Octane-March/April 2023

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RAISING THE BAR

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5 Operator

Shell-abrating success: Rebranding a “game changer” at Sahab Batth’s Woodstock, Ont. site

8 The Road Ahead *new column!

What ever happened to hydrogen? Some experts consider it to be the most viable long-term solution to transportation needs

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11

Raising the bar: Klassic Car Wash adopts the latest innovations out of the U.S. and in Canada with its new hybrid high-speed express tunnel car wash

19 It’s showtime!

The Convenience U CARWACS Show agenda and exhibitors

3 OCTANE March | April 2023
between 9 a.m. to 5 p.m. EST weekdays Fax: 1-888-520-3608 | Online: www.ccentral.ca/subscribe Convenience Store News Canada | Octane is published 6 times a year by Ensembleiq. Convenience Store News Canada | Octane is circulated to managers, buyers and professionals working in Canada’s convenience, gas and wash channel. Please direct inquiries to the editorial offices. Contributions of articles, photographs and industry information are welcome, but cannot be acknowledged or returned. ©2023 All rights reserved. No part of this publication may be reproduced in any form, including photocopying and electronic retrieval/retransmission, without the permission of the publisher. Printed in Canada by Transcontinental Printing | PM42940023 CHANNEL ALLIANCES: CCentral.ca E-newsletter CSNCOCTANE @CSNC_Octane standard no gradients watermark stacked logo (for sharing only) ConvenienceStoreNewsCanada BE A PART OF OUR COMMUNITY! STAY CURRENT Don’t miss our e-newsletter! Car wash, petroleum, and convenience news & insights, delivered weekly. Sign up today at www.CCentral.ca/signup
hover your phone’s camera over this code: CONTENTS MARCH | APRIL 2023 VOLUME 28 | NUMBER 2
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Profile
Operator Profile
COVER PHOTO, TOBI ASHMOUCHA THIS PAGE, JAIME HOGGE
Sahab Batth
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SHELL-ABRATING SUCCESS

Rebranding a “game changer” at Sahab Batth’s site in Woodstock, Ont.

The modern-day red and yellow Shell Pecten (Latin for scallop) that graces the fuel company’s more than 45,000 sta tions around the world was introduced by American industrial designer Ray mond Loewy in 1971. It has gone on to become one of the most recognizable logos in the world, so powerful that the company can be identified even if the name is not attached.

Doug Granger, owner of Granger Fu els, a Shell fuels wholesaler based in Lon don, Ont., says that for many motorists, the Pecten is synonymous with quality. “There are a lot of consumers who, if they’re driving down the street and they see three gas stations and one of them is

a Shell, they’ll go there,” says Granger. “It’s a premium product, it’s well-recognized, and they know the quality and service they’re going to get.”

Shell’s longstanding partnership with the Air Miles loyalty program (which received a “multi-year” contract extension in November) is also a major customer draw, says Granger. So, too, is the fuel company’s new partnership with the CAA, which enables members to save 3 cents per litre on fuel, and 10% off both car wash and in-store purchases.

Its brand and strong partnerships were among the reasons that Nr Fuels & Convenience owner Sahab Batth decided to make the switch to Shell as his five-year

CCentral.ca 5 OCTANE March | April 2023 OPERATOR PROFILE
The Shell brand gives Nr Fuels & Convenience new clout in a highly competitive market Owner-operator Sahab Batth, right, operates the family business with son, Nav Batth, left. The duo, with Doug Granger of Granger Fuels, at the newly rebranded site

contract with Gulf Canada approached its expiration date in 2022. Shell had been the fuel supplier when Batth purchased the business in 2017, but he had switched over to Gulf when his contract wasn’t renewed.

At the time, Gulf had only recently returned to Canada in 2015 after a 30-year absence, and didn’t possess nearly the same brand recognition as its larger rival. Its lack of any major loyalty program partner was also a potential hindrance—particularly as inflationary pressures have caused consumers to rely on rising costs for everyday essentials. In a 2022 survey by the mobile rewards program Drop, 62% of respondents said that they are redeeming loyalty points in order to better manage expenses.

With his contract expiring, Batth approached Granger about potentially renewing his relationship with Shell. The two men had several discussions, ultimately agreeing on a 10-year contract commencing in February 2022.

One year in and it’s been a “game changer,” says Batth, who owns and operates Nr Fuels & Convenience as a family business. “It’s worked out for both sides”

The changeover to Shell branding officially got underway on Feb. 1, and Nr Fuels & Convenience was open for business by noon the next day. Because the station’s tanks and the pumps had been installed by Shell in 2011, it didn’t require extensive investment in new equipment beyond the Shell branding, says Batth.

According to Granger, it cost slightly less than $30,000 to reskin the station’s four pumps (12 nozzles, four of which are for diesel) and change the pay-at-the-pump pin pads in order to connect the station to Shell’s payment system.

Batth says the business benefits from Shell’s strong tech support. “Anytime I report something, it doesn’t go on the slow burner,” he says. “I’m very impressed by that approach.”

The change to Shell quickly resulted in a “very positive” increase in sales for Nr Fuels & Convenience, not just at the pumps, but also at the convenience store, the Double Double pizza (for which Batth owns the franchise) and attached coin car wash, which is 10 or 12 years old, but well maintained. The tire inflation and vacuum equipment (from AIR-serv Canada) are also busy.

“Woodstock is mainly a farming and industrial area and the working people usually have big pickup trucks,”

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he says. “This car wash is fun for them and good business for us as they enjoy brush cleaning their vehicles.”

According to Granger, fuel sales by volume increased between 22% and 29% over the previous year, equating to between 400,000 and 500,000 extra litres of fuel.

And it’s not like the business is achieving this level of success amidst a dearth of competition. It is on Norwich Avenue, a major north-south artery in the city of 40,000, which also includes a Petro-Canada, a Canadian Tire Gas+, an Esso and a Pioneer station all in close proximity.

Batth, meanwhile, is “more than satisfied” with once again being a Shell proprietor. “Gas sales, store sales and even our propane business has increased” he says, adding he works with Vomar Industries (Tank Traders), while Superior supplies propane for the cylinder filling station. “We are serving customers the way Shell serves them, and we’re back in a good place now.” OCTANE

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It cost slightly less than $30,000 to reskin the station’s four pumps (12 nozzles, four of which are for diesel) and change the

What ever happened to hydrogen?

The gradual move away from relying on fossil fuels for our transportation requirements seems inevitable. How long the process may take is still up for debate as there are significant geopolitical and environmental issues to consider. The map is always changing, it seems, and the transportation sector is like the tail of the dog. Or maybe the hind legs of the dog.

There’s more uncertainty to take into account—specifically, which form of fuel or fuels will supplant gasoline at the top of the order. There’s definitely a lot of hype around electric vehicles right now and, as the global supply chain issues resolve themselves, it’s unlikely the fever will break any time soon. EVs are assuredly here to stay, at least in the near term.

Other types of fuel—such as biofuel, liquified natural gas, compressed natural gas and carbon-neutral fuel—seem to fall in and out of favour depending on the market and the ever-present question of infrastructure. All of this brings us to the topic of hydrogen, the fuel that some experts consider to be the most viable long-term solution to our transportation needs.

In 2008, yours truly tested a BMW Hydrogen 7, a production-ready version of their executive-class sedan that utilized a hydrogen internal combustion engine. The secret to this vehicle was that its 6.0-litre V-12 engine could run on either hydrogen fuel or premium gasoline with the toggle of a switch. The car had two fuel tanks accessed by separate fuel filler doors on the same side of the vehicle. While the Hydrogen 7 did end up being leased to 100 high-profile customers in Germany, it was very much an experiment to see what might be possible. Since then, other manufacturers have produced hydrogen-powered internal combustion vehicles for testing, including Aston Martin, Ford, Mahindra, Mazda and Toyota.

Of late, though, the more common hydrogen-powered vehicles have taken a different route. Rather than use hydrogen fuel in an internal combustion engine, these vehicles use fuel cell technology and hydrogen to produce electricity that supplies the power.

Hydrogen fuel-cell electric vehicles (HFCEVs or FCEVs for short) have been around for decades and the technolo-

CCentral.ca 8 March | April 2023 OCTANE THE
ROAD AHEAD BY
Some experts consider it to be the most viable long-term solution to transportation needs
Hydrogen fuel-cell electric vehicles have been around for decades and the technology works, but fuelling/recharging infastucture is limited
The 2023 Hyundai Nexo is only available in British Columbia and Quebec

gy is now proven to work. But as with “regular” EVs, the charging/refuelling infrastructure is the key limiting factor. Right now, there are two production HFCEVs on the market. The Toyota Mirai has been available since 2015, as has the Hyundai Nexo. (A third HFCEV, the Honda Clarity, has recently been discontinued.)

Both the Toyota and the Hyundai are only for sale in British Columbia and Quebec, the two provinces that have hydrogen fuelling stations currently open to the public. Here’s the rub: According to figures released in January 2023, there are only five stations in B.C. (all operated under the Esso or Shell banner) and just one in Quebec (run by HTEC). (There’s a seventh refuelling station in Mississauga, Ont., owned and operated by Hydrogenics Corporation.)

In terms of the driving experience, an HFCEV is similar to an EV: whisper-quiet and super-smooth. The main advantage is that they emit no carbon dioxide or other harmful emissions, just water vapour out the tailpipe. The main advantage over other EVs is that refuelling time is the same as for an internal combustion engine, just a few minutes to pick up enough fuel to travel 400 to 500 kilometres.

The main disadvantage? You guessed it: The refuelling infrastructure. Even in California, arguably the most pro-hydrogen jurisdiction in the world, there are only 60 refuelling stations open right now. The governments involved committed to 100 stations by this point in time, but they’ve fallen short.

Just as this article was being prepared, a new British manufacturer named Ineos Automotive perfectly summarized the hydrogen situation. Last year, the company launched the Ineos Grenadier, an SUV based on the original Land Rover Defender, and then spoke about a hydrogen fuel-cell version of the same vehicle. As quoted in British car magazine Car Expert, commercial director Mark Tennant referred to the tension between developing next-generation technologies and securing support for those technologies.

“Fuel-cell electric vehicles, for us, [are] the right zero-emission option for this vehicle,” he noted. “But because of the infrastructure problems—there isn’t any [infrastructure]—we can’t make a full bet on fuel-cell until we have more confidence that people can fill it up… It has nothing to do with [whether] fuel cell technology is there—it is.”

While the current state of hydrogen refuelling may seem an insurmountable challenge, the same thing could have been said about the EV charging infrastructure just a decade ago—in fact, it remains a major concern to this day. The difference? The average consumer will not have the ability to recharge their HFCEV at home; if momentum does turn towards hydrogen in the future, this would open up new possibilities for refuelling retailers everywhere.

Watch this space. OCTANE

Mark Hacking is an award-winning editor/writer with an affinity for all things automotive. He contributes to leading publications in Canada, Australia, Switzerland and the U.S. His new column, The Road Ahead, will be a regular feature in OCTANE.

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RAISING THE BAR

Klassic Car Wash adopts the latest innovations out of the U.S. and in Canada with its new hybrid high-speed express tunnel car wash in Barrie, Ont.

As owner of Klassic Car Wash, which has five locations in Barrie, Ont. (plus a sixth about to be opened), as well as a location each in Mississauga, Toronto, Wasaga Beach and Hamilton, Ont., Tony Thind loves to keep a pulse on what is happening with car wash advancements south of the border: “The car washes in the U.S. are like 10 years ahead of Canada in terms of innovation and service.”

“They do all the hard work on development, and so if you just clone them, you know you’ll be successful,” he quips with a chuckle.

That is what Klassic has done at least in part with the recent rebuild of its Dunlop Street location in Barrie, which Thind, with his brother and business partner, Rozy, purchased from a car dealership in 2016. They have created a U.S.-style

CCentral.ca 11 OCTANE March | April 2023
OPERATOR PROFILE
The newly renovated car wash features a stateof-the-art, high speed 160-ft. hybrid touch/ touchless express tunnel

www.mccleansolutionsllc.com

super car wash, with some Canadian innovation for good measure.

Gone are the two in-bay automatic car washes, which had been underperforming despite the location being heavily trafficked. Working with Deltic Wash Force in Barrie as its equipment distributor and installer, Klassic has reopened on Dunlop Street with a new state-of-the-art, high-speed 160-ft. hybrid touch/touchless express tunnel.

It is the company’s first car wash that uses a drive-on belt conveyor, which is 140-ft., rather than the traditional conveyor with rollers and chains. “Now we can wash cars with any size tires because it is traveling on a belt,” says Thind. “Because they are more north in Barrie, a lot of people drive a dually [truck with an extra set of tires on the back] but couldn’t get [it] washed anywhere.”

Quality options

Brett Bunston, president and co-founder of Deltic, who partnered with Thind on other Klassic location upgrades with MacNeil Wash Systems, got fully behind Thind’s vision. “He wanted to turn the car wash into a much richer, higher-quality experience,” says Bunston.

One of the biggest challenges to the design was giving customers the option, in the same tunnel, to choose a high-speed soft-touch foam brush wash or a touchless wash: Offering both at the highest standard in the same tunnel was an opportunity to set the location apart from competitors.

“I’ve done dual washes before, but inevitably there is always some element of compromise,” says Bunston. “That is because a perfect touchless tunnel runs at a certain line speed and a perfect brush tunnel might run at a faster line speed to get the same cleaning outcome. But we were able to find a happy medium and really get excellent results for both.”

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The touchless wash features a high-pressure spray system from Petit Auto Wash Equipment in Norton, Ohio, called The Tunnel Accutrac 360-t. With as little as 30 inches of space between vehicles, the system can clean up to 180 cars per hour depending on the set-up. Klassic’s line speed is about 130 vehicles pers hour for both touchless and touch.

“It is relatively new technology and the Accutrac 360-t may be the only one in Canada,” says Bunston. Compare that to most touchless roll over washes, “which average 15 cars,” he notes.

Further down the tunnel is equipment from Truck Wash Technologies out of Sault Ste. Marie, Ont. “They have been specializing in big rig and trailer washing for years and have adopted some of their profiling technology to car wash tunnels,” says Bunston. “Their equipment enables the car wash to sense the height of the vehicle and turn on and off the nozzles, so we are not wasting water by

CCentral.ca •Express Tunnel Washes •In-Bay Automatic Conversions to Tunnels •Wash Retrofits to Increase Profitability •Name Brand Chemicals and Fast Delivery •Preventative Maintenance & Emergency Service DELTIC WASH FORCE 501 Welham Road, Unit 9 Barrie, ON, L4N 8Z6 705-728-1196 www.delticwashforce.com
“The team at Deltic takes great pride in building and commissioning the finest express tunnel car washes in Ontario.”
Brett Bunston, President Deltic Wash Force
SPECIALIZING IN
Above: The site provides 16 free vacuum stall upon exit, one of Klassic’s trademark perks Below: A 140-ft. drive-on belt conveyor helps accommodate vehicles with any size tires

spraying overtop the car. The profiling also gives us the ability to vary the wash pressure based on how close the nozzles are to the vehicle and thereby reduce the risk of damages.”

The Dunlop location also provides 16 free vacuum stalls upon exit, a trademark perk of Klassic. “We were the first car wash to bring the free vacuum model to Canada from the U.S. at our Toronto location around 2005 and it worked really well in attracting customers,” says Thind. “Now we offer free vacuums with washes at all of our locations.”

Subscription perks

Klassic has built its customer revenue model around a monthly subscription for unlimited car washes and today has just shy of 17,000 members across its 10 locations. Membership costs between $30 to $40 per month, and before the holidays it promoted a new family plan option—up to four vehicles could be added to a membership at a price of 50% off per car. “People were buying family add-ons to their memberships during the holiday season, and they haven’t cancelled them because it is just $15 per month,” says Thind. “And so, on a membership with four additional cars, we are averaging about $100 per month on it.”

As for the Dunlop location? Thind has been pleased with the customer response since its soft launch in December 2022. Within a month, it signed up 260 customers to a monthly membership, either for the touch or touchless option and did almost 10,000 washes. Thind says 50% of members so far have

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opted for touchless, which has exceeded his expectation and has proven the validity of a hybrid model.

Thind’s target for the location is for the car wash to reach a minimum of 150,000 washes and $2 million in revenue. Operating expenses will run about $1 million annually. With those kinds of figures, Thind expects to have the $2.2 million initial investment in the state-of-the-art car wash paid off in three to five years.

On March 25, Klassic is planning a grand opening event in partnership with Deltic and will offer car washes, proceeds of which will go to Youth Haven, an emergency shelter for young people in Barrie run by Barrie Police. (Klassic has a contract with the police force to wash its vehicles.)

Klassic and Deltic have also partnered on the construction of a brand-new car wash, in downtown Barrie, which will open in spring, and it has followed the Dunlop Street blueprint. “People really want that ‘wow’ factor and options in their car wash, because a car is their second biggest investment,” says Thind. “And with all the new technology, we can deliver on that.” OCTANE

FAST FACTS

Location: 416 Dunlop St. West, Barrie, Ont.

Equipment/design partner: Deltic Car Wash on a 160-ft. high-speed hybrid express tunnel with a 140-ft drive-on belt conveyor

Line Speed: 130 CPH

Production rate: 120 CPH for touchless and touch

Key features:

• A hybrid tunnel version, with a MCE Wash Conveyor Belt for easy loading and close stacking

• A high-pressure spray system, The Tunnel Accutrac 360-t from Petit Auto Wash Equipment in Norton, Ohio, which follows the vehicle as it moves along the conveyor

• Vehicle profiling sensors, made by Truck Wash Technologies out of Sault Ste. Marie, Ont., reduce risk of damages and water waste

• The brush equipment features the latest in soft-touch foam brush technology from MacNeil in Barrie

• Drying system includes energy-saving intake power locks

Total cost: $2.2 million

Revenue model: Monthly subscription

Expected profitability: 3 to 5 years

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6900 Airport Rd.

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March 7-8, 2023

It’s showtime!

GROW CONNECT DISCOVER

Are you ready to supercharge your business?

Be there when the convenience, gas and car wash industries come together for two incredible days of learning, product discovery and networking at The Convenience U CARWACS Show March 7-8, 2023.

Each day will kick off with an action-packed morning of education, followed by the trade show floor opening from 12 to 5 p.m. As Canada’s largest and best-attended industry event, you don’t want to miss it!

“The world of convenience, gas and car wash is evolving quickly, adapting to new technologies, welcoming exciting new products and innovating to meet consumer demands,” says Sandra Parente, SVP, grocery & convenience, EnsembleIQ. “The 2023 Convenience U CARWACS Show is an incredible opportunity for attendees to stay ahead of the latest trends and position their business to thrive in 2023 and beyond.”

With the modernization of the event, delegate experience and exciting new exhibitor activations, the 2023 show will set a new standard designed to provide even more value for all stakeholders.

What’s new? The two-morning C-store IQ Conference features an engaging lineup of sessions and speakers addressing key issues, topics and opportunities to drive retailer success. Plus, take advantage of sponsored tutorials, lunch and learn activities and more.

For car wash operators, the Canadian Car Wash Association will present valuable morning sessions designed to inform and inspire this fast-growing segment.

And, of course, visit with the best in the business exhibiting on the trade show floor.

After three years of upheaval, The Convenience U CARWACS Show is where you want to be to strengthen your business and successfully navigate the road ahead.

CCentral.ca 19 OCTANE March | April 2023 BROUGHT TO YOU BY

Tuesday March 7

6:30 a.m. Registration opens

7 a.m. to 9 a.m. Breakfast *

9 a.m. to 12 p.m. C-store IQ Conference

12 p.m. Buffet lunch *

12:00 p.m. to 5:00 p.m. Trade Show

5:00 p.m. to 6:00 p.m. Cocktail reception

Conference emcee: Tara Spencer-Nairn, Canadian actress and star of Corner Gas!

CONFERENCE AGENDA: Day 1

9:00 a.m. Welcome and opening remarks

C-store IQ 2023: The new c-store shopper

Beth Brickel, vice-president, research, EnsembleIQ

Sponsored Tutorial: JTI Macdonald

Supporting the c-store industry: How we help to support our markets, with Rick Penney, manager, EU & Americas anti-llicit trade operations, JTI

C-school: Proven business lessons to drive growth and profits

Daniel Tsai, lawyer, business executive, educator and columnist,who also remotely operates a successful convenience store and gas station in B.C.

Sponsored Tutorial: Localcoin

Maximize your earnings and boost your foot traffic: Hosting a Bitcoin ATM for retail operators, with Tristan Fong, co-founder and CEO of Localcoin

Feed your bottom line: How to take advantage of the c-store foodservice advantage

Jeff Dover, president, fsSTRATEGY

12:00 p.m. Conference closing remarks, followed by buffet lunch

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*only for those registered for the C-store IQ Conference or Association education sessions
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Wednesday March 8 7:00 a.m. Registration opens 7:30 a.m. to 9:30 a.m. Breakfast *

a.m. to 12 p.m. C-store IQ Conference 12:00 pm to 1:00 p.m. National Energy Equipment Lunch & Learn

p.m. to 5:00 p.m. Trade Show

*only for those registered for the C-store IQ Conference or Association education sessions

CONFERENCE AGENDA: Day 2

9:30 a.m. Welcome and opening remark s

The evolution of convenience: Practical insights from the Retail Innovation Lab at McGill University Charles de Brabant, executive director, Bensadoun School of Retail Management, McGill University

Sponsored Tutorial: Pacific Smoke International Adapting to emerging regulations in the vaping sector: Strategies for C&G retail success, with Gero Petrolito, national accounts manager, Pacific Smoke

Increase your security, increase your sales: Responding to escalating violence in retail Sean Sportun, vice-president, national accounts and community engagement, GardaWorld

Fireside Chat: On your corner. In Canada’s corner. The importance of telling the convenience industry’s story

Anne Kothawala, president and CEO, Convenience Industry Council of Canada, in conversation with CSNC editor & associate publisher, Michelle Warren

12:00 p.m. Conference closing remarks, followed by buffet lunch

12:00 p.m. Sponsored Lunch & Learn: National Energy Equipment EV charging at c-store gas

CCentral.ca
9:30
12:00
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SHOW EXHIBITORS

Conference Supporters & Industry Leaders

Great Canadian Meat Company

JTI Macdonald

Localcoin

Mars Wrigley Confectionery Canada

Mondelez International Inc.

National Energy Equipment

NCS Canada Mondo

Nestlé Canada Inc.

Ontario Lottery & Gaming Corporation

Pacific Smoke International Inc.

Tommy’s

Trade Show Exhibitors

10K Distribution

3SI Security Systems

5 Hour Energy

Abell Pest Control Inc.

Access Cash Powered by Perativ

AIR-serv

Airlift Doors Inc.

Albert’s Gas Station Maintenance

AM Shelving Inc.

ATM Token

B Water & Beverages, Inc.

barBURRITO

Beer Nuts Inc.

Better Food Concepts

BGIS Energy & Facility Solutions Inc.

Big Chief Meat Snacks Inc.

BioSteel Sports

BLAST-OFF Fireworks

BTC POWER

Bulloch Technologies

Busch Systems International

Canadian Carwash Association

Canco Petroleum Ltd.

Century Tobacco Company

Conagra Brands Canada

Convenience Industry Council of Canada

Country Style

Creative POS Ltd.

Cree Lighting

D.A.A. Brands Company

Dare Foods Ltd.

Direct Plus Food Group

Dover Fueling Solutions

Dr. Oetker Canada Ltd.

DRB

Easy Building Products

EcoTank Canada

Electrolit

Emzone - Auto Care

Eurovac Inc.

Exact One Ltd.

Exim Universe Inc.

f’real Foods

Fisherman’s Friend

Food Service Solutions

Franklin Electric Fueling Systems

Freshstone Brands

GardaWorld

Granger Fuels Ltd.

Great Canadian Meat Company

Hamilton Manufacturing

Horse and Buggy Brands

House of Horvath/Wild Green Canada

Husky Corporation

Icon Containment Solutions

ICS

Incredible Group

InfoNet Technology

INS Market

Jack Links

Jaly International Inc.

JBS Industries

Kalcor Marketing Ltd.

Kawartha Dairy Ltd.

KCL Systems

KrackCorn LLC

Krown Rust Control

Leak Technologies Solutions Ltd.

Local Jerky Plus Inc.

Localcoin

Logiciel BEST/Software BEST

M8TE

Mark VII Equipment Inc.

Mars Wrigley Confectionery

Canada

Marsham Natural Food Brokers

McClean Solutions LLC

McCowan Design & Manufacturing

McDougall Energy

Mevol Canada

MI Petro Group of Companies

Minus Forty Technologies Corp.

Mondelez International Inc.

MONEXgroup - Money Express POS Solutions Inc.

Murray Market National Inc.

Mystical Distributing Company

Nace Care

National Energy Equipment Inc.

National Retail Solutions

National Smokeless Tobacco Company

Nayax

NCS Canada Mondo

NOV Fiber Glass Systems

Now Prepay

Nuform Building Technologies

NUPI Americas Inc.

Ontario Convenience Store Association

Ontario Lottery & Gaming Corp.

Optima Systems Inc.

OPW

P.D. McLaren Limited

Pacific Smoke International Inc.

Pagonis Live Bait Ltd.

PDQ Manufacturing

Performance Ink, Inc.

Permul Foodservice Canada

Petro Service Ltd.

Petrosoft

Pizza Pizza

Pop Daddy Snacks

Prime Deals International

Propel Brands

Pure MG Inc.

Raymar Equipment Service Ltd.

Rinnai Canada

Scholtens Inc.

SIR Solutions

Smoke Arsenal

Soapy Brushy

Sonny’s The CarWash Factory

South Cove Foods LP

Southern Recipe Small Batch

Pork Rinds

Sparkle Solutions

SRP Canada Creative Planogram Co.

STLTH Vape

STM Display Sales

Sureguard

Syntech Systems, Inc./FuelMaster

Tank Traders

TELUS Business Solutions -

Commercial Security

TFI Food Equipment

The 42 Degrees Company

Tommy’s

Total Meter Services Inc.

Transchem Group/

Turtle Wax Pro

Trusscore

Turning Point Brands Canada

Tweaker Energy Drink

uPlus Accessories

Van Holten’s Pickles

Waleco Inc.

Western Refrigeration

Wiz-Tec Computing Technologies Inc.

Workplace Safety Insurance

Board

XSite Group Inc.

X-Tron Poles and Lighting

*compared

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Eurovac is an industry leader in the manufacturing of standalone vacuums, centralized vacuums and automotive detailing equipment. Eurovac also provides a complete solution with the addition of arches and canopy’s.

We offer engineered solutions at sensible pricing. Along with an engineered system Eurovac works with a national distribution network for local support.

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• Tommy Car Wash Systems® offers selfserve vacuum stations to help customers clean while at your store or wash.

• Tommy 2.0 vacuum system includes a powerful 4.62 HP motor for increased suction and efficiency.

• Our fully stainless-steel canister is designed to survive all weather conditions and offers a low-maintenance filter.

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The dual belt design offers very easy maintenance access, and the reduction in belt width makes this an extremely practical and cost effective detailing belt option. This conveyor includes all of the industry leading design features and technology that make an STI FlowLine conveyor the longest lasting, highest quality belt conveyor available today.

Contact Bill Barber at Washlinks

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MARCH 2023

DEDICATED TO SHARING KNOWLEDGE AND BEST PRACTICES IN THE CARWASH INDUSTRY

From the President

BOARD OF DIRECTORS

Karen L. Smith - Valet Car Wash

Jeff Beam - Mondo Products

Christina Caruso - Suncor Energy Inc

Michael Destro - Rainbow Car Wash

Michael Howe - WashLinks

Mike Jacques - National Car Wash Solutions

Matthew Lapolice - Mark VII Canada

Grady Taylor - Transchem Group

Rudy van Woerkom - Belvedere Technical Services

Tim Walker - Soapy Brushy

NATIONAL OFFICE

Constance Wrigley-Thomas, CAE, DES Director of Operations

Brynne Wrigley, DES Director of Events

Heidi Loney, DES Digital Media Specialist

Hello Canadian Car Washers, Distributors and Manufacturers,

I am excited to introduce you to a brand new charitable initiative that the Canadian Carwash Association will be launching this year - Car Wash for a Cure. The intent of this program is for the car wash industry, as a Canada-wide collective, to raise funds for a worthy charity. Originally conceived in early 2020 (we all know the story) we have been biding our time during the pandemic to bring this idea to fruition. 2023 will be our inaugural campaign.

The Car Wash for a Cure idea stems from the experience of the convenience store channel, one that encourages the broader c-store community to collect donations for one day year a year to support Sick Kids Hospital. This program has been a great success.

The Car Wash industry in Canada is strong and I think we can make a difference in our communities. For the past several years, we have partnered with the Canadian Spinal Research Organizations (CSRO) - Canada's voice of the cure for spinal cord injuries. We will also be partnering with them for this initiative.

I encourage you to join with the car wash industry across Canada on March 31 and April 1, 2023, by collecting donations for our partner, CSRO. Posters and information pamphlets can be found on our website, the CSRO website (www.csro.com) or at the Convenience U CARWACS Show, March 7-8/2023, The International Centre, Mississauga, Ontario. If you would like to register for CCA seminars and attend the show, please use promo code CCA23 for free admission via www.convenienceu.ca.

This initiative has been a personal goal of mine for several years and I hope my fellow car washers will stand behind this and demonstrates that our industry cares to give back.

Most Sincerely

www canadiancarwash ca Please Note Our New Contact Info
South Service Road, Suite 305 Burlington, ON L7N 3J5
331-1768
3390
(905)
office@canadiancarwash.ca
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CCentral.ca Convenience Store News Canada March | April 2023 3 COVER ILLUSTRATION AND THIS PAGE TOP, ANDREA UCINI/ANNA GOODSON ILLUSTRATION AGENCY, SHUTTERSTOCK.COM 5 Editor’s Message Knowledge is power 6 The Buzz People, places, news and events 8 Foodservice Fundamentals The future looks bright: 4 foodservice trends and what they mean for convenience 11 C-store IQ National Shopper Study 2023 New insights for a new era 20 Tobacco + Vaping Report Tobacco: Stepping up to the contraband challenge Vaping: A landscape in flux
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Knowledge is power

Welcome to the Consumer Insights issue, which features a topline report from our third (what is now annual) C-store IQ National Shopper Study

C-store IQ debuted in January 2020—just before the pandemic upended everything—as the first convenience and gas specific study delving into the wants, needs, perspectives and habits of Canadian consumers. Working with the research team at EnsembleIQ (our parent company), we followed up with a mid-pandemic report released in early 2022. Now C-store IQ is back, with fresh 2023 data designed to provide valuable insights into the wants, needs and habits of your customers as we move beyond pandemic-related restrictions. Who is the new convenience shopper and what do they expect from you?

This year, we doubled the number of participants to more than 2,000. It’s a true snapshot of Canada—with comprehensive coverage of shoppers by age, demographic, region and more. We will extrapolate reports and detailed consumer data in the coming months to provide deep insights into a wide range of topics. Reach out and let me know if there’s something in particular you’re interested in.

The great news is that c-stores continue to play a fundamental role in the everyday lives of people living in Canada, with 50% of shoppers visiting once a week or more and 71% choosing the same store each time. Check out the topline report (p. 11).

In addition, we are thrilled to debut exclusive insights from C-store IQ at The Convenience U CARWACS Show Conference and will continue to share with readers key information to help position your business for success (Next issue: What’s in the shopping bag?).

CORPORATE OFFICERS

CHIEF EXECUTIVE OFFICER Jennifer Litterick

CHIEF FINANCIAL OFFICER Jane Volland

CHIEF OPERATING OFFICER Derek Estey

CHIEF PEOPLE OFFICER Ann Jadown

EXECUTIVE VICE PRESIDENT, CONTENT & COMMUNICATIONS Joe Territo

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Convenience Store News Canada | Octane is published 6 times a year by Ensembleiq. Convenience Store News Canada | Octane is circulated to managers, buyers and professionals working in Canada’s convenience, gas and wash channel. Please direct inquiries to the editorial offices. Contributions of articles, photographs and industry information are welcome, but cannot be acknowledged or returned. ©2022 All rights reserved. No part of this publication may be reproduced in any form, including photocopying and electronic retrieval/retransmission, without the permission of the publisher.

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CHANNEL ALLIANCES:

Speaking of success, do you know an outstanding woman in convenience? We want to hear about her! Nominations are open for the 2023 Star Women in Convenience Awards: The deadline is March 31. Winners will be announced in the July/August issue and celebrated at an in-person event September 19.

In the meantime, I hope you can join us for two exciting days of learning, discovery and networking at The Convenience U CARWACS Show. Our editorial team is curating the two-morning conference with an engaging line up of speakers and sessions addressing the topics you told us are important to you, as well as highlighting exciting opportunities.

As always, our goal is to provide valuable insights and data to both inspire and help you make informed decisions to grow your business. CSNC

CCentral.ca Convenience Store News Canada March | April 2023 5 TK
CCentral.ca E-newsletter CSNCOCTANE @CSNC_Octane standard no gradients stacked logo (for sharing only) ConvenienceStoreNewsCanada BE A PART OF OUR COMMUNITY! EDITOR’S MESSAGE

THE BUZZ

READER POLLS Crime at convenience

Has your c-store been robbed in the last 12-18 months?

61% yes

39% no

40% of robbers used a knife

27% of robbers used a gun

Have you experienced a gas-and-dash theft?

67% yes

33% no

Have you or your staff had to take time off following a robbery?

56% yes

44% no

While, thankfully, no physical injuries were reported, 50% of operators say the crime has taken a toll on their team’s mental health.

ONLINE EXCLUSIVES

10 HEADLINES YOU DON’T WANT TO MISS!

1. KaleMart24 aims to be the Whole Foods of Canadian convenience

2. CICC Connects: Conquering contraband in Canada

3. Circle K Fuel Day: Q&A with Mélissa Lessard

4. Despite inflation, budgeting for snacks is a priority: Mondelēz State of Snacking Report

5. Nestlé Canada to wind down frozen meals and pizza business

6. Mars expands BFY offering with Trü Frü

7. Rabba sets up shop in Toronto’s financial district

8. What’s in store for Juul?

9. Mondelēz International sells gum business for $1.35 billion

10. 7-Eleven launches fully plant-based breakfast sandwich

To stay up to date on the latest news and trends, get the All Convenience e-newsletter delivered to your in-box every Wednesday: CCentral.ca/signup

Alexander Benedet joins Lactalis Canada as VP, customer strategy and development. He has over 20 years of experience in progressive leadership roles within CPG companies, most recently at General Mills.

Herjit S. Bhalla is now VP of Hershey Canada. He has worked globally for Hershey, most recently spending five years with Hershey India.

Phil Cox returns to Canada as general manager for The Coca-Cola Company. The company veteran was based in Boston, as regional VP, Northeast U.S. Cox joined Coca-Cola Enterprises in 1996.

Rose Donatelli is promoted to sales director-fluid at Lactalis Canada. The 2021 Star Women in Convenience winner joined the company in 2017.

Tim McNerney is promoted to chief customer officer at Coca-Cola Canada Bottling. He joined the company in 2013 and the newly created role will bring together all sales teams for the company’s product portfolio.

Stephanie Minna Cass is promoted to VP, institutional affairs and corporate communications at Ferrero Canada, having spent five years as a director. She has held key roles at Mondelēz Canada, Kraft and Cadbury.

SAVE THE DATE

The Convenience U CARWACS Show

March 7-8, 2023 International Centre ConvenienceU.ca

2023 CEMA Conference

April 17-19, 2023 Toronto CEMAssociation.com

Sweets & Snacks Expo

May 22-25, 2023 Chicago SweetsandSnacks.com

Star Women in Convenience Awards

September 19, 2023 International Centre StarWomenConvenience.ca

CCentral.ca March | April 2023 Convenience Store News Canada 6
CROSS-CANADA ROUND-UP / PEOPLE / PLACES / NEWS & EVENTS
MOVING ON UP
SAVE THE DATE SEPTEMBER 19, 2023, TORONTO, ON PRESENTED BY 3 reasons to nominate a colleague for an award ★ She makes a difference ★ She is valuable ★ She deserves recognition 2023 Nominations are open Deadline to enter: March 31st Visit StarWomenConvenience.ca or scan this code: Categories for 2023 ★ SENIOR-LEVEL STARS ★ SHINING STARS ★ STORE-LEVEL STARS

FOODSERVICE FUNDAMENTALS

The future looks bright

4 foodservice trends and what they mean for convenience

In 2022, the world began its return to normal. The pandemic was challenging foodservice operators, including convenience stores. In 2023, the pandemic seems all but behind us (at least in terms of restricting daily routines), but the foodservice landscape has shifted significantly. Several trends are impacting commercial foodservice operations; however, many of these trends do not severely impact c-store foodservice.

1. Inflation

Food inflation is significant, peaking at 11.4% in November 2022. Fortunately, it is decreasing, projected at 9.2% by the end of Q1 2023 and is forecasted to normalize at about 2% in 2024.

The increased cost of food, unsurprisingly, has an impact on foodservice. Early in the inflationary period, foodservice operators were able to increase prices. More recently, as consumers worry about disposable income in the face of inflation and fear of a recession, operators have been adjusting menus and recipes to substitute lower cost ingredients and reducing portion sizes.

Even as inflation rates decrease, the impact is ongoing (i.e., the 9.2% inflation forecasted for 2023 is incremental to inflation rates in 2022).

Foodservice operators will continue to refine recipes and menus to control costs. A renewed focus on controlling food costs through procurement, inventory and production controls will also continue throughout the year.

2. Labour shortage

Labour, along with food, is the other major expense for foodservice operations. Labour shortages, especially back-of-house positions, have long been an issue. The labour

challenges have spread to most industries. People are comfortable applying, and are being hired, for positions they would have not considered in 2019. As a result, service industries with entry-level and low wage positions are adversely impacted. Few, if any, foodservice operations are fully staffed. They are offering pay rates and benefits previously unseen to attract and retain staff. As options increase, many people are not willing to work long hours, nights and weekends, etc. for minimum wage.

While this is a major challenge for commercial foodservice, c-store foodservice is less impacted. Sure, it’s difficult to find employees; however, with the right menu items, limited incremental labour is required to offer foodservice. In turn, there’s less upward pressure on prices, which is a competitive advantage.

3. Technology

Technology is increasingly a key part of foodservice operations and delivery. Adoption was accelerating prior to the pandemic, then increased significantly, as customers got more comfortable. Now, technology is used in ordering (mobile order pay, kiosks, online), as well as delivery (robots and drones), production (robots) and more.

Technological advances continue to infiltrate foodservice, however, given the foodservice labour cost advantage, c-store operators are not yet able to realize significant cost-savings by investing heavily in such innovations.

4. Sustainability

Sustainability is increasingly important and Canada’s single-use plastics ban, for example, targets foodservice operators. However, foodservice sustainability can take many forms, including waste

reduction, energy efficient equipment, sustainable procurement initiatives, hyper-local food initiatives and increasing plant-based menu offerings. For c-stores, waste reduction by using compostable or recyclable service ware should be considered (make sure that your municipality’s waste management can recycle or compost these products). And, let your customers know about your sustainability initiatives—tell the story. A benefit of practicing sustainable foodservice is that many potential employees want to work for an organization that shares their values. Of course, sustainable business practices would have to extend to the core retail operation.

In conclusion, the foodservice industry has changed significantly in recent years. Part of this is due to consumer demand: retail foodservice customers have adopted a “what I want, when I want it” attitude to which operators have had to respond. Another driver is the challenges operators face with respect to increasing food costs, labour costs and labour scarcity. At the core, providing good food and good service remains the key to success; however, how one accomplishes these feats is changing. Fortunately, for c-stores, the challenges aren’t as daunting as for their commercial foodservice competitors. The 2023 outlook from a convenience foodservice perspective is bright. CSNC

Jeff Dover is president of fsSTRATEGY, a consulting firm specializing in strategic advisory services for the hospitality industry, with an emphasis on food and beverage. Jeff is a Certified Management Consultant and a member of the International Society of Hospitality Consultants.

CCentral.ca March | April 2023 Convenience Store News Canada 8 SHUTTERSTOCK.COM

TOBACCO ADVERTISING IS NOT AVAILABLE IN THE DIGITAL ISSUE

TOBACCO ADVERTISING IS NOT AVAILABLE IN THE DIGITAL ISSUE

More than 50% of c-store shoppers visit a convenience store at least once a month, but the reasons behind those visits are shifting compared to pre- and peak- pandemic times.

Longer hours and changes to routine remain the top drivers for shopping more at c-stores today versus pre-pandemic, however, both decreased significantly when compared to a year ago. That makes sense—grocers and other stores are now open longer (remember when everything closed at 6 p.m.)—and as people return to regular routines, the pandemic plays a lesser role in shaping daily habits: 26% compared to 41% previously.

That said, visits to and spending at convenience remains strong. Shoppers spent an average of $18.06 on their most

recent visit (excluding the costs of gasoline), compared to $15.46 in last year’s report and $13.56 in 2019.

For further signs of pandemic recovery, look no further than foodservice. Foodservice as a driver of c-store visits increased 6 percentage points year-over-year to 18%, compared to 12%. Digging deeper, 13% of shoppers say they typically visit to purchase lunch (up from 8%) and purchasing dinner has more than doubled—to 11% in 2023 from 5% previously, according to insights from the 2023 C-store IQ: National Shopper Study from Convenience Store News Canada and the research team at EnsembleIQ.

Now in its third year, C-store IQ is the only convenience and gas specific study delving into the wants,

CCentral.ca Convenience Store News Canada March | April 2023 11

TOBACCO ADVERTISING IS NOT AVAILABLE IN THE DIGITAL ISSUE

needs, perspectives and habits of consumers in Canada.

This year, we doubled the number of participants to more than 2,000 convenience shoppers across the country. It’s a true snapshot of Canada’s convenience landscape, with comprehensive coverage by age demographics and geographical locations.

This is a topline report. We will be digging into the data throughout 2023—in the magazine and online, as well as

events and special reports—to analyze consumers’ attitudes, habits and expectations regarding key categories, foodservice, technology, fuelling, loyalty and more.

Looking for specific data about categories, demographics, urban versus rural shoppers? Reach out. The goal is to provide valuable insights into the evolving wants, needs and habits of your customers to better inform business decisions and drive success.

Reasons shopping at convenience stores more today vs. before

Convenience stores are open longer hours

Changes in daily routine due to COVID-19

Convenience stores are one of the only stores open or available in my area

Trying to consolidate or make fewer shopping trips overal

Feel shopping at convenience stores is safe

Satisfied with the safety + sanitation measures implemented at my preferred convenience store(s)

Shopping convenience stores more for foodservice items

Choosing to shop for groceries at a convenience store instead of a larger store

My preferred convenience store offers contactless payment options

My preferred convenience store offers curbside or pumpside pickup

store type

CCentral.ca Convenience Store News Canada March | April 2023 13
G rocery store Mass/Supercentre Discount supermarket Drug Dollar Online stores Local independent stores (e.g .. butcher. fishmonger. fruit market) Club Specialty/natural store Retailer’s mobile app 2% Mobile payment 5% 3% Less than $2 $2.00$4.99 $5.00$9.99 $10.00$14.99 $15.00$19.99 $20.00$29.99 $30.00 or more
of
Frequency
shopping
Significant increase / decrease 70% 55% 54% 7% 9% 1% 41% 42% 2% 33% 9% 12% 17% 25% 24% 20% 18% 12% 26% 23% 30% 36% 2% 2% Shop once/week or more Never shop 41% 37% Shop at a chain convenience store once/ week or more 40% Shop at an independent convenience store once/week or more Shop at any type of convenience store once/week or more 50 % 2% 7% 21% 22% 15% 15% 12% Can’t recall 1% Gift card 3% 1% Credit card 34% Debit card 36% 41% Cash 20% Mean trip spend and payment used C-STORE iQ C-STORE iQ 40% 48% 24% 23% 21% 20% 18% 16% 15% 11% 26% 41%

What ‘convenience’ means to shoppers

For more than one-in-four shoppers, convenience is defined as a store that is in close proximity followed by affordable prices, quick to shop and offering essential items.

Aspects that influence a visit to a convenience store

71 %

Proximity/close by Longer hours

To purchase gas

Loyalty program

Has products can’t buy anywhere else Coupon

Foodservice quality

Word of mouth

Mobile app offer

Social media promotion

Like their private label

Availability of contactless shopping

Availability of drive-thru

Occasions typically shop at convenience store

When

I need to purchase gas

While running other errands

For a late night snack

Special trips to store from home

For an afternoon snack/break

Travelling for pleasure

Although location, longer hours and need for gasoline still have the most potential to sway shoppers to visit a store, when compared to last year, all dropped in influence. In turn, social media, private label, mobile ordering, email and curbside pickup increased. Shop

Travelling to/from work or school

To purchase hot beverage / breakfast

To purchase lunch

While working from home

To purchase dinner

Travelling for business

CCentral.ca March | April 2023 Convenience Store News Canada 14
the same convenience store each time 27% Close by/ proximity 17% Affordable prices 13% Quick to shop 12% Has basic necessities 10% Longer Hours 9% Easy to shop 8% Great variety 5% Friendly Staff
Gas price app
Mobile ordering Billboard Email Availability of curbside pickup Text message Radio or TV ad None of the above 40% 30% 29% 30% 24% 20% 17% 12% 10% 25% 21% 13% 8% 11% 5% 47% 62% 32% 43% 29% 36% 20% 14% 13% 12% 10% 8% 7% 7% 5% 7% 4% 6% 6% 6% 4% 5% 5% 3% 5% 3% 5% 4% 3% 5% Significant increase / decrease Significant increase / decrease
C-STORE iQ
C-STORE iQ

TOBACCO ADVERTISING IS NOT AVAILABLE IN THE DIGITAL ISSUE

Usage of expanded services at convenience stores

Significantly more shoppers are using expanded services versus a year ago, with indications that these behaviours are being driven by younger generations, who embrace Wi-Fi, video games, passport photos, mobile ordering, drive-thru and self-checkout. Millennials are most likely to use storage lockers.

68 %

of shoppers regularly use at least one expanded service at convenience stores

New this year, we asked shoppers how long they typically spend in store: Shoppers embrace the quick and easy shopping experience. 65 %

Cash ATM

Car wash

Postal services

Internet access/Wi-Fi

Self check-out

Mobile payment

Drive-thru

Video games

Passport photos

Home delivery

Pick-up lockers

Mobile ordering

Copy/fax

Curbside pickup

Money transfer/wire

Bitcoin ATM

Time of day

Like last year, trips increase throughout the day and peak in late afternoon and evening, however lunchtime occasions appear to be on the rise. As shoppers return to school and work, retailers should pursue opportunities to attract more morning occasions.

26 %

%

CCentral.ca March | April 2023 Convenience Store News Canada 16 SHUTTERSTOCK.COM
C-STORE iQ C-STORE
iQ
13
6:00 am-8:59 am 35
4:00 pm-6:59 pm
9:00 am-10:59 am 25
11:00 am-1:59 pm 14
10:00 pm or later
2:00 pm-3:59 pm 22%
%
%
17%
%
of trips made regularly at convenience stores
Types
Quick in-and-out Less than 5 minutes
Browse a bit 5-15 minutes 6 % Hang out, eat & drink at store Over 15 minutes
33 %
shoppers
29% 21% 10% 7% 4% 7% 4% 5% 2% 2% 1% 7% 4% 7% 3% 3% 2% 30
7:00 pm-9:59pm Significant increase / decrease Significant increase / decrease
Among
that regularly use expanded services
%
13% 10% 13% 6% 11% 8% 11% 8% 8% 3%

Importance of ‘experience’ when choosing which store to shop at

Very important /Important

46 % Moderately important

27%

27%

Slightly/Not important

Areas where convenience stores must improve to encourage more shopping

Product pricing

Variety of products offered

Products needed in-stock

Loyalty program

Store cleanliness

Healthier/better-for-you items

Prepared food quality

Employee friendliness

Variety of prepared food/beverages

Store look/feel

Employee helpfulness

Store organization

Speed of shopping

Local/Canadian-made product offering

Coffee program

Larger pack size/more bulk

Better sustainability commitment/recycling

Fun to shop

Delivery

Contactless shopping options

Embraces cutting-edge tech

Significant increase / decrease

Likelihood of visiting a different store if items are unavailable at current store shopped

It’s now more important than ever to gather the right data to undersand your target shoppers’ wants and needs, or risk losing them to the competition. Shoppers in Atlantic Canada are most likely to go elsewhere if desired items are not in stock.

40 % Very likely

41 % Somewhat likely

19 % Not very/Not at all likely

CCentral.ca Convenience Store News Canada March | April 2023 17
57% 62% 28% 25% 25% 23% 20% 20% 17% 15% 15% 15% 14% 14% 13% 13% 12% 11% 10% 10% 8% 7% 7%

The survey was fielded from December 7, 2022 – January 10, 2023 and responses were gathered from 2,008 people, who were required to be 18+, reside in Canada and shop at convenience stores at least once a month. Quotas were imposed to ensure measurable base sizes for age generations and provinces or territories.

CCentral.ca March | April 2023 Convenience Store News Canada 18
Mean age = 41 19% Gen Z 20% Gen X 39% Millennials 20% Baby boomers 2% Mature/ Silent Living arrangements 56% With partner/ spouse and/
14%
parents 20% Alone
Preferred language Residence type 77% English 23 % French-Canada Rural 21% Urban 49% Suburban 30% Other 1% Male 48% Female 51% Gender QC 25% AB 10% ON 38% BC 9% MB 5% ATLANTIC 10% SK 3% C-STORE iQ C-STORE iQ Province/Territory
or children
With
7% With friends 2% Other

TOBACCO Stepping up to the contraband challenge

Pinantan General Store in Pinantan Lake, B.C. used to sell 45 packages of cigarettes a day. Now the convenience store is lucky to sell five or six on some days, says owner Cory George. It has come up against widely available, ridiculously cheap contraband tobacco.

“Between my store and the city of Vernon [about 90 minutes away], there are as many as 10 illegal shops along the road selling contraband,” says George.

He went into one of the shops. Four cartons of cigarettes were going for $200. His shop charges about $180 a carton, or about $700 for four.

He could slightly lower his price per carton, “but really, our profit on tobacco is very small and is almost at a break-even point,” says George. “We use the category to drive foot traffic, because when people come in for a pack of cigarettes, they also pick up other things, like a jug of milk or a bag of potato chips.”

Based on his conversations, many independent c-store owners are yielding profit margins of just 2% to 3% on tobacco, particularly as demand has risen for less-expensive cigarettes. Only a small few are taking 10%. “Nobody is taking more than 10% by the time they put insurance on their tobacco,” he says.

Advocating for fairness

The Convenience Industry Council of Canada (CICC) hears stories like George’s all the time these days.

“During a board meeting in November, our members were calling contraband a 911 issue,“ says Jeff Brownlee, vice-president, communications and stakeholder relations for the CICC, which is advocating for more funds toward police investigations into the illegal market, which has worked well in Quebec.

“We are hearing of year-over-year tobacco sale losses of at least 10% regardless of where the store is in Canada,” adds Brownlee. “That figure is much higher in contraband hotspots like B.C. and Newfoundland, where taxation on cig-

arettes is very high.”

In a recent pre-budget submission to the Standing Committee on Finance & Economic Affairs, Ontario Convenience Stores Association CEO, Dave Bryans, addressed the issue on behalf of his members: “Illegal untaxed tobacco continues to infiltrate every community in Ontario through an elaborate distribution and production network that is well known to all levels of government.”

The Ontario Korean Businessmen’s Association (OKBA), which represents more than 900 c-stores, recently relaunched its “Save Our Stores” campaign to bring political awareness to the issue. During the last 10 years, the OKBA estimates that it has lost close to 1,000 members “many of whom have closed their businesses permanently due to unfair competition from organized crime groups selling contraband.”

Size doesn’t matter

Both national and regional chains are feeling the squeeze. That includes MacEwen Petroleum, which has 103 corporate-owned gas/convenience stores (MacEwen/Quickie) in Ontario and Quebec.

“Illicit tobacco has been a significant concern in Ontario and, post-COVID restrictions, it has had a significant impact on the retail segment,” says Muhammad Zeeshan, category manager—tobacco, MacEwen Petroleum.

“As a result, we have seen pressure on sales in the cigarette category.”

“It is impacting the entire industry regardless of store count or size,” says Marc Goodman, VP and general manager of 7-Eleven Canada. “It is a particularly big ordeal in Western Canada, where almost every year there is another increase in taxes on cigarettes and illicit trade has become rampant.”

Filling the gap

How is a c-store supposed to compete with the illicit market?

“You can’t—it’s virtually impossible,” says Goodman. “The

CCentral.ca March | April 2023 Convenience Store News Canada 20 SHUTTERSTOCK.COM

environment is nowhere near competitive in terms of pricing.”

Eli Mail, a retail consultant and convenience store expert, who is Parkland’s former VP, merchandising, agrees c-stores can’t compete on price, and shouldn’t try.

“C-stores need to maintain their position as retailers that follow the laws and regulations,” says Mail. “But what I would say to independent operators: come up with other ways to bring people in that are not strictly related to cigarettes. Because if a customer is no longer coming in for cigarettes because they have found the illicit market, you want to make sure they have another reason to keep coming in.”

He says that could be foodservice, dry cleaning, passport photo service and auto products. (The Q3 2022 Global Convenience Store Industry Report found the latter grew by 16.9% in sales in Canadian c-stores versus Q3 2021.)

The goal, Mail says, is to retain the customer and some of their purchase basket. If you can do that, you may even be able to hold on to some of their tobacco purchases, if not in the near-term than the long-term.

Strength in partnership

If there is a silver lining to the fight on contraband—which also funds other illegal activity and robs government of bil-

The (real) story in numbers

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

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

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

Excluding tobacco, convenience store sales in Canada grew by 9%. In other words, Canada’s underperformance relative to much of the developed world is

lions in tax revenue—it is in how competitors and different parts of the industry have united.

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

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

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

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

“As independents, we would normally never speak to a 7-Eleven manager,” notes Pinantan General Store owner George. “But it has brought us together as an industry because we are all feeling this.”

due to the tobacco category. Cigarette sales were down by 10.7%. Other tobacco products (smokeless pouches, e-cigarettes, snubs) fell by 11.8%.

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

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

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

“Government may see these figures and think, ‘We’ve increased taxes on cigarettes, made it cost-prohibitive to smoke,

and therefore sales are down,’” says Marc Goodman, VP and general manager of 7-Eleven Canada. “While there is probably a bit of truth to that, the numbers also reflect that illicit tobacco has ramped up. In Western Canada, where cigarettes are very heavily taxed, we have seen very substantial declines in cigarette sales.”

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

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

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

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

CCentral.ca Convenience Store News Canada March | April 2023 21
2023 TOBACCO + VAPING REPORT

VAPING

A landscape in flux

Of its 133 locations in Ontario, Hasty Market operates about a dozen of them with a specialty vaping store—complete with a separate entrance and age verification system.

An “adults only” store-within-a-store has been the only way a convenience retailer in Ontario has been legally permitted to sell flavoured e-cigarettes since 2020. Non-fruity flavours, menthol, mint and tobacco, can still be sold at convenience store counters.

However, Hasty Market’s vape stores are offering fewer e-cigarette options these days.

“We’ve seen brands and companies eliminated because it would cost a fortune for them to meet the new mandate

of the government,” says Peter Lombardi, senior vice-president, merchandising and procurement, Hasty Market Corp. “They’ve just dropped from the picture,”

That mandate? On Oct. 1, 2022, vape manufacturers had to start paying an excise duty similar in cost to tobacco duty. Any new product being packaged and shipped to stores would also have to be labeled with a vaping excise stamp as proof of payment.

Retailers could keep selling unstamped merchandise until Dec. 31, 2022.

Unsold merchandise without the excise stamp is now being returned to manufacturers for credit towards stamped product.

That has been a massive undertaking and challenge for one-time market leader, Juul, from Juul Labs, as they had so much inventory in the marketplace.

Juul Labs used to have 80 employees in Canada, how it has less than 10, according to multiple sources, and (as of press time) there is talk of the brand being sold to one of the big tobacco companies.

Despite growing pains, the category could find itself in growth mode again.

Health Canada plans to resume a review later this year of the five-year-old Tobacco and Vaping Products Act (TVPA). Regulation of the sector, which was once likened to the Wild Wild West, aimed to make vaping products less attractive, affordable and accessible to youth. However, critics say regulatory decisions have also treated vaping as equally harmful to adults as smoking cigarettes, despite stakeholder wide agreement that it is in fact less harmful.

The Convenience Industry Council of Canada is reaching out to politicians to “discuss the role for c-stores in communicating health benefits of vaping.”

That comes on the heels of a government report of the first legislative review of the TVPA in December 2022, acknowledging, “the majority of adults who currently smoke are not aware that vaping products are less harmful than using tobacco products. Work could be undertaken to communicate the relative risk of smoking, in comparison to vaping, to people who smoke.

“These measures could include assessing the merits of developing relative risk statements and requiring the tobacco industry to use prescribed messages in cigarette packages and updating website materials,” reads the report.

The CICC is also lobbying for convenience stores to be separated from specialty vape shops in the reporting of youth access, given no other retail channel manages age compliance as well as convenience, it contends.

C-stores also say there is still lots of innovation going on in the sector, even if there are fewer players.

“We have recently added new products to our vaping category,” says Muhammad Zeeshan, category manager—tobacco, for MacEwen/Quickie.

Scan

to

That includes expanded choice in the disposable vape category, including brands STLTH and Waka Mini and Waka Solo. The latter comes in flavours like blueberry, cherry-lime, pineapple and yogurt. However, the flavoured options can only be sold at counters in Quickie’s Quebec c-stores.

“We will continue to add throughout 2023 to ensure that we can meet consumer demand,” adds Zeeshan.

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Marc Goodman, VP and GM of 7-Eleven Canada, also sees lots of potential for vaping-type products.

“It is still an underdeveloped category compared to places like Europe, and we are all supportive of people moving from cigarettes to a harm- and risk-reduced category like vape,” says Goodman. “There is lots of room to grow, but the diffi-

culty has been retailers can’t advertise that they carry these products and the companies that make harm-reduced products can’t really talk about them, either.”

“And so, it has been challenging to help move people from the traditional combustible cigarette to a harm-reduced product,” he adds.

Q&A: Steve Pinard, VP, marketing, Imperial Tobacco Canada (ITCAN) on the

ITCAN has invested in less-risk products like vape brand Vuse.

Can you talk about this evolution?

SP: Vuse is seeing fantastic growth across the country.

Canadian adult nicotine consumers are becoming more interested in switching from cigarettes to less harmful alternatives like vaping products. In fact, already 1.4 million smokers have switched to vaping. While we sell and distribute less harmful products, we ultimately rely on convenience stores to make these products available to adult nicotine consumers, while, of course, making sure that minors do not have access to them. The importance of product knowledge and responsible sales

on the part of our convenience store partners is crucial, especially given the constant innovation and addition of new products

How do you empower c-store employees?

SP: We offer direct-to-store service to over 20,000 convenience retailers. Through this model, our national field force of trade marketing representatives provides retailers with information about our products and programs so that adult nicotine consumers are able to get answers to their questions.

How do you characterize vaping regulations in Canada?

SP: Canada has some of the most restrictive tobacco and vaping regulations in the world. We agree that regulations are needed, but governments must look at the risk continuum of tobacco and vaping products. CSNC READ THE FULL INTERVIEW AT CCENTRAL.CA

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2023 TOBACCO + VAPING REPORT
role vaping products play in the changing tobacco sector
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