Voluntary Report - public distribution

**Date:** 10/26/2005

**GAIN Report Number:** FR5073

FR5073

**France**

**Product Brief**

**French Market for Food Supplements**

**2005**

**Approved by:**

![](media/image1.wmf)Elizabeth B. Berry

U.S. Embassy

**Prepared by:**

Roselyne Gauthier

**Report Highlights:**

The food supplement market in France in 2004 is valued at approximately
759 million Euros (\$942 million), a 16 percent increase, compared to
2003. Although this is an increasingly active sector in France, it is
modest compared to the total European market (\$19 billion), and the
world market (\$56 billion).

The best prospects are for plant extracts, vitamins, herbal teas,
dietetic meal substitutes, fat blockets, laxative food supplements and
many innovative products offering high quality and attractive packaging.

In 2002, the European Union (EU) issued a Directive to EU Member States
to harmonize regulation of food supplements. To date, France is still in
the process of transcribing this directive, which should be finalized by
the end of this year.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Paris \[FR1\]

\[FR\]

Note: The exchange rate used in this report for calendar year 2004 is:

U.S. Dollar 1 = 0.806 Euros (Source: Paris Stock Exchange/European
Central Bank)

***SECTION I. DEFINITION AND MARKET OVERVIEW***

***a. Definition:***

As defined by the French decree of April 15, 1996, a food supplement is
a product or food that, when absorbed into the body, supplements a real
lack or supposed lack of a nutrient. The food supplement Directive
2002/46/CE, aimed at harmonizing EU rules across Member States, defines
food supplements as \"foodstuffs meant to supplement the normal diet and
which are concentrated sources of nutrients or other substances with a
nutritional or physiological function, alone or in combination, marketed
in dose form.\" In France, food supplements are not grouped with diet
foods, which are defined by a series of directives related to foodstuffs
intended to satisfy particular nutritional requirements for specific
groups within the population.

Food supplements generally come in the form of pills, capsules, or
vials. They contain nutritional additives such as vitamins and minerals,
various ingredients such as plant extracts or technological additives,
colorings, and sweeteners. Food supplement ingredients are subject to
strict and complex French regulation which are in the process of being
harmonized at the EU level (see Regulation chapter).

***b. Market Overview:***

The popularity of natural products, as well as vitamins and all things
healthy, contributes to a dynamic food supplement market in France. The
supplement market has been growing at a rate of sixteen percent a year
for the last five years. In 2004, the French market was estimated to be
worth 759 million Euros (\$942 million).

Recent French consumer surveys show that (1) 25 percent of French
households are food supplement consumers with some 500,000 new consumers
in calendar year 2004 alone. (2) 28 percent of French households are not
familiar with food supplements, and (3) 47 percent are occasional
consumers skeptical about the results.

**Food Supplement Distribution and Sales in France**

+----------------------------------------+---------------+-------------+
| **Place of Distribution**              | **Amount of   | **Percent   |
|                                        | Sales in      | of total    |
|                                        | 2004**        | sales**     |
|                                        |               |             |
|                                        | **(in Million |             |
|                                        | Dollars)**    |             |
+----------------------------------------+---------------+-------------+
| Pharmacies & Drugstores                | 626           | 66          |
+----------------------------------------+---------------+-------------+
| Specialized Stores (including          | 148           | 16          |
| diet/health shps, sport stores, beauty |               |             |
| shops and spas)                        |               |             |
+----------------------------------------+---------------+-------------+
| Supermarkets                           | 115           | 12          |
+----------------------------------------+---------------+-------------+
| e-commerce                             | 52            | 6           |
+----------------------------------------+---------------+-------------+

Source: IMS Health/Manufacturers Estimates/IRI Secodip

The French food supplement sector is in demand of new-to-market
products, and the United States, which offers diversity in that segment
has a good potential in this market provided that U.S. manufacturers
conform to French/EU standards and regulations. Also in demand are
high-tech food supplements and innovative products, the challenge for US
products being lack of knowledge from importers and retailers and tough
competition between French and European manufacturers.

Food supplements in France are becoming more popular and increasingly
carried by supermarkets, which doubled their market share over the past
two years. The absence of harmonized EU regulations does not facilitate
trade. However, several directives in draft at the EU level should be
finalized by the end of calendar year 2005.

***SECTION II. MARKET SECTOR OPPORTUNITIES AND THREATS***

***Entry Strategy***

To succeed in introducing new-to-market products, U.S. exporters must
have local representation and make personal contact. Local
representatives can provide up-to-date information on business
practices, trade laws, sales leads, and marketing and distribution
strategies. Some local representatives are also importers and
distributors. The Office of Agricultural Affairs in Paris has listings
of potential importers and distributors.

Depending on products, U.S. exporters can penetrate the market through:

-   A central buying office

-   Specialized importers/distributors

The Office of Agricultural Affairs recommends that small-to-medium size
U.S. exporters work through importers/distributors familiar with central
buying offices and supermarket buyers, which often require financing for
product listing or referencing, but share the management and promotional
costs of positioning products in the market.

***Market Structure and Trends of the five distribution circuits***

***Pharmacies and Drugstores:***

Pharmacies and drugstores are the leading distributors of food
supplements in France representing 66 percent of the total market and
annual sales of 505 million Euros (\$626 million). There are 22,750
pharmacies and drugstores in France. Most French consumers prefer to buy
food supplements in pharmacies where they can get advice on product
benefits. However, there is increasing competition from the other
distributors, such as specialized dietetic stores, sport and beauty
shops, and hyper/supermarkets. Although pharmacies and drugstores
created central buying offices such as Giphar or Optipharm to buy
products at more competitive prices, they lost sales over the past two
years to specialized stores and hyper/supermarkets.

***Hyper/Supermarkets:***

Total sales of food supplements in French hyper/supermarkets are worth
93 million Euros (\$115 million). Most of the food supplements sold in
supermarkets are natural products such as plant extracts, herbal teas
(55 percent), vitamins and minerals (24 percent), and mix of different
ingredients (21 percent). Five major manufacturers are currently
supplying supermarket stores. Supermarket sales of food supplements are
increasing at a rate of about 10 percent a year. Supermarkets should
continue gaining market share in the coming years over sales in
pharmacies, specialized stores and sport/beauty outlets, since
supermarkets allocate more and more space to food supplements and beauty
care in their stores.

***Specialized stores/sport and beauty outlets:***

Specialized stores, including sport and beauty shops represent about
3,000 outlets. A lot of them are franchises. These stores account for 16
percent of the total market with estimated sales of 119 million Euros
(\$148 million) in 2004, and a clientele mostly interested in dietetic,
organic and plant extract products. Approximately seven manufacturers
are currently supplying specialized stores. This distribution circuit is
suffering from the sales growth in supermarkets.

***Direct Sales:***

Although there are no statistics available for direct sales, including
mail order (VPC), home and internet sales, estimates suggest they total
six percent of total food supplement market sales. The number of
Internet websites selling food supplements is increasing, and they are
becoming more and more popular. These websites give customers
information on food supplement ingredients as well as the results to be
expected. This means of distribution is very dynamic, and is expected to
continue increasing in the future.

***Major Companies in the Food Supplement Sector***

  --------------------------- -------------------------------- -----------------------------
  Name of Operator            Major Brands                     Distribution Circuits

  Laboratoire Arkopharma      Phyto Naturland & ExtraVine      Pharmacies/Drugstores and
                              (plant extracts)                 Supermarket Stores

  Laboratoire Oenobiol        Oenobiol                         Pharmacies & Drugstores

  Laboratoire Physcience      Physcience                       Pharmacies & Drugstores

  Sed (Laboratoire Juva       Juvamine (vitamins), Juvaflorine Specialized Stores and
  Santé)                      (plant extraxts) and Evert       Supermarkets

  Groupe Distriborg           Equilibrance/Vendomine/Ephytem & Supermarkets & Specialized
                              Evanea                           Stores

  Laboratoire Yves Rocher     Santé Naturelle                  Direct sales

  Léa-Institut Vital          Amphorm, Floressance,            SupermarketsDrugstores &
                              Natessance, Natébio              Specialized Stores

  Laboratoire Pierre Fabre    Pierre Fabre Santé Furterer      Pharmacies & Drugstores

  Ponroy Santé Group (Yves    N/A                              Direct Sale, Pharmacies and
  Ponroy & Biohamonyl/Nutri                                    Supermarkets
  Santé, Vitamonyl &                                           
  Vitathéra                                                    

  Laboratoires Martin Privat  Specialized in plant extracts    Pharmacies & Drugstores and
                              and vitamins                     Specialized Stores

  Roche - R.C.H.              Minerals and vitamins (Santogan) Pharmacies
  --------------------------- -------------------------------- -----------------------------

  -------------------------------- ---------------- ----------------------
  Sandoz (Nutrition et Santé)      Cereal & Gerble  Supermarkets

  Laboratoire Inneov (joint        Top line of      Pharmacies
  venture between L\'Oreal &       firmless & hair  
  Nestle)                          products         
  -------------------------------- ---------------- ----------------------

Source: AC/Nielsen Panel

In reaction to French consumer demand, large food industry groups such
as Dannon and Nestlé are increasing investigating in the health
food/supplement sector, resulting in a hybrid market half way between
food and medicine, called \"aliments-santé\" (functional foods). In
fact, recent mergers between pharmaceutical and food industries should
reinforce the development of functional foods to the detriment of some
current standard food supplements. As an example, in 2003 the creation
of Inneov, a joint venture between L\'Oreal and Nestle, two large
industry groups one in the cosmectics and one in the food sector,
resulted in a top line of body firmless and hair supplements sold
uniquely in pharmacies.

***SECTION III. COSTS AND PRICES***

Pharmacies and drugstores generally carry innovative products in this
category at higher prices; consumer research shows buyers are unwilling
to pay these prices in supermarkets. At prices over \$7.00 per unit, the
French consumer generally prefers to buy a food supplement in a pharmacy
or a drugstore where consultations on the products\' benefits are
available.

***SECTION IV. MARKET ACCESS***

***Custom duties***

Food supplements are generally classified under the harmonized system
(HS) 21 06 9098. However, this classification may differ according to
the percentage of ingredients in the product. The French customs office
is the agency responsible for determining the final classification of a
product and can be reached at the following address:

Direction Generale des Douanes

Bureau E-4

8, rue de la Tour des Dames

75436 Paris Cedex 09

Tel: (33-1) 55 07 46 55

Fax: (33-1) 55 07 48 60

Email: dg-e4@douane.finances.gouv.fr

Internet: www.douane.gouv.fr

***Regulation***

***General Information:***

The EU issued a directive in 2002, giving a precise definition of a food
supplement, and authorizing the use of 13 vitamins and 15 minerals.
Prior to 2007, the EU should issue a directive authorizing use of
additional plant extracts, fibers, aminated and fat acids. Recent and
pending legislation on food supplements is changing the EU market for
nutritional products from 25 separate regulatory regimes to a harmonized
set of rules. In an effort to harmonize the EU market for food
supplements and similar products, the European Commission has undertaken
the drafting of legislation on dietetic foods, food supplements,
nutritional and functional claims, herbal medicinal products and
fortified foods.

For additional information on EU directives on food supplements, herbal
medicines and dietetic foods, see the following website:
http://www.europa.eu.int.

***Composition:***

The percentage of ingredients (vitamins/minerals and additives) in the
product should correspond to the daily-recommended allowance determined
by the French Research Center on Nutrition and Food. If the percentage
of vitamins/minerals or additives is above the daily-recommended
allowance or if they are not listed in the French decree of 12/2/93, the
manufacturer or importer must request a special authorization from the
French Public Superior Council for Hygien (CSHPF) to market the product.

***New EU Directive on Food Supplements:***

The new EU Directive 2002/46 on food supplements, Annexes I and II,
lists vitamins/minerals and other substances, which may be used in food
supplements. Vitamins/minerals and other substances not listed in these
annexes of the EU Directive may be authorized by Member States on a
case-by-case basis until December 31, 2009, provided (1) that the
substance contained in the food supplement was already sold in the
European Union prior to this directive and (2) that the EU Food Safety
Authority has not issued unfavorable advice for the sale of the
substance. In that case, a specific file needs to be submitted by the
Member State to the European Commission.

***Labeling:***

Labels should be in French and include the following basic information:

-   Product definition

-   Shelf life

-   Precautionary information or usage instructions, if applicable

-   List of ingredients and their percentage relative to daily
    recommended allowance

-   Weights, volumes, etc., in metric units

-   Product's country of origin and nane of importer or vendor within
    the EU

-   Manufacturer's lot or batch number

***Advertising:***

A food supplement is not a medicine and consequently advertising and
labeling should not indicate any curative or preventive properties. A
list of forbidden claims is listed in the official bulletin of the
General Direction for French Consumption, Competition and Fraud (DGCCRF)
of October 7, 1997.

***French Dietetic and Food Supplement Trade Association Concerns:***

While vitamins and minerals are harmonized (they represent approximately
30 percent of the total market for food supplements), other ingredients
such as fatty and amino acids, plants and plant extracts, are still
regulated by each Member State. For plants, France has a list of 34
medicinal plants authorized for use in food supplements. In 1999, the
French Ministry (DGCCRF) and the French Association for Food Safety
(AFSSA) created a working group aimed at extending the list of
authorized plants. To date, 4 lists have been determined by DGCCRF and
AFSSA, however, none of them has been validated yet.

***SECTION V. BEST PRODUCT PROSPECTS***

In supermarkets, the best selling products are plant extracts, herbal
teas and phyto-vitamins (a mix of plant extracts and vitamins). Despite
competition from French manufacturers, if imported products are of good
quality, reasonably priced, with attractive packaging they can find a
niche in the market.

In pharmacies and drugstores, opportunities exist for U.S. exporters
carrying innovative products such as green mixtures (extracts of young
shoots of wheat, oat and barley) rich in vitamins and oligo-elements. In
addition, vitamin C, representing ten percent of the total market of
food supplements in supermarkets and 21 percent in pharmacies is also in
demand. Other products such as fat blockers, dietetic meal substitutes
and laxative food supplements also represent best product prospects for
U.S. suppliers offering quality and innovative packaging.

***SECTION VI. KEY CONTACTS AND FURTHER INFORMATION***

For further information contact:

Office of Agricultural Affairs

American Embassy

2, avenue Gabriel - 75382 Paris Cedex 08

Tel: (33-1) 43 12 2264

Fax: (33-1) 43 12 2662

Email: [agparis@usda.gov]{.underline}

Internet: [http://www.amb-usa.fr/fas/fas.htm]{.underline}

For more information on exporting U.S. food products to France, visit
our homepage. The homepage includes "The Exporter Guide", the "HRI Food
Service Report" and the "Retail food sector Report", as well as "Food
and Agricultural Import Regulations and Standards", product briefs on
the market potential for U.S. products, upcoming promotional trade shows
and fairs in France.

Importer/distributor lists as well as major French supermarket buyers
addresses are also available from our office to exporters of U.S. food
products.

For more information on exporting U.S. agricultural products to other
countries, please visit the Foreign Agricultural Service homepage:
[http://www.fas.usda..gov]{.underline}