The (real) story in numbers

Two of 33 countries saw a decline in convenience store sales in Q3 2022 compared to Q3 2021. One was Honduras. The other? Canada.

This is according to the Q3 2022 Global Convenience Store Industry Report from NielsenIQ and the National Association of Convenience Stores. The report analyzes c-store metrics across 33 nations in North America, Europe, Asia-Pacific, and Central and South America.

It found Canadian Q3 2022 convenience store dollar sales fell 3.4% versus the year-ago quarter. Additionally worrying: the decline has accelerated since Q2 2022 (down 2.7%).

Excluding tobacco, convenience store sales in Canada grew by 9%. In other words, Canada’s underperformance relative to much of the developed world is lions in tax revenue—it is in how competitors and different parts of the industry have united.

Over the last 18 months, JTI field representatives have met with more than 60 independent convenience store operators in Newfoundland and British Columbia.

“We have been hearing them and aggregated their voice and presented their case to government and law enforcement agencies on their behalf,” says Elaine McKay, the Toronto-based head of corporate affairs and communications for the tobacco company. “We have also shared actionable information from them to law enforcement.”

McKay says independents in small communities “fear reporting illegal activity, because of appraisal from organized crime or victimhood. By sharing their reports with us, we protect their anonymity.”

Meanwhile, more than 200 independent store owners in rural B.C. have formed the Convenience Retailers Alliance 4 Safe Communities to lobby the government, and owners have gained support from unexpected places.

“As independents, we would normally never speak to a 7-Eleven manager,” notes Pinantan General Store owner George. “But it has brought us together as an industry because we are all feeling this.” due to the tobacco category. Cigarette sales were down by 10.7%. Other tobacco products (smokeless pouches, e-cigarettes, snubs) fell by 11.8%.

Tobacco’s annual share of Canadian convenience store sales has also declined substantially, to 54.4% from 59.3% in Q3 2021. It’s still a majority piece of the pie (amounting to $1.1 billion in Q3 2022), but the 4.9 percentagepoint drop is the second largest of the nations tracked in the report.

True, tobacco use is declining in most developed nations. But it isn’t falling by such an extreme in the c-store sectors of other nations. In the U.S., it slipped 1.3 share points, in Sweden by .5 and in Hong Kong by .1.

The story behind why Canada is an outlier isn’t that smokers here suddenly quit or cut back in droves, say industry leaders. It’s the rise of contraband.

“Government may see these figures and think, ‘We’ve increased taxes on cigarettes, made it cost-prohibitive to smoke, and therefore sales are down,’” says Marc Goodman, VP and general manager of 7-Eleven Canada. “While there is probably a bit of truth to that, the numbers also reflect that illicit tobacco has ramped up. In Western Canada, where cigarettes are very heavily taxed, we have seen very substantial declines in cigarette sales.”

Advocacy group Convenience Retailers Alliance 4 Safe Communities estimates at least 30% of tobacco sales in B.C. are now contraband.

Industry leaders agree that a decline in tobacco sales isn’t necessarily a win for public health.

“It is misleading to think that this is cause for celebration,” says Goodman. The real story? “In a recessionary climate, smokers have looked for other means to get their nicotine fix.”

Across the board, the industry is calling on governments to freeze tax increases or risk driving more people to purchase illicit tobacco. CSNC