers. In May, for instance, Korean travel retailers Hotel Shilla and Shinsegae Duty Free sought court action to demand their rental payments to Seoul Incheon airport be reduced by 40%, complaining of lower spending by Chinese travellers.

Business has also been bad at Thailand’s Bangkok Suvarnabhumi airport, where duty free operator King Power has been racking up ­financial losses. The retailer has blamed the challenging situation on declining spend by Chinese travellers, the axing of arrivals duty-free shops, and a decrease in domestic taxes on wine. In June, King Power approached Airports of Thailand, requesting to withdraw from its contract at Bangkok airport and four other regional airports.

Similarly, in June, DFS Group revealed it was closing its downtown duty free stores in Queenstown and Auckland in New Zealand, as well as in downtown Sydney, Australia. The retailer attributed the decision to “challenging economic conditions”. In a sobering year for the luxury oriented DFS, the company has reportedly also pulled out of Macao’s M8 shopping mall less than a year after signing its lease.

Dubai Duty Free shows the way

In stark contrast, other regions are faring better. For instance, Dubai Duty Free (DDF) posted record duty free sales of $1.128bn in the ­first half of 2025, a 5.34% year-on-year increase. The result con­firms Dubai Airport’s position as the world’s busiest international hub. In the same period, liquor sales at DDF totalled $140.65m, remaining the retailer’s second-bestselling product category after perfumes.

Scotch remains a bedrock category at DDF, selling over 2 million bottles last year. Underlining its importance, French spirits group La Martiniquaise Bardinet showcased the new Glen Moray 21 Year Old Portwood Finish at DDF this August, a single malt matured in American oak before being finished in Portuguese port wine casks for a further two years. The activation also marked Glen Moray’s 125th anniversary, showcasing the distillery’s full range, from the Classic to the 12, 15 and 18 Year Old expressions, as well as the new release.

Record tourist numbers drive regional favourites

Meanwhile, parts of Europe have welcomed a record number of tourists this summer, including countries such as Greece, Spain and Italy. Such an influx of visitors hasn’t always pleased the residents, of course, but it has kept the duty free cash tills ringing at airport shops and border stores, especially when it comes to regional spirits, such as Italian grappa, Spanish brandy and Greek ouzo. “2025 is shaping up to be another exceptional year for Greek tourism, following the remarkable success of 2024,” says Eleni Papadopoulou, brand manager, exports, at Plomari Distillery Isidoros Arvanitis, Greece’s biggest ouzo brand. “Last year, Greece welcomed more than 40.7 million visitors through its airports, ports and land borders, a record that set the stage for continued growth.”

Duty free sales of Ouzo of Plomari have grown strongly this year, she notes. “Our brand is fully listed across all Greek airports and proudly holds the largest share of the entire spirits category, cementing its position as the undisputed leader in ouzo.” The company has produced a limited-edition 2025 bottle celebrating the craft of Aegean boat building, which is performing well in duty free shops.

The rise of the Indian traveller continues

As the level of spending by outbound Chinese travellers has fallen this year, the importance of Indian travellers has grown considerably. According to the Reserve Bank of India, India’s monthly expenditure on international travel is now consistently exceeding $1bn, with April’s total reaching $1.3bn, a 10% increase from the previous month. Moreover, by 2030, India’s outbound travel market is expected to reach 100 million international trips, a ­figure comparable to France’s entire annual visitor count.

The big drinks multinationals are waking up to the enormous potential of this emerging shopping nationality, with Diwali, India’s most important religious festival, growing in importance year on year as a key focus for promotional initiatives. For instance, between October and November last year, Bacardi GTR ran a multi-region Dewar’s campaign at 25 airports with Indian traveller footfall.

The expansive campaign blended the centuries-old Indian art of Rangoli, a central part of Diwali celebrations, with a modern in-store digital experience. Travellers were offered three Dewar’s whiskies, 15 Year Old, 16 Year Old and 18 Year Old, with travel retail-exclusive gift sleeves, featuring Rangoli-inspired packaging, and QR codes allowing the purchaser to upload an image and message to personalise the gift.

Moreover, it’s not only western companies targeting Indian travellers. Homegrown brands are increasingly doing so too. In August, for instance, Piccadily Agro Industries launched two exclusive limited-edition cask-­finished Indri single malt whiskies with Dubai Duty Free. Earlier in the year, Rampur whisky, produced by Radico Khaitan, unveiled Rampur Select – DDF Label Edition with the same travel retailer, a 43% abv Indian single malt, non-chill-­filtered and matured in select vintage casks.

All aboard the cruise opportunity

The cruise sector continues to grow in importance for the travel retail drinks business. A record-breaking 34.6 million people took a cruise holiday last year, according to the Cruise Lines International Association (CLIA) trade body, a total predicted to rise to 37.7 million in 2025. Eleven new ships will enter service this year, with a further 56 vessels on order between 2025 and 2036.

Given the affluence of many cruisers, the growth of the channel is hard to ignore. According to Edrington travel retail managing director Kasper Andersen, the cruise sector has become an important driver for the Scotch whisky producer’s business. He noted that 2024 delivered particularly strong results, with The Macallan Colour Collection, a travel-exclusive range, performing well, thanks in large part to onboard pouring programmes, which have helped encourage trial and foster long-term loyalty.

This year, an emerging trend is for cruise lines and their onboard concessionaires to collaborate with spirits brands to offer passengers exclusive bottlings. This May, for instance, Brown-Forman partnered with Carnival Cruise Line and onboard retailer Harding+ to showcase the Jack Daniel’s Single Barrel Collection exclusively onboard its ships. It featured a single-barrel whiskey, which had been chosen by the Harding+ and Carnival teams at the Jack Daniel’s distillery in Lynchburg, Tennessee.

Let’s get digital

A decade ago, there was widespread criticism of the travel retail sector for failing to move with the times and adopt an omnichannel business model. It wasn’t reacting fast enough to the rapid uptake of digital technology and smartphones by travellers. Today, much of the industry has caught up, with online pre-order and click-and-collect services commonplace at many key airports, offering contactless payment and digital loyalty programmes.

This year, this digital transformation has intensi­fied both in-store and behind the scenes.

For instance, Qatar Duty Free, the travel retailer at fast-growing Doha Airport, has installed its new 36Q data-sharing platform. Available to all the operator’s business partners from the start of the year, the platform allows suppliers access to real-time data on key sales metrics and the airport’s changing passenger mix.

Meanwhile, DDF has dipped its toe into the world of crypto, signing a Memorandum of Understanding with the global digital asset platform Crypto.com in July this year. The agreement opens the door for DDF to enable crypto payments both online and in-store, marking a signi­ficant shift in how travellers might purchase their goods in the near future.

Indian travel retailer Ospree Duty Free has also been breaking new ground. In May, the retailer staged an AI-powered promotion at Mumbai International Airport, which didn’t require traditional signage. Instead, the activation featured a single QR code displayed on in-store digital screens. Offers were then delivered to anyone scanning the code via an AI-powered promotion engine, which offered travellers targeted offers based on their shopping preferences and purchase history.

Drinks brands are also embracing this digital transformation at pace. AI-powered recommendation tools, which guide travellers to their ideal match, are being enthusiastically installed by the likes of Edrington in its new The Macallan boutiques at London Heathrow and Los Angeles airport, which both opened earlier this year. Where this leaves the role of the traditional in-store brand ambassador is a moot question, but the momentum driving the digital revolution looks unstoppable.