The tobacco market - France

1.2 The global market in decline

The most recent estimates for the global tobacco market (***). [***] More than US$*** billion of this comes from the sale of conventional cigarettes, of which more than *,*** billion units are consumed each year.

Although combustible cigarettes remain the largest category, their volume has gradually declined over the years due to increased regulation and changing social attitudes.

According to data from the Food and Agriculture Organization of the United Nations[***], global tobacco production stood at *.** million metric tons in ****, a figure that has been declining since ****. The production peak for the period ****-**** was reached in ****, with *.** million metric tons.

World tobacco production World, ****-****, Thousands of metric tons Source: ****

China is by far the largest producer, with ****.* thousand metric tons produced in ****. India and Brazil follow with ***.** and ***.** thousand metric tons respectively. Indonesia and the USA also produce a significant amount of tobacco, with ***.** and ***.* thousand metric tons respectively.

Ranking of largest tobacco-producing countries World, ****, in thousands of metric tons Source: ****

1.3 A downward trend in the French market

A sharp drop in market volume

The overall tobacco market (***). [***]

But in volume terms, the French tobacco market is in sharp decline, due in particular to the steady rise in cigarette prices as well as the boom in sales of medical patches and electronic cigarettes. In ****, tobacco sales were in fact down -*.*% on the previous year, reaching **.* billion units sold (***) in ****.[***]

trends in tobacco and cigarette sales France, ****-****, thousands of tons (***) Source: ****

This downward trend continued until ****. In ****, ** thousand tonnes of cigarettes were sold, or **.* billion cigarettes.

By ****, cigarette consumption had fallen further, to **.* thousand tonnes, equivalent to **.* billion cigarettes. This analysis thus reveals a significant and continuous decline in cigarette consumption in France over the period studied.

Tobacco is harmful to health and responsible for cancer and cardiovascular disease: according toAFP, it kills **,*** people in France every year.

The parallel tobacco market

Volumes of tobacco seizures by Customs France, ****-****, tonnes Source: ****

Analysis of data on tobacco volumes seized by French Customs over the last three years reveals a significant upward trend. In ****, the volume of seizures amounted to ***.* tonnes. This figure rose by **.*% to ***.* tonnes in ****.

The year **** marks an even greater increase, with the volume of ...

1.4 The rise of the electronic cigarette

"On a scale of * to **, how would you rate the dangerousness of these products?" France, ****, in % Source: ****

Often perceived as a smoking cessation tool, e-cigarettes influence the tobacco market. Vaping enjoys arelatively good image regarding its effects on health, as shown in the graph above. Respondents consider vaping to be the least harmful (***). What's more, its average harmfulness is the lowest with sugar, with a score of *.*/**.

The e-cigarette market could reach a size of *.* billion euros by ****[***].

1.5 Foreign trade

Value of tobacco and tobacco product imports France, **** - ****, in millions of dollars Source: ****

Analysis of the data provided shows a general downward trend in tobacco imports in monetary terms from **** to ****. In ****, the value of tobacco imports was $*,***.* million. This value fell slightly in ****, reaching $****.* million, a drop of *.*%. In ****, despite the global health crisis, tobacco imports continued to fall, but at a slower pace, reaching $****.* million, down *.*% on the previous year. In ****, imports rose slightly to $****.* million, up *.*% on ****. However, this increase was followed by a sharp drop in ****, with tobacco imports amounting to $****.* million, down **% on ****.

France's main import partners are shown in the following chart:

Main tobacco-supplying countries France, ****, in millions of dollars Source: ****

With the exception of China, the main suppliers are European countries, relatively close to France.

Value of tobacco and tobacco product exports France Source: ****

In ****, tobacco exports amounted to $***.* million, dropping to $***.* million in **** and even lower to $***.* million in **** (***). However, an upturn was observed in **** with exports reaching $***.* million, and this upward trend continued in **** with exports of $***.* million.

Main tobacco export partner countries France, ****, in millions of dollars Source: ****

Among the top tobacco export partners are some of the largest suppliers, ...

2.1 Smoking is widespread in France but declining

Daily smoking prevalence by gender among **-** year-olds France, **** - ****, in Source: ****

The prevalence of daily smoking in France fluctuated between **** and ****. Among men, the percentage of daily smokers rose slightly from **.*% in **** to **.*% in ****, then oscillated and finally fell to **.*% in ****. Among women, prevalence rose from **.*% in **** to **.*% in ****, before gradually declining to **% in ****. Overall, the proportion of daily smokers in France has fallen since ****, reaching **.*% in ****.

2.2 Smoker profiles in France

Geographical distribution

There are major regional disparities in the proportion of smokers. The regions with the highest smoking rates in France are Provence-Alpes-Côte-D'azur (***). [***]

Share of smokers by region among **-** year-olds France, ****, in % Source: ****

Age and gender

Share of smokers in the population by age and sex France, ****, in % Source: Santé Publique France Among men, the age category with the highest proportion of daily smokers is the **-** age group (***). Also, generally speaking, men have proportionately more smokers than women, although the gap tends to narrow in the older age categories.

Level of education

Level of education and employment status also have a strong impact on the propensity to smoke regularly.

Prevalence of daily smoking by level of education France, ****-****, % of population Source: ****

Between **** and ****, the proportion of daily smokers decreased overall for all levels of education. For individuals with no diploma or less than Bac, the daily smoking rate fell from **.*% in **** to **.*% in ****, although it reached a low of **.*% in ****. For Bac holders, the rate fell from **.*% in **** to **.*% in ****, with a low of **.*% in ****. Finally, for individuals with a diploma higher than Bac, the rate of daily smokers has fallen from **.*% in **** to **.*% in ****.

Beyond the ...

2.3 The French are trying to quit smoking

More and more French smokers are trying to quit their harmful habit.

Daily smokers wishing to quit France, ****, in Source: ****

The desire to quit smoking is very strong among daily smokers: nearly * out of ** want to quit. Just under a third of them had made a quit attempt lasting at least a week in the last ** months at the time of the survey.

This desire is also reflected in increased sales of stop-smoking treatments:

Sales of smoking cessation treatments, in "equivalent months of treatment". France, **** - ****, in "equivalent months of treatment". Source: ****

Over the past three years, devices have gained in popularity. Among others, oral medications have been the most popular since ****, followed by transdermal patches.

2.4 The impact of legislation on demand

Tobacco demand is highly dependent on various regulations, and in particular on taxation and other taxes: for example, theWHO estimates that a **% price increase on a pack of cigarettes reduces demand by around *% in high-income countries, and by *% to *% in low- and middle-income countries.

In France, the data provided by the OFDT below effectively demonstrate the strong correlation between higher pack prices and lower sales.

Cigarette sales and pack price France, ****-****, in millions of units and €. Source: ****

3.1 Simplified diagram of market structure

Source: ****

3.2 Sector concentration

Based on the net sales of the world's leading tobacco producers, Forbes magazine puts Philip Morris International at the top of this ranking, with $***.* billion in sales in ****. Next come Altria Group (***).

Ranking of top tobacco companies by total sales World, ****, Billions of dollars Source: ****

From **** to the present day, tobacco companies have continued their policy of corporate takeovers, extending their grip to other areas such as healthcare and cannabis/CBDs. Faced with the decline of the tobacco market, they are seeking to diversify their activities by investing massively in other sectors. Sidelined by the WHO Framework Convention on Tobacco Control, they are using this diversification to improve their image and regain a place in political decision-making. This strategy also aims to strengthen their presence in the fuel markets, their main source of income.

Initially, this trend manifested itself in the acquisition of emerging e-cigarette companies. For example, Altria acquired a third of Juul Labs' shares in ****, but sold them back at a loss in **** due to legal proceedings against Juul.

Diversification also involves other tobacco and nicotine products. Snus (***) were introduced by Altria in the United States in the ****s. Oral tobacco, once found mainly in Sweden, Norway and the ...

3.3 Tobacconists have a monopoly on the retail trade

The entire network of tobacconists in France is managed by the French customs and excise administration, providing a framework for the tobacco distribution system.

By ****, there will be a total of **,*** tobacconists , generating sales of €**.** billion.

Number of tobacconists France, ****-**** Source: ****

There is a clear downward trend in the number of tobacconists in France. In ****, there were almost *,*** fewer tobacconists than in ****. The number of tobacconists has been falling steadily for over a decade.

Moreover, most tobacconists are located in small, sparsely populated communities.

Breakdown of tobacconists by commune size France, ****, in Source: ****

In ****, **% of tobacconists were based in towns with fewer than *,*** inhabitants.

Tobacconists by activity other than tobacco France, ****, in Source: ****

Most tobacconists carry out one or more additional activities, such as selling newspapers and bar services. For example, **.*% of tobacconists also sell newspapers. **% are bar-tabac and **.*% bar-tabac-presse.

The tobacco distribution network is entirely managed by Logista France.

Tobacconists' remuneration

Tobacco retailers earn money through a gross discount on the retail price of products. On April *, ****, the net tobacco discount for tobacconists was *.**%. This remuneration will increase to *.**% on January *, ****. In addition, tobacco retailers benefit from an exemption from license duty on the first €***,*** of sales. The administration ...

4.1 Cigarettes are by far the most widely consumed tobacco product

Cigarettes are the most widely consumed tobacco product in France, accounting for **% of sales volume in ****. Sales of roll-your-own tobacco have risen sharply in recent years due to the higher price of industrial cigarettes. This segment will account for **% of tobacco sales in ****.

Share of volume sales of main tobacco products sold France, ****, % Source: ****

Cigars and cigarillos still account for a small share of tobacco sales (***).

4.2 Tobacco manufacturers set prices

Tobacco prices are set not by the government, but by tobacco manufacturers. Here are the successive stages:[***]

Manufacturers submit a proposal for prices before tax (***) to the French customs administration; The Minister of the Budget ratifies these prices to harmonize prices across the country, depending on the type of product, and to avoid low prices that would encourage smoking; Once prices before tax have been set, taxes are added to them: Taxes comprise a fixed portion and a variable portion, proportional to the rates set by article *** of the French General Tax Code. In total, these taxes represent around **% of the price of tobacco sold to consumers.

The price of a €** pack of cigarettes in **** can be broken down as follows:

Breakdown of the price of a €** pack of ** cigarettes on January *, **** France, ****, in € Source: ****

More than **% of the price of a pack of ** cigarettes is made up of taxes.

4.3 Steadily rising tobacco prices

Change in the price of the best-selling pack of cigarettes and roll-your-own tobacco France, **** - ****, in € Source: ****

Analysis of the data presented shows a steady increase in the price of the best-selling pack of cigarettes and the best-selling pack of rolling tobacco between **** and ****.

For the best-selling pack of cigarettes, the price rose from €*.** in **** to €**.** in ****, an increase of **.*% over this period. The most significant increase took place between **** and ****, with a rise of **.*%.

For the best-selling pack of roll-your-own tobacco, the price rose from *.** euros in **** to **.** euros in ****, an increase of ***.*% over the same period. The most marked increase took place between **** and ****, with a rise of **.*%.

These data show an upward trend in tobacco prices in France over the ****-**** period, with more pronounced increases for roll-your-own tobacco than for cigarettes. This dynamic is the result of policies aimed at reducing tobacco consumption by raising prices through higher taxes.

4.4 A growing illegal parallel market

Faced with rising tobacco prices, many consumers are turning to counterfeit products. The parallel network is an attractive alternative for many smokers, as the supply is much more affordable.

Tobacco sales by network France, **** - ****, in Source: ****

From **** to ****, the proportion of tobacco purchased outside the official network rose sharply, from **.**% to **.**%. At the same time, legal domestic consumption fell from **.**% in **** to **.**% in ****. This trend can be interpreted as a direct consequence of the rise in tobacco prices in the traditional sales network.

5.1 Loi Evin 1991, loi de modernisation de notre système de santé 2016

Loi Evin ****

Promulgated in **** by Health Minister Claude Evin, this law reinforces the **** Veil law, and aims to control tobacco and alcohol consumption in France. [***]

With regard to tobacco, it provides for :

A ban on advertising and free or promotional distribution, except in tobacco shops Price increases A ban on smoking in public places and workplaces (***) A ban on tobacco sales to under-**s. The age was subsequently raised to ** by the Bachelot law in ****. Tobacco packets are required to show the content of various harmful substances, such as nicotine and tar The obligation to include the words "Nuit gravement à la santé" (***)

Law to modernize our healthcare system ****

Two of the main measures of the **** law[***], supplemented by Ordinance n°****-***, are the introduction of the neutral pack for cigarettes and roll-your-own tobacco, and the reinforcement of health warnings.

As regards health warnings: there is now a list of ** warnings in the form of color photographs. In addition, the words "Smoking kills" and "Tobacco smoke contains over ** carcinogenic substances" have been added to the sides of packs. In all, warnings and photographs must cover **% of the pack's surface.

The other main measures of the law to modernize our healthcare system are ...

5.2 Maximum substance contents and individual tobacco imports

Maximum substance levels

European Directive ****/**/EC introduces Europe-wide limits for various harmful substances in cigarettes and tobacco:

Tar: ** mg / cigarette Nicotine: * mg / cigarette

Carbon monoxide: ** mg / cigarette

It is permitted to bring tobacco into France from a foreign country, but there are certain rules and limits to be respected. Beyond these limits, purchases are no longer considered "personal" but "commercial", i.e. made with a view to resale.

Individual tobacco imports

In addition to paying a fine, you must be able to prove that the goods are for personal use; otherwise, you will have to pay import duties and taxes. [***]

- From a European country

As of January *, ****, each traveler (***) may hold the following quantities:

* cartons of cigarettes, i.e. *** units *** cigarillos *** cigars * kg of smoking tobacco

These quantities may be accumulated: a single traveler may hold * cartons of cigarettes and * kg of smoking tobacco, for example.

NB: some islands and territories have special regulations, e.g. the Channel Islands and the Canary Islands[***]

- From another country

Each traveler (***) may hold up to :

*** cigarettes or *** cigarillos or ** cigars or ***g of smoking tobacco

If these quantities are not respected, the traveler is faced with two options:

pay a ...

5.3 Sales, tax and rollover legislation

Sales

The decree of January **, **** prohibits the resale of tobacco products at cultural and sporting events and in health establishments. Cigarette scalpers face prison sentences

Under article *** of the French General Tax Code, the retail sale of tobacco is controlled by customs and carried out by tobacconists, who are required to pay license fees, or by holders of buyer-reseller status.

Taxation

Tobacco taxation is divided into three parts:

consumption duty vAT at the standard rate of **%; and the gross discount paid to tobacconists

Tobacco consumption duty (***) cannot be less than this minimum collection threshold. as of March *ᵉʳ, ****, pricing is as follows:

Source: ****

Under law n°****-****, these figures are set to increase over the coming months:

Source: ****

Vaping legislation

Thehealth law of ****subjects electronic cigarettes to a legal regime very similar to that of tobacco and conventional cigarettes:

Ban on additives that color emissions, create the impression that the product has health benefits, facilitate inhalation or absorption of nicotine,.... Mandatory information on packaging: composition and average nicotine content in particular No sale to minors Smoking banned in public transport, public places and enclosed workplaces No advertising, except for commercial signs on the front of the establishment or products displayed in the ...

6.1 Player segmentation

• Philip Morris International
• Imperial Brands
• Japan Tobacco
• British American Tobacco
• Altria (Philip Morris USA, Malboro)
• Logista France (Altria)
• Altadis (Imperial tobacco)
• Arnold André
• Altadis Océan Indien (Altadis Oi)
• British American Tobacco France
• British American Tobacco La Réunion (Bat La Reunion)
• Cash Tobacco
• Cie Réunionnaise Des Tabacs (Coretab)
• Conba Constant Balyu & Associés
• Coprova
• Davidoff Of Geneva France
• Jt International France
• Manufacture Corse De Tabacs (Macotab)
• Philip Morris France
• Philip Morris Réunion
• Sté Nationale D'Exploitation Industrielle Des Tabacs Et Allumettes (Seita)
• Traditab