The sale of tobacco at supermarkets will be banned in 2024. What are the constraints and opportunities for the supermarket business? – mr. C. Damen – dated December 8, 2020

To promote and discourage smoking cessation, the sale of tobacco in supermarkets will be banned in 2024. At the proposal of State Secretary Blokhuis of Health, Welfare and Sport, the Council of Ministers has agreed to a major reduction in the number of tobacco outlets and aims to reduce the number of smokers by approximately 120,000 by 2030. In the motion, the government urges to enter into talks with supermarkets to achieve a rapid reduction in the sale of tobacco products. In 2024, the sale of tobacco will stop in approximately 6,400 Dutch supermarkets. It is the government’s aim to gradually phase out the sale of tobacco after 2030, successively at filling stations and tobacco and convenience stores, after which only specialty stores will be able to sell tobacco. In 2021, it will be examined how the phase-out after 2030 can best take shape, so that a subsequent cabinet will decide on this.

At the moment, however, it is still unclear which rules will apply to the phasing out and eventual ban on tobacco sales. The most important policy framework for local tobacco policy is the Tobacco and Tobacco Products Act. In addition, letters to Parliament and national prevention programs give direction to the implementation of local policy. In addition, international treaties apply to which Dutch policy must conform. Its main objectives are in line with the goals set by the World Health Organization (WHO) and the EU European Union. These objectives are aimed at preventing young people from starting to smoke, helping people to stop smoking and protecting people against tobacco smoke.

The ban on the sale of tobacco in supermarkets will have a greater or lesser impact on turnover, depending on the location and type of supermarket. Although the margin on tobacco products usually does not appear to be large, the decline in tobacco sales also has an impact on any goodwill agreements upon the sale of the company. These calculations are sometimes based on weekly supermarket sales plus a variable factor. For other supermarket entrepreneurs, the future profit expectation plays a role in determining goodwill. According to a recent financial analysis, turnover from tobacco sales appears to be particularly large in smaller shops in deprived areas and large cities. The general expectation is that turnover may fall as a result of the tobacco ban, the minimum percentage margin will remain the same and the amounts may be compensated with a different interpretation of tobacco and convenience services.

In addition to the investments required by the measures to cover tobacco products from 1 July 2018, the phasing out of tobacco sales requires possible alternatives. If and insofar as there is a desire to still sell tobacco articles, it can be investigated whether a separate room or location for the sale of tobacco, in an entity to be set up separately for this purpose, offers a solution. In this way, the sale of tobacco would no longer be carried out from the supermarket entity and the current plans of the government seem to allow this way until 2030 to sell both tobacco and convenience services. After 2030, according to the government’s current plans, the newly created entity can then serve as a mere specialty store, where tobacco could also be sold after 2030.

If you are confronted with the expiration of the franchise agreement and making other agreements, you should be alert.

mr. C. Damen – franchise lawyer
Ludwig & Van Dam Franchise attorneys, franchise legal advice.
Do you want to respond? Go to damen@ludwigvandam.nl