According to a study published by the Xerfi Institute, the French e cigarette market is returning to growth after two years of turbulence. The institute even evokes a favourable context for the future of e cigarettes in France.
A necessary maturation phase
The French e cigarette market posted indecent growth of more than 140%. Like any new market, the vaporizer market has developed in a frenetic, even anarchic fashion. The number of points of sale, marginal in 2010, literally exploded until 2015. The number of signs followed the same trend. And while growth slowed down in 2014, showing a 43.6% increase, it is 2015 that will mark the end of this eldorado.
That year, the French vaporizer market declined by -10%. And the decline, which continued in 2016 to the tune of -5%. This market slowdown has inevitably led to the closure of many points of sale. Some 600 ecig stores would thus have shut down. However, this period of settling is neither surprising nor alarming. It is even perfectly rational for a new market which, after euphoria, needed a necessary structuring to enter a period of maturity.
Prospects for sustainable growth
Far from declining, the e cigarette market is entering a new cycle and seems to be moving towards a stable and sustainable growth phase. This is at least what the various observers agree on and what the Xerfi survey highlights. The Institute anticipates a return to growth in 2017, accentuated in 2018 and in the years to come. From 350 million euros in 2017, electronic cigarette sales could reach 500 million euros by 2020.
These good prospects are justified by a favourable context. The market now benefits from the regulatory framework that was sorely lacking, and the vaporizer has moved away from the gadget product image to become a true mainstream product. Finally, the announced government measures to combat tobacco use, notably the drastic increase in the price of a cigarette pack, undoubtedly benefit the industry’s players.
There won’t be one for everyone
However, not everyone will benefit from this market recovery, as Xerfi points out, pointing to the inevitable pursuit of a “concentration around a few leading brands such as J Well, Vapostore or Clopinette”. Manufacturers of e-liquids will also face extreme competition from the market and saturation of supply. According to Xerfi, there are currently more than 50 national brands on the territory and about 30 foreign brands. In addition, several distributors are now producing their own e-liquid.
In terms of distribution, vape shops are also directly confronted with competition from tobacconists. Many of them have taken the measure of the phenomenon and measured the attractiveness of the product as a reliable alternative to offset the inevitable fall in tobacco sales that would result from the rise in the price of a pack of cigarettes to €10. Undoubtedly, the major assets of the tobacconists are their proximity and an established and loyal clientele. However, according to Xerfi, it is the tobacco giants who should benefit from the incomparable territorial network of 14,000 tobacco offices.
Big Tobacco wants his share of the cake
Tobacco companies have privileged relationships with wholesalers and tobacconists and also have considerable marketing power. Already enjoying leadership in several important markets such as the United States, the United Kingdom, Japan and Eastern Europe, cigarette manufacturers seem to find it more difficult to impose their vapes on Germany, Italy and France, even if they redouble their efforts to penetrate these markets. Xerfi cites in particular Japan Tobacco International’s approach, which “opted for a distribution model in France that is not exclusive to the tobacconists of its e-cig Logic”.
In summary, although the vape market is unquestionably returning to the forefront in France, competition remains exacerbated and the concentration around major brands will continue. They will have to deal with the tobacco industry, which does not intend to let this money slip away and has considerable resources at its disposal. The market should thus continue to structure itself, with the emergence of leading brands and brands that will have to consolidate their position. On the customer side, after the acquisition