By Jonathan Bell

France’s tobacco product market is a good one for study. The market is matured but within its purchasing sectors evolves among product genres in ways that provide information on European consumer preferences.

The market is strong economically having suffered least perhaps in the European Union during the Great Recession. Living standard endures quite high. France is a nation that, by nature, tolerates smoking and maintains tobacco products in its cultural heritage. The country receives more tourists than any other, yet another positive factor in its smoking products profile. Finally, France is a nation of relatively sophisticated buyers whose tastes set trends.

Cigarillos and Cigars
Sales figures for cigarillos and cigars (C & C) are not segregated. In 2009 the French C & C market consumed 1.58 bn units, a reduction of 3.2%. Value came to 500 mn Euros, off 1.7%.

Purchasing in 2009 was the weakest in volume since 1997. The three-year period 2004 - 06 gives an average annual sales of 1.85 bn units while the current three-year period of 2007 - 09 shows an average of 1.63 bn units. Although alarming, the apparent loss of more than 200 mn cigarillos and cigars from the market should be seen in perspective of the ban in 2008 on smoking in French cafes, restaurants and hotels, an event of major repercussions. The ‘recession’ climate figures as another factor.

Obviously the C & C market is in a tumultuous period and although results in 2009 indicate stabilization the scene remains volatile. Impact is somewhat more on ‘cigars’ - in weights of three grams or more - than on cigarillos. This is so because France is a cigarillos market. The great majority of C & C sales are of cigarillos.

Cigar sales are also more sensitive to smoking-bans and economic climate. Currently too French cigar sales, including its relatively stable premium sector, see effects of increased cross-border, duty free and internet sales.

Leaders in France’s C & C market all figure in for their cigarillo products. The top ten companies on the market are Scandinavian Tobacco with 22% share, Imperial with 20%, Agio holding 15.4%, J. Cortes at 15.3%, Swedish Match with 12.4%, Verellen with 5.4%, Arnold Andre at 4.6%, Danneman at 1.1% and Toscano with 0.1%.

Top ten brands are Café Crème, Scandinavian Tobacco (15.4%); Neos, J.Cortes (12.2%). La Paz, Swedish Match (6.1%); Mehari’s, Agio (8.2%); Fleur De Savane, Imperial (6.8%); Ninas, Imperial (5.5%); Havana Stokjes, Verellen (5.4%); Panter, Agio (4.7%); Clubmaster, Arnold Andre (4.3%); and Havanitos, Imperial (3.6%). Together these ten brands take 74.4% of C & C sales.

Trends in France for the C & C sector: good price for value ratio, fewer new launches, and advent of the ‘cigarlette.’ Following EU statutes cigars/cigarillos are no longer to have homogenized leaf wrappers; if cigarillos maintain them they fall under cigarette designation and are termed cigarlettes, which have sales in France of about 100 mn units. Also there is the continuing growth, albeit slow, in flavored C & C with the sector reaching 17.3% of sales. The filtered aroma sector conversely is expanding robustly at 16% per year, although these products still hold a small overall share of 2%.

STK - SM
With the merger of Scandinavian Tobacco and Swedish Match the French retailers can expect to see further concentration of sales into leading brands. The new company, STG-SM, will indeed hold 34% of the French C&C market; 64% of the market in Belgium, almost 50% of The Netherlands market, 80% of total cigar sales in Denmark, 36% in the UK, not quite 7% of the Spanish market, and somewhat less then 25% of the Portuguese cigar/cigarillos market.

The gangbuster small cigars of the new Group are Café Crème and La Paz in Europe and the cigar labels Macanudo, Don Tomas, Partagas and CAO among other trademarks in the USA. CAO is also being heavily promoted to retailers in Europe. For its part Swedish Match is retaining ownership of its highly profitable snuff portfolio and of its mass-market cigarillos in the States.

President of the new Group is Anders Colding Friis, with offices in Copenhagen. STG-SM raises the theme of pipe tobacco products markets because it will dominate these in Europe as well with its leader brand families of Orlik and Borkum Riff.

Pipe Tobaccos
In 2009, French pipe smokers bought 515 tons of product. This at a value of 68 mn Euros, showing a decline against sales in 2008 of minus 6.9%.

The six companies dominating the market in 2009 are Imperial with sale of 408 tons, Philip Morris - 52 tons - Scandinavian Tobacco with 24 tons, Mac Baren selling 12 tons, Poeschl - 11 tons - and Bat with sales of one ton.

The market brand leaders were Scaferlati, 37%; Amsterdamer, 19.9%; Bergerac, 10%; Le Superieur, 8.1%; Caporal, 5.6%; St. Claude, 4.8%; Amphora, 3.2%; Clan, 3.2%; Habibi, 2%; Radford’s, 0.9%.

Products by Imperial, Philip Morris, Scandinavian Tobacco, MacBaren and Poeschl all gained share during the year.

RYO Tobaccos
The market for roll your own tobaccos, including tubes of course, remains the most dynamic sector in France. In 2009 sales slid back 0.3% to 7,772 tons yet this in context of the overall market is ‘stability.’ For many it proves the durability of the new French market for RYO tobaccos, one that has expanded by nearly 10% during this decade of the new century.

Sales volume growth aside it is the holding pattern of strong expansion in product sales value that keeps manufacturers and retailers with their eyes on France. Product value has more than doubled in the same decade period, rising from 537 mn Euros in year 2000, to 7,772 mn Euros last year. For the tobacco industry this is incredible.

Fanning the fire are innovations. In package style this trends to a wider variety of product weights on offer, and too of packaging styles for rolling and for tube tobaccos. Additions to RYO tobacco array have also taken off - original blends, 100% tobacco blends, American and ‘pure’ blend styles. Another fertile growth area in France’s RYO market has been for products bearing cigarette brand names.

Leaders in the French RYO markets by volume of sales are as follow, with difference from year 2008 given in parentheses: BAT, 1,647 tons (-7.1%); Imperial, 1,537 tons (-2.9%); Gryson, 1,537 tons (+10.2%); Philip Morris, 1,415 tons (-7.3%); JTI, 947 tons (+4.8%); Poeschl, 76 tons (+58.5%); H.V.Landewyck, 64 tons (+25%); Traditab, 23 tons (+688.7%); Scandinavian Tobacco, 6 tons (+308.5%).

By weight, Gryson achieved the most gains during the past year continuing its strong showing on international RYO markets.