Trade Talks With Theo Foukkare, AACS

The CEO of the 32-year-old retail, non-profit organisation AACS (Australian Association of Convenience Stores), Theo Foukkare, said that his start within the industry began as a graduate of British American Tobacco approximately 25 years ago.

“They provided me with a solid platform to have a springboard for my career,” said Foukkare.

While on an overseas study tour when Foukkare met the owner of Pacific Optics when the company was in the preliminary stages of building its business. When Foukkare returned from the trip, he was offered a job with equity in the company, which he accepted after discussing it with his wife, a decision Foukkare described as one of the best in his life. The business grew its turnover from six million to 80 million dollars after 17 and a half years of work, transforming from a small supplier to the largest supplier of general merchandise products to the Australian petrol and convenience market.

“Then we sold our business to a US private equity firm. Before selling, I was a supplier director with the Association [AACS], one of three supplier directors representing the voice of suppliers on the Board. I held that role for two years while still at Pacific Optics as General Manager."

Foukkare’s predecessor in his current role announced his retirement, allowing Foukkare to put his hand up and be considered as the next CEO of AACS. From 100 applicants shortlisted to 20, the board selected Foukkare as the right candidate to lead the organisation into the future.

The AACS has approximately 100 supplier and manufacturer partners. It represents the interest of all major petrol and convenience retailers in Australia, state-based groups, and multi-site operators, where the focus is on all things convenience retail.

Foukkare shared that the AACS-specific focus has been on developing small box retailing to provide the local community, in the suburbs and the regional areas, and Australian motorists the best locations where customers can rest, recharge, refuel, and keep themselves busy between travelling destinations.

The AACS is underpinned by three key pillars, advocacy, connection, and knowledge. First, it undertakes significant advocacy for its strategic priorities with federal and state governments. Secondly, it provides its members with local and global insights into convenience, retail, and trends, focusing on its comprehensive State of Industry Report. Finally, it creates networking opportunities between its members through a series of events locally and internationally.

Foukkare shared that the association was in the business to help make customers' lives easier, with members creating access to excellent quality food, barista coffee, and freshly baked products as consumers have become more informed of their needs.

Tobacco remains one of the most significant drivers of sales in the petrol communion space at 35 percent, despite experiencing the most significant decline in dollar sales as a category in 2022. This decline has been driven mainly by the explosion of the illicit tobacco and illegal vaping market, which has been supercharged by Australia's bans on nicotine vapes that have grown in consumer demand. Over 1.3 million adults are now vaping regularly and almost exclusively purchasing from the black market.

The second largest category at 25 percent contribution to sales was packaged beverages, accounting for two and a half billion dollars. Following is food service, with 12 percent of sales and delivering AUD 1.2 billion annually. Foodservice in 2022 had its sixth consecutive year of growth, increasing by 21 percent. Some retail members invested in their food, coffee, and café seating offer are now achieving close to 50 percent of total shop sales.

The food service category encompasses not only pies and sausage rolls but highquality sandwiches delivered daily and prepared meals that can be heated at retail stores. These have become popular for busier, time-poor consumers looking for a convenient and nutritious dinner. Due to the development and popularity of the category, in regional areas mainly, retailers include full commercial kitchens within the premises, operating 24/7 and offering a wide range of food for now or food for later, including roast meals, burgers, toasties, salads, pasta, fresh bakery items, and more. Foukkare believes that food service will continue to grow as all retailers broadly invest in their in-store food offers.

Another significant growth category is snacks, the fastest-growing category in 2022 despite only making up two and a half percent of the total shop sales. However, Foukkare shared that the growth driver for snack foods had been items such as chips and convenient share bags.

Foukkare revealed that grocery has also been a growth area for convenience retailers. With Australians entrenched in completing a full weekly shop at a supermarket, the growth has been centred around midweek top-ups for essential items such as milk, bread, or any other small items the consumer wants to avoid travelling to the supermarket to buy. Hence, retailers have increased grocery items to accommodate these consumers' top-up needs, with the category growing by 12 percent over 2021.

Foukkare stated that significant challenges for the convenience industry were directly related to the black market developing in Australia for tobacco and nicotine products, the second being the prolonged but eventual transition to future energy (EV, hydrogen or other).

However, Foukkare stated that the industry would continue to invest in food, coffee, seating areas with wifi and other areas, making service stations a destination rather than a pit stop.

“We want to be a destination, a retail community known for their consistently good quality food that customers can experience wherever they are around the country. The traditional servo of yesterday is well on the path to becoming roadside retailers that sell great food & other options that just so happen to sell different types of energy.” n