Issue 47 | July 2023
)
Raising the Bar
In this issue of Dufry World, Enrique Urioste, President & CEO Latin America, invites us to discover one of the regions where Dufry enjoys a solid leadership position and where he is facing the challenge of developing the F&B business from scratch. A lot of work ahead, which will undoubtedly take time away from one of Enrique's passions: motorcycling. Although he gave up the practice of sports such as polocrosse several years ago, the unique sensation of extreme challenges and wind in the face is something that is difficult to give up. Therefore, he has traded it for challenging routes and off–road motorcycle trips, many of them through the breathtaking landscapes that his native Uruguay offers.
Latin America and the Caribbean are traditionally strong markets for Dufry. Give us a picture of the market under your remit.
I like to say that I work for the sexiest and most fun region in the world! Who doesn't want to go on a cruise in the Caribbean? Who doesn't want to go to the Caribbean beaches or experience the wild nature that the entire southern cone offers us? Without pretending to be the official tourist board, it is clear that this is a vast and varied region with a wide range of vacation alternatives, where everything is still to be discovered.
Los Cabos, the Dominican Republic, the Caribbean islands... all appear in the top positions as vacation destinations. But beyond sun and sand, Latin America offers much more: tropical rainforests, ski resorts, indigenous cultures, history, heritage, some of the world's most important business centers... the possibilities are endless, as are the diverse client profiles we have in the 23 countries where we operate in the region. Of these 23 countries, 16 are in the Caribbean. We operate in airports, seaports (we are the only duty-free operator in the world that operates in these types of locations), cruise ships... and even a jewelry company – Colombian Emeralds International.
The region's business is split in two: South America is counter-cyclical compared to the northern hemisphere. The peak season is in the winter months of the northern hemisphere. The Caribbean and Mexico do have their high season, but from a sales standpoint, there is virtually no change in seasonality throughout the year.
Dufry's position in the region is very solid, how did it come about and what factors are responsible for this leadership?
Dufry's position in the region was achieved through the vision of Dufry's management, who understood the potential of the region and were able to carry out a very successful M&A program.
You could also say that the years of experience in the market, the heritage of the companies – then small – that have become part of Dufry over the years, are also at the top of the list. Nevertheless, this still requires the hard work that Dufry has been doing since the beginning.
The main risk of a bad integration is the loss of people, because knowledge disappears and the company is decapitalized. And we have done an excellent job. Airport operators trust us because of our expertise. Of course, for many other reasons as well, but mainly because they see us as close to them and that we therefore know their business.
One example. If you take any of our stores, you will see that the product range is a good combination of global and local products: for the local passenger, access to goods that are difficult to obtain or cheaper than in the local market; and for the tourist, to take home a little piece of the destination. This product selection, i.e. understanding what each person wants and choosing the right assortment, makes all the difference.
Based on these concepts, it´s now time for raising the bar: we will offer more and better training for our employees, new store designs, unique products and experiences trying to surprise our passengers and achieve a "WOW" effect through experiential marketing. This will arouse the emotions of our customers and put them in relaxation mode to enjoy a unique experience in our duty-free, duty-paid or F&B stores.
Latin America and the Caribbean are areas where there is no overlap with Autogrill's Food & Beverage (F&B) business. This means that everything has to be built up, although there is no local experience on the ground. How do you plan to develop this business in your area?
With enthusiasm and ambition – and no time to waste! We have a fantastic opportunity in front of us. Our presence in the market opens many doors for us to offer alternatives to the traditional F&B operators. The Dufry name is well known and respected in the region, which makes it easier to develop the business.
We are learning at an accelerated pace. But again, the knowledge is in-house and we can leverage it. Stealing an analogy from my Global Executive Committee (GEC) colleague, Steve Johnson, we are bringing together three all-stars in duty-free, convenience and F&B with the Autogrill deal. The challenge is to make the most of these three stars and to exploit the synergies.
We recently participated in a tender for F&B at Lima Airport in Peru. Autogrill's expertise and knowledge is impressive and the work done to present the proposal was incredible. I would like to extend a special “thank you” to Walter Seib and the entire team that prepared the bid, who demonstrated that even though the merger is very recent, we are all already working as one team.
As with all bidding processes, we now have to wait, but I am proud of this first foray into the business. The future is bright.
In the last interview with Fernando Pérez–Peña, the door is open to be able to opt for Master Concessionaire concessions and manage both retail and catering space for the airport. Do you see the viability of this in Latin America?
It is certainly an option. In other regions, we are seeing more and more infrastructure managers open up to this model, where companies like ours are given the freedom to develop both concepts – retail and F&B spaces. This has clear benefits for both parties.
This concept does not yet exist in Latin America, although I would like to point out that we are already working with one of the region's major airports to make it a reality.
I have no doubt that it will only be a matter of time before we see hybrid store and F&B concepts in stores – as we have presented in our Destination 2027 strategy – or even master concessionaire opportunities. But there is still a long way to go.
What makes Dufry appealing to those traveling to Latin America?
Price, product and service. The tax regime in many Latin American countries imposes very high taxes on certain international products: alcohol, luxury goods, perfumes, etc., so the ability to buy duty-free represents a significant savings for our customers.
Product supply is also very important. The availability of international products is quite limited in many countries in the region. This is one of the main reasons why concepts such as arrivals stores – with high legal limits on purchases per passenger – or concepts such as Dufry Shopping are successful and popular with customers.
All of this is enhanced by our teams with their high service orientation and knowledge of the products offered.
Finally, we have made great strides in developing new customer services, such as Home Delivery, the introduction of the Duty-free Locker service (which allows customers to shop and pay on the outbound flight and pick up their purchases on the return flight) and Reserve & Collect. All these services have been very well received by our customers and have been a resounding commercial success.
After 20 years in the industry, what milestone are you most proud of?
I repeat; it is the people and the teams we have assembled in the region. The energy they bring, the motivation and the commitment to the company is second to none. Our people, as I said, are our most important asset.
Building fantastic groups of people, both in the companies I have worked in over the years and in the new ones I lead today, is undoubtedly the milestone I am most proud of.
This is the team that has been able to hold its own in times of extreme complexity for the region: the Argentinean crisis of 2002, the Brazilian crisis of 2015, the pandemic... these were situations that pushed us to the limit and from which we emerged stronger, thanks to our people.
In a minute:
A food: I am passionate about a good barbecue (Asado in the River Plate dialect) ... and also Sushi.
A book: Decline and Fall of the Roman Empire, by Edward Gibbon.
A city: Punta del Este in Uruguay.
A movie: The Godfather.
A hobby: Off-road motorcycle routes and motorcycles in general.
A leader: Winston Churchill for his leadership position in one of the most complicated moments in history.
An airport: Among the large ones, London–Heathrow, Montevideo in the small airport category for its design and functionality.
