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Vapers, smokers take a hit as N.L. budget focuses on prevention



If you took up vaping to avoid the taxes on cigarettes, your luck just ran out.

A 20% tax on vaping products was a key feature of the Newfoundland and Labrador budget September 29, which aimed to focus as much as possible on community health and prevention.

Vaping has so far escaped the province’s sin tax net, even though research suggests the practice can present significant health risks, especially for teens and young adults.

The province also added an extra 10 cents in taxes per gram of loose tobacco and five cents per cigarette.

The budget also allocated $1.7 million for school initiatives, awareness campaigns and cessation programs to help reduce tobacco use and vaping.


Juul releases new study linking market entry to decreased cigarette sales

PlenariesAs part of Juul Labs’ AcademyHealth 2020 Annual Research Meetingthe company released a report linking Juul’s market entry to decreased cigarette sales in Canada. The conference, which took place virtually, focusesd on the intersection of health, health care, and policy.

The study, conducted and presented by Dr. Shivaani Prakash, Juul Labs’ director of health economics and policy research, found that the Juul System’s market entry in Canada “likely decreased combustible cigarette sales, especially in urban markets.”

Using city-level data on cigarette and Juul sales in Canada and variation in timing of Juul’s market entry in the study, the company says researchers ran econometric difference-in-difference models. In a release, Juul concluded: “Within the first 12 months of market entry, market entry and availability of the Juul System likely led to a 1.5% decrease on average in store-level cigarette sales volume, within one large retailer chain. Overall, this could translate to over 400 million fewer cigarettes sold in Canada within the first year of the Juul System’s market entry.”

In addition, the study found that the decline in cigarette sales magnified Juul’s market share increased in stores, suggesting that local tobacco market competition plays a strong role in uptake and purchase of vaping products. For every 1% increase in Juul’s market share at the store-level, there was an associated 0.5% reduction in cigarette sales.

“This work provides strong evidence that the availability of vaping products could reduce cigarette sales, and suggests that providing alternative nicotine products to adult smokers could drive down combustible cigarette consumption,” s Rasmus Wissmann, VP of dta at Juul Labs, said in a statement. “Further research is needed to determine the long-term impact of vapor products on cigarette sales, and the net population health impact of such products.”

The company says that “Identifying the impact of vaping products in global markets can help policymakers understand the role of alternative nicotine products in the commercial tobacco product market, and better evaluate the impact of such products.”

As part of the Premarket Tobacco Product Application (PMTA) process in the United States, Juul Labs has built a research program focused on examining the public health impact of the Juul System. This includes research on the Juul System’s impact on the individual user, their ability to convert adult smokers from combustible cigarettes, and the net-population impact on public health.


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Industry reacts to cross-Canada contraband cigarette bust

Cigarettes Generic Lg_100517Following a major crime bust last week, 16 people are facing charges and millions on contraband cigarettes are off the streets.

According to the OPP, a two-year investigation, dubbed Project Cairnes, took place across Ontario, British Columbia and Quebec, and targeted the illegal manufacture and distribution of contraband tobacco, as well as cannabis and other drugs.

Among the items seized, were 11.5 million contraband cigarettes, with an Ontario street value of $942,000, as well as 1,714 pounds of cannabis, with an estimated street value of $2.5 million.

“The depth and scope of this investigation reveals just how extensive the problem of contraband tobacco and its links to organized crime is in Canada,” Anne Kothawala, president of the Convenience Industry Council of Canada, said in a statement. “These groups are well-financed and organized, and their operations have major consequences on public health and safety as well as on small business convenience retailers.”

The tax loss associated with the cigarettes seized throughout the investigation is estimated at $3.3 million.

“Particularly at a moment when governments are looking to finance COVID-19 response and recovery efforts, decision-makers should support even greater actions to break up contraband networks that consistently evade taxes,” said Kothawala. “These are criminals who are flooding the legal market with cheap, unregulated cigarettes that have economic consequences for both law-abiding retailers like convenience stores as well as governments across the country.”

She further noted that these illegal products are more easily obtained by youth, as organized criminals are not concerned about access to tobacco by minors.

According to The Toronto Star, “The project began as an investigation into a tobacco plant on Six Nations of the Grand River First Nation, near Brantford. The OPP said that operation was controlled by a GTA-based criminal organization and that no benefit or investment was provided for Six Nations.”

The fight against contraband tobacco is ongoing. As the convenience store industry’s number one dollar sales category, stopping contraband and the illegal sale of cigarettes is an important issue.

The Ontario Convenience Stores Association is asking independent, chain or franchise operators to participate in a related survey.

“If you are concerned about contraband and what it is doing to your revenue and traffic, then here is a great opportune to weigh in as a small business owner,” says CEO Dave Bryans, adding he will be sharing the information with the Tobacco Project Team, which is making a report to the Minister of Finance in August. “The government wants to hear from the convenience sector themselves, small business owners and how it effects them.”

Click here to complete the survey.

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Plain packaging 2.0: Challenges and solutions

Screen Shot 2019-11-01 at 10.38.06 AMAs the coronavirus reaffirms the value of convenience stores to communities across the country, those same stores are grappling with an unprecedented upheaval to one of their core channels business: plain packaging. On February 7th, plain packaging regulations—deemed the “best in the world” by the Canadian Cancer Society—came into full effect across Canada. 

C-store owners and their teams are looking for ways to make the transition from branded packaging smooth and seamless for both their business and their customers. Here are some suggestions to help address the biggest problems presented by plain packaging.

Challenge: Avoiding customer confusion

Solution: Information and insight

Tobacco smokers are traditionally brand loyal—and they instantly recognized their brand by its distinctive packaging. Those days are gone. Now all packages look the same, sporting a dull brown colour, specifically Pantone 448C. To add to the confusion, the names of some brands have changed, while others are gone for good. This results in confused customers who often don’t know they have the wrong brand until they light up. 

“Some jurisdictions saw a huge impact and a lot of returns from customers. The increase in returns reflects an increase in frustration,” says Markus Merrill, general manager Canada with Vend Data Media Solutions in Mississauga, Ont., adding this adds to the burden of c-store operators. “You have to spend more time managing that category.”

Reducing frustration requires reducing the likelihood of mix-ups or delays caused by customer and employee uncertainty. “Staff need to be educated,” stresses Sara Clarkson, president and CEO of Storesupport Canada Inc., a national sales and merchandising company, in Mississauga, Ont. 

Fortunately, help is at hand. Tobacco companies have stepped up to assist. In many cases, the companies have already experienced the transition to plain packaging in other countries and have identified issues and best practices. They also moved quickly and early to lend a hand to their c-store customers. Rothmans, Benson & Hedges, for example, updated the names in its ordering system months in advance and set up a website for consumers to find out what products would be affected. 

If you’re struggling, reach out to your suppliers to tap into materials, programs and opportunities designed to help stores and employees adapt quickly and effectively to this new way of selling cigarettes.

Challenge: Reducing clerks’ uncertainty

Solution: Training and technology 

Customers expect a seamless transition to plain packaging, and they’re counting on c-stores to deliver. Extra effort will be required. “You need to know who your customers are. Know who your loyal customers are, and know their brands,” says Clarkson. 

Staff will also need to know the current brand names, she adds. “Steer customers to a cigarette that is close to what they used to smoke. That is a new role for c-stores.”

Tobacco companies can become an important partner. JTI-Macdonald Corp., for instance, organized information sessions and prepared communications materials to explain what’s changing, why and what the alternatives are. The company also worked closely with c-stores to better understand their needs going forward, suggest storage solutions and ways to organize shelving so that clerks are able to more easily identify products when consumers ask for them. 

Find the system that works best for your store. Plain packages can be organized alphabetically, making it a little easier for clerks to reach out and select the correct product. Memorization will undoubtedly kick in. Or, you may want to use dedicated flaps to identify packages. Either way, stick with a system so employees get comfortable quickly. 

With change comes opportunity and technology is helping in the form of automated dispensing systems—high-tech vending machines that help clerks quickly and easily find what they’re looking for.

For instance, Vend Data offers a smart dispensing system designed to overcome the challenges of plain packaging at the store level. There are more than 3,000 in market in Australia, which introduced plain packaging in 2012 and the numbers are quickly growing here in Canada. “It gets rid of the guessing,” says Merrill. “You don’t have to train employees how to sell tobacco…. Just press a button.”

Montreal-based Artitalia Group, which creates custom fixtures and other retail design elements, has also created a vending system to dispense controlled products, such as tobacco. The Audimac is an automated distribution machine designed to simplify the tasks of clerks, produce faster transactions and reduce theft.

As the price of cigarettes rises, so too does their appeal to thieves. These automated systems, with secure metal containers that house tobacco packages, discourage burglars looking to make a fast and easy score.

Challenge: Managing inventory levels

Solution: Education and real-time data

Managing inventory levels is a major challenge in the wake of plain packaging. Verifying you have received the items you ordered and have enough on hand is significantly more difficult when all the products look alike. 

“It’s not like cigarettes are on a shelf and you can see if the shelf is empty,” says Clarkson. 

“You have to understand how inventory will change in the new environment,” she adds. “Take advantage of any education program you can.”

Technology can help. For instance, the new smart dispensing systems not only help clerks get the right products into the hands of customers, but also they’re also programmed for ongoing and accurate inventory monitoring. 

Operators can access sales, out of stock and inventory data online or through an app. Custom reports can help operators track what’s selling and what’s not to better streamline offerings. 

“We’re in real time capturing the data,” says Merrill.  

As an added bonus, vending systems feature digital media advertising capabilities at POP, which can be used for in-store promotions, community outreach and to create additional revenue streams from vendor advertising.  

Originally published in the May/June issue of Convenience Store News Canada.

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Manitoba increases tax on cigarettes

Cigarettes Generic Lg_100517With the tabling of it’s most recent budget, Manitoba is increasing  tobacco-related taxes.

The tax on a carton of cigarettes is to rise by $1 on July 1.

The move is designed to help offset the reduction of PST, which was also announced in the new budget, released March 20.

Overall, the Progressive Conservative government plans to keep a tight leash on spending in 2020-2021, as it deals with the COVID-19 crisis and rising healthcare costs.


Nova Scotia to regulate nicotine levels in e cigarettes in proposed legislation

shutterstock_766102951Proposed legislative changes in Nova Scotia would give the province regulatory authority over the nicotine content of tobacco and electronic cigarettes.

Health Minister Randy Delorey says the move is aimed at protecting youth from potentially hazardous nicotine levels and builds on a ban he announced on flavoured vaping products in December.

Nova Scotia was the first province in Canada to ban flavours, and Delorey says the details of the nicotine regulations will be established at a later date.

Delorey says another change would broaden the definition of tobacco to include types of tobacco-free nicotine products.

Nova Scotia’s ban on flavoured e-cigarettes takes effect April 1.

Under Nova Scotia’s current law, vaping products cannot be sold to anyone under 19.

In Tuesday’s spring budget, the province’s Liberal government said that as of Sept. 15, it will tax vaping liquids at about 50 cents per millilitre and 20% of the retail value of all vaping devices. The annual take is expected to be about $4.3 million.

Many typical vaping devices hold slightly less than a millilitre of fuel, meaning the tax on a package of four would total about $1.50.


The OCSA shares 9 tips to help c-store adjust to plain packaging

cigarette-1642232_1920-1024x783By now many convenience stores will have started to receive some of their higher volume cigarettes and tobacco products in the new plain packaging. These have arrived while much of the previous stock remains on the shelf, causing confusion.

Retailers have until February 7, 2020 to sell through their slower moving coloured products and the following checklist will assist you in identifying product lineups and new requirements as you reconfigured your tobacco section to ensure speed of service, staff awareness and ease of reordering going forward.

This transition will not be easy as you will have an array of sales people from all the various tobacco companies coaching or influencing you to favour their concepts. Some easy ideas for all retailers to follow can be:

1) train staff as new products arrive in the areas of placement for ease of service.

2) sell through all coloured packaging first and rotate the plain in behind.

3) explain to your customers the change while assuring them that the colours are as fresh as the plain (ask for patience)

4) decide on the best set up for your tobacco section (ie. alphabetical or dedicated flaps for each major product) and minimize the influences to continually change the shelf by tobacco reps.

5) track your sales/inventory closely. This is a good time to re-evaluate which products are most popular as many consumers may move to the cheaper products on the shelf when there is no difference in packaging.

6) ensure you have reviewed your security needs and procedures for the handling of plain packaging from receiving an order, inventory counts and replenishment through proper rotation.

7) work with your local tobacco representatives on product returns and product issues and swap out slower formats as you define the shelves.

8) be patient as this will be somewhat of an operational frustration of the business and spend time with employees to insure they have an understanding of this change

9) be mindful of underground sellers and don’t be influenced to purchase coloured packaging from anyone or compromise your tobacco business with anyone.

Originally published by the Ontario Convenience Stores Association

Industry reacts to Health Canada plain packaging rules for tobacco

Canadian cigarette packs will have to be plain drab brown with standardized layouts and lettering under new rules that start this fall, Health Canada says.

The government says plain packages will increase the impact of graphic health warnings about the dangers of smoking, keeping them from getting lost amid colourful designs and branding.

Health Canada says plain packages will increase the impact of graphic health warnings about the dangers of smoking.

Manufacturers will have to begin complying with labelling rules for packages and dimensions for cigarettes by Nov. 9, 2019, while retailers will have to sell only products meeting the new rules by Feb. 7, 2020.

Officials said plain packages will increase the impact of graphic health warnings about the dangers of smoking, keeping them from getting lost amid colourful designs and branding.

The government wants to stop cigarette companies from using their packs as tiny ads for their products, insisting even on a single shape and design for the packs themselves – meaning soft packs are out, as are creative designs with bevelled edges and any other distinctive features.

Health Canada picked the same dark brown for the packages as Australia did for its tobacco products a few years ago, one identified by market researchers as the ugliest colour in the world. Several European countries have used the colour as well.

“Packages with darker colours were perceived to be more ‘harmful to health’ and their products ‘harder to quit,’ in contrast to packages with lighter colours,” the department said in a summary of the plans.

Health Canada said there could be a shortage of the new packs in the early going as a very limited number of suppliers retool to make just one design instead of many different ones.

The regulations released May 1 also standardize the size and appearance of cigarettes, cigars and other tobacco products inside the packages.

Specific rules have been awaited since Parliament passed a law requiring them last fall, joining 13 other countries that have adopted similar measures.

The new rules are part of a larger strategy aimed at driving the rate of tobacco use among Canadians down to five per cent by 2035. Federal statistics show that in 2017, 18 per cent of Canadians over the age of 15 said they used tobacco in the previous month, an increase of 15% from 2015.

The Canadian Cancer Society praised the government’s regulations, calling them “the best and most comprehensive in the world.”

On the flip side, the industry association representing convenience stores said plain packaging increases the appeal of contraband tobacco products and makes them harder to distinguish from legally marketed ones.

“Instead of addressing the 20% of tobacco that is sold illegally in Canada, government is adding one more burden to law-abiding retailers who don’t sell to minors, comply with display bans, and partner with government to collect and remit most of the $9 billion in tobacco tax revenue every year,” Anne Kothawala, president of the Convenience Industry Council of Canada, said in a statement.

Representatives from the Ontario Korean Businessmen’s Association agree, saying the new rules will hurt small businesses.

“The only way the government can guarantee this will occur is if the law is applied equally to all products being sold and purchased in Canada, including the up to 40 percent of illegal tobacco consumed in Ontario today. To date, this government has shown no willingness to crack down on illegal manufacturers,” stated OKBA spokesperson Kenny Shim. “The booming black market of illegal, unregulated, and untaxed products not only leads to a loss in market share for our members – it also leads to a loss of hundreds of millions of dollars in government revenue, contributes to the funding of organized crime, and further compromises Canadian public health by introducing unregulated products to the market.”

The convenience industry has long advocated that plain packaging is not an effective tool to reduce smoking. In its recent eNewsletter, CICC stated: “We were successful in one key area: standardized packaging (slide and shell) will not happen for another 24 months for manufacturers, with retailers being given an additional three-month transition period to comply. On plain packaging, a few technical issues arose out of last week’s regulations that the CICC is working to clarify. We will be providing comprehensive information to both wholesalers and retailers in the coming weeks to help prepare them for this significant policy change.”

With files from Michelle Warren