New brand launch targeted at attaining lowest prices and to offer bettershopping experience

According to a news article published by DFE (Duty Free Expert), CDFG-LS (ChinaDuty Free Group and Lagardere Travel retail) launched Duty Zero by cdf, CITS'new brand of liquor & tobacco duty free business in Hong Kong InternationalAirportt (HKIA).

Duty Zero stated that it is committed to keeping price of liquor&tobaccothe most attractive in Asia.

Duty Zero will operate 8 stores with a total area of 3,400 sq m. It willgradually introduce experience stores with different themes by June2018.

Duty free business of liquor and tobacco in HKIA will start from November 18,2017

CITS duty free business (liquor&tobacco) in HKIA will start operation in November18.

To recall, CITS announced on 5 April that the joint venture (CDFG-LS) ofChina Duty Free Group and Lagardere Travel retail had won the biddingfor the HKIA duty-free liquor and tobacco concession for seven years fromDFS Group.

CITS owns 80% stake of the joint venture. Operating period will be fromNov 18, 2017 to Sep 30, 2024. Currently, there was still no disclosure onthe concession rate.

Traffic for HKIA in 2016 is c.70.8 million (vs. 25 million for BCIA and 35million for Shanghai Pudong). In addition, most of the travellers stay morethan 3 hours in HKIA.

We observe traffic in Hong Kong starts to rebound in Sep 2017. Accordingto PartnerNet.HK, visitor arrivals in Hong Kong increased by 4.8% to 4.64million in Sep 2017, mainly driven by 7.2% growth of traffic from MainlandChina (3.6 million in Sep 2017). 9M17 total traffic increased by 2.2% yoyto 42.6 million.

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