French tobacconists receive 80 million Euro government subsidy
For the past few years, tobacconists have suffered a drastic drop in sales, and 2018 was a particularly hard year. On average, each store saw a 9.32% drop in tobacco sales, equivalent to 40.23 billion cigarettes. To help tobacconists, the government recently instated a “transformation plan.”
In France, 24,500 tobacconists continue to fight for survival despite the constant price increases of tobacco. In the last 15 years, 8,000 tobacconists had to close their doors. To combat this troubling phenomenon, the government’s “transformation plan” will allocate 80 million Euros to the struggling sector. The goal is to allow various locations to begin selling new products.
Today, 60-80% of all tobacconist revenue comes from tobacco sales. With the 80 million Euros in subsidies, the government is hoping that tobacconists can start selling new products and services to their customers. A maximum sum of 33,000 Euros per location has been allocated to allow for new construction and equipment, and the subsidy is capped at 40% of the total investment.
Diversify to survive
For tobacconists, one of the options is to develop a sales point for vaping products. This market, long ignored by tobacconists, has captured the attention of the majority of the tobacconists’ clientele. Today, e-cigarette sales continue to rise, and predictions suggest the boon will continue throughout 2019. In order to stand out from the competition, it is imperative that the managers of these tobacconists offer additional products and services.
Today, tobacconists control a monopoly on lottery tickets, and the Confederation of Tobacconists is currently renegotiating the terms with the French games authority. The commission should go from 1.8% to 2.25% to increase their benefits. Thanks to the government subsidy, other options are opening up for tobacconists: some stores can sell regional products, or otherwise develop concierge services, and even package collection and delivery services.
