We have to go back to the commercial offensive. For that we must change our software. I am optimistic because we have the first network of proximity of France, tobacconists who do not count their time and a real affect with the French. In addition, among our 10 million customers per day, 42% are not smokers: they come to buy a phone card, crosswords, the press, confectionery, even open a bank account, with already 860,000 Nickel accounts, one true success story … It would still be amazing that we can not transform the test!
Diversification will go through the electronic cigarette?
In the future, we will have three tobacco liners: the classic products, the electronic cigarette and the heated tobacco. Five years ago, I accidentally discovered vaping. I was amazed to learn that the products were bought in pharmacies, but not at home! The confederation did not want to hear about it. In addition, as the quality of equipment and liquids has dropped, the wave has dropped a little.
But we must invest in this market, even though it has only 2 million consumers today. Because it is the smokers who switch to the e-cigarette. Migrating to this new consumption will allow us to keep our current customers. It is not expensive, but there is volume, and margins above 60% against 8% for tobacco.
Are you ready to reduce tobacco consumption, your core business?
Absolutely. I do not hesitate to say that we have a public health role to play, even if it is shocking to some. I also suggested to the Minister of Health that the tobacconists be partners of the “month without tobacco” operation in November. We can tell the smoking client that there are alternative offers that are less harmful. It would be the “month of the vape”.
Take England as an example of e-cigarettes as a means of weaning or moving away from tobacco. Moreover, we note that vapers self-reduce their addiction: three or four years ago, they smoked liquids containing 12 to 16 mg of nicotine, the equivalent of Camel or Marlboro cigarettes. Now they buy liquids between 3 and 6 mg – comparable to blue Philip Morris.
In February, tobacconists got 100 million euros from Bercy to manage the decline in sales from 2018 to 2021. Why?
We wanted to diversify, but few ways to do it. Gérald Darmanin, the Minister of Action and Public Accounts, promised us help with the transition, but not ad vitam aeternam. The new transformation fund with 80 million euros, or 20 million a year, will target around 2,000 tobacconists. It replaces the aid for the modernization of 10,000 euros per point of sale, which was pointed at the tobacco area.
This will allow us to renovate our businesses and fund a network observatory. Because we do not know where is the diversification of tobacco shops. With this data, we will be able to publish a roadmap for the network by the end of the year. The model is supermarkets, able to help its network of convenience stores and drive change through its global vision. We will propose to the tobacconists concepts, kits to diversify.
Do you think you have relaxed the financial constraint?
Our profession is under strong economic tension. That’s why I signed three framework agreements with our key partners in February, three months after taking office: the 2 with Bercy, the 5 with the French games, the 15 with our main distributor, Logista. The latter has made a move to relieve our cash to the tune of 90 million euros, by extending by one day its withdrawal period and by increasing the proportion of goods stored on credit. It is in Logista’s interest to help us hold, because if the attrition of the network gets worse, the tobacco companies will demand the end of the monopoly of the tobacconists.
What did you get with the French games?
The French games, it is 572 million euros of remuneration for tobacconists. It is also a big workload, a responsibility and explanations to give to the players. I took the initiative to go to the CEO of the French games, Stéphane Pallez, to talk about our remuneration that had not changed for a long time. She listened to us because we make 76% of the turnover of the FDJ.
We signed a contract that brings in an additional € 48 million a year. The tobacconist no longer pays for his gambling furniture, which saves him 1,000 euros a year. On January 1, 2019, the board of the French game, uniform 5.2% today, will be modulated. All prints are revalued. Some addictive scraping will not move, for reasons of public health. On simple sports betting, a segment struggling with the rise of the Internet offer, our remuneration will fall by 1 point. The FDJ has the ambition to conquer 1 million customers. It’s in our mutual interest. It remains to be discussed with the PMU, but it is a more complex file.