CStore Decisions June 2022 by WTWH Media LLC

CStoreDecisions Solutions for Convenience Retailers

2022

Tobacco and Nicotine

Outlook

The tobacco category’s resilience keeps paying off for c-stores even as regulatory headwinds, inflation and rising fuel costs pose challenges for tobacco sales.

INSIDE Vape Popularity Grows Despite Uncertainty CBD Opportunities for C-Stores C-Store Loyalty Programs Grow Consumer Engagement

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EDITORIAL

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VICE PRESIDENT, EDITOR-IN-CHIEF John Lofstock jlofstock@wtwhmedia.com

VICE PRESIDENT, CREATIVE SERVICES Mark Rook mrook@wtwhmedia.com

VICE PRESIDENT, DIGITAL MARKETING Virginia Goulding vgoulding@wtwhmedia.com

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EDITORIAL ADVISORY BOARD

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Robert Buhler, President and CEO Open Pantry Food Marts • Pleasant Prairie, Wis. Lisa Dell’Alba, President and CEO Square One Markets • Bethlehem, Pa.

WEBINAR COORDINATOR Kim Dorsey kdorsey@wtwhmedia.com

Raymond Huff, President HJB Convenience Corp. • Lakewood, Colo.

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Bill Kent, President and CEO The Kent Cos. Inc. • Midland, Texas Patrick Lewis, Managing Partner Oasis Stop ‘N Go • Twin Falls, Idaho

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Vernon Young (Board Chairman), President and CEO Young Oil Co. • Piedmont, Ala. Joy Almekies, Senior Director of Food Services Global Partners • Waltham, Mass.

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Mary Banmiller, Director of Retail Operations Warrenton Oil Inc. • Truesdale, Mo.

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Greg Ehrlich, President Beck Suppliers Inc. • Fremont, Ohio

DIGITAL PRODUCTION SPECIALIST Nicole Johnson njohnson@wtwhmedia.com

Doug Galli, Vice President/General Manager Reid Stores Inc./Crosby’s • Brockport, N.Y.

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SUBSCRIPTION INQUIRIES To enter, change or cancel a subscription, please go to: http://d3data.net/csd/indexnew.htm or email requests to: bsprague@wtwhmedia.com Copyright 2022, WTWH Media, LLC CStore Decisions (ISSN 1054-7797) is published monthly by WTWH Media, LLC., 1111 Superior Ave., Suite 2600, Cleveland, OH 44114, for petroleum company and convenience store operators, owners, managers. Qualified U.S. subscribers receive CStore Decisions at no charge. For others, the cost is $80 a year in the U.S. and Possessions, $95 in Canada, and $150 in all other countries. Single copies are available at $9 each in the U.S. and Possessions, $10 each in Canada and $13 in all other countries. Periodicals postage paid at Cleveland, OH, and additional mailing offices. POSTMASTER: Send address changes to CStore Decisions, 1111 Superior Avenue, 26th Floor, Cleveland, OH 44114. GST #R126431964, Canadian Publication Sales Agreement No: #40026880. CSTORE DECISIONS does not endorse any products, programs or services of advertisers or editorial contributors. Copyright© 2022 by WTWH Media, LLC. No part of this publication may be reproduced in any form or by any means, electronic or mechanical, or by recording, or by any information storage or retrieval system, without written permission from the publisher. Circulation audited by Business Publications Audit of Circulation, Inc.

CSTORE DECISIONS •

June 2022

Joe Hamza, Chief Operating Ofﬁcer Nouria Energy Corp. • Worcester, Mass.

YOUNG EXECUTIVES ORGANIZATION (YEO) BOARD

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Jeff Carpenter, Director of Education and Training Cliff’s Local Market • Marcy, N.Y. Megan Chmura, Director of Center Store GetGo • Pittsburgh Ryan Faville, Director of Purchasing Stewart’s Shops Corp. • Saratoga Springs, N.Y. Caroline Filchak, Director, Wholesale Operations Clipper Petroleum • Flowery Branch, Ga. Cole Fountain, Director of Merchandise Gate Petroleum Co. • Jacksonville, Fla. Alex Garoutte, Director of Marketing The Kent Cos. Inc. • Midland, Texas Daillard Paris, Director of Petroleum Supply and Trading Sheetz Inc. • Altoona, Pa.

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CONTENTS June 2022

•

Number 6 •

Volume 33

CStoreDecisions

EDITOR’S MEMO

8 YEO Heading to Boston FRONT END

10 Quick Bites: Inflation, Supply Issues Impact Shopper Experience 12 NATO Update: Synthetic Nicotine Products Now Regulated by the FDA CATEGORY MANAGEMENT

26 Cigarettes Holding Strong Despite Volatility 30 Cigars Under FDA Scrutiny 34 Vape Popularity Grows Despite Uncertainty 38 Smokeless Tobacco Faces Local Regulatory Pressure 42 Expanding Tobacco Accessories 46 CBD Opportunities for C-Stores 48 The Potential for Cannabis Sales FOODSERVICE

54 C-Stores Drive Foodservice Sales with Pizza, Chicken and Roller Grill 60 Delivery Is Key to Unlocking the Dinner Daypart TECHNOLOGY

64 C-Store Loyalty Programs Grow Consumer Engagement

COVER STORY Tobacco and 16 2022 Nicotine Outlook The tobacco category’s resilience keeps paying off for c-stores even as regulatory headwinds, inflation and rising fuel costs pose challenges for tobacco sales.

BACK END 68 Product Showcase 73 Ad index 74 Industry Perspective:

The Secret to Winning Today’s War for Workers

CSTORE DECISIONS •

June 2022

cstoredecisions.com

Editor’s Memo

For any questions about this issue or suggestions for future issues, please contact me at jlofstock@wtwhmedia.com.

YEO Heading to Boston The convenience store industry’s next-generation leaders are headed to Massachusetts. After a three-year hiatus due to the COVID-19 pandemic, I am proud to report that the Young Executives Organization (YEO) Conference is returning in September. The 7th Annual YEO Conference will be held Sept. 7-9 at Nouria Energy in Worcester, Mass. The 2022 YEO Conference will feature ﬁve educational sessions and workshops; a tour of the top convenience stores in the Boston market; Information Exchanges; and outstanding networking opportunities with the industry’s future leaders, rising stars and next-generation executives poised to lead their businesses into an uncertain future. The agenda includes: • How Nouria Built a Winning Brand and Culture, Joe Hamza, chief operating ofﬁcer, Nouria Energy • Perfecting Your Retail Brand, Ernie Harker, president, Ernburn Brands • Integrating Technology into Labor Management, Jeff Carpenter, director of education and training, Cliff’s Local Markets • Building Leadership, Management and Accountability Systems, Tom Bandy, founder and CEO, BandyWorks • Diversity, Equity and Inclusion in the C-Store Industry, Jayson Council, principal, Adjaycent Consulting Plus, the conference will feature our signature Information Exchanges, which will be divided into three tracks: Foodservice, Technology and Operations/HR. WHY YEO MATTERS

As the c-store industry continues to evolve, training the next-generation leaders of tomorrow is more important than ever. The National Advisory Group (NAG) relaunched YEO in 2012 to give young executives a group solely focused on exchanging personal experiences with peers of similar age. YEO’s mission is to cultivate young talent in the c-store industry through education and networking. YEO members are industry leaders who are approximately 40 years of age or younger. Members are entrepreneurs, leading top businesses and are actively pursuing a higher 8

CSTORE DECISIONS •

June 2022

level of professionalism in the c-store industry. Membership in YEO provides young executives with an opportunity to network with other NAG members and inﬂuential industry leaders. It also gives them a platform to express their ideas, leadership abilities and vision for the future of convenience retailing. I am extremely proud to be partnering with Nouria, an outstanding family business that has grown from a single store to one of the most powerful retail brands in New England. Tony El-Nemr, Nouria’s founder and CEO, represents a great American success story that proves if you work hard, treat people right and believe in yourself, you can succeed. Today, Tony’s two sons, Fouad and Badih, work alongside him and have helped steered the company’s growth. Both have been active members of YEO for the past ﬁve years. After the successful events we’ve had at Family Express, RaceTrac Petroleum, Maverik, Cumberland Farms and McLane, I’m sure our members will have a wonderful experience at Nouria that will help them grow personally and professionally. In addition, YEO members have an opportunity to give back to the local community. For the fourth year, YEO is partnering with Habitat for Humanity on a team building exercise. Teams will participate in Habitat’s Operation Playhouse, a unique program that builds playhouses for veterans, military families and their children. Children of veterans are often left with a one-parent household and have to cope with feelings of loss and uncertainty. The playhouses provide a special place for family members to bond and for their kids to feel safe. Playhouse construction will take place on-site at Nouria on Sept. 7, and YEO members will reveal the playhouse to the children in a surprise presentation later that day. Registration information will be available in the coming weeks at NAGConvenience.com. Mark your calendars for Sept. 7-9 to attend this important event aimed at helping young executives navigate the competitive landscape and build a successful career in the c-store industry.

k c o t s f o L n Joh

cstoredecisions.com

THE COMPETITION DOESN’T STACK UP.

NICOTINE POUCH DOLLAR SHARE

78%

of all nicotine pouch dollars come from

22%

on!

10.5%

Rogue

Velo

5.5%

Competition NICOTINE POUCHES

quickBites INFLATION, SUPPLY ISSUES IMPACT SHOPPER EXPERIENCE Supply chain challenges, inflation, sustainability concerns and a trend toward online shopping and delivery are shaping the retail experience for customers.

SUPPLY CHAIN WOES

91%

Supply chain challenges are disproportionately impacting small and midsized retail businesses (SMBs), according to Software Advice’s new SMB Retail Supply Chain Survey.

of SMB retailers noted larger companies have an advantage over them when it comes to supply chain inventory challenges. 86% of SMB supply chains have already been impacted or expect to be impacted by the war in Ukraine. 59% of retail SMBs said it’s taking somewhat to much longer to acquire inventory compared to 2021. 42% of retail SMBs said they can’t meet minimum order sizes. 41% of retail SMBs said they’re unable to pay premium prices. More than half of SMBs said they’ve raised retail prices due to increased supply chain costs, and 35% of them plan to increase retail prices again, if costs continue to rise. Source: Software Advice, “SMB Retail Supply Chain Survey,” which surveyed 305 logistics and inventory professionals in March 2022 about their experiences procuring inventory over the past 12 months

ONLINE SHOPPERS FACE OUT-OF-STOCKS Lucidworks, a provider of the Connected Experience Cloud, conducted a survey of 800 respondents in the U.S. and U.K. about online grocery shopping behavior and preferences.

58% of respondents noted they frequently or at every visit experience unavailable products online.

30% seek a substitute on the same grocery website or app, if they can’t find the specific item they want.

47% will shop a different store, if they can’t find what they need on their preferred app or website. More than half said a low-stock notification would influence their purchase decision. 80% of those shoppers said they’d be more likely to buy the product, if they were alerted it was low in stock.

Source: Lucidworks, "Shoppers Stay Hungry Online: Groceries on the Internet in 2022”

INFLATION DERAILS SHOPPERS

In the last month, have you stopped yourself from purchasing something at a grocery store because of its price being higher than usual? Weekly Percentages.

Source: CivicScience 2022

CSTORE DECISIONS • June 2022

ONLINE SHOPPING PREFERENCE GROWS A survey from YouGov found a segment of customers prefer to replace in-store experiences with online shopping.

27% of U.S. shoppers go out of their way to avoid in-store shopping whenever possible.

19% of U.S. consumers said they enjoy in-store shopping less now compared to before the pandemic.

Source: The U.S. survey was conducted online between March 21-22, 2022, through YouGov Realtime among 1,209 U.S. adults aged 18 and over. Results are weighted to be nationally representative of all U.S. adults.

CUSTOMERS CONSIDER SUSTAINABILITY

Customers concerned about sustainability look to limit the environmental impact of online shopping, according to Blue Yonder’s “2022 Consumer Sustainability Survey.”

86% of consumers are willing to delay e-commerce deliveries

for the sake of improving sustainability, if given an incentive to do so. of 44% consumers said their interest in shopping sustainably increased since the start of the pandemic. 81% of consumers recycle boxes/bags from in-store and online shopping at least 50% of the time, and 53% recycle the packaging 75-100% of the time. 64% of shoppers are willing to spend more on sustainable packaging, with 44% willing to spend up to 5% more. 40% agree there should be a minimum amount a consumer must spend to qualify for expedited shipping or shipping in general. Source: Blue Yonder’s “2022 Consumer Sustainability Survey” collected responses between March 21-22, 2022, from over 1,000 U.S.-based consumers, 18-years and older, via a thirdparty provider. cstoredecisions.com

Leading Together:

Category

Dollar % Chg

Dollar Share of Category

Cigarettes

3.5%

Cigars

Source: National Retail Solutions (NRS) scan data of 10,341 stores selling Tobacco. All change mesasures are same store sales (6,004 stores) 2/1/22 - 4/30/22 vs 2/1/21 - 4/30/21

The Cigarette Store Corp. dba Smoker Friendly. Indeed, if you gauge year-over-year percentage change, then spitless items, like nicotine pouches, come out the dominant winner. IRI logged year-overyear change in dollar sales growth for spitless at nearly 37% and unit sale increases at more than 44% for a 12-month period, whereas chewing tobacco/ snuff landed with 1.5% and 8.1% losses, respectively. In addition to challenging traditional smokeless tobacco products, modern oral nicotine brands, including pouches, gum and toothpicks ﬁnd favor with females. According to Goldman Sachs, women represent an estimated 5% of all nicotine users, but account for approximately one-fourth of nicotine pouch consumers. Analysts suspect the discreetness of pouches offers a big draw for women. All these factors add up to an extraordinarily optimistic market forecast. Not only do analysts project nicotine pouch retail sales to top $4 billion by 2025, they anticipate greater than 30% compound annual growth rate (CAGR) over the next three years. In fact, Goldman Sachs places the ZYN brand CAGR at 17%. It should be noted, however, this estimate was reported prior to the news of PMI’s potential purchase of Swedish Match. On! pouches nearly doubled its retail share during Q4 last year. Goldman Sachs stated consumer trials and repurchases of the pouches are up by an 22

CSTORE DECISIONS •

June 2022

estimated 5% and 3%, respectively, which boost future market expectations. But now that Congress amended the deﬁnition of tobacco products to include “containing nicotine from any source,” the synthetic nicotine landscape could undergo a major shift. Products with an accepted pre-market tobacco application (PMTA) can remain on sale until July 13 while the FDA reviews their market status. Eligibility beyond that depends on the regulatory body’s ﬁnal ruling. But category managers can hope modern oral nicotine will follow the lead of vape. VAPE: CHANGING EXPECTATIONS

For years, vape and e-cigarettes have been the most visible regulatory target with flavor bans and FDA market denial orders (MDOs) forcing c-stores to reconfigure inventories. In April, the FDA issued the latest round of MDOs for myblu items produced by Fontem US. It still hasn’t released decisions on other big-name products, like JUUL, that turned in PMTAs seeking to gain market authorization. Since the September 2021 deadline, the FDA has issued more than 1 million MDOs on flavored vape and e-cigarette products. Still, the OTP subcategory continues to surpass expectations. “Regardless of the flavor bans and other issues cstoredecisions.com

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2022 Tobacco and Nicotine Outlook

impacting the category, we see that vape is still a stronger item for us, even though there is more variety of pouches sold in our set,” added Nathan Arnold, director of marketing for Englefield Inc. The familyowned company runs 119 Duchess c-stores throughout Ohio and West Virginia. Price increases of more than $1 plus an increase of nearly 4% in unit sales equals a jump of 13.1% in dollar sales for the 52 weeks ending April 17, per IRI. Although the market research firm recorded a dip in unit sales over the four weeks leading up to April 17, a price bump of $1.52 bolstered dollar sales by 4.8%. Even among the positive news, Arnold admitted flavor bans have stirred up circumstances for vape. “While many of our customers have changed behavior and started purchasing allowable items, it still has squeezed this category,” he said. “If one of the bigger brands is not approved, it will affect our set dramatically.” MODIFIED RISK: OPPORTUNITIES

Albeit a small fraction within the tobacco/nicotine category, modified and reduced risk products continue to pique consumer, and therefore category manager interest. In 2019, General Snus products were the first smokeless items to be granted the label of modified risk. Late last year, 22nd Century Group’s VLN King and VLN Menthol King combustible cigarettes also secured the distinction of modified risk for containing 95% less nicotine than traditional cigarettes. When IQOS, a heat-not-burn tobacco device, and companion Marlboro HeatSticks were released in the U.S. three years ago, the industry had high hopes smokers and other customers would embrace the technology. However, PMI pulled the product last fall on orders from the U.S. International Trade Commission due to patent infringements. CANNABIS: AWAITING LEGISLATION

An additional point of interest for c-stores is the burgeoning ﬁeld of cannabis-derived products. Over the past few years, Cannabidiol (CBD) has both captured the public’s acceptance and grown in application, from capsules to infused beverages and more. Forbes reported the U.S. market could exceed $20 billion by 2025. 24

CSTORE DECISIONS •

June 2022

But other cannabis products are making inroads, too, as more voters endorse legalizing recreational adult use. Currently, 18 states, Washington, D.C. and Guam have passed laws legalizing cannabis. “Smokeable hemp offerings continue to see positive results as consumers become more familiar with the category,” said Greene. This product segment could offer even more opportunity for the convenience store industry if Congress moves ahead with federal decriminalization of cannabis. “The main frustration that still looms in that experience is the inability of dispensaries to use debit and credit cards in most cases due to the lack of traditional banking services. The SAFE Banking Act has passed the U.S. House of Representatives six times already in recent years, but has stalled in the Senate,” said Bethany Moore, director of communications for the National Cannabis Industry Association. “We’re optimistic that the more comprehensive cannabis reform bill, called the Marijuana Opportunity Reinvestment and Expungement (MORE) Act, which has passed the House twice now, and the Cannabis Administration and Opportunity Act (CAOA) being introduced by the Senate, will continue to gain traction and bipartisan support, and ultimately make it all the way to the president’s desk for signature.” Although external factors such as inﬂation and prices at the pump will still inﬂuence the tobacco and nicotine category’s performance, it appears the category is resilient. A diversity of products with a close relationship to cannabis-related options promotes polyusage as well as appealing to a broader population that, for the moment, seems to be adapting to expanding regulations. CSD cstoredecisions.com

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Category Management | Cigarettes

CIGARETTES HOLDING STRONG

DESPITE VOLATILITY Inflation, high gas prices and wide-ranging legislation are impacting sales, but retailers expect the category to remain steady. John Lofstock • Editor-in-Chief

High gas prices, increased legislation and inflationary pressure will continue to have a negative impact on cigarette sales, but despite these external factors, cigarettes continue to hold strong and remain a key driver of in-store sales. Cigarette dollar sales dropped 5.8% to $4.2 billion for the four weeks ending April 17, 2022, according to total U.S. convenience data from IRI. Unit sales fell 9.6% to 497 million. For the 52 weeks ending April 17, 2022, cigarette dollar sales fell 2% to $56.4 billion. Unit sales fell 7.5% to 6.79 billion. External forces remain a big driver in the drop in sales. “Cigarette sales are under pressure since gas prices exceeded $3.50 per gallon earlier this year. As consumer fuel prices rise, discretionary income tends to be reallocated toward necessities,” said Greg Ehrlich, president of Fremont, Ohiobased Beck Suppliers, which operates 30 FriendShip stores.

The dip in sales comes just one year after a solid year for cigarettes. In 2021, for the first time in two decades, cigarette sales increased during the COVID-19 pandemic. The Federal Trade Commission (FTC), in its annual Cigarette Report, said that manufacturers sold 203.7 billion cigarettes in 2020, up from 202.9 billion in 2019 — an increase of 0.4%. The FTC compiled the report from data submitted by four major tobacco companies — Altria Group, the maker of Marlboros; ITG Holdings USA,

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Category Management | Cigarettes

State Legislative Roundup Powered by NATO Alaska: Senate Bill 45, which imposes a tax on electronic smoking products (including e-liquid) at the rate of 45% of the wholesale price, increases the legal age to purchase and possess tobacco and vapor products to 21 years of age, and prohibits the distribution of electronic smoking products that are not clearly recognizable as a tobacco product, moved out of the Senate Finance Committee with recommendations on April 12, 2022. The current version of the bill reduced the proposed tax rate from 75% of the wholesale price and also removed a provision banning flavored electronic smoking products.

Connecticut: Senate Bill 367, which prohibits the sale of flavored nicotine delivery systems and vapor products; caps nicotine content at 35 milligrams/milliliter; requires dealers to maintain documentation of nicotine content;

and increases penalties for sales violations, is pending in the General Assembly. Delaware: Senate Bill 131, which reduces the tax rate on premium cigars from 30% to 15% of the wholesale price, was heard in the House Committee on Revenue and Finance and reported without recommendation on April 13, 2022.

Hawaii: House Bill 1570, which bans the sale of flavored tobacco products except those having received a marketing order from the FDA, passed Senate Commerce and Consumer Protection and Ways and Means Committees on April 7, 2022; was amended on the Senate floor on April 12, 2022 to make the ban effective Jan. 1, 2023; passed Senate on April 14, 2022; and the House disagreed with the Senate amendments on April 14, 2022.

which makes Winston and Kools; Reynolds American, with brands such as Camels and Pall Malls; and Vector Group Ltd., maker of Pyramid brand cigarettes. While traditional c-stores saw a sales dip, there is reason for optimism in this crucial category. Independent stores and urban markets saw dollar sale gains during the first quarter of 2022, according to National Retail Solutions (NRS), which tracks sales data across urban markets. “Across the NRS Network of 10,622 independent stores selling cigarettes, we are seeing category dollar sales increase by 2.14% in the first four months (January to April) 2022 versus 2021 in same-stores scanning,” said Suzy Silliman, senior vice president of data strategy at NRS, which tracks sales at independent stores across the U.S. “Still, packs scanned are down 2.3% and baskets containing a cigarette item are down by 3.76%.” It should be noted that overall transactions across the NRS network are up 7.4% for that same period. “Our data shows the average price per pack steadily increasing from $8.68 in January 2021 to $9.23, or 6.3% in April 2022, which reflects a combination of higher prices and changes in product mix,” Silliman said. “The average price of premium cigarettes has increased by 8% during that time in our stores.” MENTHOL WATCH

On May 4, 2022, the Food and Drug Administration (FDA) published two new proposed tobacco product standard regulations. A tobacco product standard regulation is a power granted to the FDA under the Family Smoking Prevention and Tobacco Control Act to reduce or eliminate an ingredient in a tobacco product or a constituent in tobacco smoke. One of the proposed tobacco product standards would provide that a cigarette or any of its components cannot contain menthol as either an ingredient or a smoke constitu28

CSTORE DECISIONS •

June 2022

Rhode Island: House Bill 7725, which allows cities and towns to create ordinances to regulate the use and sales of cigarettes, other tobacco products and electronic nicotine delivery systems, was heard in the House Committee on Municipal Government and Housing on April 12, 2022. The committee recommended the measure to be held for further study. Virginia: House Bill 1076 and SB25, which require any locality that increases its tax rate on cigarettes to allow a person with unsold inventory to pay the tax increase on the unsold inventory by filing a return for one calendar year after the tax increase and define "unsold inventory" for the purposes of this provision to mean cigarettes held prior to the tax rate increase, were signed by the governor on April 8, 2022.

ent. The second proposed tobacco product standard would prohibit an artificial or natural characterizing flavor (other than tobacco flavor) in cigars, cigar components and parts. Specifically, the flavors that would be banned include, but are not limited to, an herb or spice, strawberry, grape, orange, clove, cinnamon, pineapple, vanilla, coconut, licorice, cocoa, chocolate, cherry, coffee, menthol and mint. It is important to note that the proposed regulation would apply to premium cigars, which means that premium cigars could only have a characterizing flavor of tobacco, according to Thomas Briant, executive director of the National Association of Tobacco Outlets (NATO). “The FDA is proposing that these regulations, when and if finalized, become effective one year after the date of the publication of the final rule,” Briant said. “It is very important for retailers, their employees and even their customers to submit comments to the FDA to oppose this legislation. The time is now to let your voice be heard by the FDA and the means to do that is through the public comment process.” NATO and the National Association of Convenience Stores (NACS) oppose menthol bans. Menthol makes up 37% of the c-store cigarette category, which accounts for approximately 28% of all in-store sales, per the 2020 NACS State of the Industry report. A hit to menthol certainly would further dampen sales and reduce store visits. CSD

fast facts: • Cigarette dollar sales fell 2% to $56.4 billion for the 52 weeks ending April 17, 2022, per IRI. • The Food and Drug Administration proposed tobacco product standards that would ban menthol cigarettes.

cstoredecisions.com

Category Management | Cigars

CIGARS UNDER FDA SCRUTINY

Characterizing flavors in cigars are on the chopping block as FDA releases proposed product standards. Howard Riell • Contributing Editor

Proposed rules from the Food and Drug Administration (FDA) targeting flavored cigars have retailers considering what such a ban would mean for their business. On April 28, 2022, the FDA announced proposed product standards “to prohibit menthol as a characterizing flavor in cigarettes and prohibit all characterizing flavors (other than tobacco) in cigars.” The National Association of Tobacco Outlets (NATO) explained that, if the standards are finalized and implemented, artificial and natural characterizing flavors (other than tobacco flavor) 30

CSTORE DECISIONS •

June 2022

in cigars, cigar components and parts — such as cigar tobacco, filters or wrappers — would be prohibited. Flavors including but not limited to an herb or spice, clove, vanilla, chocolate, cherry, menthol and mint would be included in the ban. The regulation would also apply to premium cigars, which would only be able to feature a characterizing flavor of tobacco. “The proposed product standard provides no sound public health reason or scientific basis for eliminating the entire flavored cigar category,” said the Cigar Association of America Inc. (CAA) in a statement. “Based on data gathered by government-funded surveys, youth usage of flavored cigars has been steadily declining for years, and youth usage of cigars in general is at an all-time low. This is only the latest in a series

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Category Management | Cigars

“The trend in cigars continues to be in natural leaf cigars,” offered Adam Chonko, category manager — alCigar dollar sales at convenience stores dipped 0.9% for the cohol, tobacco, beverages and store-food for Westlake, 52 weeks ending April 17, 2022, while unit sales declined 4.7% Ohio-based TravelCenters of America, which operates for the same period. more than 275 locations in 44 states and Canada, under Dollar Sales Unit Sales the TA, Petro Stopping Centers and TA Express brands. 1-Year % 1-Year % “Premium cigars are viable in c-stores and continue to Current Current Product Change Change perform well in our stores.” Cigars $4.00 B -0.9% 2.36 B -4.7% “Pre-priced cigarillos in two- and three-pack pouches at 99 cents and $1.49 still dominate the category,” said Source: IRI OmniMarket Convenience Outlet, Total U.S. Convenience data for the 52 weeks ending April 17, 2022 Jeremy Weiner, category director, cigars and premium products for The Cigarette Store Corp., dba Smoker of proposals by the FDA to attempt to deprive adult Friendly, which operates 180 locations in eight states. cigar consumers of the products of their choice.” Natural leaf cigarillos are also popular at Smoker “We believe a ban on certain cigars will clearly have Friendly. an impact on our retail partners,” added David Ozgo, “The top-selling flavors in our Smoker Friendly president of CAA. “Due to the fact that there are many stores are Grape, Strawberry, Cherry, Berry and Irish unanswered questions regarding even what would be Cream,” Weiner said. considered a ‘characterizing flavor’ under the proposed Weiner said his reaction to the proposed ban of product standard, it is difficult to say what impact the flavored cigars is intense. “Total outrage, and I am tired proposed ban would have on c-store cigar sales were it of all government overreach. The FDA is taking away to be finalized.” choices from adult, legal-age consumers, and this will hurt our industry,” he said. “Flavors are popular in so many other products that are not deemed healthy, such CIGAR SALES IMPACT as alcohol and soft drinks, and tobacco products are Cigar dollar sales at c-stores held steady in 2021 up the only ones being singled out.” 3.3%, despite a unit sales decline of more than 3% A flavor ban will definitely hurt c-store cigar sales, for the 52 weeks ending Dec. 26, 2021, according to Weiner added, since a majority of the cigars sold are Chicago-based research firm IRI. flavored. The result of such a ban going forward, he Cigar dollar sales rolled in flat, bringing in $4 billion suggested, will be much smaller cigar sets with fewer in dollar sales — a dip of 0.9% — for the 52 weeks endchoices for the consumer. ing April 17, 2022, per IRI. Unit sales fell 4.7% for the same period. Dollar sales dropped 2.3% for the latest “Premium cigars are a viable option for c-stores,” four-week period, ending April 17, 2022, with unit sales Weiner said, “since many premium cigar manufacturers down 2.8%. now offer single cigars packaged in humidified pouches.” “It goes without question that the ban will have a Many manufacturers also offer packs of cigars in detrimental impact on cigar sales in c-stores,” said Steven humidified bags that carry four of the same style or a Montgomery, president of b2b Solutions LLC in Lake variety pack. Forest, Ill. “The extent of the impact will depend on two The battle is ongoing. CAA’s Ozgo said the group is factors. First, the percentage of a retailer’s total cigar sales “committed to defending the right of adult consumers that the flavored cigars represented, and the willingness to purchase a legal product, including in the important of their purchasers to switch to non-flavored ones.” c-store channel. While there will continue to be C-store operators might be able to mitigate lost challenges, we’re optimistic about the future.” CSD sales by expanding their selection of non-flavored cigars, he added. While the threat to retailers is real, it is not imminent, suggested Thomas Briant, executive director of NATO. • Cigar dollar sales rolled in flat, bringing in The regulatory process will take one to two years to be finalized and go into effect, he said, and many factors $4 billion in dollar sales — a dip of 0.9% — could change between now and then. for the 52 weeks ending April 17, 2022, per IRI. In the meantime, c-store operators continue to do all • FDA proposed product standards aim to prohibit they can to follow consumer trends and promote this characterizing flavors in cigars. popular category of products.

Cigar Dollar Sales Flat as Unit Sales Drop

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CSTORE DECISIONS •

June 2022

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Category Management | Vape

VAPE POPULARITY GROWS DESPITE UNCERTAINTY Retailers wait to see how FDA regulations affect the vape category, while continuing to promote top-selling options. Emily Boes • Associate Editor

CSTORE DECISIONS • June 2022

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C-store retailers continue to wait in suspense for Food and Drug Administration (FDA) decisions on pre-market tobacco applications (PMTAs) to trickle in, revealing the future direction of the category and which products can legally be sold under FDA’s ongoing regulations. Despite the uncertainty, vape sales maintained steady growth. Dollar sales for electronic smoking devices increased by 13.1% to $6.20 billion for the 52 weeks ending April 17, 2022, according to U.S. convenience data from IRI. Unit sales at c-stores increased by 3.9% for the same period. “Vape continues to stay strong,” said Nathan Arnold, director of marketing at Engleﬁeld Oil, which operates 120 Duchess locations in Ohio and West Virginia. “While other tobacco categories continue to fall, we do see some of our consumers switching from traditional cigarettes to vape. This trend has been occurring for many years and continues.” WATCHING FDA REGULATION

“The FDA continues to be paralyzed by fear that someone somewhere could be angry with their decisions on a ﬂavored product,” said Greg Conley, president of the American Vaping Association, a provaping advocacy organization. “They continue to only authorize the most inoffensive products.” One of the most signiﬁcant events to affect c-store operators recently, according to Conley, is the removal of blu’s nicotine salt system from the market. “That’s something that we’ve been warning about for years that the natural end or the natural conclusion of the PMTA process was 99%plus of existing products being banned,” he continued. For the rest of 2022, Conley predicts the end of the disposable synthetic nicotine category or the disposable vaping products within the synthetic nicotine category due to Congress giving the FDA regulatory authority over synthetic nicotine. Lance Klatt, executive director of the Minnesota Service Station & Convenience Store Association, sees more traditional tobacco being left alone from regulators as vaping continues to be a larger trend with young adults.

Y cstoredecisions.com

June 2022 • CSTORE DECISIONS

Category Management | Vape

Electronic Smoking Devices Retain Upward Growth Electronic smoking device dollar sales rose 13.1% in the 52 weeks ending April 17, 2022, while unit sales increased by 3.9%. Dollar Sales

Unit Sales

Product

Current

1-Year % Change

Current

1-Year % Change

Electronic Smoking Devices

$6.20 B

13.1%

4.35 M

3.9%

Source: IRI OmniMarket Convenience Outlet, Total U.S. Convenience data for the 52 weeks ending April 17, 2022

He also predicted the availability of safer options. “(I) can see higher pricing affecting the overall category through theft and gray markets,” he added. IN-STORE INSIGHTS

Disposables dominate the vape category at Boulder, Colo.-based The Cigarette Store Corp., dba Smoker Friendly, which has 180-plus locations in eight states. Tim Greene, director of tobacco and general merchandise at Smoker Friendly, believes this will change somewhat in the second half of 2022. “The second half of 2022 will see the disposable market slow down with the regulation, although I expect many brands to remain on the market as they await FDA ruling or challenge expected marketing denial orders (MDOs),” Greene said. The biggest change in 2022 for Smoker Friendly is eliminating the brands it knows will not submit PMTAs. The chain’s 2022 first quarter sales were up 53% from 2021’s first quarter sales and up 12% from 2021’s fourth quarter sales. Meanwhile in Minnesota, c-stores’ vape sales have been flat, according to Klatt, but they have been adding “mostly closed systems due to valid and safer systems offered through respectable manufacturers.” At Rotten Robbie Gas Stations, which operates 36 locations in California, six of which are in towns with full e-cigarette bans, sales are also basically flat (up 1.5%).

fast facts: • Dollar sales for electronic smoking devices increased by 13.1% to $6.20 billion for the 52 weeks ending April 17, 2022, per IRI. • The FDA issued marketing granted orders and marketing denial orders for various Vuse Vibe and Vuse Ciro e-cigarette products.

CSTORE DECISIONS •

June 2022

In cities with e-cigarette bans, customers cross over into nearby towns to purchase their vape products. “Stores that are next to cities with e-cigarette bans sell more product,” said Reilly Robinson Musser, vice president of marketing and merchandising at Rotten Robbie. Juul remains the most popular brand at Rotten Robbie, which also sells Vuse and blu products. At Duchess convenience stores, however, Vuse is outpacing other vape options. The industry has been especially awaiting FDA decisions on market share leaders Vuse and Juul, particularly when it comes to their menthol varieties, Conley pointed out. On May 12, FDA issued marketing granted orders (MGOs) to R.J. Reynolds Vapor Co. for its Vuse Vibe e-cigarette device and accompanying tobacco-flavored closed e-liquid pod, as well as for its Vuse Ciro e-cigarette device and accompanying tobacco-flavored closed e-liquid pod. The FDA also issued MDOs to R.J. Reynolds Vapor Co. for multiple other Vuse Vibe and Vuse Ciro e-cigarette products. Any of those products currently on the market must be removed or the FDA may take enforcement action. “Little can be read from this decision,” said Conley of the Vuse MDOs and MGOs. The FDA has not yet issued a decision on Vuse menthol products, which are still under review, Conley noted. “The authorization of a tobacco flavor, delays on a menthol flavor (decision) and bans on other flavored products have become a pattern for FDA,” Conley said. Arnold admitted consumers and retailers are wary considering the FDA discussions on the category. “However, it seems that our consumers are knowledgeable about the press around vape,” he said. Recently, Duchess has increased signage and promotional offers for its vape products to promote awareness of its brands and offerings, despite the historical absence of tobacco marketing on its forecourts or in store. Rotten Robbie offers two three-foot sections for the category, Musser noted. Smoker Friendly is continuing to feature brands and offerings its customers are searching for by highlighting the category on the backbar. CSD

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Category Management | Smokeless

Smokeless Tobacco Faces Local

REGULATORY PRESSURE Smokeless tobacco sales are rising with nicotine pouches showing strong growth, but regulation looms in some parts of the country as local and state legislators take flavored tobacco bans into their own hands. Erin Del Conte • Executive Editor

CSTORE DECISIONS •

June 2022

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After the Food and Drug Administration (FDA) outlined its proposed rules to ban menthol cigarettes and characterizing flavors in cigars last month, all eyes are turning to cigarettes and cigars, allowing smokeless tobacco to fly under the radar. Smokeless tobacco has so far remained unscathed by FDA flavor bans. However, some state and local legislatures increasingly have smokeless in their crosshairs as they push ordinances banning tobacco flavors. But for now, smokeless sales are trending upward at convenience stores as rising interest in nicotine pouches continues to buoy the category. Smokeless tobacco dollar sales rose 3.7% to $8.72 billion for the 52 weeks ending April 17, 2022, with unit sales flat (up 0.2%) at 1.41 billion. Dollar sales of chewing tobacco/snuff dipped 1.5% to $7.17 billion, with unit sales down 8.1%. Spitless tobacco dollar sales climbed 36.9% to $1.54 billion, with unit sales up 44.2% for the period. For the four weeks ending April 17, 2022, smokeless dollar sales grew 2.2%, while units dipped 1%. Chewing tobacco/snuff dipped 3.3%, with unit sales down 9.7%. Spitless dollar sales grew 31.9%, with unit sales up 34.6%. SMOKELESS TRENDS

“Moist smokeless tobacco (MST) continues to dominate the smokeless category even as volumes continue a slight decline and the shift to nicotine pouch/spitless continues,” said Tim Greene, director of tobacco and general merchandise for Boulder, Colo.-based The Cigarette Store Corp., dba Smoker Friendly, which owns and operates 180 locations in eight states. Greene expects the trend toward nicotine pouches and spitless tobacco to continue throughout 2022. When it comes to MST, Greene expects to continue to see natural and wintergreen SKUs dominate the category. “…Value brands continue to take market share from premium,” he said. Smoker Friendly hasn’t made any major changes to the MST category at its stores this year. “We continue to work manufacturers’ programs to offer our customers the best possible value,” Greene said. “We have, however, expanded our nicotine pouch offerings in strategic markets where volumes warrant additional offerings.” cstoredecisions.com

June 2022 • CTORE DECISIONS

Category Management | Smokeless

Smokeless Sales Rise Smokeless tobacco sales ticked up 3.7% for the 52 weeks ending April 17, 2022, per IRI. Chewing tobacco/snuff sales dipped slightly, down 1.5% for the period, while spitless tobacco sales soared 36.9%. Dollar Sales

Unit Sales

Product

Current

1-Year % Change

Current

1-Year % Change

Smokeless Tobacco

$8.72 B

3.7%

1.41 B

0.2%

Chewing Tobacco/Snuff

$7.17 B

-1.5%

1.09 B

-8.1%

Spitless Tobacco

$1.54 B

36.9%

321 M

44.2%

Source: IRI OmniMarket Convenience Outlet, Total U.S. Convenience data for the 52 weeks ending April 17, 2022

REGULATORY HURDLES

C-store retailers can rest assured that the FDA won’t be targeting smokeless tobacco anytime soon. “The FDA’s proposed tobacco product standard regulations regarding a ban on menthol in cigarettes and flavors in cigars do not mention or refer to any future possible regulatory action on smokeless tobacco products,” said Thomas Briant, executive director of the National Association of Tobacco Outlets (NATO). “The FDA has requested comments on whether the proposed regulations prohibiting the use of characterizing flavors in cigars should be expanded to also include traditional pipe tobacco and hookah/water pipe tobacco. However, there is no reference to smokeless tobacco in the proposed regulations.” But while the FDA might not be targeting smokeless tobacco in the near future, states and cities are already pushing legislation targeting smokeless products. “The immediate concern regarding menthol or

fast facts: • Smokeless tobacco dollar sales rose 3.7% to $8.72 billion for the 52 weeks ending April 17, 2022, per IRI. • More customers are gravitating toward nicotine pouches/spitless tobacco. • While the Food and Drug Administration isn’t targeting smokeless tobacco, local and state ordinances are popping up with proposals to ban flavors, including menthol. 40

CSTORE DECISIONS •

June 2022

any flavored offerings is at the local and state level where we continue to see proposed flavor bans,” Greene said. “The number of state legislatures that are considering total flavored tobacco product bans is increasing,” Briant agreed. For example, the San Diego City Council on April 25, 2022, passed an ordinance to ban the sale of flavored tobacco products in the city as of Jan. 1, 2023. The state of California is set to vote on the California Flavored Tobacco Products Ban Referendum on the Nov. 8, 2022, ballot. The bill is a veto referendum that looks to overturn Senate Bill 793, which was signed into law on Aug. 28, 2020, banning the sale of flavored tobacco products. Colorado’s House Bill 1064 looks to ban the sale and distribution of all flavored tobacco products and nicotine products in the state. Hawaii Senate Bill 3118, which bans the sale of flavored tobacco products, passed the Senate Health Committee in February. In Illinois, Senate Bill 3854, which aims to ban the sale of all flavored tobacco products and vapor products, including menthol, mint and wintergreen, is under consideration. “The trend in banning the sale of all legal flavored tobacco products began on the local level and has now migrated to the state level,” Briant said. “Generally, the main focus of such bans is on youth usage of flavored electronic cigarette/ vapor products and is then expanded to include all flavored tobacco products despite the fact that underage use of traditional tobacco products is at historic lows and continues to decline.” C-store retailers are encouraged to become active in their local legislature and speak with their representatives about how such ordinances impact business. CSD

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Category Management | Accessories

Expanding

TOBACCO ACCESSORIES As the tobacco category evolves, the tobacco accessories segment is transforming with it, opening up opportunities for retailers when it comes to unconventional items from screens to vaporizers. Howard Riell • Contributing Editor

Displays and sales of tobacco accessories at convenience stores are shifting as c-stores incorporate new items to meet customer demands. The evolution mirrors the changing algebra of the tobacco category as a whole. A nationwide drop in cigarette smoking; the growth of smoke shops, dollar stores and cannabis-related products; rising taxes; increasingly restrictive legislation; and differences in regional markets are all contributing to the changing fortunes of this must-have category of products. In the convenience store channel, dollar sales of smoking accessories, including pipes and other items, totaled $430 million, up 4.2% for the 52 weeks ending April 17, 2022, according to Chicago-based research ﬁrm, IRI. 42

CSTORE DECISIONS •

June 2022

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Category Management | Accessories

Dollar Sales for Smoking Accessories Grow But Unit Sales Come in Flat Smoking accessories, such as pipes, etc. saw a 4.2% boost in dollar sales for the 52 weeks ending April 17, 2022. Dollar sales for lighters were flat (up 0.3%) for the same period, while sales of matches fell 17.8%. Meanwhile unit sales came in flat for smoking accessories (0.3%) and fell for lighters (-6.0%), while matches saw a large decline (-24.1%). Dollar Sales

Unit Sales

Product

Current

1-Year % Change

Current

1-Year % Change

Smoking Accessories (Pipes, etc.)

$430 M

4.2%

216 M

0.3%

Lighters

$625 M

0.3%

316 M

-6.0%

Matches

$309,036

-17.8%

173,107

-24.1%

Source: IRI OmniMarket Convenience Outlet, Total U.S. Convenience data for the 52 weeks ending April 17, 2022

But unit sales rolled in ﬂat, up just 0.3%. Sales of lighters totaled $625 million, up slightly by 0.3%, while unit sales fell 6%. Matches topped $309,000 in sales, but were down 17.8% versus the previous period, with unit sales falling 24.1%. Competition is one factor impacting sales of tobacco accessories. “Here in California, you have smoke shops that sell these items, and in so many examples they are next door to convenience stores on every block,” said veteran convenience store operator Amer Hawatmeh, the longtime president of 52-store St. Louis-based St. George Oil and most recently Coast to Coast Bodega in Santa Clarita, Calif. “But for our industry, wraps and different lighters — cheap lighters — always sell.” Major shifts continue to impact the tobacco category overall. The tobacco category is shrinking, taxes on tobacco products are growing, cannabis is becoming legal in more states, and vape and organicsmoking SKUs are getting more space on the backbar, Hawatmeh pointed out. These changes are opening the door for sales of unconventional tobacco accessories, from pipes to screens to grinders and vaporizors. Accessories can also help grow basket sizes as sales dip in other areas. Tobacco accessories remain an important segment, generating strong sales and high proﬁt margins for retailers, Hawatmeh noted. 44

CSTORE DECISIONS •

June 2022

“Every store around the country should be focused and adding all these items into their mixes to add sales,” he said. “Where there is no competition for these items, be the leader and do it strong.” And, it’s not just tobacco that’s evolving. At c-stores, every item from gas to candy is in transition, Hawatmeh added. “Moving and adding big-ticket items is what every owner and company should be seeking.” UNCONVENTIONAL ACCESSORIES SHINE

Sharan Kalva, the chief operating ofﬁcer of Huntsville, Ala.-based C-StoreMaster, a national distributor of convenience store products specializing in the tobacco and beverage categories, said he sees overall unit sales growth in the tobacco accessories category of 6.39%. “We are seeing a steady decline in traditional tobacco accessories like ashtrays, matches and rolling paper at a rate of 1.07%,” Kalva said. “We are seeing an increase in unconventional tobacco accessories like vaporizers, water pipes and grinders at a rate of 16.09%.” The factors behind the changes, Kalva continued, include hemp consumption cstoredecisions.com

fast facts: moving from plant-based smoking to vaping, pill, gummies and tinctures, and cigarette volume shrinking year over year. A proprietary breakdown of unit sales by subcategory shows: • Lighters — up 3.11% • Rolling papers — up 6.21% • Ashtrays — down 11.21% • Matches — down 9.21% • Water pipes — up 3.11% • Grinders — up 11.77% • Vaporizers — up 29.16% “Medical and recreational marijuana and increased hemp usage will sharply fuel the growth of rolling papers, water pipes, lighters and vaporizers going into the future,” Shalva added.

MAPPING GROWTH

“We are seeing the accessories category grow depending on the area we are servicing,” said Chad Owen, president of Chambers & Owen Inc., in Janesville, Wis., a U.S. convenience store distributor, supplying customers in Wisconsin, Minnesota, Michigan, Illinois and Iowa. “Accounts in Illinois, where marijuana has been legalized, are doing very well. We are also seeing that spill into border areas/cities around states — for our purpose, Illinois — that have legalized it. Consumers seem to like to try new accessories.” Owen added that it is difficult to talk about the growth of the lighter category as that was greatly affected

• Customer demand for unconventional accessories from vaporizers to water pipes is growing. • Shifts in the tobacco category are leading to new opportunities for accessories. • Smoking accessories totaled $430 million, up 4.2% for the 52 weeks ending April 17, 2022, per IRI. by lingering supply chain issues in 2021. “All of the other areas have seen some nice growth that can be attributed to them,” Owen said. “We have not gotten into the glassware/water pipes arena yet,” he added. “With the way the category seems to be moving, it may not be long though.” CSD

Category Management Column | CBD

CBD OPPORTUNITIES FOR C-STORES We’re still early in CBD adoption, and convenience stores can play a large role in the market’s growth. Brian MacIver • BrightField Group

Convenience store operators across the U.S. increasingly are stocking cannabidiol (CBD) products on their shelves. These businesses are tapping into this market to boost revenues and attract canna-curious customers — an effective strategy in the short and medium term as the Food and Drug Administration (FDA) continues to drag its feet on any meaningful regulatory updates. According to Brightfield Group’s Q4 2021 Evergi Wellness survey, which identifies trends and consumer behaviors across the wellness, tobacco and beverage-alcohol (bev-

alc) spaces, 14% of U.S. consumers have tried CBD in one form or another in the last six months. This growing adoption of CBD, or at least growing willingness to try CBD, is translating into a booming market. In 2021, CBD sales generated $4.7 billion in revenue in the U.S., according to Brightfield Group market sizing data. That figure is expected to balloon to nearly $5.8 billion in 2022, and $12 billion by 2026 (the end of Brightfield’s current forecast period). While still relatively small compared to other distribution channels, c-stores nevertheless represent a high-growth channel for most CBD brands, as most producers

still are looking to build brand awareness. Convenience and gas station sales of CBD products topped $170 million in sales in 2021, and are set to grow nearly 30% to $221 million by the end of 2022, before more than doubling to $449 million by 2026. Drinks and gummies are some of the most popular CBD product formats in the industry, and that is mirrored in c-stores. Gummies are popular due to being a familiar format — vitamin-packed chewables have been available in pharmacies and large retailers for years. Drinks also have been a mainstay in the functional ingredient space, making consumers comfortable turning to beverages

Projected CBD Growth by Product Type

Convenience and gas station sales of CBD products topped $170 million in sales in 2021 and are set to grow nearly 30% to $221 million by the end of 2022 before more than doubling to $449 million by 2026.

YEAR Category

2018

2019

2020

2021

2022

2023

2024

2025

2026

$3.0 M

$92.2 M

$114.2 M

$170.7 M

$221.3 M

$301.7 M

$353.4 M

$402.0M

$448.9M

Tinctures

$38.0 M

$46.7 M

$40.2 M

$44.8 M

$41.3 M

$42.2 M

$42.3M

$39.8M

Capsules

$7.0 M

$12.7 M

$10.1 M

$14.3 M

$28.8 M

$36.3 M

$43.8M

$50.8M

Topicals

$6.5 M

$17.4 M

$12.6 M

$15.2 M

$20.5 M

$21.0 M

$21.1M

$23.8M

Total

Beauty and Personal Care

$1.3 M

$1.2 M

$6.8 M

$6.3 M

$8.0 M

$9.0 M

$10.2M

$11.5M

Gummies

$10.3 M

$13.2 M

$29.5 M

$42.3 M

$62.4 M

$72.5 M

$83.1M

$93.6M

Drinks

$2.2 M

$17.1 M

$9.6 M

$30.9 M

$44.0 M

$87.6 M

$109.0 M

$131.4M

$151.0M

Other Edibles

$0.1 M

$2.9 M

$4.8 M

$3.0 M

$4.3 M

$6.9 M

$9.9 M

$12.5M

$14.5M

Pet Vape Oil and Cartridges

$0.7 M

Other CBD Products

$0.4 M

$1.1 M

$1.6 M

$1.8 M

$2.3 M

$2.6 M

$3.0M

$3.4M

$8.1 M

$5.7 M

$35.2 M

$47.6 M

$38.9 M

$49.6 M

$54.1M

$59.8M

$0.5 M

$1.9 M

$0.9 M

$0.6 M

$5.0 M

$1.4 M

$0.7M

$0.8M

Source: Brightfield Group, “US CBD Market Sizing Q4 2021”

CSTORE DECISIONS •

June 2022

cstoredecisions.com

CBD Product Sales at C-Stores In the CBD category, electronic smoking devices, vitamins, bottled water and non-chocolate candy saw the biggest dollar sales at U.S. convenience stores for the 52 weeks ending April 17, 2022.

to treat issues and promote general health and wellness. Drinks are projected to contribute $44 million to c-store revenues in 2022, while gummies are set to generate more than $42 million over the course of 2022. CBD gummy sales are likely to more than double in size by 2026 to more than $93 million. Drinks are the real growth driver: CBD drink sales are projected to more than triple to $151 million by the end of Brightfield’s current forecast period. LESS ALCOHOL, MORE CBD?

C-store operators looking to capitalize on CBD’s growing adoption have a few options. One interesting way to position CBD products is as a substitute to alcoholic beverages. According to Brightfield’s Evergi data portal, more than 10% of consumers looking to reduce their alcohol consumption are turning to CBD products. For context, a similar portion is replacing alcoholic beverages with non-alcoholic beer, which is a $20 billion market according to Future Market Insights. Positioning cannabis drinks alongside non-alcoholic beverages can build product awareness and provide further options to consumers looking to cut back their alcohol consumption (as well as recapture potential capital flight from lost alcohol sales). WELLNESS-ORIENTED

Education remains a major hurdle to product trial and adoption. C-store operators, thanks to the volume of people they service every day, have a great opportunity to fill that education gap and direct curious consumers to CBD products. One entry into that conversation can be through highlighting CBD products’ health and wellness benefits (within what is legally allowed). These conversations can help build consumer trust in CBD products and brands that c-stores carry. Positioning CBD as a wellness product could yield strong returns for

Dollar Sales

Unit Sales

Current

1-Year % Change

Current

1-Year % Change

$44.5 M

-7.7%

4.57 M

-18.8%

Electronic Smoking Devices

$17.4 M

601.4%

634,827

439.2%

Vitamins

$11.3 M

-43.7%

1.12 M

-41.8%

Bottled Water

$3.44 M

-11.1%

806,250

-5.2%

Non-Chocolate Candy

$2.36 M

31.7%

232,362

36.5%

External Analgesic Rubs

$1.90 M

-54.9%

133,773

-53.8%

Spices/Seasonings

$1.71 M

-43.3%

141,570

-43.1%

Sleeping Remedies

$1.41 M

-76.4%

127,058

-72.4%

Smoking Accessories

$1.02 M

6.5%

713,274

3.5%

Smokeless Tobacco

$947,418

56.0%

127,857

186.8%

Carbonated Beverages

$720,959

5.1%

183,360

5.5%

Cigarettes

$570,305

-67.8%

53,297

-62.1%

Tea/Coffee — Ready to Drink

$379,363

61.0%

67,703

56.7%

Bottled Juice — Shelf Stable

$270,064

7.0%

53,988

23.6%

Tea/Coffee — Refrigerated

$259,889

-38.1%

52,323

-40.2%

Pet Supplies

$255,207

13.1%

23,003

57.6%

Product

Total Store

Energy Drinks

$171,848

-81.7%

37,942

-83.4%

Lip Treatment

$104,278

-30.4%

19,027

-18.3%

Canned Juices — Shelf Statble

$61,632

24.6%

11,632

22.7%

Hand & Body Lotion

$60,381

-38.0%

4,440

-15.0%

Cigars

$60,324

50.8%

6,045

53.7%

Source: IRI OmniMarket Convenience Outlet, Total U.S. Convenience data for the 52 weeks ending April 17, 2022

c-store operators, as many consumers already are familiar with wellness trends and concepts. According to Evergi data, 47% of U.S. consumers used vitamins and supplements in both Q3 and Q4 2021. C-STORE WHITESPACE

Pet CBD products make up a large portion of total CBD sales. In 2022, these products are expected to generate more than half a billion in sales before nearly doubling to $910 million by 2026. However, c-store sales only contributed $1.8 million to the category in 2022, a figure expected to less than double by 2026 to $3.4 million. That doesn’t mean the category should be avoided — c-store operators can change

cstoredecisions.com

that trend by stocking more pet CBD products and learning and communicating the potential benefits of CBD for their customers’ pets. This education could ultimately translate to higher sales of human CBD products as customers familiarize themselves with the cannabinoid. There remain plenty of opportunities for c-store operators to further delve into the CBD market, whether for humans or their pets. C-stores see a wide range of consumers every day and, as such, can play an outsized role in educating consumers and building awareness around CBD. Brian MacIver is a senior insights manager for Brightfield Group, a consumer and market research company covering the cannabis, CBD and wellness industries. June 2022 • CSTORE DECISIONS

Category Management Column | Cannabis

The Potential for Cannabis Sales Many retailers anticipate that cannabis sales will one day become legal in their channel. C-stores can prepare now by boosting vape sales and improving age verification, so they’re ready when the time comes. Don Burke • Management Science Associates

With a majority of Americans favoring the legalization of cannabis for both medicinal and recreational use, and with the convenience channel representing the largest number of outlets of any retail class of trade, it would seem rather logical that this channel would have strong potential for the distribution of cannabis. I believe there is current evidence that should cannabis gain the legal status necessary to be sold at conventional retail outlets, there is strong potential for it to sell very well in the convenience channel. Yet the path to this happening, while rather strong in the long term, is still on questionable timing. One likely opportunity is The Secure and Fair Enforcement Banking Act (SAFE), which has been passed by the House five times, but was stripped from the defense spending 48

CSTORE DECISIONS •

June 2022

bill last December by the Senate. While this bill will not legalize cannabis on a federal level, it does allow for safe banking practices for any firm involved in the sale of cannabis where state law allows. In April, the House passed the Marijuana Opportunity Reinvestment and Expungement Act (MORE), but this bill also did not receive the support it needed in the Senate. Currently, 37 states have some form of cannabis legalization, with 18 states having legalized cannabis for recreational use. In 13 states cannabis remains totally illegal. While support at the federal level for cannabis to be considered legal is gaining momentum, it will still be up to the individual states to make the ultimate decision. Many believe that more states will be encouraged to take steps to legalize cannabis, if the federal government does pass some type of positive legislation.

cstoredecisions.com

Category Management Column | Cannabis

Total Dollars of Each Alternative Product Type (Graph 1) Total Dollars by Form (through Week 16) 2021 (through week 16)

2022 (through week 16)

Dollars

2020 (through week 16)

Total All Types

Kratom

CBD

Delta 8

Despite the limited number of states where cannabis is recreationally legal, current estimates are that recreational cannabis dollar sales represented over $8 billion last year, with total cannabis sales around $25 billion, an increase of over 35% versus the previous year. For perspective, this makes total cannabis sales just less than half the size of the cigarette market in the U.S. So if it is becoming more likely that cannabis will be legal in more states, it remains to be seen when cannabis can be sold in retail outlets like convenience stores. While many believe that step is very likely to happen, it will follow the surrounding turmoil that will make it legal at both the federal and state levels. C-STORE OPPORTUNITY

So, what is the current evidence that suggests cannabis is likely to sell very well in convenience stores? Many convenience stores, but not the majority, have been selling products such as Kratom, Delta 8 or Delta 10, all of which have reportedly some similar effects to those of cannabis. As shown in the graph above, Kratom, by far the top selling of these three items, will this year outsell CBD in the convenience channel, according to the 50

CSTORE DECISIONS •

June 2022

Hemp Smokes

Delta 10

Source: Distributor Shipment to Retail data through 4/16/2022

CBG 1

InfoMetrics distributor shipment data collected by Management Science Associates (MSA). The strong growth of Kratom this year has been signiﬁcant — it is currently selling at about a 50% greater level than CBD. Further, this growth is likely considerably understated. Due to the legal uncertainty around products such as Kratom, Delta 8 and Delta 10, many established distributors do not provide these products. Many convenience retailers that sell these items purchase them from smaller, less established distributors or purchase them online directly from manufacturers that do not report their data. The high level of sales for Kratom may be the strongest evidence to date of the potential for cannabis sales in the convenience channel. One suggestion for retailers interested in positioning their outlets as a future potential destination for cannabis is to possibly enhance their vapor category. MSA data has shown that when cannabis is consumed it is most often inhaled, the same as with current CBD products. Interestingly, as shown in the graph on p. 52, in terms of CBD sales the convenience channel trails in vapor development as compared to both tobacco outlets and all other classes of trade (food, drug and mass). cstoredecisions.com

Category Management Column | Cannabis Top CBD Forms by Class of Trade (Graph 2) Top CBD Forms by Class of Trade (Graph 2)

to-date processes to manage the sale of regulated items, will have a distinct advantage over other retail channels. The growing sales of Kratom in the select retailers currently selling 2 Source: Distributor Shipment to Retail data through 9/25/2021 the item strongly Retailers that establish themselves as a destinasuggest that cannabis will have great potential in Shipment to Retail data through 9/25/2021 tion for vapor items should benefit when cannabis Source: Distributor the convenience channel. A2little preparation by becomes available. convenience retailers is likely to pay rewards when A second opportunity for retailers is to establish federal and additional state regulations are developed. a robust, reliable age verification process. When Don Burke is the senior vice president of Management regulations are developed on how, where and to Science Associates (MSA), a data management and analytics whom cannabis can be sold, the convenience class of firm. Burke has 20-plus years of CPG experience working trade with a strong history of managing the tobacco across the cannabis, tobacco, grocery, confectionary and beverage categories. He can be reached at DBurke@msa.com. and alcohol categories, and with the adoption of up© 2020 Management Science Associates, Inc. All rights reserved.

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Foodservice | Chicken, Pizza and Roller Grill

C-STORES DRIVE FOOD SALES WITH

PIZZA, CHICKEN AND ROLLER GRILL By offering quality high-demand items such as chicken, pizza and roller grill, retailers are continuing to experience substantial sales growth in the foodservice category. Marilyn Odesser-Torpey • Associate Editor

As c-store retailers grow their foodservice category, many are expanding with tried-and-true customer favorites like chicken, pizza and roller grill items. These foodservice basics bring high appeal, and by offering a variety of options and promotional pricing, retailers are further driving sales and repeat purchases.

CSTORE DECISIONS •

June 2022

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During COVID, FriendShip introduced chicken bundles and family meals.

Double hand-breaded for extra crunch, cooked in small batches and always hot and fresh, chicken is “the champion” in the foodservice category at FriendShip Food Stores, said Kirk Matthews, vice president foodservice and marketing. The proprietary program, which is available in 21 of the company’s 30 Ohio stores, was launched about four years ago and sales have grown substantially every year. “We are chicken-centric, and tenders are the drivers, making up 80% of our chicken sales,” Matthews explained. “At an ounce-and-a-half in weight, twice the size of our competitors’ tenders, ours are an exceptional value.” During COVID, FriendShip introduced chicken bundles and family meals. Since then, the stores are running targeted promotions such as snack boxes for lunch and bigger take-home packs after 5 p.m. (“Feed a family of four with chicken, dinner rolls and sides for $10.99.”)

the stores offer discounted prices on whole pies on weekends, on special days such as Tax Day and Father’s Day and through the company’s loyalty program. At Dakota Plains Co-op’s two c-stores in South Dakota, Hunt Brothers Pizza has been a stellar attraction since it was introduced almost a year ago, said Scott Halverson, general manager and CEO. Since the stores made the switch from another pizza program, sales have increased 47% and one store sells 390 pies a week. “Customers really like the variety we offer from regular or thin crust to numerous toppings to specialty pizzas such as Lotsa Meat, Loaded, Veggie and Breakfast,” Halverson explained.

PROFITING WITH PIZZA

FriendShip has also been successful with its proprietary pizza program, which like the chicken, has been available for about four years. The signature crust features a savory blend of garlic and other spices and in addition to the traditional toppings, the stores offer buffalo chicken, chicken bacon ranch varieties and a breakfast pizza with sausage gravy. While slices, which are priced at $2.99 for one and $5 for two, are the best sellers, FriendShip is making a strong effort to sell more whole pies, according to Matthews. To drive trial and demonstrate value, 56

CSTORE DECISIONS •

June 2022

FriendShip is offering discounted prices on whole pizza pies on weekends as well as on special days to drive sales. cstoredecisions.com

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Foodservice | Chicken, Pizza and Roller Grill

FriendShip has been successful with its proprietary pizza program. Its signature crust features a savory blend of garlic and other spices.

Limited-time-offer (LTO) varieties such as chicken ranch and buffalo chicken also generate excitement, he noted. “The chicken ranch sells so well we can barely keep it in stock,” he said. Halverson aggressively promotes the pizza program with newspaper and radio advertising, and signage on the building. He is also having new signs made for the gas pumps and the gas pricing signs. B-Quik’s three convenience stores in Louisiana also serve Hunt Brothers Pizza. “It’s a core foodservice item for us,” said David Schumaker, B-Quik’s general manager. “Everybody likes pizza.” Sales are consistently increasing, and the company is working to come up with more ways to keep the momentum going. “The No. 1 thing is to make sure fresh hot slices are always available,” he noted. To increase sales of whole pies, the stores installed phones in the foodservice area so that customers can directly call in their orders. “This has streamlined the ordering process, it’s less cumbersome for our employees and customers, and it has cut down on wait time,” he said. Schumaker noted that the company is planning to add ordering capabilities to its loyalty app and is also looking into third-party delivery services such as Uber Eats and Grubhub. Presently, B-Quik uses its app to run promotions on pizza such as a buy-10-get-one-free club for slices and $2 off on Mondays for whole pies. “Our sales are telling us that customers are following these promotions,” he said. 58

CSTORE DECISIONS •

June 2022

Lunch is the strongest daypart for pizza sales at B-Quik, but breakfast does very well, too, and is continuing to grow. “We sell a lot of pepperoni and other meat toppings in the morning as well as our breakfast pizza,” Schumaker noted. ROLLER GRILL DEMAND

For convenience store traditionalists, B-Quik also offers an assortment of roller grill items. “People associate roller grill with c-stores and ask about them, if they’re not here,” he said. Each store has two small self-serve roller grills. One is for hot dogs, sausages and chicken bites, the other for tornados and taquitos. To promote the roller grill items, B-Quik always offers a ‘buy one get the second one at half price’ discount. CSD

fast facts: • When it comes to pizza, promotional pricing, hot slices and a variety of options are generating trial and repeat sales for c-stores. • Customers associate roller grills with c-stores and ask about them, if they’re not available. • Chicken tenders are in high demand among FriendShip’s foodservice customers, making up 80% of chicken sales for the c-store chain.

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Foodservice Column | Delivery

DELIVERY IS KEY

to Unlocking the Dinner Daypart C-store retailers are recognizing that delivery needs to be an essential component of their overall growth strategy. Kevin Rice • Bounteous+Hathway

Evening is the preferred time for food delivery from convenience stores, according to a Bounteous+Hathway study conducted in partnership with the National Association of Convenience Stores (NACS). For c-stores that don’t yet offer delivery options, delivery can present a fresh opportunity to capture sales during the dinner daypart. Interestingly, the study also showed that 42% of respondents had attempted to order products for delivery from c-stores in the past 12 months but were unable to because the store did not offer delivery services. Even so, 62% tried to order delivery again within a few months. This shows that customers want c-store delivery options — but retailers continue to struggle to meet evolving customer expectations. Like restaurants, c-stores are navigating major changes in consumer purchasing habits that center around off-premise dining and delivery. Operators are coming around to the idea that delivery is not just “nice to have.” It is an increasingly critical component of any major retailer’s growth strategy. 60

CSTORE DECISIONS •

June 2022

The bottom line? C-stores that don’t offer delivery are missing out on sales and sacrificing market share both within the c-store channel and to outside channels such as quick-service restaurants (QSRs). CONSIDER THIRD-PARTY DELIVERY

Retailers can start with third-party delivery services (3PDs), while working toward developing their own e-commerce channels. The ultimate goal for large c-stores should be establishing and maintaining a direct relationship with customers via native, first-party channels. A native e-commerce site or app — combined with a capable customer data platform (CDP) — provides deep analytical insights into who, when, what and how customers are ordering from your store. It’s these insights that fuel the creation of customized experiences that consumers crave. It can be daunting to think about the significant financial investment these tech stacks require — but there’s good news. C-stores can do exactly what restaurants did in the early days of the pandemic: start with 3PDs, such as DoorDash, Uber Eats and Grubhub, to get in the game. This allows stores to offer delivery without a large upfront investment, while giving customers what they want. There are, however, some downsides to this approach. First, 3PDs charge exorbitant fees

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Foodservice Column | Delivery

— often up to one-third of the check price. This isn’t sustainable for businesses long-term, a fact restaurants quickly discovered during the pandemic-related explosion of off-premise and delivery. Customers don’t like these fees, either. In a 2021 study of 1,525 respondents, 3PD giant DoorDash found that 43% of its customers prefer to order food through a restaurant’s website or app, while only 27% prefer to order through a third-party delivery platform. Most consumers would rather order directly from a brand, especially if it saves them money. Additionally, outsourcing means operators must trust customer relationships to these third parties — and give up valuable customer data and insights that play such a significant role in building those relationships over time. Ultimately, c-stores should be working to build their own native apps and e-commerce sites, so they can capture as much first-party data as possible and deliver a better branded experience that differentiates them from the competition. Only then can they serve up the emotionbased customizations that build long-term loyalty. SUCCESSFUL DINNER DAYPART OPTIONS

Several main products for purchase were tested as part of the Bounteous + NACS study, including prepared food, pre-packaged sandwiches/salads, salty snacks, alcoholic beverages, groceries and more. One product stood out as being the most desirable for delivery — prepared food. “Delivery” means ready-to-eat food for the typical convenience shopper. In the shopper’s mind, delivery from convenience retail is more akin to ordering from a restaurant for delivery rather than placing an order for merchandise or other household items. Convenience shoppers clearly indicate prepared food is the top influencer for their delivery purchase decision. As a result, convenience retailers that offer delivery, or are considering doing so, must ensure they have a robust prepared food offering. Think crowd-pleasing, yet easy-to-prepare dinner favorites the whole family can enjoy: pizza, burgers, “meat and two” meals, fried or rotisserie chicken and made-to-order sandwiches. Additionally, e-commerce platforms and apps can encourage customers to bundle other category products that restaurants don’t sell with their online transactions and delivery purchases. After all, access to a variety of products in one delivery experience is a key point of differentiation for c-stores. Ankeny, Iowa-based Casey’s, for example, with more than 2,000 c-stores in 16 states, has a strong foodservice offering, but also offers groceries for delivery. New products, bottled drinks, Casey’s private-label snacks, and even household items like toilet paper and cleaning products are prominently featured on the home page and as add-ons for food delivery orders. 62

CSTORE DECISIONS •

June 2022

A C-STORE DOING DINNER RIGHT

In August 2020, Wawa, which operates more than 900 stores in six states and Washington, D.C., expanded its dinner offerings to resounding success. Customers now have choices such as Angus burgers, pasta with roasted veggies, chicken or meatballs, entree platters like pot roast and braised pork with sides, and even kids’ meals. The chain also offers “heat-and-eat” meals for customers who want a hot dinner for later and a robust selection of grab-and-go sandwiches, wraps, fresh fruit, salads and other healthy options. Customers can order in several ways — in the drivethrough, in-store at self-service kiosks, for curbside pickup or delivery using third-party partners DoorDash, Uber Eats, Grubhub and Postmates — and are encouraged to interact with the brand via its easily-navigable native app for the best deals. With a hybrid model that includes both a native app and support from 3PDs, c-stores can accommodate a variety of consumer ordering preferences. WHAT’S NEXT?

Companies such as Wawa and 7-Eleven — brands which have invested heavily in technology ranging from order and pay ahead to delivery drones — will be far ahead of those who are just beginning to consider technology investments that support broader foodservice offerings and the ways customers can place orders. One thing, however, is certain: better late than never. The demand for off-premise dining and delivery options will not wane in the foreseeable future. Dinner delivery presents a valuable opportunity for c-stores to better serve their current customers while also attracting new customers in search of a good meal. Kevin Rice is the executive vice president at Hathway+Bounteous, a digital growth partner for the restaurant and c-store industries that helps brands like Dash In, Domino’s and Raising Canes drive incremental revenue through digital experiences. Hathway joined Bounteous in November 2021.

cstoredecisions.com

Technology | Loyalty

C-STORE LOYALTY PROGRAMS GROW CUSTOMER ENGAGEMENT As retailers upgrade their loyalty programs to offer more personalization and customization, they’re seeing growth in enrollment, active users and spending. Marilyn Odesser-Torpey • Associate Editor

Convenience store loyalty programs are doing more than just tracking the number of store visits and repeat purchases. C-store retailers are also using the data to personalize the customers’ experience, making for long-term relationships. Since Casey’s convenience stores launched its Casey’s Rewards mobile app loyalty program in January 2020 in its 2,400 stores in 16 states, nearly 5 million customers have enrolled. “We saw that kind of enrollment and adaptation in the midst of COVID, which shows us that we have much more room to grow,” said Art 64

CSTORE DECISIONS •

June 2022

Sebastian, the company’s vice president of digital experiences. “And more than half of our stores are in low population areas of 5,000 or less, which shows how much of the population is participating.” In a qualitative focus group, customers who are members of the program said they were willing to share personal data with Casey’s, if it makes their experience more personalized and relevant. For the sake of relevance, the c-store chain gives its customers a choice of how to redeem their reward points. “They can redeem their points for fuel discounts, or we will turn those points into cash to donate to local schools as part of a ‘Cash for Classrooms’ cstoredecisions.com

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Technology | Loyalty

Yatco’s points-based loyalty program is accessible through the mobile app and with a physical card or key tag. It has resulted in an average 50% increase in spending month over month among members.

effort,” Sebastian explained. In addition to various other money-saving offers in the app, from time to time Casey’s will design a personalized campaign for each customer. For example, he noted, to drive sales in the breakfast daypart, it might target a customer who purchases only coffee or fuel in the morning with a promotion to add a breakfast sandwich. Knowledge of customers’ purchasing preferences even allows Casey’s to tailor its promotional visuals and copy to each person to make its messages more impactful. “If we send a visual of a pizza, and we know the customer usually buys cheese pizza, we’re not going to send them an offer on a meat lover’s pizza,” Sebastian explained. “And if the member usually buys Red Bull, we’re not going to offer them a Monster.” The program also tracks days between purchases. If, for instance, a customer buys a pizza once a week, Casey’s will send a reminder on the fifth day. By showcasing a particular product category or a new product, the program can encourage customers to shop across categories. Sebastian pointed out that connecting salty snacks with Red Bull can provide incentive for customers to connect the two categories. DRIVING ACTIVE USERS

At Yatco Energy’s 14 company-operated c-stores in Massachusetts and Connecticut, the Yatco Rewards loyalty program with Paytronix has taken off since its launch last November. The program has resulted in an average 50% increase in spending month over month among members, according to Hussein Yatim, vice president of Yatco Energy. 66

CSTORE DECISIONS •

June 2022

The points-based program is accessible through the mobile app and with a physical card or key tag, which must be registered on the chain’s website. Points can be redeemed for discounts at the pump or for in-store food and other items. Yatco also includes an employee tier in its loyalty program. Store and office employees get 20% off any item in the store, excluding lottery, tobacco and alcohol, anytime they make a purchase. They also get a 25-cent discount weekly at the pump. Pilot Flying J’s myRewards and myRewards Plus loyalty programs are designed to make road travel easier and save money for its three unique customer bases: professional drivers, motorists and RV traveler customers, said Steven Root, director, loyalty CRM for Pilot Co. Pilot Co.’s total network consists of more than 800 locations spanning 44 states. The myRewards program was introduced in 2011, and the digital myRewards Plus program with enhanced perks and savings rolled out in 2020. “Over the last year, we have seen double-digit growth in daily and monthly active users of the myRewards Plus program,” Root noted. “Each customer base can earn rewards tailored specifically to meet their needs and preferences.” Professional drivers, for example, can earn points with every fill-up and redeem them for showers, food, merchandise, Prime Parking and more. Auto and RV guests can save three cents on every gallon. All users can save in-store with daily mobile offers on their favorite foods, snacks, beverages and supplies. CSD

fast facts: • C-stores are personalizing loyalty programs to better tailor rewards to customer preferences. • Giving point redemption choices can help make loyalty programs more relevant to customers.

cstoredecisions.com

CStoreDecisions .com Making Connections that Drive Business

CStoreDecisions.com is geared toward C-Store retailers, convenience store suppliers, and distributors looking to stay abreast of industry trends, new product oﬀerings and category management best practices. We use the latest media technology, delivering content the way you want it: print issues, digital issues, enewsletters, and videos. Use CStoreDecisions.com to help you strengthen your peer network with social engagement through Twitter, LinkedIn, Facebook, YouTube, Pinterest, and Google+. Browse, bookmark, share and interact with the most relevant industry content and people in the market.

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Grab & Go Liege-Style Waffles Eggo released its latest innovation — Eggo Grab & Go Liege-Style Waffles. These are bistro-quality handheld waffles, available in Buttery Maple and Strawberry flavors. The waffles, inspired by a classic Belgian street food staple, feature a golden brioche dough and are baked through with crunchy bits of pearl sugar. These waffles are made with real butter and are infused with maple flavor and other natural flavors. The new Eggo Grab & Go Liege-Style Waffles are available nationwide in a four-pack box for a suggested retail price (SRP) of $5.99 and a 12-pack box for a SRP of $12.99.

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Barebells has announced the launch of Creamy Crisp, its renamed protein bar ﬂavor. Following the huge success of the limited-edition ﬂavor, Holiday Crisp, the bar consisting of a smooth texture with a creamy chocolate outside and gooey salty caramel, was given its new name. Available year-round, the chocolate and caramel blend with soft puffy crisps throughout the snack, giving it a light and crispy consistency. Barebells are available in 11,000-plus stores nationwide and on its website. Barebells have 20 grams of protein, no added sugar, no palm oil and are only 200 calories.

Barebells

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Lower-Sugar Iced Teas Pure Leaf Iced Tea expanded its tea portfolio with new Lower Sugar iced teas, now available in major retailers nationwide. The new line from Pure Leaf comes in three ﬂavors that are reduced sugar takes on Pure Leaf favorites — Subtly Sweet Black Tea, Subtly Sweet Peach and Subtly Sweet Lemon. Each 18.5-ounce bottle of Pure Leaf Lower Sugar contains 20 calories and ﬁve grams of added real sugar. Pure Leaf Lower Sugar is available for a suggested retail price of $2.09 per bottle and can be found in the beverage aisle in single-serve bottles, packs of six (16.9-ounce bottles) and a 64-ounce multi-serve bottle.

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CSTORE DECISIONS • June 2022

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PRODUCTShowcase

Chicken Alfredo Pizza LTO Hunt Brothers Pizza is welcoming back the latest addition to its limited-time offering (LTO) lineup — Chicken Alfredo Pizza. Chicken Alfredo Pizza features Hunt Brothers Pizza’s original crust topped with a creamy Alfredo sauce; a blend of 100% natural part-skim mozzarella, natural white cheddar and aged Asiago cheeses; and a layer of ﬂavorful diced chicken. The ﬁnishing touch is a sprinkling of Hunt Brothers Pizza’s signature Just Rite Spice. Consumers can purchase the Chicken Alfredo Pizza as a large 12-inch whole pizza or a Hunk A Pizza (one-fourth of a 12-inch pizza) while supplies last.

Hunt Brothers Pizza

www.huntbrotherspizza.com

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Aloe Vera Beverages The Aloe Vera Drinks category is growing, and consumer demand for plant-based and functional beverages is only strengthening. Retailers can take advantage of this growth opportunity by offering shoppers refreshing GOYA Aloe Vera Drinks. They are ideal to enjoy on their own or as an ingredient to create a variety of ﬂavorful drinks. They have a suggested retail price of $1.59.

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www.goyatrade.com

www.cardlytics.com

Disposable, Single-Use Cleaning Pads Virtu-Clean Disposable Cleaning Pads are disposable, single-use mop pads that hold more liquid, release that liquid over a larger surface area and at a controlled rate, and reduce friction for more effort-free cleaning. Virtu-Clean pads come in three types: Virtu-Clean VCU, Virtu-Clean DC and Virtu-Clean DCS. Virtu-Clean pads’ microﬁber construction assures more ﬁber is interacting with surfaces, maximizing the lift and hold of dust, dirt and grime. Plus, the cleaning surface employs a carefully mapped embossment pattern that reduces surface-to-mop friction, resulting in easy, even cleaning strokes and reduced musculoskeletal strain. The embossment also actively channels dirt toward the center of the pad where it remains.

Hospeco Brands Group

www.hospecobrands.com cstoredecisions.com

June 2022 • CSTORE DECISIONS

PRODUCTShowcase

Tropical-Flavored Candy Bites Laffy Taffy’s new Laff Bites Tropical introduces a tropical twist on the poppable treats, including assorted bags of the newest Red Orange, Mango, Pineapple and Guava flavors, alongside Laffy Taffy tropical jokes on every package. The new Laff Bites Tropical features a dualtextured, bite-sized treat, combining taffy with a tropical flavor drop in the center, wrapped in a crunchy, hard candy shell. Laff Bites Tropical is available now nationwide in three sizes: two-ounce single pegs with a suggested retail price (SRP) of $1.29, three-ounce pegs with a SRP of $1.39 and six-ounce pegs with a SRP $2.69.

Ferrara

www.ferrarausa.com

Watermelon Energy Drink

Red Tea Tall Boys AriZona Beverages brought the national drink of South Africa to the U.S. with its launch of Red Tea in 20-ounce tall boys. Native to South Africa, Rooibos is made from the needles of an indigenous bush and is a mild tea with deeply red hues. Made with only four ingredients, AriZona Red Tea will take imbibers on a trip to the Cederberg Mountains of South Africa, where Rooibos is grown. AriZona Red Tea has a suggested retail price of $1 for a single bottle wherever AriZona is sold or $22.99 for a 12-pack for direct-to-door delivery on AriZona’s website.

AriZona Beverages USA

www.drinkarizona.com 70

C4 Smart Energy announced the brand’s latest flavor, Watermelon Burst. Released just in time for summer, C4 Smart Energy Watermelon Burst has a fresh, lush and pleasant flavor profile. The new C4 Smart Energy flavor, Watermelon Burst, joins Freedom Ice, Peach Mango Nectar, Black Cherry and Icy Blue Razz as the fifth flavor in the Smart Energy collection, providing consumers with another flavor designed to help them conquer any task, anytime. The Watermelon Burst flavor will be sold in 16-ounce cans online and at over 20,000 doors within retailers, including 7-Eleven, Speedway, QuikTrip and others.

Nutrabolt

www.nutrabolt.com

Mint Chocolate Mini Wafers Hostess Brands rolled out a new mint chocolate flavor nationwide to its texture-rich, crunchy and bite-sized line of Hostess Cr!spy Minis. The new Mint Chocolate Hostess Cr!spy Minis combine refreshing mint with indulgent cocoa. The two layers of creamy refreshing mint filling between crisp wafers are topped with a chocolate flavored layer for a balanced bite. They are made with real mint and real cocoa and are free of high-fructose corn syrup and artificial colors and flavors. The new snack comes in a resealable standup pouch for optimal shareability. The new Mint Chocolate Hostess Cr!spy Minis are available in a 7.3-ounce package at a suggested retail price of $3.49.

Hostess Brands

www.hostessbrands.com

CSTORE DECISIONS • June 2022

cstoredecisions.com

PRODUCTShowcase

Multi-Use, Disposable Smoking Accessory Hemper released its first product able to be sold in convenience stores — the Quick Hitter. This is a flavored, multiuse, disposable one-hitter made for on-the-go use without sacrificing the customer smoking experience. Available in packs of two and retailing at just $2.99, Quick Hitters come in five flavors: mango, raspberry, watermelon, banana and blueberry, in addition to a classic non-flavored version. It is easy to use in just three steps: Loading the ceramic bowl at the top, squeezing one or both of the flavored capsules to dispense the desired amount of flavor, and finally smoking and enjoying. The products come in a resealable pouch.

Hemper

www.hemper.com

Spicy and Sweet Soda Back by overwhelming demand, MTN DEW Flamin’ Hot is a meeting of spicy and sweet and now the official drink of Hell, Mich. To celebrate earning the title, MTN DEW Flamin’ Hot journeyed into the depths of Hell for a onenight-only event, affectionately called To Hell with MTN DEW Flamin’ Hot, on April 30. The drink was launched online last year in limited supply and sold out quickly. Now, MTN DEW Flamin’ Hot is available nationwide at all major retailers and convenience store locations in 20-ounce bottles and 12-ounce cans.

PepsiCo

www.pepsico.com

Fruit-Flavored Popping Candy Hilco announced its expanding line of popping candy with iconic brand KOOL-AID. Hilco has joined with Kraft Heinz to create everyday three-pack peg bags and single packs of popping candy. Flavors include Tropical Punch, Grape and Cherry. Each peg bag contains three 0.24-ounce pouches in top brand flavors. The net weight per peg bag is 0.74 ounces per 21 grams. The suggested retail price (SRP) is $1.99. It ships in a 48-count master case with four 12-count displays per case. The single packs are 0.33 ounces with a SRP of 99 cents. It ships in an 80-count master case with four 20-count displays per case.

Hilco

www.hilcousa.com

Tequila-Based Watermelon Cocktail Monaco Cocktails launched the latest addition to its portfolio with the new Watermelon Crush variety. Watermelon Crush can be a great tequila-based cocktail to enjoy all season long. Ready to drink straight from the can, this fusion of fresh watermelon with agave tequila flavors creates a refreshingly fruity canned cocktail. As with all Monaco Cocktails varietals, the new flavor features two shots in every 12-ounce single-serve can, 9% ABV and no gluten or malt. The Monaco Watermelon Crush is currently available at convenience stores nationwide for $2.50-$2.99 per 12-ounce can.

Atomic Brands

www.atomic-brands.com cstoredecisions.com

June 2022 • CSTORE DECISIONS

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© 2022 North American Bancard, LLC (NAB). All rights reserved. NAB is a registered ISO of BMO Harris Bank N.A., Chicago, IL, Citizens Providence, Bancorp Philadelphia, PA, and First CA, Fresno Bank, Fresno CA.Philadelphia, American Express ©2019Bank NorthN.A., American Bancard RI, is aThe registered ISOBank, of Wells Fargo Bank, N.A., Concord, and The Bancorp Bank, PA. mayAmerican require separate approval. *Durbin regulated Checkregulated Card percentage rate. A per transaction fee will also **Some Express may require separate approval. *Durbin Check Card percentage rate. A per transaction feeapply. will also apply. ©2019 North American Bancard isapply. a registered ISO of Wells Fargo Bank, N.A., Concord, CA, and The Bancorp Bank, Philadelphia, PA. **Some restrictions This advertisement is sponsored by an ISO of North American Bancard. Apple Pay is a trademark of Apple Inc. restrictions apply. This advertisement is sponsored by an ISO of North American Bancard. Apple Pay is a trademark of Apple. American Express may require separate approval. *Durbin regulated Check Card percentage rate. A per transaction fee will also apply. **Some restrictions apply. This advertisement is sponsored by an ISO of North American Bancard. Apple Pay is a trademark of Apple Inc.

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Classifieds/Ad Index ADD Systems

MIT45

Al Capone

Modern Store Equipment

North American Bancard

NRS Petro

Premier Manufacturing, Inc.

Republic Brands

800.922.0972 / www.addsys.com www.alcapone-us.com

Altria Group Distribution Company

www.TobaccoIssues.com

886.MIT.4555 / Sales@MIT45.com 877.532.8433 / sales@modernstoreequipment.com modernstoreonline.com/cstore 866.481.4604 / www.nynab.com

Brakebush

Calico Brands, Inc.

888.260.0112 / www.nrspetro.com

Chesters Chicken

www.gopremier.com

Cheyenne International, LLC

800.288.8888 / www.republicbrands.com

www.chickenchampions.com 800.544.4837 / www.calicobrands.com 800.646.9403 / www.chesterschicken.com 866.254.6975 / contactus@cheyenneintl.com / www/4thTierLeader.com

E-Alternative Solutions

www.EalternativeSolutions.com/Leap

Galaxy Treats

888.426.9005 / account@galaxytreats.com / www.galaxytreat.com

GSK C-Store

14-15 51

Reynolds Sky Wellness

Streamline

480.562.6282 / www.skywellness.com 888.426.9005 / sales@streamlinegroupinc.com / juicehead.com

5, 65

Chapstick: John.L.Hankins@gsk.com / Nicorette: Scott.F.Breisinger@gsk.com

Swedish Match

Home Market Foods, Inc.

Hoshizaki

800.367.3677 www.zyn.com www.gamecigars.com www.whiteowl.com

Swisher International

75, 76

VLN

Cover

800.367.8325 / info@HMFfoodservice.com / HMFfoodservice.com www.hoshizakiamerica.com

Hunt Brothers Pizza

800.453.3675 / www.huntbrotherspizza.com/csd

Krispy Krunchy Chicken

800.874.9720 / www.swisher.com 59

TryVLN.com 3

800.290.6097 / www.krispykrunchy.com

Liggett Vector Brands

9 19, 41 31

Xcalibur International, Ltd. 918.824.0300

877.415.4100

Clean and safe

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cstoredecisions.com

June 2022 • CSTORE DECISIONS

IndustryPerspective

The Secret to Winning Today’s War for Workers Best practices in recruitment messaging can help attract high-quality employees. Mel Kleiman • Humetrics

How ‘The Great Resignation’ has affected the c-store industry was pointedly brought home in the results of this year’s 14th annual CSD/ Humetrics’ HR Benchmarking Survey. When asked: “What are the three most significant challenges your organization will face in 2022,” more than 83% of respondents singled out “staffing” as their paramount concern — far ahead of inventory management/supply chain issues (61%) and the pandemic (42%). With unemployment at historic lows, we all know the demand for reliable, trustworthy, hardworking people far exceeds the supply. How then are you going to get quality, front-line applicants to apply, sign on and show up to work for you instead of the other employers vying for their attention? First, you can be sure of this: “Now Hiring” has never been a compelling reason for anyone to apply for work with your organization. The only message it sends is one of desperation. If you want to hire more than a warm body, you need to give people a real reason to apply. Think along these lines: “Life is too short not to work someplace awesome;” “Our growth is your opportunity;” “Come for the job, stay for the career.” The secret to winning the war for workers is simple; it just isn’t easy — become an employer great people want to work for — an employer-of-choice. 74

CSTORE DECISIONS • June 2022

START WITH MESSAGING

It all starts with creating a recruiting message around your Unique Employment Proposition (UEP). It spells out the reasons a star employee should want to work for your c-store organization instead of anywhere else. It is a value statement, a marketing statement and something you post on every manager’s office wall. It defines your culture and values, and it becomes what you live by. It doesn’t have to be long or complicated. I recommend a list of the top five to 10 reasons a person would want to join your team. It will cover what’s in it for the jobseeker and what you can offer that competing employers don’t. For example, it might be as simple as: “We care;” “We have fun and get the job done;” “We train you so well you can leave but treat you so well that you won’t.” In order to develop your own UEP, consider the following: • Why would the ideal candidate want to apply for your job opening instead of another job in a nearby location with a similar title, job description and wage? • What do your employees like about their jobs and your organization? (Don’t know? Ask them!) • What will you and the company do to ensure the new hire is successful on the job?

Sit down with co-workers, employees and HR folks to brainstorm additional benefits and features that are specific to each job as well as your company. Once completed, use one, some or all of the key points in your recruiting messages. In interviews, share the list with the applicant and ask which one or two are most appealing. (If hired, their answer will tell you how that person would most effectively be managed and motivated.) Have posters made and put them everywhere. This makes the entire management staff accountable for protecting and maintaining a work environment that keeps your people happy to be — and stay — on your team. Once you have your UEP, market your jobs with the same energy and attention you devote to your brand, your product offerings and your services. Then jobseekers will be eager to buy what you’re selling, and you will be a winner in the endless war for workers. Certified Speaking Professional Mel Kleiman is North America’s foremost authority on how to recruit, select and retain hourly employees. He is also the president of Humetrics. Founded in 1976, Humetrics provides selection and retention tools as well as speaking, training and consulting services. He is also the author of five books including the bestseller, “Hire Tough, Manage Easy.” Visit Humetrics.com or call (713) 771-4401 for more information.

cstoredecisions.com

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CStore Decisions June 2022

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