According to a study published by the Xerfi institute, the French electronic cigarette market is returning to growth after two years of turbulence. The institute even evokes a favorable context for the future of electronic cigarettes in France.
SOME DIFFICULTIES FOR A MARKET THAT IS PROFESSIONALIZING!
In 2013, the French e-cigarette market showed an indecent growth of more than 140%. Like any new market, that of the electronic cigarette has developed in a frantic, even anarchic way. The number of outlets, marginal in 2010, has literally exploded to 2015. The number of stores followed the same trend. And if growth fell in 2014, still showing a progression of 43,6%, it is the year 2015 which will sound the death knell of this eldorado.
That year, the French electronic cigarette market recorded a decline of -10%. And the decline that continued in 2016 up to -5%. This slowdown in the market has inevitably led to the closure of many outlets. Some 600 ecig stores would have put the key under the door. However, this period of settlement is neither a surprise nor alarming. It is even quite rational for a new market that, after the euphoria, needed a necessary structuring to enter a period of maturity.
THE VAPE MARKET: TOWARDS STABLE AND SUSTAINABLE GROWTH!
Far from decline, the e-cigarette market enters a new cycle and seems to be moving towards a phase of stable and sustainable growth. This is at least what the different observers agree and what the Xerfi inquiry highlights. The institute anticipates a return of growth in 2017, accentuated in 2018 and in the years to come. 350 million euros in 2017, Electronic cigarette sales could reach 500 million in 2020.
These beautiful prospects are legitimized by a favorable context. The market today benefits from the regulatory framework that was sorely lacking and the electronic cigarette broke away from the product image gadget to become a true product of everyday use. Finally, the announced government measures to combat smoking, includingdrastic increase in the price of the cigarette package, play unquestionably in favor of the actors of the sector.
However, Not everyone will benefit from this market recovery as pointed out by Xerfi, which evokes the inevitable pursuit of «concentration around a few leading brands such as J Well, Vapostore or Clopinette». Manufacturers of e-liquids will also be confronted with the extreme competition of the market and the saturation of the supply. According to Xerfi, there are currently more 50 national brands on the territory and about thirty foreign brands. Not to mention that several distributors now produce their own e-liquid.
In terms of distribution, electronic cigarette shops are also directly confronted with the competition of tobacconists. Many of them have taken the measure of the phenomenon and measured the attractiveness of the product as a reliable alternative to overcome the problem.inevitable drop in sales of tobacco that would drive the rise in the price of the pack of cigarettes to 10 €. The major assets of the tobacconists are, without question, the proximity and an established and faithful clientele. The big brands of the market can of course rely on the tobacconists to distribute their products. Yet, according to Xerfi, it is the tobacco giants who should benefit from the incomparable territorial network of 14.000 tobacco shops.
BIG TOBACCO FUTURE LEADER OF THE VAPE MARKET?
Tobacco manufacturers have privileged relations with wholesalers and tobacconists and have, in addition, considerable marketing power. Already enjoying leadership in several important markets such as the United States, the United Kingdom, Japan or Eastern Europe, tobacco companies seem to have more trouble imposing their e-cigarettes on Germany, Italy or Franceeven if they redouble their efforts to penetrate these markets. Xerfi cites in particular the approach of Japan Tobacco International which « opted in France for a distribution model that is not exclusive to the tobacconists of its e-cig Logic ».
In summary, if the e-cigarette market is undeniably back in France, competition is still exacerbated and the concentration around major brands will continue. They will have to rub shoulders with the tobacco industry which does not intend to let slip this money and has considerable means. The market should continue to be structured, to emerge brands and reference brands that will consolidate their position. On the customer side, after the acquisition, the retailers now have to work on loyalty.
