Tobacco in France

Tobacco’s performance linked to number of factors in 2018

The performance of tobacco in France was negatively impacted by a number of factors in 2018. Stronger current value growth was linked to huge increases in unit prices for cigarettes, cigars and cigarillos and smoking tobacco due to successive tax hikes in November 2017 and March 2018.

Consumers look to cheaper alternative methods of smoking

The positive current value growth recorded by e-vapour products towards the end of the review period intensified in 2018 following the high tax hikes for cigarettes and other traditional tobacco products, encouraging some French smokers to turn to alternative methods. E-vapour products benefit from being much cheaper than cigarettes or fine cut tobacco, but also experienced a growing number of innovative products enter the category, attracting consumers.

Multinationals continue to dominate in a concentrated market

The competitive landscape within tobacco remained fairly concentrated in 2018, with Philip Morris France SAS strengthening its leadership of cigarettes, gaining retail volume share from second-ranked Seita Groupe Imperial Tobacco SA and third-ranked British American Tobacco France, while JT International France SAS also continued to gain ground. However, with cigarettes performing poorly in 2018 due to price hikes, all players experienced overall decline in retail volume terms.

Lifeline offered to buralistes to distribute e-vapour products

While bar-tobacconists continued to dominate distribution of cigarettes in 2018, increasing taxes and the emergence of illicit trade forced several “buralistes”, as they are known locally, to close, encouraging the government to provide subsidies to help buralistes diversify their activities at the end of the review period. One such activity was to improve their offer of e-vapour products, with the latter category enjoying strong growth and increasing distribution through traditional grocery retailers.

Positive forecast for e-vapour products and heated tobacco devices

Over the forecast period, retail volume sales of cigarettes, cigars, cigarillos and fine cut tobacco are predicted to continue declining as they continue to be adversely impacted by the high tax hikes at the end of the review period, in addition to falling smoking prevalence due to growing awareness of the dangers of smoking and, to a much lesser extent, plain packaging. Cigarettes will also continue to be negatively affected by growing demand for illicit trade, while fine cut tobacco, which was previously used as a cheap substitute for cigarettes, is also likely to become increasingly expensive.

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