CStore Decisions June 2024

TOBACCO and NICOTINE: CHARTING THE WAY AHEAD

C-store retailers are adapting to shifting tobacco trends amidst regulatory challenges while navigating economic pressures influencing customer behavior.

and the effects of regulation on the category.

Sean Carroll, director of category management for Good 2 Go, is keeping a watchful eye on tobacco trends

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CStoreDecisions

EDITORIAL

VP EDITORIAL — FOOD, RETAIL & HOSPITALITY

Greg Sanders gsanders@wtwhmedia.com

EDITOR-IN-CHIEF

Erin Del Conte edelconte@wtwhmedia.com

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Emily Boes eboes@wtwhmedia.com

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Zhane Isom zisom@wtwhmedia.com

ASSOCIATE EDITOR

Kevin McIntyre kmcintyre@wtwhmedia.com

COLUMNISTS

Bruce Reinstein

David Spross

EDITOR EMERITUS

John Lofstock

SALES TEAM

VP SALES — FOOD, RETAIL & HOSPITALITY

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CStore Decisions is a three-time winner of the Neal Award, the American Business Press’ highest recognition of editorial excellence.

EDITORIAL ADVISORY BOARD

Olivia Beck • Operations Beck Suppliers Inc. • Fremont, Ohio

Nate Brazier • President and Chief Operating Officer Stinker Stores • Boise, Idaho

Robert Buhler, President and CEO Open Pantry Food Marts • Pleasant Prairie, Wis.

Herb Hargraves, Chief Operating Officer Sprint Mart • Ridgeland, Miss.

Bill Kent, President and CEO The Kent Cos. Inc. • Midland, Texas

Dyson Williams, Vice President Dandy Mini Marts. • Sayre, Pa.

Bill Weigel, CEO Weigel’s Inc. • Knoxville, Tenn.

NATIONAL ADVISORY GROUP (NAG) BOARD

Vernon Young (Board Chairman), President and CEO Young Oil Co. • Piedmont, Ala.

Joy Almekies, Senior Director of Food Services Global Partners • Waltham, Mass.

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

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

Doug Galli, Real Estate/Government Relations Reid Stores Inc./Crosby’s • Brockport, N.Y.

Derek Gaskins, Senior VP, Merchandising/Procurement Yesway • Des Moines, Iowa

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

Brent Mouton, President and CEO Hit-N-Run Food Stores • Lafayette, La.

Robin Hunt, Sales Hunt Brothers Pizza • Nashville, Tenn.

Kyle May, Director External Relations Reynolds Marketing Services Co. • Winston-Salem, N.C.

Steve Yawn, Director of Sales McLane Company Inc. • Temple, Texas

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Copyright 2024, WTWH Media, LLC

YOUNG EXECUTIVES ORGANIZATION (YEO) BOARD

Kalen Frese (Board Chairman), Director of Merchandising Warrenton Oil Inc. • Warrenton, Mo.

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.

Cole Fountain, Director of Merchandise Gate Petroleum Co. • Jacksonville, Fla.

Alex Garoutte, Director of Marketing The Kent Cos. Inc. • Midland, Texas

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Editor’s Memo

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

Next-Gen Leaders to Guide C-Store Evolution

Today’s young executives and leaders of tomorrow are inheriting a rapidly evolving c-store landscape. Nowhere is that more evident than in the tobacco category where regulatory heat and changing consumer preferences are reshaping the backbar.

Given declining cigarette sales and ongoing tobacco regulations, retailers are branching into new profit centers, particularly in the foodservice arena. But food trends are ever-changing as well and foodservice strategy is also shifting for retailers. This month’s food column, “Six Factors for Success in C-Store Foodservice,” discusses how c-stores are modifying their approach to food to fit new customer needs.

But even as the industry changes and more c-stores add food, tobacco remains a key category for c-stores.

Convenience stores account for 70% of U.S. tobacco sales, pointed out Don Burke, senior vice president, Management Science Associates, in this month’s cover story, “Tobacco and Nicotine: Charting the Way Ahead.”

“This level is unlikely to change dramatically over the next several years, meaning that even though tobacco is a declining category, it is still one of the largest revenueproducing categories for many convenience stores and is also a strong driver of store visits,” he continued.

Out of all the tobacco segments, vape is currently feeling the most heat on the federal level. As this month’s article, “Compliance Vital for Vape,” points out, the Food and Drug Administration at press time had only approved 23 tobacco-flavored vape products and had started enforcement actions against retailers selling illegal vapes. But confusion abounds for retailers, who are often unclear on where products are at in the approval process or how best to handle products that wait in limbo without a marketing denial order or a marketing granted order.

Meanwhile, as covered in this month’s article, “Retailers React to Menthol-Ban Moratorium,” the final rules on a proposed ban on menthol cigarettes and characterizing flavors in cigars has again been bumped down the line — likely until after the election. But a possible future ban still hangs over the categories.

At the same time retailers must remain vigilant about changing regulations at the state and local level.

One thing is certain: the tobacco category is shifting as is the c-store marketplace itself, and it is next-generation and young executive leaders that will be bearing the brunt of navigating these changes in the industry.

This makes it more important than ever that nextgeneration leaders have a community of peers with whom they can discuss the unique challenges ahead.

CSTORE MOMENTUM

To that end, CStore Decisions and the National Advisory Group (NAG) are introducing CStore Momentum (formerly the Young Executives Organization Conference). This exclusive event is tailored to young leaders (traditionally under or around 40 years of age) in the convenience store industry and offers a transformative experience designed to propel emerging leaders to new heights of excellence and help prepare them for the challenges of tomorrow.

This year’s event will take place Sept. 18-20 at the Texas Motor Speedway in Fort Worth, Texas, hosted by Yesway. Young executives and next-generation leaders will have the opportunity to engage in educational sessions on topics such as foodservice, leadership and consumer engagement; interactive workshops; and networking opportunities to help expand their industry knowledge and cultivate the skills needed to thrive in a fast-paced, evolving environment.

CStore Momentum is a NAG member-only event. Attendees must be employed by a NAG member company or have been inducted into the 2023 class of the 40 Under 40. Learn more and register at cstoremomentum.com

Erin Del Conte

2024 Tobacco & Nicotine Regulatory Update

Federal and state-level legislative activity continues to cause shifts in the tobacco landscape, impacting retailers.

David Spross • NATO

As expected, 2024 has been a very dynamic year in the tobacco legislative and regulatory space.

FEDERAL HAPPENINGS

In April, the Biden administration announced it was delaying a decision on whether to issue a final rule that would ban menthol cigarettes.

“This rule has garnered historic attention, and the public comment period has yielded an immense amount of feedback, including from various elements of the civil

rights and criminal justice movement,” Xavier Becerra, the health and human services secretary, said in a statement. “It’s clear that there are still more conversations to have, and that will take significantly more time.”

Additionally, the Food and Drug Administration’s (FDA’s) Center for Tobacco Products (CTP) has been under increased scrutiny over the lack of transparency and delays in its regulatory processes and the influx of illicit vapor products in the marketplace. In April, FDA Commissioner Robert Califf testified before the U.S. House Oversight and

Accountability Committee over concerns regarding the FDA’s CTP operations. Commissioner Califf received several bipartisan concerns from U.S. House members questioning CTP’s handling of tobacco regulations, including the unrea sonable delays in the premarket tobacco product application (PMTA) process, only authorizing 45 tobacco products (including only 23 tobacco-only vapor products) and the lack of enforcement against illicit products.

U.S. Senator Dick Durbin (D-IL) called in CTP Director Dr. Brian King and U.S. Department of Justice (DOJ) Prin cipal Deputy Assistant Attorney General Brian Boynton to brief him on the lack of enforcement against unauthor ized e-cigarettes.

In a press statement, Durbin stated, “I called in FDA and DOJ leaders to understand why they are failing to enforce the law in the face of clear harms to children. I reminded them that they have a job to do and that they have the legal authority to stop unlawful e-cigarette man ufacturers from flooding the market. I hope our conversa tion spurred them to finally take action to protect the next generation from a lifelong addiction to nicotine.”

STATE-LEVEL ACTIONS

There are also some noteworthy tobacco and nicotine legislative developments at the state capitols.

The year started off with the Ohio Legislature’s override of the governor’s 2023 veto of statewide preemption of the sale of tobacco and other nicotine products. The legislation was in response to some Ohio cities banning flavors in these products. The legislature recognized that regulating tobacco and nicotine products is a matter of statewide concern and that prohibiting youth access is best accomplished with a uniform statewide policy. Some cities have filed a lawsuit seeking to overturn the legislation.

Banning tobacco and nicotine flavors continues to be considered by state legislatures. Utah passed legislation to ban flavored vapor products other than menthol. In Vermont, flavor ban legislation was vetoed by Governor Phil Scott, who cited inconsistencies in banning flavored tobacco products while the state has recently legalized other adult-oriented products such as cannabis. Michigan is considering a proposal to ban all flavored tobacco products, while similar legislation failed in Hawaii, Maine, Minnesota and New Mexico.

A few states are considering increases in tobacco and nicotine product excise taxes. Maryland increased the cigarette tax from $3.75 to $5.00 per pack, the other tobacco product (OTP) tax from 53% to 60% and vaping liquid from 12% to 20% of the retail price. A significant tax increase on all tobacco products is currently under consideration in Michigan, while tobacco tax increase bills failed in Hawaii, New Mexico and Nebraska. Also, some states

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are starting to consider how to define and tax heatedtobacco products. For example, Mississippi enacted a bill that distinguishes heated-tobacco products and rather than apply the cigarette 68-cents per pack cigarette tax, a tax rate of 25-cents per pack was enacted.

An emerging issue in the states is the creation of state e-cigarette registries. The introduction of these bills is in response to the uncertainty around the FDA PMTA process and the proliferation of flavored disposable e-cigarettes on the market. The FDA hasn’t completed processing applications for thousands of e-cigarette and other nicotine products. The FDA has only approved the marketing of a few dozen products, making unclear the regulatory status of a large number of products, such as those for which a PMTA was never filed, those for which a PMTA was timely filed and the application is awaiting an order, and those for which a PMTA was denied but the application remains pending for legal reasons.

These bills create a state-based directory that requires e-cigarette manufacturers to submit information

to state tobacco regulators demonstrating that any e-cigarette being sold in the state is in compliance with FDA regulations and guidance. Florida, Kentucky, Utah and Virginia enacted legislation thus far in 2024, while approximately 15 states have rejected this legislation. Alabama, Louisiana, Oklahoma and Wisconsin have enacted legislation in previous years.

The National Association of Tobacco Outlets (NATO) remains engaged on these issues and at all levels of government to help protect its retail members. NATO is proud to serve its retail members and to communicate to legislators and regulators how its members sell tobacco products responsibly and in compliance with all applicable laws and regulations.

David Spross is the executive director of NATO, a national retail trade association that represents members operating more than 66,000 stores throughout the country. He comes to this position with 23 years of tobacco industry experience, previously working in the government affairs departments at UST Inc. and at Reynolds American.

THE ROOT OF YOUR SUCCESS

QUICKBITES

SHOPPING WITH INFLATION

While inflation is still in full effect, consumers are continuing to find new shopping and spending habits when purchasing items they need.

CITIES MOST IMPACTED BY INFLATION

The cities impacted by inflation the most, according to a recent report from WalletHub, are:

• Honolulu

• Miami

• Riverside, Calif.

• St. Louis

• Seattle

• Dallas

Source: WalletHub, April 2024

CONSUMER SPENDING SNAPSHOT

As prices continue to rise, consumer spending is changing. Based on Alvarez & Marsal’s Consumer and Retail Group’s “Spring 2024 Consumer Sentiment" survey of 1,800-plus U.S. consumers:

• Overall consumer confidence was weaker this spring compared to fall 2023, as consumers anticipated having less money to spend.

• Consumers reported planning to reduce spending across the board.

• Shoppers with an income of more than $150,000 spent 27% less, on average, than in fall 2023.

• Only fresh food saw a rise in anticipated spend.

• Higher income brackets saw a 12% uptick in saving, prioritizing it over spending.

Source: Alvarez & Marsal’s Consumer and Retail Group’s “Spring 2024 Consumer Sentiment" survey, April 2024

PRIVATE-LABEL BRAND SALES RISE

Despite inflation, more consumers are buying private-label products. Circana’s “CPG Private Brands Update” report mentioned that:

• Dollar sales of private brands increased by 6% in 2023, and units increased by 0.9%.

• Sales were higher for private-brand food and beverage (6.7%) compared to nonedible (5.1%).

• Private brands gained share from name brands, increasing to 25.5% of total unit sales, up from 24.7% in 2022.

• Private brands grew both unit and unit share across general food, shelf-stable beverages and refrigerated foods, as well as in beauty and home departments.

• Within food and beverage, private brands outperformed name brands based on dollars and units for the core pantry.

Source: Circana, “CPG Private Brands Update” report, March 2024

SAVING WHILE SHOPPING CONTINUES

Consumers are shopping even more strategically in stores this year than they did last year to save money.

Source: CivicScience, April 2024

CONSUMER COST-SAVING BEHAVIORS

In order to navigate high food costs, consumers are changing their behaviors when it comes to spending money. Deloitte’s Food Frugality Index stated that:

40% of consumers are saving by reducing at-home food waste. 29% of consumers are purchasing mostly store brands. 29% of consumers are purchasing low-cost ingredients. 22% of consumers are buying less than they want.

31% of consumers are only buying essentials.

Source: Deloitte’s Food Frugality Index, March 2024

Tobacco and Nicotine: Charting the Way Ahead

C-store retailers are adapting to shifting tobacco trends amidst regulatory challenges while navigating economic pressures influencing customer behavior.

Emily Boes • Senior Editor

Today’s c-stores find themselves at the center of changing customer preferences and evolving regulatory frameworks, especially when it comes to the tobacco category, which continues to grapple with market trends and legal considerations that are impacting the very makeup of the backbar.

Amidst these challenges, convenience stores are diversifying into burgeoning market segments like foodservice and beverages, yet tobacco remains a cornerstone category, playing a pivotal role in driving foot traffic and retaining loyal, longstanding customers.

For years now, c-store retailers have watched the Food and Drug Administration (FDA) and state and local governments regulate the category with excise taxes, flavor bans, and package and advertisement warnings.

The general population’s sentiment toward tobacco has also shifted as customers have become

increasingly health conscious, which has, in part, contributed to the rise of vaping devices, followed by oral nicotine pouches and cannabidiol (CBD). Even the legalization of cannabis in certain areas has affected how retailers and customers alike consider the tobacco category. Additionally, inflationary pressures have forced some cigarette consumers to purchase lower-tier products or switch to alternate tobacco options overall. And through it all, new brands continue to emerge on the tobacco scene as retailers work to monitor evolving trends and market dynamics.

SALES SCOPE

Cigarette dollar sales at convenience stores fell by 2.1% for the 52 weeks ending April 21, with units down by 6%, according to market research firm Circana. More recently, cigarette dollars dropped by 2.7% with units down 6.4% for the 12 weeks ending April 21. And the

four weeks ending the same day saw a greater 4.8% decrease in dollar sales with an 8.3% decline in units.

“Overall, total nicotine sales are declining by several percent this year, similar to last year, with cigarettes driving this overall lower nicotine sales level with high singledigit percentage declines,” said Don Burke, senior vice president, Management Science Associates.

However, even as cigarette sales fall, other tobacco categories grow, and the $53 billion category remains at the top spot in tobacco dollar sales.

Sean Carroll, director of category management at Good 2 Go, which operates 82 stores in seven Western states, has noticed interest in natural leaf products and expects pod-based vape product sales to flatten or increase going forward due to FDA focus.

At Hat Six Travel Center, with one site in Wyoming, cigarette sales have significantly decreased.

Good 2 Go, which operates 82 stores in seven Western states, has also seen cigarette unit sales decline, although dollar sales remain flat.

Cigars, too, are trending down at Good 2 Go.

“(However,) there is and has been consumer focus around natural leaf products. Some of the key products in this segment, Dutch Masters and Backwoods, continue to perform well,” said Sean Carroll, director of category management, Good 2 Go.

On a national scale, cigars have seen a 6% decrease in units for the 52 weeks ending April 21, per Circana, but a 2.7% uptick in dollar sales. The price per unit jumped the highest for cigars among all tobacco segments for this time period at 9.3%.

In the 12 and four weeks ending April 21, the price per unit percentage increase only rose.

Meanwhile, at Benny’s Car Wash,

which operates nine total locations, including three B-Quik c-stores in Louisiana, General Manager David Schumaker has noticed customers transferring to the vape segment.

“You can see the cigarette numbers go down as the vape numbers go up. We’ve really been watching that trend for the last several years play out,” he said.

That being said, B-Quik stocked

flavored vapes up until three to four months ago.

“With the flavored vapes, that was a $20-$25 ring. And it sold; it turned quite well, and (sales) have pretty much just evaporated once we had to pull them off the shelf,” said Schumaker.

In March, Louisiana had announced enforcement of laws banning certain vape products.

These sales haven’t resurfaced in other areas the way many cigarette sales had originally transitioned to vape, but the chain found “something completely different” to put in that high-exposure spot.

Good 2 Go, primarily offering pod-based solutions, has noticed sliding vape numbers.

“These products were disadvantaged with the increased presence of flavored disposables (when flavored disposables were exempted from the vape flavor ban),” explained Carroll. “(However,)

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I would expect pod-based numbers to flatten and/or increase with the continued focus on flavored disposables by the FDA.”

Alternately, Hat Six sees “a huge increase in vapes,” noted Erin Breeden, merchandise manager for the company.

ORAL NICOTINE — THE SEGMENT TO WATCH

Oral nicotine pouches have rocketed forward in the tobacco arena, jumping to the forefront of c-store retailers’ radar.

The smokeless category in general has risen 14.1% in dollars and 10.1% in unit sales for the 52 weeks ending April 21, second only to cigarettes in terms of sales numbers, per Circana.

Within the smokeless segment, spitless tobacco, which includes oral nicotine pouches, has witnessed a 63% boom in dollar sales and 49.4% surge in units for the same period.

Just in the last four weeks ending the same day, the numbers increased to a 70.1% burst in dollars and 56.4% gain in units.

“Nicotine pouch products continue to be the segment with the most upside over the last few years, led by ZYN. ZYN has dominated the nicotine pouch segment. Secondary players are Rogue and on!” explained Carroll.

At Good 2 Go, the nicotine pouch segment is taking customers from moist tobacco products. The typical nicotine pouch consumer is between 21-39 years of age.

In fact, Carroll has noticed the expansion of nicotine options and increase of friction for nicotine users lead to growing poly usage.

“It’s more typical to see the average tobacco consumer picking up multiple nicotine products at the same time (as part of the same transaction),” he said.

Hat Six is also experiencing a rise in pouch sales, as well as Calloway Oil’s EZ Stop Food Marts, where “the modern oral nicotine segment is

Keeping Tabs on Tobacco

Smokeless tobacco showed the most growth over the last year with a 14.1% bump in dollar sales to hit $10.4 billion, followed by tobacco accessories. The little cigar segment saw the biggest drop at 26.1%.

showing exceptional growth,” noted Tom Tucker, buyer and category manager for EZ Stop, which operates 25 stores in Tennessee.

Interestingly, EZ Stop has clocked an uptick in women’s use of modern oral products, with this demographic moving to the category and away from cigarettes and vape. ZYN, specifically, is attracting these women consumers.

Oral nicotine pouches have also become popular at B-Quik.

When Schumaker first added ZYN, he accepted some countertop displays as part of a 90-day trial. “It just took off like a rocket,” he said.

Burke credited the ability to use modern oral products in almost all work and social situations as the driver for the category’s notable sales increases.

Source: Circana Total U.S. Convenience data for the 52 weeks ending April 21, 2024

“The bright spots in the nicotine category are the modern oral (nicotine pouch) products and disposable vapor products,” he said.

Overall, retailers and wholesalers are optimistic regarding the smokeless segment, and oral nicotine in particular, according to Goldman Sachs research. The research results are based on the company’s “Nicotine Nuggets” Q1 survey and were compiled on April 22.

Based on the survey, the category is expected to grow around 19% this year, above the previously expected 11% growth.

“The category’s strength reflects the growing presence and popularity of modern oral nicotine products and share gains, especially from traditional chewing tobacco,” surmised Bonnie Herzog, managing director at Goldman Sachs, in the company’s research.

Herzog also noted there is a newer oral nicotine player to retailers on the scene, Zone X, which retailers plan to roll out with the thought that it could be a strong competitor.

One concern present among a few retailers, however, is recent short-term ZYN supply shortages, although any headwind is expected to be temporary.

“Overall, ZYN continues to show strong growth. …” said Herzog.

PRICING POWER

“Many tobacco firms have aggressively increased the price of their products over the past few years to help compensate for declines in sales,” noted Burke. “The effect of the higher tobacco prices, combined with less government financial assistance and mounting credit card debt, have caused the tobacco consumer to reduce their consumption and/ or to look for the most economical means of acquiring their nicotine.”

The economic uncertainty of the last few years has certainly forced many consumers to prioritize their discretionary spending allocations. With inflation and high gas prices overhead, tobacco customers have also switched to alternate products in addition to increasing their time in between trips and otherwise finding methods to stretch their dollars.

At EZ Stop, Tucker has noticed price increases affecting cigarettes in particular.

“The multiple cigarette cost increases we see each year are moving consumers to the modified risk segment or quitting altogether,” he said.

In fact, many of these consumers are moving away from tobacco, according to Tucker.

“We have seen that the consumer may choose other products instead of tobacco for their nicotine needs,

or alternatively some consumers supplement their consumption of tobacco with other nicotine products, ultimately using tobacco products less,” he noted.

Other cigarette consumers are choosing to abandon premium brands for fourth-tier options. This fourth-tier growth is offsetting the decline in premium, said Tucker.

Hat Six’s Breeden, too, has found customers searching for better prices and longer-lasting products in the wake of cigarette price spikes.

Goldman Sachs research supports these observations.

“Retailers and wholesalers indicated that deep-discount/fourthtier brands and discount brands like Marlboro Special Select, VUSE Alto and NJOY Ace are gaining share sequentially, while premium brands lose market share, reflecting consumers continuing to make tradeoff decisions in an environment that remains economically challenging for many,” noted Herzog.

According to the research results, the deep discount/fourth-tier cigarette brands fared best in market share performance in Q1 2024 vs. Q4 2023 compared to other brands, although increased shelf space is still expected to be allocated primarily to oral nicotine pouches.

The “Nicotine Nuggets” survey

Left: Calloway Oil’s EZ Stop Food Marts operates 25 stores in Tennessee. Right: Tom Tucker, buyer and category manager for EZ Stop, has seen an increase in women’s use of modern oral products.

results also indicated increased excise taxes to be a factor in cigarette purchasing patterns.

Additionally, with gas prices potentially affecting the trade downs from premium brands, Herzog expects these trends to be comparable in the short term, “given that gas prices have remained elevated following Q1.”

B-Quik has also closely monitored pricing strategies for the different tobacco segments.

“We have maintained pretty hard, clear-cut margins in the different categories for quite a while,” Schumaker stated.

For example, the chain wants the snuff segment to turn faster as it’s date based, so it maintains tighter margins for these products.

Conversely, cigars have a healthy markup at B-Quik stores.

At Good 2 Go convenience stores, Carroll has noticed different pricing elasticities of customers based on the nicotine segment.

“Some of the larger tobacco companies have done well to increase trial of their nicotine pouches by providing deeply discounted promotional retails,” he continued.

David Schumaker, general manager for Benny’s Car Wash, which operates nine total locations, including three B-Quik c-stores in Louisiana, believes brands make a difference when it comes to CBD success.

only factors influencing the backbar. Federal, state and local legislation play an important role in the c-store tobacco space.

And, at the moment, vape is feeling the heat more than any other tobacco segment.

“I worry about selling vapes and the fight that they are having to keep them or get rid of them. At any moment they could outlaw them and we’d get stuck with product that is illegal to sell,” said Breeden.

Breeden isn’t the only retailer concerned about vape’s trajectory.

“The continuing premarket tobacco product application process relating to vape products has had a significant impact on this segment,” said Good 2 Go’s Carroll. “I expect this to continue.”

Goldman Sachs’ survey results also revealed that retailers are seeing promotional activity, particularly with oral nicotine pouches and e-cigarettes.

With oral nicotine becoming such a hot-ticket item for tobacco and nicotine, focusing promotions here will help drive competition.

For e-cigarettes, c-store retailers are noticing JUUL and NJOY specifically increasing promotional activity, noted Herzog.

“Retailers are suggesting that customers have shifted across brands that have been promoting,” she said.

Schumaker understands the power of promotions as well. He noted tobacco companies are experimenting with buy downs and multipack support based on where they want to see movement.

“We take our marching orders from them. …” he said. “For our role, we just want to make sure that we’re up to date, we’re keeping a good variety and that we have everything available.”

THE LEGISLATION IMPACT

Of course, tobacco trends, the economy and sales data aren’t the

To date, the FDA has issued marketing granted orders to only 23 e-cigarette products.

In fact, in April, the FDA and Department of Justice seized more than 45,000 unauthorized vape products from a California warehouse, primarily flavored disposable brands.

Earlier this year, civil money penalty complaints were filed against brick-and-mortar retailers in an effort to crack down on marketing denial order (MDO) enforcement.

C-store operators concerned with which vape products are legally able to be sold can now, however, use FDA’s searchable database to determine this information.

Some retailers needing to adjust their backbars to accommodate for MDOs have found their sales dropping due to no longer stocking customer preferences.

Like B-Quik, EZ Stop has felt the significance of government intervention in tobacco.

“Several vape products that had been removed from the market last year impacted our sales negatively this year,” said Tucker.

Within the category, EZ Stop has seen year-over-year downward

trends with a few older vape brands.

Tucker hopes Tennessee will assist with vape regulation through an excise tax to all vape products, as has been done in other states.

“Currently, vapes are entirely unregulated in Tennessee. Bills like this would ensure bad products that are not FDA regulated are not being sold. With the appropriate taxing and enforcement against these non-approved products, it would help protect the category from unfavorable legislation long term or a ban of the current approved items,” Tucker elaborated.

Unfortunately, regulation has increased black market sales of disposable vape products.

“While most retailers believe the impact (of the black market and retailers willing to sell unauthorized products) is significant, the true size is hard to gauge due to limited visibility,” said Herzog. “However, most note that its impact will continue until there’s greater enforcement by the FDA; meantime there is growing frustration among retailers.”

In fact, there is increasing pessimism regarding the impact of the illicit e-cigarette market on c-store retailers for the rest of the year, according to Goldman Sachs research.

B-Quik’s Schumaker, too, has questioned whether a black market has taken the vape sales that the chain can no longer stock.

Vaping devices aren’t the only segment the FDA is focusing on. A decision on the legality of menthol cigarettes and flavored cigars still has yet to be made. In April, the FDA announced it would once more delay the menthol cigarette ban ruling.

A potential decision on a nicotine cap would be made even further down the road.

“You tend to see people go back and forth between the menthol (cigarettes) but not to the nonmenthols. I don’t know what kind of

result (the FDA) would get off of (a ban),” said Schumaker. “I would be very interested, if they did actually do it, to see how it affects sales — if you would actually have their desired effect, which is to get people to quit (smoking), or if people would go to (other products).”

It’s possible to overregulate, he continued, and controlling consumer behavior doesn’t always have the desired effect.

STOCKING CBD

In terms of regulation, CBD is another category in which retailers are looking for further guidance.

Still, many c-store retailers have put CBD products on the shelf to see what works in their market.

At EZ Stop’s stores, CBD has seen steady growth.

B-Quik, too, carries CBD and has seen much activity in the area.

Although, CBD didn’t move much at B-Quik stores for the first two years after it was introduced to shoppers in the stores. Then, a local Louisiana company approached B-Quik with a CBD product, and the chain added a case at the front to increase exposure.

“I was just shocked. I mean, it was a highly profitable item, and the sales just took off like a rocket. And it really goes to show that all CBD is not created equally,” said Schumaker.

The product had a sound profit structure, and the brand had a helpful social media presence.

“Brands make a difference sometimes in certain segments. And I

think that’s true when it comes to CBD, because (the local brand) had a good presentation. They had good brand recognition. And they had a good following,” Schumaker further elaborated.

THE OUTLOOK

C-store retailers are staying on top of the trends and legality of tobacco and nicotine, which will ultimately lead to category success.

“Convenience stores will continue to be the store of choice for tobacco purchases,” noted EZ Stop’s Tucker.

Breeden agreed. “I feel like we are the industry. We cater to tobacco users because it is also what gets them in the doors.”

By understanding and focusing on tobacco, c-stores are retaining a core customer segment.

Convenience stores account for 70% of U.S. tobacco sales, according to Burke.

“This level is unlikely to change dramatically over the next several years, meaning that even though tobacco is a declining category, it is still one of the largest revenueproducing categories for many convenience stores and is also a strong driver of store visits,” he continued.

Schumaker noted c-stores don’t necessarily need a large number of customers buying a certain tobacco SKU to justify highlighting that product. The tobacco consumer will likely buy consistently, so c-stores only need to be sure the right products are on hand. CSD

Offering Deep Discount Tobacco Options Increases Revenue

As nicotine prices continue to rise, consumers look for quality, price-friendly options.

As name-brand tobacco and nicotine products see persistent price increases, c-store operators are increasingly turning to high-quality 4th-tier options as a profitable strategy. This shift allows operators to cater to the growing consumer demand for affordability without sacrificing quality. To save money, consumers are showing a growing interest in discount tobacco products that prioritize quality and consistency. “We’ve seen deep discount brands account for as much as 44 percent of total cigarette sales in certain states which reflects a significant shift toward more affordable options,” says Ernie Teague, vice president of sales and marketing at Cheyenne International.

For c-store operators looking to offer a wider range of nicotine products to consumers, it is necessary to now look towards 4th-tier or deep-discount products. “Tobacco and nicotine typically account for 20–30 percent of a store’s revenue so it’s important not to overlook it,”

Teague says. “When it comes to the bottom line, tobacco is an important piece, but retailers need to have the right mix to meet the needs of consumers in their area. With the right products, priced correctly, and well merchandised, tobacco is a vital and viable category for c-stores.”

Steve Barbour, owner of Cigarettes 4 Less, found customers were interested in deep discount products as long as the quality was maintained. As much as two-thirds of his sales are from deep discount products. “Premium brand’s prices were going up and the value brands were following them,” Barbour says. “So, after a certain point in the late nineties, I felt like there was another level that could be targeted, which was the price level the value brands used to be at. Deep discount brands were being made by smaller manufacturers, like Cheyenne. They were startups, but I liked the idea of having another level customers could choose if the value brands got too expensive.”

the product,” Barbour says.

As the price for premium and value tobacco increases, high-quality 4thtier products have proven to be lucrative for c-store owners. Price hikes in premium and value tobacco products continue to be an issue for consumers. Partnering with a reliable company, like Cheyenne, gives consumers and c-store operators another tobacco option that won’t break the bank.

This trend underscores the growing importance of price-sensitive strategies in the tobacco market as economic pressures mount. “I liked that Cheyenne products were made in the United States. I chose them because they had a great-looking package that I thought would help me push

For c-store operators who may be on the fence about offering 4th-tier products, Barbour has some simple advice. “I would tell anyone who is starting a business or has been in the business a while that offering deep-discount products is not an option. Operators have to offer more price options that are good quality. This trend is getting more obvious as the industry moves forward because large companies increasingly have more expenses, translating to multiple price hikes a year.”

Retailers React to Menthol-Ban Moratorium

With the menthol ban delayed on the federal level, c-stores must continue to grapple with state-level flavor-ban proposals and price pressures on cigarettes and cigars.

Erin Del Conte • Editor-in-Chief

C-store retailers can breathe a collective sigh of relief now that the proposed ban on menthol cigarettes and characterizing flavors in cigars has been further delayed — likely pushed to after election season.

The Food and Drug Administration (FDA) first proposed the ban on menthol cigarettes and characterizing flavors in cigars in April 2022, with final rules predicted for August 2023. But the anticipated announcement regarding the final rules didn’t come, with the FDA moving the announcement date further out

several times. The agency’s most recent estimate of a March 2024 announcement came and went without a peep from the agency. In response, anti-smoking groups sued the U.S. government over the delay in early April.

Then on April 26, the Biden administration announced it was delaying a decision on whether to issue a final rule at all. The move came as no surprise to many in the industry who had predicted the final rules would be delayed until after the November election. But does this mean

the ban might not happen at all?

“Regarding the menthol delay, I do see it as just that — a delay,” clarified David Spross, executive director of the National Association of Tobacco Outlets (NATO). “While no time has been specified, I see the delay lasting at least through the November 2024 election since it has become such a political issue. Depending on the presidential election, results could have an impact on the potential timing of the bans or if they occur at all.”

Tracking Cigarette Excise Taxes

Cigarette excise taxes continue to tick upward across the U.S. Colorado and Maryland are both set to see cigarette tax increases again this summer. The Colorado cigarette tax is set to increase to $2.24 per pack on July 1 and then tick up again to $2.64 per pack on July 1, 2027. In Maryland, the budget bill (SB362) includes language to up the cigarette tax by $1.25, taking it from $3.75 to $5.00, which would make it the second-highest state tax after New York ($5.35), and nearly as high as the District of Columbia ($5.02). At press time SB362 was expected to be signed by the governor and go into effect on July 1.

Source: Tma.org, Jan. 1, 2024

Cigarettes & Cigars See Unit Sales

Decline as Prices Rise

Unit sales for cigarettes and cigars both fell 6% for the 52 weeks ending April 21, 2024, per Circana. Prices climbed 4.2% for cigarettes during the period and 9.3% for cigars, with little cigars seeing the biggest increase of 27.5%.

Source: Circana Total U.S. Convenience data for the 52 weeks ending April 21, 2024

NATO, as part of the comment process for the proposed ban, met with representatives from the Office of Management and Budget, the executive office of the president, the FDA and the Department of Health and Human Services and advocated that the rules not be finalized. NATO pointed out that the ban would have a substantial adverse economic impact on the retail businesses that are reputable, licensed and regulated. It would also hurt government revenues and public programs that are funded by those revenues. What’s more, the ban could shift these products to the black market. Meanwhile, licensed and regulated retailers are following the laws and regulations, which is already helping to reduce youth access to tobacco products.

Mike Jones, director of marketing, S&S Petroleum Inc., which has 90 stores in Washington, Idaho, Oregon and California, noted the delay is a positive for the tobacco category, but meanwhile legislatures are looking to pass similar bans at the state and local levels.

Spross pointed out that, at press time, pending

state-level flavor ban legislation included a total flavor ban introduced in Michigan; a total flavor ban pending in committee in Minnesota that was scheduled for review on May 20; and a total flavor ban from a bill carried over from the 2023 session pending in committee in Pennsylvania. Rhode Island added a ban on flavored vapor products to its budget bill that is scheduled for review on June 30, which would codify the Rhode Island Health Department’s current ban on flavored products that is already in effect. And New York has added oral nicotine pouch products to its vapor flavored ban, scheduled for review on June 6.

TREND WATCH

Meanwhile, cigarettes and cigars are facing inflationary heat. Prices were up 4.2% for the 52 weeks ending April 21 and 3.8% for the four weeks ending April 21 for cigarettes. Cigarette dollar sales fell 2.1% for the 52-week period, with unit sales dropping 6%. At the same time, cigar dollar sales grew 2.7%, with unit sales down 6% and

up a whopping 9.3%.

Youth Usage of Cigarettes and Cigars at All-Time Low

In November 2023, the Food and Drug Administration and Centers for Disease Control and Prevention released data from the 2023 National Youth Tobacco Survey that outlines youth tobacco use. The report found that cigarette and cigar use among underage youth is at an all-time low.

Among middle and high school students, ecigarette products were the most used tobacco product in 2023 (7.7%; 2.13 million), followed by cigarettes (1.6%), cigars (1.6%), nicotine pouches (1.5%), smokeless tobacco (1.2%), other oral nicotine products (1.2%), hookahs (1.1%), heated-tobacco products (1%) and pipe tobacco (0.5%).

Source: Centers for Disease Control and Prevention, “Tobacco Product Use Among U.S. Middle and High School Students — National Youth Tobacco Survey,” 2023; and FDA.gov, “Results from the Annual National Youth Tobacco Survey”

“With increased price pressure we are seeing shifts to cheaper and alternative brands, or even options to traditional cigarettes,” Jones said. “Cigars are mixed as we see more value play from the consumer in this category.”

Jones said he sees customers taking a hybrid approach to cigarette shopping, where fourth-tier or value brands are gaining traction, but customers then go back to premium on more of a treat-based occasion. With cigars he sees customers moving toward single cigars and value options.

Looking ahead, Jones predicted a soft year for cigarette volumes.

“Sales may be slightly up due to retail increases, but (I) expect that units and cartons per week as a whole will be soft,” he said. “Cigars could see some lift as a result of consumers shifting from cigarettes to cigars as a possible replacement.” CSD

FAST FACTS:

• The ban on menthol cigarettes and flavored cigars has been delayed.

• Inflation is impacting both cigarette and cigar prices, prompting shoppers to look for value.

• Some customers are taking a hybrid approach to cigarettes, buying fourth tier regularly but opting for premium on treatbased occasions.

Compliance Vital for Vape

With FDA cracking down on illegal vape products, retailers are working to navigate the murky regulatory landscape.

Erin Del Conte • Editor-in-Chief

In the c-store industry, compliance with regulations isn’t merely an issue of legality; it’s the foundation of a responsible business.

Nowhere is this more evident than in the realm of vape products. For convenience store retailers, ensuring compliance in the face of ongoing marketing denial orders (MDOs) isn’t just a box to tick — it’s an important component of maintaining trust with customers, avoiding expensive penalties and safeguarding the integrity of the business. But a lack of clarity from the Food and Drug Administration (FDA) over the past year and confusion over product legality has made vape compliance an especially fraught issue for many retailers.

Many c-store retailers shared that they felt uncomfortable discussing the vape category at this time given the regulatory heat around the category at present.

In recent months, the FDA has been seen stepping up enforcement actions against illegal vape products. In May, the FDA announced that thus far it has issued more than 670 warning letters to manufacturers, importers

and distributors for illegally selling and/or distributing unauthorized new tobacco products, including e-cigarettes, as well as issued more than 550 warning letters to retailers for the sale of unauthorized tobacco products. In addition, the FDA has filed civil money penalty complaints against more than 55 manufacturers and more than 100 retailers for the manufacture and/or sale of unauthorized tobacco products. It has also sought injunctions against seven manufacturers of unauthorized e-cigarette products in coordination with the U.S. Department of Justice (DOJ), and it has seized unauthorized e-cigarette products valued at more than $700,000 in coordination with the DOJ.

At press time, the FDA had most recently issued warning letters to 14 online retailers for selling unauthorized e-cigarette products that are allegedly popular among youth, targeting brand names such as Elf Bar/EB Design, Esco Bars, Funky Republic, Hyde, Kang, Cali Bars and Lost Mary.

To date, the FDA has only extended marketing granted orders (MGOs) to 23 flavored-tobacco e-cigarette products and devices. “These are the only e-cigarette

products that currently may be lawfully marketed and sold in the U.S.,” the FDA said in a May statement.

Still, many retailers have expressed confusion over how to handle products that are in the premarket tobacco product application (PMTA) process but have not yet received an MDO or MGO. What’s more, a number of vape manufacturers have taken legal action to dispute the FDA’s MDO decisions, which has resulted in emergency stays on products while these lawsuits work their way through the courts, adding to retailer confusion over which products are safe to sell and where any given product is in the approval process.

“While chain stores with limited vaping offerings may navigate regulatory waters relatively unscathed, those catering to adult consumers through disposable vaping products operate under constant FDA scrutiny,” noted Gregory Conley, director of legislative and external affairs, American Vapor Manufacturers Association, which represents independent vapor manufacturers across the U.S. “Although warning

letters precede fines for noncompliant sales, the specter of FDA intervention looms large, challenging retailers’ ability to meet consumer demands effectively.”

Like many retailers, Cubby’s, which owns and operates 37 convenience stores and supermarkets throughout Nebraska, Iowa and South Dakota, has so far taken a wait-and-see approach to MDOs from the FDA, noted Mike Wilson, chief operating officer, Cubby’s Inc. He pointed out that most of the MDOs that involve a major manufacturer are immediately met with a civil suit and a stay.

FDA TARGETS

In a CStore Decisions March webinar titled “How FDA Rulemaking is Changing the Backbar,” David Spross, executive director for the National Association of Tobacco Outlets (NATO), shed some light on the FDA’s recent crackdown on illegal products. He pointed out that the Reagan-Udall Foundation’s evaluation of the FDA’s Center for Tobacco Products’ (CTP) operations included an audit, which criticized the agency’s lack of transparency regarding the PMTA progress and lack of enforcement around illegal products.

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NATO Lists Vape Products Targeted So Far by FDA

Listed below are the disposable vapor brands cited as unauthorized or illegally sold in the Food and Drug Administration (FDA) civil money penalty (CMP) complaints, import alerts and warning letters, as outlined by the National Association of Tobacco Outlets (NATO) at press time. NATO noted that if a brand is identified below, it does not necessarily mean that all SKUs in that brand family have been cited for enforcement. NATO encourages retailers to check with their suppliers to learn the status of each individual product. NATO also noted this list does not constitute any commentary on a.) the status of other non-vape categories of tobacco products that may bear the same or similar brand names or b.) the validity of FDA’s allegations in the civil money penalty complaint, import alert or warning letter.

Brands Seized in FDA, DOJ and U.S. Marshals Service Joint Effort

• Elf Bar/Elfbar/EB Design • Esco Bar(s)

• Puff Bar/Puff • Kuz • Smok • Pixi

Brands Cited in FDA CMP Complaints

• Elf Bar/Elfbar/Elf Bar TE6000/EB/EB Design/EB Create/BC5000

• Esco Bar(s) • Flum Gio • Lost Mary

• Puff Bar/Puff Flow/Puff Max/Puff Plus/Puff Xtra/Puff XXL

Brands Cited in FDA Import Alerts

• Elf Bar/Elfbar/Elf Bar TE6000/EB/EB Design/EB

• Esco Bar(s) • RandM/Fumot

Brands Cited in FDA Warning Letters

Elf Bar/Elfbar/Elf Bar TE6000/EB/ EB Design/EB Create/BC5000

Flow/Puff Max/ Puff Plus/Puff Xtra/Puff XXL

“What I think you’ve seen since that report is the FDA stepping up its enforcement efforts, which it has done,” Spross noted.

Spross further noted that the FDA looks to the National Youth Tobacco Survey that comes out each fall to help guide how the agency focuses its enforcement. The survey showed that Elf Bar was the preferred brand amongst youth that use vape products.

“What you’re seeing is a response to that and the FDA focusing in on that flavored disposable product in particular,” Spross said.

Specifically, the FDA noted that the 2023 National Youth Tobacco Survey found that, of the more than 2.1 million youth who reported currently using e-cigarettes, more than 50% said they used Elf Bar products and more than 20% reported using Esco Bar products.

NATO has put out a list of vapor products that the FDA appears to be targeting most heavily in its enforcement actions (see sidebar on the left).

“We went through the last, I want to say two-and-a-half years of enforcement actions that the FDA has filed, and that’s how we came up with the list,” Spross noted.

Once again, products that have high youth usage appear to be the FDA’s top focus in terms of enforcement. Spross also noted that it’s also important to be aware of products that have not filed a PMTA.

But federal regulations aren’t the only thing c-store retailers need to worry about.

“While federal regulations are important, it is more imperative to stay up to date on any new local legislation affecting the areas we serve,” noted Wilson.

For example, some states have introduced legislation to implement vape directories that would make it clear which products are legal to sell. Proponents of the directories

Vape Faces Inflationary Pressures

Unit sales of electronic smoking devices fell 7.9% as prices rose 8%.

Source: Circana Total U.S. Convenience data for the 52 weeks ending April 21, 2024

say they give needed information that has been absent from the FDA. Opponents, however, dislike the added regulation that in some cases includes fines for retailers. At press time, Alabama, Louisiana, Oklahoma, Wisconsin, Florida, Kentucky, Utah and Virginia had all passed legislation to implement such directories.

Wilson pointed out that in his marketing area, the Iowa Legislature recently passed bill HF 2677, requiring all vapor devices sold to be included on a state registry. “Those not registered would be illegal to sell. The governor has yet to sign the bill. I am keeping a close eye on this so we can react accordingly,” he said.

IMPROVING TRANSPARENCY

In response to criticism over its lack of transparency, the FDA launched the Searchable Tobacco Products Database (STPD) at the end of March. The STPD is a “new user-friendly list of tobacco products — including e-cigarettes — that may be legally marketed in the U.S.”

The FDA noted that the database is designed to serve the public, and especially retailers, by consolidating this information in one location with an easy search capability. It

can be accessed at Fda.gov/searchtobacco, and the FDA plans to update it monthly.

According to the FDA, the database will provide information on three categories of products: 1.) new tobacco products that received marketing authorization through one of FDA’s three pathways to market a new tobacco product; 2.) preexisting tobacco products established through a voluntary determination program (commercially marketed as of Feb. 15, 2007); and 3.) provisional tobacco products that were removed from review.

“CTP remains committed to enhanced transparency in a way that is useful, timely and user friendly,” said Dr. Brian King, director of the FDA’s Center for Tobacco Products, in a statement. “We hope that this database will be an asset to stakeholders — including retailers — that will be used to help facilitate compliance with the law.”

VAPE SALES

As regulatory decisions are hashed out, c-stores must still focus on serving today’s adult vaping customers.

“Despite the FDA’s malfeasance around the category, the demand for flavored vaping products among American adults remains strong,

with an estimated 11 million adults choosing to use disposable vaping products,” Conley said. “This underscores a fundamental economic principle: Where there’s demand, there will be supply. …”

Inflationary pressures, however, are impacting the vape segment in convenience stores. Price per unit rose 8% for the 52 weeks ending April 21, with unit sales down 7.9% even as dollar sales, buoyed by price increases, dipped only slightly by 0.5% to $7.13 billion for the same period.

“In our stores customers are defiantly looking for discounts on pods,” Cubby’s Wilson said, noting that it was resulting in a slight decline in unit sales. “When those discounts aren’t available, a few customers are trading down from a four-pack to a two- or single pack, but the majority aren’t returning. They are asking for high-puff-count disposable devices.”

Wilson also sees a steady number of independent vapor stores opening in Cubby’s market area, adding to the competition for sales.

In 2024, Wilson expects vape sales to slowly trend downward. “If the governor of Iowa signs HF 2677 (the PMTA directory bill), I think we will see that part of our market flatten or even increase.” CSD

Smokeless Continues to Succeed

As demand for smokeless tobacco products rises, retailers are making tough decisions on which items to keep or replace on their backbar to stay up to date with trends.

Zhane Isom • Associate Editor

Smokeless tobacco remains one of the bestperforming segments in the overall tobacco category. With more consumers becoming interested in these products, the segment is likely to see even more growth for the remainder of 2024.

For the 52 weeks ending April 21, smokeless tobacco came in strong with $10.4 billion in dollar sales, a 14.1% increase, according to Circana. Unit sales also showed significant growth at

$1.55 billion, which is a 10.1% increase for the same period.

“I expect to see growth in the smokeless market through 2024 in both volume and variety, driven mainly by pouches,” said Alex Clark, CEO of Consumer Advocates for Smoke-free Alternatives Association.

Movement Fuels, operator of 34 c-stores throughout Texas, also expects the smokeless category to see forward momentum.

Consumers Demand Smokeless

Smokeless tobacco products are coming in hot when it comes to sales with a 14.1% increase in dollar sales and a 10.1% increase in unit sales for the 52 weeks ending April 21, 2024.

Source: Circana Total U.S. Convenience data for the 52 weeks ending April 21, 2024

“There is a lot of room for growth in this category, especially now that more consumers are finding out about these products and choosing them over traditional tobacco products,” said Imran Ali, co-founder of Movement Fuels.

“We have a projected year-over-year increase of approximately 12-15% within the smokeless category,” added Tim Greene, director of tobacco and general merchandise for Boulder, Colo.-based Smoker Friendly, which operates 290 convenience stores in 13 states.

Although many retailers are seeing growth within the smokeless category, others have a different outlook.

Mike Wilson, chief operating officer for Cubby’s, which has 41 c-stores in South Dakota, Iowa and Nebraska, noted that he expects smokeless sales to be down as much as 30% because consumers are moving to cheaper, lower-quality moist products.

REGULATORY VIEWPOINT

Even though, at the moment, there are no proposed federal rules pending to ban flavors in smokeless tobacco like there are for menthol cigarettes and flavored cigars, smokeless has received some regulatory attention lately.

U.S. Senator Schumer held a press conference in January calling for federal action to crack down on ZYN nicotine pouches due to their alleged youth appeal.

There are also some states seeking to ban flavors in all tobacco products, which would include smokeless tobacco.

At the moment, the states looking to potentially ban flavors in all tobacco products include Michigan (total flavor ban), Minnesota (total flavor ban), New York (adding oral nicotine pouch products to vapor flavor ban) and Pennsylvania (total flavor ban), according to David Spross, executive director of the National Association of Tobacco Outlets.

Movement Fuels, operator of 34 c-stores throughout Texas, expects the smokeless category to see forward momentum.

While a number of states, including Hawaii, New Mexico, Colorado, Maine and Vermont, have defeated proposed flavor bans, more states continue to target smokeless products with flavor ban legislation.

The states that have defeated flavored tobacco bans include Hawaii, New Mexico, Colorado, Maine and Vermont.

Along with keeping an eye on regulatory factors that could affect smokeless products, retailers must keep tabs on other potential hurdles, including the popularity of these products amongst youth.

“While smokeless is historically unpopular with youth, the advent of perceived lower-risk products may change that,” said Clark. “So far, it hasn’t happened, but trends in adult use may affect curiosity among youth. As companies enter the category, special attention needs to be paid to marketing, specifically branding and flavor descriptions.”

Clark also mentioned that while there is no established threshold of youth experimentation that will trigger aggressive action from the Food and Drug Administration, a real or perceived spike in use could set off alarm bells with regulators.

TAKING ON SMOKELESS TRENDS

When consumers enter a convenience store to purchase smokeless tobacco products, they are looking for certain factors to determine their purchasing decisions.

“Similar to what we saw in vaping, consumers are looking for a variety of flavors other than tobacco, a range of nicotine strengths and affordability,” said Clark.

Spitless tobacco is a smokeless segment that performs exceptionally well in convenience stores, outperforming both snuff and chewing tobacco products.

Spitless tobacco reached $3.41 billion in dollar sales, a 63% increase for the 52 weeks ending April 21, per Circana. Unit sales increased to $620 million (up 49.4%) for the same period.

Snuff, on the other hand, stayed relatively flat with a 0.5% decrease in dollar sales but dropped 6.5% in unit sales, while chewing tobacco slightly fell 3.8% in dollar sales and 1.2% in unit sales for the 52 weeks ending April 21, as specified by Circana.

However, nicotine pouches remain the most purchased smokeless tobacco product amongst tobacco/nicotine consumers.

The global nicotine pouch market size is expected to reach $22.98 billion by 2030, expanding at a compound annual growth rate of 35.7% from 2023 to 2030, according to a new report by Grand View Research Inc.

“I think the most obvious trend is the visibility and growing popularity of nicotine pouches and other smokeless analogs that don’t contain tobacco leaf. There also appears to be a number of vapor companies that are expanding into pouches,” said Clark.

“We are seeing a lot of people moving from chewing tobacco towards products like ZYN,” added Movement Fuels’ Ali. “We are also seeing people who smoke cigarettes move to smokeless because it’s cheaper.”

Smoker Friendly, as well, has seen a rise in nicotine pouch purchases, with customers looking for cleaner nicotine formats.

“Within the category, we’re seeing a demand for different nicotine levels from the traditional six-milligram and three-milligram offerings,” said Greene.

Retailers have also seen the way inflation has impacted how consumers are buying their smokeless tobacco products.

FAST FACTS:

• For the 52 weeks ending April 21, smokeless tobacco came in strong with $10.4 billion in dollar sales, a 14.1% increase, according to Circana.

• Although there are no federal rules currently banning smokeless products, states, including New York, Michigan and Minnesota, at press time were considering bans on flavored tobacco products.

• C-store consumers are still demanding nicotine pouches, along with new flavors and brands.

“The main demand that we see is customers looking for lower-cost alternatives as the costs of major brands increase,” said Cubby’s Wilson.

THE FUTURE OF SMOKELESS

The remainder of 2024 and the start of 2025 look bright for smokeless tobacco as more consumers are taking notice of nicotine pouches, other products and brands that are coming out with new innovative flavors and ideas.

With the ever-changing demands and trends from consumers, retailers are starting to become picky when it comes to what stays on the backbar and what goes.

“We are cutting SKUs; cutting back on variety by removing slower-selling, non-returnable products,” said Wilson. “Where we used to keep a large variety of SKUs on hand to service the infrequent customer, we are moving to a more uniform set across the chain. One where we can try new items or brands and quickly remove them if they don’t do well.”

Smoker Friendly has expanded its nicotine pouch offering, giving its customers a wider variety of brands, nicotine strengths and flavors to choose from.

Movement Fuels has also begun rethinking its backbar setup and how it can showcase new smokeless products.

“At first, we were just carrying a few SKUs of ZYN, Rogue, on! and other brands,” said Ali. “Now, we are heavily focusing on whether there is a new product out, and we want to make sure we have it on our shelves.” CSD

Tapping Into Tobacco Accessories and CBD

As retailers await regulatory direction on CBD, the product remains in demand with customers. Plus, with the legalization and use of cannabis rising in some states, retailers see an opportunity to stock new tobacco accessories.

Zhane Isom • Associate Editor

Cannabidiol (CBD), despite an unclear regulatory framework, is being sought by many consumers given its range of perceived health benefits from pain relief to calming properties.

Recent forecasts by BDSA, a cannabis market research firm, indicated that the legal U.S. cannabis market is

poised for remarkable growth. Sales are projected to reach nearly $46 billion by 2028, with a compound annual growth rate of nearly 10% from 2023 to 2028.

The growth is primarily driven by the expansion of adult-use markets across the country. Approximately

50% of the U.S. adult population now consumes cannabis in states where it is legal, according to BDSA Consumer Insights data.

On the regulatory front, Chair of House Oversight Representative Jamie Comer held a hearing with the Food and Drug Administration (FDA)

Tobacco Accessories Sees Growth

The tobacco accessory segment has been seeing a bit of growth in sales so far in 2024. For the 52 weeks ending April 21, tobacco accessories grew 9.3% in dollar sales with a 3.1% increase in unit sales for the same period.

Source: Circana Total U.S. Convenience data for the 52 weeks ending April 21, 2024

commissioner on April 15, which covered a wide range of topics, including CBD and hemp.

During the hearing, the FDA commissioner repeatedly said they are waiting for direction from Congress on what to do regarding regulating CBD, according to Kerry Hinkle, membership coordinator for the U.S. Hemp Roundtable.

DIVING INTO CBD TRENDS

While the FDA continues to work on a regulatory framework for CBD,

consumers are still buying and seeking CBD products.

For instance, the CBD beverage space is performing well at the moment as more consumers are looking into alternatives to alcohol.

“Several well-established brands like Medterra or Lord Jones have expanded their offerings to include CBD-infused beverages,” said Hinkle. “But there are also new brands growing in popularity like CANN, High Spirits Beverages, High Rise and more.”

Another growing trend is the inclusion of other natural extracts in CBD products.

“Kratom, mushroom extracts and Kava are among the growing number of natural alternatives that have been added to CBD products to increase functionality, effectiveness and profit margins,” said Hinkle.

Consumers also want various CBD products they can trust and rely on. Consumers are becoming more conscientious about their products and are demanding quality, transparency, and accurate dosage and labeling, noted Aaron Smith, co-founder and CEO of the National Cannabis Industry Association.

In terms of variety, not only are consumers looking for CBD-infused beverages, but they are also purchasing tinctures, topicals, pet treats and more.

“Each of these products tends to attract different customers,” said Hinkle. “Beverages might be an alternative for alcohol; tinctures might be used for general relaxation and topicals for pain.”

As CBD products continue to grow in popularity amongst consumers, an

opportunity exists for c-store retailers to profit from the category.

“I see low-dose hemp-derived CBD products as an excellent product category for c-stores to enter. The same can be said for hemp-derived delta-8 and delta-9 products as alternatives to tobacco,” said Hinkle. “I think if c-stores can properly market, display and educate their customers on these products, they can be the go-to spot for these CBD products.”

VARIETY DRIVES TOBACCO ACCESSORIES

As the cannabis market expands,

it’s offering new opportunities for tobacco accessories as well. Retailers in states with legal cannabis sales can look to boost accessory sales by offering pipes, screens, rolling papers and more.

Tobacco accessories reached $510 million in dollar sales, up 9.3% for the 52 weeks ending April 21, per Circana.

However, some retailers see potential challenges ahead for the category in 2024.

Mike Gilligan, vice president of Gilligan’s Retail, which operates 12 convenience stores in Arizona and Montana, expects tobacco

accessories to be flat or slightly decline for the rest of 2024.

“The trends in tobacco and nontobacco/nicotine products have been going through a big change over the past few years,” said Gilligan. “The popularity of nicotine pouches and e-cigarette products have started to chip away at traditional tobacco sales, which in turn will hurt tobacco accessories.”

Lighter sales, for example, already appear to be feeling the pressure of shifting tobacco trends. Lighter unit sales dropped 5.4% while match unit sales declined 2.5% at convenience stores for the 52 weeks ending April 21, according to Circana.

But tobacco accessories, including lighters, still have a promising future,

especially with consumers’ high demand for variety.

“Consumers want options,” said Gilligan. “The challenge is bringing in a variety to meet customer demands while working with the counter space available to showcase the accessories.”

Gilligan’s is keeping its options open when it comes to rearranging its tobacco accessories section.

“As the customers’ taste changes and the category evolves, we change with it. We are continually on the lookout for the best products and the newest trends,” Gilligan said. “It is a welcomed challenge and opportunity for us to stay ahead and have an offering that is current and products our customers desire.” CSD

FAST FACTS:

• Tobacco accessories reached $510 million in dollar sales, up 9.3% for the 52 weeks ending April 21, per Circana.

• Cannabis sales are projected to reach nearly $46 billion by 2028, with a compound annual growth rate of almost 10% from 2023 to 2028, according to BDSA.

• Consumers are demanding variety from both tobacco accessories and CBD product options.

Winning Foodservice Daypart by Daypart

C-store retailers looking to succeed with foodservice programs are appealing to customers differently based on daypart, strategizing with their offerings and marketing efforts.

Emily Boes • Senior Editor

As c-store foodservice programs continue to grow, it’s important for retailers to focus on dayparts, understanding how best to promote and manage foodservice at different times of the day.

Shop Rite/Tobacco Plus, which operates 36 Shop Rite locations and 24 Tobacco Plus sites in Louisiana, for instance, has been focusing on the “after-school snack time,” noted Angelle Cloud, who is both a registered and licensed dietitian nutritionist and is the foodservice compliance director and dietitian for the company. “These are generally parents and teens looking for a quick bite while they are in between appointments and events. We make sure that our hotbox is full, fresh and stocked with the favorites,” she said. “This is also a great time to offer menus, and when

Angelle Cloud

applicable, talk about our drive-through or other special conveniences that we offer in that location. Getting those customers to become regulars and/ or return at more standard mealtimes is a big goal for all of us.”

The two brands offer a combined 34 Bourbon Street Deli locations within the stores.

DAYPART OFFERINGS

At Quality Dairy Co., which operates 26 sites in Michigan, breakfast is the most popular daypart.

“Here at Quality Dairy, we cut our teeth on our doughnuts and coffee. We make our doughnuts fresh every day for all of our locations,” said Michael Wensel, Quality Dairy fresh food category manager. “We probably have 50 different styles of doughnuts at any given time that you can try.”

The chain also stays busy during the breakfast daypart due to its specialty hot food offerings and variety of coffee options.

In the mornings, Shop Rite/Tobacco Plus serves grab-and-go items such as breakfast biscuits and burritos at its smaller locations and for quick purchases at its larger spots.

That said, in a move that brought a large uptick in customers at Quality Dairy for the lunch/dinner daypart, the chain launched a fried chicken program in February.

“It’s a fantastic product. People are coming in specifically for that chicken now, which is cool,” said Wensel. He said he likes seeing on customers’ faces how much they enjoy the chicken.

“And then they realize they’re getting it at a convenience store. That still has that kind of negative stigma. But when they’re like, ‘Oh … I’m still in a convenience store, and I’m getting this really good food.’ That’s why I’m here. That’s the purpose of all of this is to change that narrative,” said Wensel.

In the mornings, Shop Rite/Tobacco Plus serves grab-and-go items such as breakfast biscuits and burritos at its smaller locations and for quick purchases at its larger spots.

Additionally, customers can choose to order local favorites such as boudin balls, links and egg rolls, offering different flavors within each of the categories, since the company makes its own boudin.

“Lucky for us, in Louisiana, the perfect Cajun breakfast is boudin and a Coke,” said Cloud.

Not solely for breakfast, these items are able to cross from daypart to daypart.

“(This) is great for business,” Cloud noted. “Customers know what to expect and we can assure the quality as we oversee production from start to first bite.”

DAYPART MARKETING

Successful foodservice programs need strategic marketing plans.

Shop Rite/Tobacco Plus takes advantage of social media and on-site signage to reach customers at different times and maximize shopping potential when they are at the store.

“Approaches that appeal to various ages and types of customers are valuable because you don’t have to reinvent the wheel and put in tons of extra work,” said Cloud.

At Quality Dairy, the chain uses pumptoppers and social media outreach, as well. In areas with Quality Dairy’s hot food locations, it sends mailers. For lunch and dinner, the mailers are sent to a larger radius. The chain also incentivizes customers with bag stuffers such as coupons and extra rewards.

6 delicious fl avors from America’s #1 Sausage Brand,* each wrapped in a hearty, soft baked bread for the ultimate grab n go package. Ready to satisfy every craving?

“At some of our other locations where we have a little more technology, we recently had been using the (Dover Fueling Solutions) Anthem pumps that have a giant touchscreen right on the gas pump itself,” said Wensel.

Customers who fill their gas tanks at these pumps will notice a slot machine appear on the touchscreen that allows them to win one of three prizes, such as $1 or $2 off an in-store purchase, a free doughnut or a free hot food item.

“That accomplishes two things. One, it obviously gets the customer to walk into the store and then increases your market basket. … Two, it exposes them to some of the things that they may not have realized that we have,” said Wensel.

The rewards on these pumps change by daypart.

Additionally, Quality Dairy partners with local businesses, such as a vegan restaurant and a company that sells kombucha, and does combined advertisements.

“(We’re) putting out signage for those as well, just to kind of get the attention that it deserves and hopefully reach a different clientele than we’re normally used to having walk in our stores,” Wensel added.

Overall, the way to foodservice daypart success needs to be broken down into questions such as, “Who are our customers? When are they coming to our store? What is in demand in our area?” and more, said Cloud.

“When you can answer these types of questions and execute with consistency and quality,” she continued, “I really think that customers will find you.” CSD

FAST FACTS:

• Marketing your foodservice daypart programs is key for driving foot traffic to the food counter.

• Items that cross from daypart to daypart can assist with quality and consistency and drive customer expectations.

• After-school snack time can be a big foodservice opportunity for c-stores located near schools.

6 FACTORS FOR SUCCESS IN C-STORE FOODSERVICE

As the c-store landscape changes, more c-stores are shifting their approach to food to keep pace with evolving customer expectations.

Bruce Reinstein • Kinetic12 Consulting

How important is foodservice to the future of convenience stores?

The response to this question varies considerably from company to company and person to person. There are many factors that go into the response as rural stores will vary from urban locations and the type of consumer will also have an impact.

The one thing that is very consistent is that today’s consumer is looking for some type of foodservice whether it is “restaurant quality” or simply something to eat or drink. There is not one way to do food, but without foodservice, there may not be a future for many convenience stores.

Here are six factors for success in foodservice to pay attention to amidst the changing c-store landscape.

1. Adapting to the “modern” c-store consumer. The modern consumer still values convenience when it comes to c-store foodservice, but their demands are quite different from the traditional consumer. The younger consumer is looking for healthier options that are freshly prepared. They prefer customized products, but grab n’ go with a clear differentiation toward quality is appreciated. The modern consumer wants to engage through technology whenever possible so they can order and pay at their pace and be able to customize, when possible, to their preferences. They will pay a little more to get what they want.

2. Thinking like restaurants. If you want to be successful in c-store foodservice, you must think like a restaurant. The downfall of c-store foodservice is when there is a lack of commitment to standards and 100% execution. A convenience-only mindset cannot be a factor in creating a great foodservice program. Restaurant operators focus on food quality, service/ hospitality and delivering on the promise. C-store foodservice must follow this formula. It will help create a more loyal foodservice customer. The foodservice team should want the consumer to come for food and beverages and then get gas and more while they are there, as opposed to coming for gas and other products and then deciding to purchase food or beverages.

3. Understanding changing consumer expectations. For many consumers, simply purchasing food and beverages without knowing more about what they are buying is old news. Expectations have changed dramatically and will continue to change. It starts with quality products and a selection that appeals to a broad base of consumers. Quality and freshness are where the consumer starts. Many are looking at health and wellness when they make their selections. Others are looking at ethnic and global flavors. Our population continues to become more diverse and consumer palates are changing. Today’s

Consumers’ Greatest Expectations of Convenience Store Foodservice

Source: Kinetic12’s Q1 Emergence Convenience Store Foodservice Group Survey

consumers also live in a digital world and want order and payment options that allow for an easy and consistent experience.

4. Engaging with the community to drive customer loyalty. C-stores used to be the place where you picked up something when nothing else was available or it was on the way to somewhere else. Foodservice has made c-stores into destinations and with that comes the responsibility to be a part of the community by supporting events and the people who make a community great. It is great to tell a story, but it’s important to deliver on the story. Community engagement drives traffic, but it doesn’t maintain traffic. Consistent food and beverage quality and great hospitality will keep them coming back.

5. Driving traffic. C-store foodservice operators are looking to both drive more traffic as well as maintain the traffic that they have. The consumer wants nothing more than to be loyal and come to the same locations to get what they crave. Whether it is grab n’ go, customized or a combination of both, the product quality must meet or exceed expectations and must be consistent each and every time the consumer has the product. It therefore falls on the operator to have a menu and limited-time offers that each employee

is capable of producing consistently. The consumer will not accept poor service, out-of-stock items or a product that does not meet their expectations. Traffic will grow, but foodservice operators must make the difficult decisions necessary to provide the consumer with what they want.

6. Balancing driving revenue with managing costs. It is quite simple. Growth without profitability is a formula that does not work. Many have worked hard on driving revenue through loss leaders. It is important in today’s marketplace to run promotions on the foodservice side that are compelling, a good value and more profitable than a standard menu item. It sounds like a daunting task, but it really isn’t. It takes some creativity, engagement with the customer to understand what they are looking for and engagement with the foodservice staff to confirm what the customer wants. Freshness, quality, healthier options, combos, a diverse menu, enhanced packaging, hospitality and consistency are important drivers of revenue, but the challenge remains to make sure that cost is fully evaluated to create a true balance.

Bruce Reinstein is a partner with Kinetic12 Consulting, a Chicago-based foodservice and general management consulting firm. Learn more at Kinetic12.com or contact him at Bruce@ Kinetic12.com.

PRODUCT Showcase

Automated Coffee Machine

Franke Coffee has introduced its new Mytico Due coffee machine. Mytico Due offers the beauty and elegance of traditional Italian espresso machine design with all the benefits of automated coffee making. With four bean hoppers, each with dedicated grinders, brands can maximize the variety of coffees they can showcase to their customers. Best of all, the machine is a breeze to use. Programmable barista levers enable quick dispensing of the most popular beverages and easy access to milk profiles, while the high-resolution, intuitive touchscreen display provides easy access to the entire menu.

Franke Coffee Systems www.franke.com

Plant-Based Chocolate Truffles

Lindt LINDOR has launched its new Non-Dairy Oat Milk Truffles and Dark Chocolate Oat Milk Truffles. Lindt LINDOR Non-Dairy Truffles are a luxurious chocolate treat with an irresistibly smooth-melting truffle center. The outer shell is made with rich and high-quality oat milk chocolate, which gives it a delicate sweetness and a velvety texture. The combination of the delicate chocolate shell and the truffle filling produces an irresistible chocolate experience that Lindt LINDOR fans have come to expect, now made with oat milk. These truffles can now be found at retailers across the U.S.

Lindt & Sprungli www.lindt-spruengli.com

Thin- and Stuffed-Crust Pizza

DiGiorno has introduced its new Thin & Crispy STUFFED Crust Pizza, combining the crispiness of thin crust with the 2.5 feet of hot, melty cheesiness of stuffed crust into one combination. This new pizza comes in three flavorsome varieties: Pepperoni and Sausage, Margherita, and Pepperoni with legendary Mike’s Hot Honey. All varieties of DiGiorno Thin & Crispy STUFFED Crust Pizza are available now at select retailers nationwide for a suggested retail price of $8.99.

Nestlé www.nestle.com

Beer Cocktail Mix

Zing Zang has launched its new Zing Zang Michelada Mix, adding to its portfolio of premium cocktail mixes. Crafted with a unique blend of real tomato juice, zesty lime and lemon juices, Worcestershire sauce, hot sauce, and hand-selected spices, Zing Zang Michelada Mix creates a savory and refreshing beer cocktail experience. Zing Zang Michelada Mix will be packaged in the familiar 32-ounce bottles and will be available soon at retailers nationwide.

Zing Zang LLC www.zingzang.com

Sweet and Tart Licorice Candy

SweeTARTS has launched its new SweeTARTS MEGA Rope. SweeTARTS MEGA Rope is filled with “MEGA” amounts of tart filling surrounded by sweet, smooth licorice. Available in the popular classic SweeTARTS Ropes flavor — Twisted Rainbow Punch — each fun, soft and chewy bite features a perfectly powerful union of vibrant fruit punch flavors with a tart filling to match. SweeTARTS MEGA Rope is available now at retailers nationwide in 1.32-ounce packs for a suggested retail price between $1.49 and $1.99.

Ferrara Candy Co. www.ferrarausa.com

Mobile Cup-Dispensing Cart

DISPENSE-RITE mobile dispensing carts are an ideal solution for both front- and back-of-counter needs, providing maximum cup dispensing mobility. It is ideal for all cup types, including plastic tumblers. The mobile cup-dispensing cart also has a quality stainless-steel construction with reinforced locking casters for long-term reliability.

DISPENSE-RITE www.dispense-rite.com

Grab-and-Go Dessert

Rich Products has introduced its new Our Specialty Treat Shop Turtle Cheesecake Mousse Parfait. The decadent dessert features a cheesecake mousse on a bed of chocolate crumbs, topped with a layer of caramel and sprinkled with chocolate chips and pecans — all packaged in a convenient 5.75-ounce cup. It’s an ideal solution for labor-challenged c-stores looking to offer indulgent options. This turnkey solution arrives frozen, fully finished and retail ready. The frozen shelf life is 365 days, and the treats come eight per case with a suggested retail price range of $3.49-$3.99 per serving.

Rich Products

www.RichsConvenience.com

Cheddar Jalapeño Popcorn

SkinnyPop Popcorn has added a new flavor to its permanent lineup: cheddar jalapeño. SkinnyPop Cheddar Jalapeño popcorn is set to spice up snack time for consumers nationwide, delivering crunchy, cheesy satisfaction with a kick of jalapeño heat. Made with the same high-quality ingredients from SkinnyPop Popcorn, the new flavor delivers the bold, spicy flavor consumers have been seeking. SkinnyPop Cheddar Jalapeño is available at stores now in the following sizes: one ounce, 4.4 ounces, 6.7 ounces and the subsequent case packs: one-ounce peg (12-count), 4.4-ounce pouch (12- and six-count) and 6.7-ounce pouch (six-count).

The Hershey Co. www.thehersheycompany.com

PRODUCT Showcase

Minions-Themed Mini Backpacks

CandyRific, in partnership with Universal Products and Experiences, has launched its new Minions Despicable Me 4 Mini backpacks. The new Minions character-themed mini backpacks have 0.28 ounces of banana-flavored and banana-shaped dextrose candies (natural flavors and colors). The mini backpacks are the perfect size to hold candy, keys and other small treasures. They come with a different design on either side and have a metal keyring and clip. Minions character-themed mini backpacks are available now for a suggested retail price of $3.99.

Pre-Toasted Sandwiches

CandyRific www.candyrific.com

Universal Products and Experiences www.universalproductsexperience.com

Tyson Foodservice is offering a new foodservice solution with its Pierre Melts. These sandwiches feature Philly cheesesteak, cheesy bacon and BBQ pulled pork. The packaging crisps the buttered Texas Toast bread while microwaving, delivering a toasty exterior and melty interior in 45-60 seconds. A labor-saving item, these preassembled and pre-toasted sandwiches help address operator concerns, allowing for an affordable, quality snack that satisfies the demand for speedy, proteinpacked sandwiches in the c-store landscape.

Tyson Foodservice www.tysonfoodservice.com

Italian Dessert-Inspired Candy

DOVE Chocolate has introduced its latest chocolate — DOVE Milk Chocolate Tiramisu Caramel PROMISES, inspired by the beloved Italian dessert. DOVE Milk Chocolate Tiramisu Caramel PROMISES are premium chocolate that brings a multitexture experience to fans. The classic dessert-inspired treat features a tiramisu-flavored caramel center, surrounded by silky-smooth milk chocolate. DOVE Milk Chocolate Tiramisu Caramel PROMISES are available now at retailers nationwide in a 6.7-ounce stand-up pouch.

Mars www.mars.com

Compostable FoodPackaging Products

Eco-Products added a variety of paper bags, sandwich wraps and more to its GreenStripe compostable products line. The products are made with no added per-and polyfluoroalkyl substances and are ideal for all foodservice operators. They include paper bags, insulated and non-insulated sandwich wraps, pinch bottom bags, French fry bags, cutlery bags, boxed interfolded deli paper and grease-resistant multipurpose bags. The paper bags come in No. 6 and No. 20 sizes and feature a heavy-duty, selfopening style for demanding applications. The sandwich bags and wraps are also compostable. The bags and wraps provide excellent moisture protection.

Novolex www.novolex.com

Classifieds/Ad Index

ADD Systems 12

800-922-0972 / www.addsys.com

Ajinomoto® Foods North America 3 www.AjinomotoFoodservice.com

Altria Group Distribution / NJOY 2 877.968.5323

Black Buffalo 51 https://blackbuffalo.com

Calico Brands, Inc. 57 800.544.4837 / www.calicobrands.com

CB Distributors Inc. 55 608.368.9909 cb-orders@cbdistributorsinc.com cbprices.com

Chester's Chicken 5

800.646.9403 / www.chesterschicken.com

Cheyenne International, LLC. 29 866.254.6975 / contactus@cheyenneintl.com www.cheyenneintl.com

Fintech 73 813.207.5511 / info@fintech.com www.fintech.com

Hunt Brothers Pizza 15 www.HuntBrothersPizza.com/csd

Kretek / Cuban Rounds 27 KretekSales@Kretek.com CubanRoundsCigars.com

Krispy Krunchy Food, LLC 65 www.krispykrunchy.com/marketing

Johnsonville 63 www.JohnsonvilleFoodservice.com

JT International, USA, Inc. 33 800.966.9709 / www.LDCigarettes.com

Liggett Vector Brands 35 877.415.4100

Mi-Pod Wholesale 43 www.mipodwholesale.com (Regional Split)

Modern Store Equipment 19 877.532.8433 / info@moderstoreonline.com modernstoreonline.com

North American Bancard 71 866.481.4604 / www.nynab.com

NRS Petro 58 888.260.0112 / www.nrspetro.com

Perfetti van Melle 75 www.perfettivanmelle.com

Premier Manufacturing, Inc. 21 www.gopremier.com

IndustryPerspective

Thinking About the POS and Back Office

As technology advances, so do back-office and point-of-sale trends. Retailers need to stay on top of their digital infrastructure, including cloud software, mobile ordering, self-checkout and more.

Emily Boes • Senior Editor Perry Kramer

Back-office and point-of-sale (POS) needs are evolving with each piece of emerging technology.

As customers grow to expect digital progress in the retail landscape, convenience stores need to keep up with the new trends. CStore Decisions reached out to Perry Kramer, managing partner at Retail Consulting Partners, for insight into how c-store operators should be considering the back office and POS.

CStore Decisions (CSD): What are some back-office and POS trends to watch?

Perry Kramer (PK): The traditional POS applications continue to expand into a more complete in-store retail platform that enables integration with online ordering, self-checkout, kiosks, fuel, back-office reporting and other local functions. When evaluating back-office systems, c-store leaders should be looking for partners who have a comprehensive suite built on a modern technology platform. Over the last 10 years there has been a significant migration from the concept of having to have a dozen partners to meet the needs of the forecourt, foodservice, digital ordering, self-checkout, loyalty and inventory management.

CSD: How should c-store retailers be thinking about cloud infrastructure and where it’s headed?

PK: Cloud infrastructure is here to stay, and retailers need to embrace it to take advantage of the long-term savings that cloud technology enables. If c-stores have not identified a preferred cloud platform, they should formalize a strategy as soon as possible. ... This is especially important if they are going to rely on a cloud platform for their middleware functionality. … However, it is important that while developing the cloud strategy retailers do not underestimate the impacts of limited access to data in the cloud and the need to transition roles and skills.

CSD: What should retailers consider when it comes to mobile ordering?

PK: Consumer adaption to mobile ordering continues to grow. A recent Intouch Insight study revealed that 71% of consumers have placed at least one mobile order. Mobile ordering is both a win for consumers and retailers who continue to try to find any way possible to offload tasks requiring labor. One flaw that we continue to see in the area of mobile ordering is retailers building a mobile ordering user interface that is not consistent with their in-store kiosks and menu boards. It is important to keep these touch points consistent in the use of terminology and organization of products.

CSD: Where do you see the future of self-checkout?

PK: Self-checkout will remain an important tool in containing labor costs (both staffing and reconciling) and customer satisfaction. However, it is not a ubiquitous solution. There are certain areas and demographics where the increased shrink profile that is associated with self-checkout will not compensate for the labor savings. Customers have come to expect it in many areas to keep the lines short. When evaluating self-checkout, a key decision will be if they include cash-accepting units in addition to credit-only units. The cost of adding cash-accepting units can double or even triple the total longterm cost of procurement and maintenance. However, having to reconcile the cash once or twice a week is also attractive for many. ...

CSD: What questions should retailers be asking themselves as they research back-office and POS technology?

PK: Have they built a strong business case, and if so, what are the core pieces of the business case that must be satisfied? Have they evaluated what they want their long-term future customer experience to look like? And what do they want their future IT and operations support model to look like? These all need to be well understood prior to kicking the tires with new POS vendors.