No vacation is complete without first running the perfume-scented gauntlet of airport duty-free.
With the anxiety of transit, check-in and customs behind you, you emerge into an assault course of the senses: gaudy whiskey displays, exotic fragrances and novelty-sized chocolate bars siren-calling you to reach into your pocket.
But is duty-free really the Aladdin’s cave of cut-price wonder it claims to be? Or is it just a well-marketed myth?
We wanted to know so we looked into the cost of eight popular duty-free mainstays spanning a range of categories and cross-referenced them against 12 major airports to see which offered the best value.
What is duty-free?
Duty is the tax you pay on taking a product across international borders. This includes value-added tax and customs tax, which vary by country.
The story of duty-free begins on the windswept coast of western Ireland in 1947. It was the brainchild of Brendan O’Regan, a comptroller at the minuscule Shannon Airport, a popular re-fuelling spot for flights ferrying celebrities (the only people who could afford transatlantic air travel back then) between the U.S. and Europe.
O’Regan realized these super-rich passers-by were an untapped source of great wealth for Shannon. So he persuaded the Irish government to create a tax loophole that allowed him to sell farm foods and Irish whiskey to transiting passengers, with the usual customs taxes knocked off. They never left the airport, he argued, so why should they have to pay local duties on products they wouldn’t be consuming locally?
The idea took off. Inspired by Shannon’s success, Amsterdam opened its own micro free-trade zone in 1957, before the concept went to the U.S. in 1962.
In 2021, according to Fortune Business Insights, international travelers spent $35.87 billion in duty-free stores, a figure that is expected to more than double by 2029.
The ground rules
The world of retail has changed hugely since the 1940s. In today’s age of online discounts, year-round sales and growing competition for consumer attention, does duty-free actually still save you money? And if so, where can you get the best deals?
We chose a handful of the most iconic products from the best-known brands that you would expect to see in any duty-free store across the world.
It is important to note that it is illegal in some countries, such as Turkey, to advertise alcohol or tobacco products, meaning the prices of some items were not readily available online, and could not be provided remotely. In other cases — such as Madrid, Rome, Prague and Warsaw — our requests for further information regarding some products (cigarettes in particular) received no response from the airports and duty-free retailers we reached out to at the time of writing.
We then looked for the best high-street and online prices we could find for each product. In the interests of parity, we excluded limited-time offers or seasonal sales from our searches.
The products we looked at were:
- Jack Daniel’s Tennessee Whiskey (1l).
- Talisker Dark Storm Single Malt (70cl).
- Taittinger Brut Reserve or Moet&Chandon Imperial Brut (75cl).
- Hendrick’s gin (1l).
- Dior J’adore Eau de Toilette for women (100ml).
- Versace Eros Eau de Toilette for men (100ml).
- YSL Rouge Pur Couture lipstick (3.8g).
- Ray-Ban Wayfarer Folding 50 (or similar Wayfarer) sunglasses.
- A carton of 200 Marlboro Gold cigarettes.
The airports we looked at were:
- London Heathrow (LHR).
- New York JFK (JFK).
- Rome Fiumicino (FCO).
- Berlin Brandenburg Airport (BER).
- Stockholm Arlanda Airport (ARN).
- Adolfo Suárez Madrid–Barajas Airport (MAD).
- Athens Elefthérios Venizélos (AIA).
- Václav Havel Airport Prague (PRG).
- Warsaw Chopin (WAW).
- Istanbul International Airport (IST).
- Mexico City Airport (MEX).
- Dubai International Airport (DXB).
In short, VAT varies from country to country so there’s no hard rule as to what you can save in duty-free. In the U.K. the standard rate for most goods and services is 20%. In Italy, it is 22%; in Luxembourg, it’s 17%. The U.S., on the other hand, levies no VAT. Though, like most countries, it does require consumers to pay some customs tax upon taking certain goods out of the country.
In addition to this, duty-free prices vary between airports depending on local costs like employing staff, rents and rates, and other taxes. In other words, they can pretty much set their pricing as they see fit. Duty-free prices in one airport, therefore, may not be consistent with those in another airport in the same country.
With that in mind, here are a few things we learned:
- Never buy sunglasses in airports located in sunny countries.
- On average, Sweden is one of the cheapest places to buy alcohol products in airports.
- Dubai airports are some of the cheapest to buy tobacco products.
- Buy your duty-free fragrances and makeup in Poland.
- Do not buy Champagne at New York City’s JFK Airport.
- Duty-free isn’t always the best deal in town. If there’s something you actually want, always check online for a better offer first.
Which airports have the most expensive duty-free shops?
Perhaps unsurprisingly, Dubai — whose duty-free emporium turned over $976 million in 2021 — is the most expensive airport on average when it comes to alcohol and beauty products.
Interestingly, though, JFK is the most expensive airport in our list to specifically buy Champagne — more than $18 more expensive than the average across all the airports we researched.
Which airports have the cheapest duty-free shops?
When it comes to booze, the Swedish capital Stockholm offered the best value on average of all the airports we surveyed. There, a bottle of brut Champagne costs just $34 (£28), compared to $39 (£32) at Heathrow and $50 (£41) in the supermarket. Meanwhile, a bottle of premium Tallisker scotch costs $59 (£49) in Stockholm and $74 (£61) at Heathrow.
However, if American whiskey’s your tipple, the best price is in Warsaw, where a 1L bottle of Jack Daniels costs just $21 (£17), almost $12 (£10) cheaper than at Heathrow and half the price at British supermarkets.
Warsaw is also where you can buy the cheapest beauty products, consistently cheaper than the average across airports when looking at product-by-product comparisons.
As for tobacco products, committed smokers will be happiest in Dubai, where 200 Marlboro Gold cigarettes cost $27 — a third the price of the same carton at Heathrow, and 500% cheaper than in a British supermarket.
What products are cheaper to buy at a shopping mall or online instead?
The truth is, for a lot of products, there isn’t always much difference between duty-free and the prices you can get at home — especially if you’re prepared to hunt online.
The key differentials are tobacco and alcohol, which are both usually taxed heavily and therefore can be bought for a lot less at the airport.
But it’s a more complicated picture when it comes to beauty products. A stick of YSL Rouge Pur Couture, for instance, is $36 (£30) in British shops — exactly the same price you’d pay at Heathrow. And the only two airports where you’d pay less than that are Rome and Warsaw, for a saving of around $3.
The same goes for accessories such as sunglasses and watches. We found that, while airport prices may compete with what you’d pay in Ray Ban’s central London shop, a quick search online will often yield a far better deal.
What are the rules of duty-free in the US?
You can’t just fill up a suitcase of whiskey and perfume on a trip home from Greece. But the U.S. does have fairly generous allowances for what you can bring back.
When entering the U.S., travelers can bring in one liter of alcohol and up to 200 cigarettes duty-free, according to the U.S. Customs and Border Patrol (CBP) website. citizens are also entitled to bring $200 worth of goods into the country without paying additional taxes.
However, if you go over your allowance, then you must pay tax and duty on the total value of the goods, not just the value above the allowance. You may also have to pay import VAT and customs duty if you exceed your allowance.
To get a duty-free bargain on anything that’s not alcohol or cigarettes, you should always do some research before you travel. Because duty-free isn’t always the great deal it’s marketed as.
An online sale or in-store offer can often make lower-taxed items cheaper at home than in a duty-free shop, especially if you’re buying makeup, where you might find that the duty-free discount is not better than a gift set offered at your local pharmacy or beauty store.
If you’re in the market for a pair of designer sunglasses or big brand perfume, know ahead of time what it costs both at home and on the web so you’ll recognize a good deal if and when you see it during your holiday.
Courtesy The Points Guy. By Matt Blake. Article available here.