the product – £1.05 on a 75cl bottle of wine, 31p on a pint of beer and £5.32 on a 70cl bottle of spirits (the French equivalents are 2p, 5p and £2.67).
Other goods, not subject to duty, are sold tax-free provided they are taken out of the country. This also changes from June 30, when duty and tax-free shopping is scheduled to be abolished within the EC.
Once it goes, ferry operators will have a lot of revenue to make up from somewhere.
Stena Line calculates that duty-free sales contribute 25% to the group’s operating income – a similar figure is quoted by SeaFrance. Irish Ferries puts its duty-free income at £8m-£10m a year.
SeaFrance and Irish Ferries are among operators waiting for a final decision from Brussels before revealing their post duty-free plans, while Scandinavian Seaways has already routed its Newcastle-Gothenburg sailing via Norway, which is not a member of the European Union, so the operator can continue to sell duty-free.
Other operators are implementing new retailing strategies. Hoverspeed, for instance, has opened duty-paid wine outlets in France. Prices are from 90p a bottle, giving an average 30% saving on UK prices, according to retail director David King.
Hoverspeed also introduced fridge/freezers in its UK terminal shop last year – as these can’t be taken abroad, the fast-ferry operator is absorbing the tax, leading to £30-£40 savings on high-street prices. Tax-free Vodafone mobile-phone packages went on sale in March for £55, undercutting Dixons by £15. “There is no better way to test the market than to sell the goods,” said King.
“We are also moving into branded clothes, such as Henri Lloyd, Timberland and Barbour, which are popular with both the French and English.”
P&O Stena Line invested £10m this winter on its on-board product, including its shopping outlets, where it now sells branded goods such as Sony, Nike and Calvin Klein clothing.
Hotel services director Pat Hollis said:”It is important to give passengers names they recognise so they have confidence in the product.
“Our staff go to Sony to be trained so they can talk with authority about the products.”
Brand names will also appear in larger numbers in Eurotunnel’s terminals at Folkestone and Calais/Coquelles, following a 15-year deal with airports operator BAA, effective July 1.
Eurotunnel retail director Bruce McKendrick said:”The strategy is still being worked out, but we will have something similar to the type of shops now in BAA airports.”
Whether these new retailing strategies will enable operators to cover the loss of duty and tax-free shopping is unclear. King is pessimistic, although McKendrick feels that good service and product choice will encourage passengers to continue spending while travelling.
Hollis said P&OSL is making money now from tax-free retailing, but declined to comment on whether new avenues of retailing can equal duty-free revenue after June 30.
shopping around
Eurotunnel: struck a 15-year deal with BAA, effective from July 1, to handle retailing in terminals in Folkestone and Calais/Coquelles. The operator is still finalising its strategy, but fashion, electrical items and leather goods are likely to be on sale alongside duty-paid alcohol. It has released land next to Cite Europe for proposed factory shops, subject to planning permission, to provide more incentives for passengers to travel to France.
Stena Line: is trialling various goods such as designer clothes, skincare products, cosmetics and CDs but nothing is finalised.
Hoverspeed: owns four wine shops in Boulogne, Dieppe, Ostend and Frederickshaven, Denmark, to pick up duty-paid sales. Products include Vodafone digital Pay as you talk mobile phone packages and fridge/freezers.
P&O Stena Line: on-board retailing products include: Sony radios, music systems, in-car radios and camcorders; Kodak and Olympus cameras; Stieff teddy bears; Swarvoski jewellery; Nike and Calvin Klein clothing; and Casio watches.
SeaFrance: looking at shore-based distributors in France and on-board brand names. Awaiting Brussels’ final decision.
P&O Portsmouth: has added fashion boutique with designer labels on Pride of Bilbao. Considering options for other ships.