Money Your Budget Duty free shopping not always the bargain it seems
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Duty free shopping not always the bargain it seems

Duty free shop
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Australia’s duties are technically called excise. And excise applies to only a fraction of the things for sale at a Duty Free shop.

How do you know if you’re getting a good deal? It’s a bit like shopping elsewhere. You need to do some research.

Excise is complicated. Very complicated. Click here to see a graph which illustrates how complex tax is just on booze. It’s crazy but in summary you pay excise on alcohol, cigarettes and petrol.

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dutyfree2Duty free shops don’t sell petrol. And rules about buying smokes duty free just got tightened considerably. You can only bring in 50 cigarettes now. So alcohol is where you find the big savings. In theory.

Of course, duty free shops also take GST off everything. You don’t pay GST on exports, and when you buy something duty free it counts as an export.

There’s obviously big profit in duty free. With the recent high dollar and cheap flights, our love for travel has boomed. Over the last 10 years, the number of people travelling overseas every month has doubled. We have had more chances to do duty free shopping than ever before.

But we are rightly suspicious of whether duty free offers us a better deal. TripAdvisor and other websites are full of complaints of people finding cheaper deals outside the airport than inside.

With Aldi and Costco inside our nation’s territorial boundaries and cutting margins severely, Duty Free stores have a fight on their hands.

veuveLet’s look at some examples that show how tough it is for the duty free shopper to know if they have found a bargain.

The bad deals

In Melbourne airport recently I spied a twin pack of Veuve Clicquot Champagne for $139.

That works out at about $70 a bottle. The same French champagne costs less than that at Dan Murphy’s (see right).

Likewise, you’d feel ripped off if you bought certain male fragrances duty free. For example, Davidoff Cool Water costs $2 less than at an online retailer, but the bottle is about half the size – 40ml versus 75ml.

johnny-walkerThe good deals

Spirits – which get the highest rate of excise – do seem to be sometimes cheaper in duty free stores.

A one litre bottle of Johnnie Walker Blue Label cost $206 in Melbourne airport recently. The same volume would cost $242 in Dan Murphy’s, with a special discount delivery offer. (Pictured right: Johnnie Walker Blue Label, 700ml.)

Lower down the elegance chain, a similar pattern can be seen for Jim Beam. A 1.125 litre bottle costs $48 at Dan Murphy’s and $33 Duty Free.

Technology

But spirits are not where the duty free bargains end. If you hunt hard enough, unexpected categories are good value.

An Apple Mac is cheaper duty free than from Kogan. The computer pictured right is about $350 of cheaper duty free. The identical model at Kogan is $2359.

The moral of the story

What this shows is that duty free is just like any other shop.

It makes profit by discounting some things sometimes. The only way to know is to do your research.

The problem for most of us is that we buy duty free in a state of jetlagged confusion at the end of a holiday, when we’re most susceptible to falling into a trap.

If this sounds like you, the safest thing to do is stick to spirits.

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