Convenience Store News

MAR 2017

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84 Convenience Store News | MARCH 2017 | WWW.CSNEWS.COM Spotlighting major industry events OUT ABOUT & Zeroing In on the Backbar Tobacco Plus Expo 2017 takes a close look at tobacco in the convenience channel By Melissa Kress A fter experiencing some high points in 2015, the cigarettes business is back to its historical deceleration rates. Yet even with its challenges, cigarettes — and the tobacco category as a whole — still ranks at the top of the convenience channel's in-store categories. Tobacco's performance in convenience stores was a topic of discussion at the recent Tobacco Plus Expo (TPE) 2017, held Jan. 25-26 at the Las Vegas Convention Center. Backbar offerings account for a large part of the business at Cumberland Farms stores. During a panel session, Anne Flint, senior category manager at the Framingham, Mass.-based chain, shared that Cumberland Farms' approximately 550 c-stores total $1 billion in annual revenue, and tobacco comprises about 45 percent of the business on the revenue side. Of that, the combustible segment generates approximately 40 percent to 45 percent of the revenue. Cumberland Farms saw a 4-percent increase in the combustible segment in 2015, and a 1-percent increase in 2016 — two very good years, Flint noted, adding: "I spend a lot of time on combustible." She did acknowledge, however, that "it's a little concerning, the last three months of the year [2016] were not as good as the beginning of the year." While Flint expects cigarettes, in general, to return to its normal decline of 3 percent to 4 percent for 2017, she said she doesn't "expect Cumberland Farms will be down that much." And as for other tobacco products, smokeless has experienced some "very good increas- es," she reported, also noting that the chain saw some gains in alternative tobacco products when it added them to the mix. Las Vegas-based Speedee Mart is also finding suc- cess with its backbar offerings. Ray Johnson, opera- tions manager for the c-store chain, pointed out that tobacco was 40 percent of sales when he entered the convenience business in 1979 and it's still 40 percent of sales today. "I have always felt without tobacco, there would be no convenience stores," he said, explaining that when you factor in the other items a tobacco consumer buys, that percentage-of-sales figure jumps to 50 percent. "The tobacco customer is very important." Breaking down his segments, Johnson said ciga- rettes were up 2 percent last year; smokeless climbed 10 percent; and cigars and vapor products each jumped 25 percent. "The trends are going in the right way," he said. Looking at the backbar from the other angle — the supplier angle — John Wiesehan Jr., CEO of Mistic E-Cigs, said when it comes to the convenience channel, supplier companies can find success with products that are easy to use and have the right price point. As the regulations set forth in the Food and Drug Administration's final deeming rule settle in, vape shops — a chief competitor to c-stores in the vapor space — are under "arduous constraints," Wiesehan said. "A lot of them may not make it, and I think those customers will migrate to traditional channels," including c-stores, he predicted. CSN Tobacco Plus Expo Jan. 25-26, 2017 Las Vegas CSNews Editorial Director Don Longo (from left) discusses tobacco category trends with Anne Flint of Cumberland Farms, John Wiesehan Jr. of Mistic E-Cigs, and Ray Johnson of Speedee Mart.

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