The last cigarette manufacturing factory will be closed at the end of the year and let’s talk about the French tobacco industry

The last cigarette manufacturing factory will be closed at the end of the year and let’s talk about the French tobacco industry

When the French tobacco industry is mentioned, the first word that comes to mind is “shrinkage”. France's last cigarette manufacturing plant, Macotab, will close at the end of this year, which means that France's cigarette production will also end. The factory, located in Corsica, produced cigarettes for Philip Morris International but recently terminated its contract.

Due to the phase-out of EU tobacco subsidies in 2006, France's tobacco planting area has also decreased, from 3149 hectares in 2016 to 1205 hectares in 2021. According to Statista, French tobacco sales are expected to decline by nearly 1% annually between 2023 and 2028. In 2022, the French tobacco market experienced its worst value decline in ten years.

Government steps up tobacco control efforts

About three years ago, France raised tobacco excise tax to 6.61 euros, well above the EU average of 3.34 euros. The government has since continued to increase taxes on roll-your-own cigarettes (RYO). With a pack of 20 cigarettes now costing 11 euros and a 30-gram pack of rolled tobacco costing 15 to 20 euros, the RYO market has declined more than the cigarette market.

In 2023, France has an ambitious plan to continue to increase tobacco taxes, ban disposable e-cigarettes, and further restrict outdoor smoking. The plan aims to reduce the health effects of tobacco consumption and create a "smoke-free" generation by 2032, where less than 5% of the population smokes.

In addition, the government also plans to ban smoking near beaches, schools and other public buildings, in parks and forests by 2024. Local authorities have previously banned smoking in more than 7,000 outdoor locations, including beaches, forests and parks across the country, but there has been no nationwide ban. The government also wants to extend plain packaging requirements for cigarette packages to e-cigarette products and set a minimum price of 13 euros ($14) per pack.

Smoking rates no longer falling

Although the government has formulated strict tobacco control plans, the effectiveness of tobacco control in recent years has not been ideal. According to data from French public health authorities, between 2016 and 2019, the smoking rate fell from 34.5% to 30.4%, and the number of daily smokers fell from 29.4% to 24%, consistent with a regular decline over the past few decades. But since 2019, smoking rates have remained essentially unchanged. Currently, nearly a quarter of French adults, or about 12 million people, still smoke every day.

According to the ACT Alliance Contre Le Tabac survey released in November, about 15% of teenagers have smoked e-cigarettes, and 47% of them started consuming other nicotine products after using e-cigarettes.

Illegal trade is rampant

Harm reduction tobacco campaigners have raised concerns about a planned ban on disposable e-cigarettes, saying it is a step backwards in the fight against smoking. Michael Landl, director of the World Smokers Federation, said such bans would only drive consumers back to smoking or into the black market. France should learn from the tobacco control experience of countries such as Sweden, whose harm reduction approach has brought significant public health gains. The French government must recognize the importance of providing smokers with a variety of less harmful alternatives.

France’s cigarette excise tax is almost twice the EU average. The government has raised tobacco taxes and the smoking rate among residents remains high, which will inevitably stimulate the huge illegal tobacco trade. It is reported that France is one of the largest illegal cigarette trade markets among EU member states, accounting for almost half (47%) of illegal consumption in the 27 EU countries. According to a study commissioned by Philip Morris International and conducted by KPMG, illegal trade in France accounted for 29% of total consumption in 2021, increasing to 32% of total consumption in 2022.

Gabriel Attal, deputy minister of the French Public Accounts Committee, said that tobacco smuggling sets new records every year and is not only accelerating but also undergoing profound changes. In 2021, France dismantled four illegal tobacco production factories.

In 2022, French customs seized nearly 650 tons of tobacco, including 473 tons of cigarettes, in nearly 17,000 crimes. In the same year, the combined value of all products seized on French soil exceeded 213 million euros ($238.24 million).

CTS Corporation

However, in this terrible environment, some remarkable success stories have also been born, such as CTS. Founded in 2016, CTS is a medium-sized company headquartered in Belgium with offices in France and Spain. It currently produces and sells four brands of hand-rolled tobacco, focusing on the concept of "producing areas", specifically related to the impact of crop manifestations. Types of environmental factors, including unique environmental context, agricultural practices and growing habitats.

The company's best-selling product is 1637. In October 2023, this product became the third best-selling brand of hand-rolled cigarettes in France. Tobacco raw materials are produced in southwestern France, and 1637 refers to the year when tobacco was first grown in the region. At that time, there were not many organic tobacco products, but they were popular. CTS started with 20 tons of tobacco, gradually increased production, and lobbied tobacco companies to sell their products and support growers.

This approach works well in France. It’s no secret that France prides itself on its domestically produced cheese and wine varieties with clear origins. Therefore, CTS applied the same concept to the tobacco market. CTS works with 120 tobacco farmers in France to grow nearly 300 hectares of tobacco in the area between Bordeaux and Lot-et-Garonne. The farm is very small, and tobacco is only one of the crops grown. Usually the tobacco planting area is 2-4 hectares.

The CTS aims to preserve a region with a centuries-old tradition of growing tobacco, but faces challenges including finding new farmers, tobacco promotion issues, and issues of economic viability. CTS is currently working to solve these problems, find ways to maintain tobacco cultivation, and try to create a better future for growers.
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