About a year ago, the French government and the Confederation of Tobacconists signed an agreement to limit the impact of increasing tobacco prices. In this context, the Government is working to help them diversify. To this end, a transition plan was established for tobacconists.
The state has planned an 80 million Euro envelope to achieve this until 2021. This budget will serve to finance expenses by tobacconists planning to renovate their business, the sum covered representing 40% of the cost of works, that is to say 33 000 euros. This strategy seems to be unavoidable, given the spectacular drop in sales of cigarettes. Until recently, tobacconists were entirely dependent on this activity, and as a result are now forced to reinvent their business to progressively disconnect from cigarette sales.
A profession undergoing significant change
The French Tobacconist Confederation estimates that currently in France, there are 24 500 businesses that survive only thanks to their monopoly of tobacco sales, which represents 60 to 80% of their revenue. The recent historic drop in sales was due in large part to the significant tax hike established in March 2018 which drove cigarette prices to over 8 Euros, and will increase them further to 10 Euro by November 2020. As a result, smokers are packing up and quitting the habit. Another influential factor could be the national anti-smoking policy, which has a positive impact on the public image of smoking.
Everyone knows that smoking-related diseases can kill. Tobacco kills 75 000 people in France every year. As stated by Philippe Coy, president of the French Confederation of Tobacconists, the new fiscal year will allow them to adapt and take on new types of business.
Their customers will find vaping products available, but also various services such as delivery pick-up points, local products, snacks and other products. Alongside this government measure, the confederation is also negotiating with the country’s lottery operator (Française des Jeux) on the subject of gambling commissions, which represent on average 30% of tobacconist revenues.