The Heinemann view – The China challenge and opportunity in Saudi Arabia and India

We feature further talking points from Gebr. Heinemann’s recent press conference in Hamburg, at which Co-CEOs Max Heinemann and Raoul Spanger and Chief Commercial Officer Inken Callsen discussed 2024 performance (sales climbed above €4 billion for the first time), company growth plans and their views on regional and global markets.

Click here for part one of our take-outs from the event.

Click here for part two. More will follow. 

Talking Point 7 – The Chinese consumer

Co-CEO Raoul Spanger said that the decline in Chinese contribution to spend relative to pre-pandemic times represented “the biggest negative that the industry had to face in 2024”.

He said: “There are two issues facing our market relating to the China traveller that have an impact on us. One is the economic situation at the moment. The other is the government move to encourage Chinese travellers to spend on duty-free shopping in their home market, keeping that spend within China.

“This has affected all players in the market, especially those that were heavily dependent on Chinese shoppers. In our case that means Sydney and Kuala Lumpur, but Europe too.”

Spanger elaborated on this using a basic formula. “Before COVID, if a European consumer spent €40 for example, then a Chinese consumer was spending €120. Today that €120 has become €60, which means the Chinese are still good shoppers but their contribution has halved compared to before.

“This also means we have to redefine what our business in Asia Pacific means. Contractually at many airports the industry is still living in a pre-Covid scenario. So that needs sorting out in the next couple of years.”

Talking Point 8 – Four pillars of ESG action

In 2024, Gebr. Heinemann made further advances toward its 2030 sustainability goals within the four dimensions of its global sustainability strategy, which are Environment, Social, Governance and Responsible Value Chain.

Key targets under these pillars include:

• Environment: Gebr. Heinemann aims for net-zero emissions in Scopes 1 and 2 by 2030. The company has already reduced emissions by around -50% from the baseline year of 2019, meeting its 2024 interim target. The majority of Scope 3 emissions occur in the supply chain, it noted. Collaboration with forwarders and several initiatives including the shift to rail, the conversion to HVO and the use of e-trucks are helping reduce these emissions further. One example is the partnership of Gebr. Heinemann and its Turkish joint-venture partner, Unifree Duty Free, with the transport company Mars Logistics to pilot a shift from road to rail for transporting goods.
• Social: Gebr. Heinemann introduced an updated global strategy for diversity, equity and inclusion. As a first step, the company published an internal policy to provide a unified international framework for orientation and established a steering committee.
• Governance: Gebr. Heinemann expanded its overarching global Corporate Responsibility Committee to include three subcommittees for the Environment, SociaI and Responsible Value Chain areas of action. They focus on promoting the 2030 sustainability goals and monitoring progress.
• Responsible Value Chain: Gebr. Heinemann noted that it works closely with its suppliers to ensure high standards for sustainable products. The company expects its suppliers to be evaluated by independent third-party assessments such as EcoVadis and B-Corporation certifications and already achieved 70% of its purchasing volume through these assessments in 2024.

In addition to its partnership with L’Oréal, Gebr. Heinemann has concluded joint green business plans with Diageo, Tony’s Chocolonely and EssilorLuxottica, extending the reach of sustainability initiatives across the core categories.

Talking point 9 – Regional opportunity

Entry to Saudi Arabia in 2024 and to India later this year represent vital breakthroughs for the Heinemann group of companies.

In Saudi Arabia the company (JAH Arabia International Duty Free LLC, with JV partners Jordanian Duty Free Shops and Astra) started operations at Jeddah Airport last October. The 11,500sq m area is being developed in phases, with half completed in Q1 and full completion expected in the coming months.

In December, Gebr. Heinemann opened eight boutiques onboard the first Saudi Arabian cruise ship AROYA, in what is claimed to be the largest ever retail space (1,603sq m) at sea.

Max Heinemann told media guests: “Saudi Arabia is a great growth market. We are committed to succeeding there and to showing that our model with our partners works. We are the choice to provide the best solution in Jeddah.

“We will see what the future holds. We are also flexible and prepared to work with any model that is appropriate for Saudi Arabia in future. And under any scenario, we believe we are the best partner.”

The company said it is planning further duty-free collaborations at border crossings, ports and domestic retail locations, with additional airports also under consideration.

On the decision to create a regional Middle East-Africa hub in Dubai, Spanger said: “We see additional potential in the region. To be close to the market and our customers, we elevated our Dubai office, which has been operational since 2023, to the status of a regional headquarters and will continue to strengthen our team there.

“With the appointment of Bernard Schlafstein as CEO of Heinemann Middle East Africa and the opening of our new logistics hub in Istanbul in 2026, we are sending a strong signal to our partners and customers within the region.”

The tender win with partner BBM Group at Noida International Airport in India will see a new territory open for the company by autumn.

Raoul Spanger said: “We believe in India very much. We have prepared the groundwork even for years before we prepared for any tender. If you look at the orders for aircraft, it is exciting, and India has decades more growth ahead. We have big targets there, beginning with Noida.

“You have a luxury shopper and then you have the blue collar shopper. This consumer is not easy to read and it’s a learning curve for us. We know the Indian traveller well from Frankfurt and they are highly valuable, but we need that India presence to discover more.”

*More key takeaways will follow.