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Eyvind Dahl owns Dahl's Coin Laundry & Convenience in Renfrew, Ont.

The ups and downs of tobacco 

After a surge in sales during the COVID-19 lockdown, how do c-stores keep smokers coming back for more?

Eyvind Dahl owns Dahl's Coin Laundry & Convenience in Renfrew, Ont.

Eyvind Dahl owns Dahl’s Coin Laundry & Convenience in Renfrew, Ont.

As Canada locked down in the wake of the COVID-19 pandemic, Eyvind Dahl noticed something at his Renfrew, Ont. c-store went up: tobacco sales. 

Dahl, the owner of Dahl’s Coin Laundry & Convenience, attributes the increase in tobacco purchases to the closure of First Nations’ borders in the province, a protective measure to fight the coronavirus. “When they closed the reserves, our tobacco sales more than doubled,” says Dahl. 

He notes that sales of Imperial tobacco alone jumped from 50 to 100 cartons a week. Hand in hand with that increase in business came a surge in impulse purchases. “All my categories shot up,” says Dahl. “We were so busy it was crazy.”

 Surge then slide

Screen Shot 2020-10-27 at 10.40.46 AMDahl was not alone in seeing a surge in tobacco. According to a survey conducted by the Ontario Convenience Stores Association (OCSA), retailers throughout Ontario showed an increase in tobacco sales that ranged from 10% to more than 30%. The survey of the association’s 6,000 members also found that proximity to a reserve played little role in the booming business. Sales increased across the board, and almost half of the stores surveyed were more than 30 kilometres from the closest reserve. Dahl’s Coin Laundry & Convenience is an hour away from the nearest First Nations community. 

The boom has been temporary, however. “Now that the reserves are back open, sales are going down, down, down,” says Dahl. “It’s going back to normal, which shouldn’t be normal.”

The issue of contraband tobacco has been a significant one for retailers, particularly in Ontario. “The illegal cigarette market has been left unchecked for far too long,” says OCSA CEO Dave Bryans, who is based in Oakville. “This can’t go on. In Ontario, 30 to 60% of butts swept are contraband.”

The OCSA is calling on the provincial government to develop an integrated plan to address contraband concerns and other tobacco issues. “The survey demonstrates a need to work with the Ontario government to develop a tobacco strategy from pricing, formats, promotions and incentives to protect small businesses as well as government’s health policies,” says Bryans.

The Convenience Industry Council of Canada noted a similar surge amongst its members. During a recent interview with CSNC, president and CEO Anne Kothawala said CICC is engaging “Ernst & Young to put together a comprehensive study on contraband tobacco across the country. We need much stronger public policy to address this issue.”

 Competing with contraband

Until then c-stores are looking for ways to enhance tobacco sales. In the current environment, productivity is paramount, says Anthony Ruffolo, vice president, McCowan Design & Manufacturing Limited in Toronto. “Plain packaging has definitely made it more difficult to vend the product quickly. You need to be more efficient and organized.”

Products like McCowan’s secure undercounter tobacco cabinets can help. This may also free up the back wall for new opportunities, space often previously dedicated for tobacco products. “There is an ability to generate profits off the back wall. You may even be able to sell advertising,” says Ruffolo. 

Sara Clarkson, president of Storesupport Canada in Mississauga, points out that helping people work through the plain packaging maze will build customer loyalty. “There is still lots of confusion regarding cigarette brands with the start of plain packaging. Knowing what brands to recommend is key and ensuring stock is available of those brands for your regular customers is also of huge importance.”

Bryans recommends c-stores promote the least expensive products they have in inventory as a way of competing with First Nations’ retailers at a basic level. 

While that will attract some new customers and keep others coming back, there is no way c-stores can compete head on with contraband sales, notes Dahl. A carton of cigarettes from the reserve is $20. His cheapest brand is $120. “It’s a huge difference. I can sympathize with the customer.”

The focus on tobacco sales includes another harsh reality for c-stores: the category is declining.

Bryans notes that c-stores sell 99% of all legal cigarettes and sales are declining 1.5 to 2% a year. “That is a huge concern for the channel. The time has come for a task force to review the tobacco business in Canada.”

Filling the void

One solution is to look for options that can replace tobacco. Vaping seemed a promising category and the profit margin is greater than tobacco. The product is also very popular, but there are concerns about safety and increasing regulations that are undoubtedly affecting retailers.

Many would like to see c-stores be able to sell alcohol, and the industry has been lobbying the government and raising public awareness for the last seven years to encourage a move to an open retailing market. Doug Ford’s Progressive Conservative government has promised that market will soon be a reality in Ontario, but the wait continues.

Ruffolo also recommends retailers look for products and services that set them apart, such as foodservice or local products. “You need to draw in new customers. The more you know your customers, the more you will be able to retain them.”

It’s also critical to remind customers—through signage, conversation, and any other means—that c-stores offer what competitors, from larger stores to smoke shacks and vape shops, do not. That message resonates more clearly and convincingly in a COVID-19 world, notes Clarkson. “With access to grocery stores being more difficult with line-ups and extra time needed to shop, quick convenience is more important than ever. Ensuring staples are in stock and healthy snacks will promote a quick stop at the convenience store.” 

 

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

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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.


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Survey shows a decline in youth vaping

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A new survey finds that young people have been vaping less frequently since the COVID-19 pandemic began.

The survey, conducted by the Lung Association of Nova Scotia and Smoke-Free Nova Scotia, finds that respondents decreased vaping to five days per week from six, on average.

They also cut back to an average of 19 vaping episodes per day, down from 30.

There has been a major push by all levels of government to introduce regulations designed to curb youth vaping.

The survey funded by Heart & Stroke also found the decrease in vaping frequency is most notable in British Columbia and Ontario.

The researchers say it may be related to warnings of potential complications from COVID-19 for e-cigarette users.

The survey heard from more than 1,800 respondents between 16 and 24 years old, and found most begin vaping at around the age of 15.


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Imperial Tobacco opens vape shop in Toronto

The company plans to open more locations in cities across the country

image002Imperial Tobacco Canada is opening a new retail store in Toronto that offers adult consumers a full-range of vapour products, while a select portfolio of these vaping products will continue to be available at convenience stores.

“The opening of our first Vuse store in Canada is an important component of our harm reduction strategy and an integral part of our goal to reduce the health impact of our business by offering a greater choice of less risky products to adult consumers,” Ralf Wittenberg, president and CEO at Imperial Tobacco Canada, said in a release. 

The tobacco giant pointed to multiple studies and academic journals reaffirming the “less harmful nature of vaping products,” adding many health groups, including Public Health England, have estimated that vaping products are” at least 95% less harmful than traditional cigarettes.”

“We have come a long way but there is still significant progress to be made,” said Wittenberg. “Health Canada’s acknowledgment of vaping as a less harmful alternative to cigarettes is indicative of the shift we’re seeing around the world.  This global movement among public health authorities is still unknown to most smokers, and that is where our efforts must be placed: creating the necessary awareness among adult smokers to make the switch.”

The company stated that in order for vape products to “achieve their full potential, it will require the federal and provincial governments to implement a science and evidence-based regulatory framework – a framework that allows and supports the appropriate communication to adult smokers, ensures the availability of these products to adults who are looking for an alternative to cigarettes, and enforces the protection of youth from gaining access to these products.”  

However, most provinces, as well as the federal government, are cracking down on vaping by introducing new rules and regulations that restrict advertising and the selling of vape products in environments frequented by youth. This has been particularly challenging for c-stores. The Convenience Industry Council of Canada argues that c-stores are not a major source for youth vaping and a flurry of new rules and regulations introduced in the last 18 months actually punish neighbourhood stores, while restricting choices for adult smokers who want to quit.  

“As technology advances and social attitudes towards reduced risk products change, we believe that embracing the principles of harm reduction can play a key role in helping Health Canada achieve its goal of reducing Canada’s smoking rate to less than five percent by 2035,” said Wittenberg.  “We are particularly proud to be opening this store during these difficult times. This one location has the potential to have a positive impact on thousands of smokers in Toronto, and we look forward to opening Vuse stores in other Canadian cities when and where regulations permit.”


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Juul tackles illegal reselling of pods

Juul Labs, Inc. and its Canadian affiliate, Juul Labs Canada Ltd. filed litigation against an illicit global network of entities and individuals that illegally sourced and resold authentic Juul pods and devices in the U.S. and abroad.

In a statement, the company said “one of the largest distributors of these diverted products are the purveyors of the PodVapes and PodMaster websites, entities based in Canada that acquired Juul products from the U.K., Canada, and U.S., to ship all over the world, disregarding the laws and regulations of a variety of jurisdictions.”

Juul is alleging that PodVapes, for example, acquired authentic pods from Canada and the U.K. in non-tobacco and non-menthol flavors, and shipped them into various states in the U.S. to be illegally resold. If proven, these activities violate U.S. federal, state, and local tobacco regulations.

The company says “diverted products are part of a growing illicit market for vapor products, including compatible and counterfeit products. Diverted products, in particular, are authentic products that are produced for lawful distribution in an intended market, but are illegally diverted into a different, non-compliant market without authorization from the manufacturer.”

Such measures violate laws and regulations in various jurisdiction and undermine underage-prevention measures because they often are sold through non-traditional retail channels without age-verification.

Juul claims evidence of illicit activity first started to emerge in February 2019. With this legal filing, Juul “aims to disrupt these illegal operations while gathering more information about how these products are distributed across the global trade channel. We stand ready to fully support and cooperate with law enforcement, regulators, and other key stakeholders in every jurisdiction impacted by this illicit trade.”


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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.

CLICK HERE FOR THE LATEST VAPING NEWS


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Ottawa’s vaping ad regulations kick in Friday

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Ottawa’s new rules restricting the promotion of vaping products are set to take effect this Friday (Aug. 7), while some point-of-sale regulations will be implemented on Sept. 6.

Health Canada published regulations July 8 prohibiting vaping advertisements in public spaces where youth may be exposed to them.

The nationwide ban on vaping ads applies to all retail locations and online stores that sell e-cigarettes, except for adult-only establishments, such as designated vaping shops. However, “permitted ads displayed where youth are not permitted convey a health warning about vaping product harms.”

This means that c-store operators across the country must remove all window, point-of-sale and in-store marketing materials, as well as product displays.

These requirements are applicable only when a province or territory does not already have such requirements in place. Ottawa stated in a release: “The Government of Canada remains concerned by the rise in youth vaping and is acting to address it.”

These new changes will further restrict the promotion of vaping products, to protect youth from being exposed to advertisements that can induce them to try vaping. It will now be prohibited to advertise vaping products in public spaces if the ads can be seen or heard by youth, whether in brick and mortar stores, online or other media channels.

In addition, the display of vaping products at point-of-sale where youth have access will be prohibited. These changes will also require that any permitted ads displayed where youth are not permitted convey a health warning about vaping product harms. These requirements are applicable only when a province or territory does not already have such requirements in place.”

Health Canada is also considering additional regulatory measures “that would further restrict the nicotine content of vaping products, further restrict flavours in vaping products, and require the vaping industry to provide information about their vaping products, including sales, ingredients, and research and development activities.”

Health Canada has invested more than $12 million over three years in a national vaping public education and prevention campaign.


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The latest vaping news

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As a category, vaping is in flux, with new rules and regulations rolling out across the country in 2020. C-stores are bearing the brunt of the changes.

Here’s what you need to know, starting with the most recent news item.

  • Imperial Tobacco opens vape shop in Toronto Read more
  • Ottawa’s vaping ad regulations kick in Friday Read more
  • B.C. introduces new vaping rules that restrict products sold by c-stores Read more
  • Ottawa’s new rules restricting the promotion of vaping products in places young people can access are set to come into effect August 7 Read more
  • Public Health Units have discretion when it comes to enforcing Ontario’s new vape rules targeting sales at c-stores Read more
  • Ontario agrees to delay full enforcement of vaping rules Read more
  • Ottawa delays new vape packaging regulations Read more
  • Ontario sticks with July 1 for new vaping regulations Read more
  • C-stores not a major source for youth vaping Read more
  • Nova Scotia to regulate nicotine levels in e-cigarettes Read more
  • Alberta introduces legislation to regulate vaping Read more
  • Saskatchewan introduces rules to ban vaping products for youth Read more
  • New vaping rules will punish neighbourhood c-stores Read more
  • Ontario convenience and gas stations comply with vaping ad ban Read more
  • CICC supports vaping priorities outlined by Minister of Health mandate Read more

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B.C.’s new vaping rules a blow to c-stores

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The British Columbia government is moving ahead with regulations designed to making vaping less appealing for young people by restricting the availability of vaping products in convenience stores.

During a news conference last week, the province’s Health Minister Adrian Dix said the sale of flavoured nicotine vapour products will be restricted to adult-only shops: “We have the power to restrict flavours. Only tobacco flavours will be allowed.”

The proposed changes are expected to be fully in place by the end of summer and represent another blow to the convenience industry, which is grappling with similar restrictions in other provinces, including Ontario.

The Government of British Columbia’s regulations restricting the availability of vaping products in convenience stores, while allowing specialty vape shops and online retailers to continue to operate unchecked, will not address youth vaping, counters the Convenience Industry Council of Canada.

“All the available evidence shows that convenience stores outperform specialty retail shops in the responsible retailing of age-restricted products. Recent reports released by the Government of Canada show that 87% of convenience stores passed their mystery shopping tests, compared to the 20% of vape shops which passed,” says CICC president and CEO Anne Kothawala, noting that eight out of 10 vape shops failed mystery-shopping tests.

In addition, CICC points out that the largest study of its kind conducted in Canada, the Centre for Addiction and Mental Health (CAMH) “2019 Drug use Among Ontario Students Report” found that convenience stores were ‘the least common source of vaping products for youth: Borrowing from a friend topped the list (53.7%), buying from a friend or someone else (11.2%), and purchasing from a specialty vape store (9.7%) were the top three sources, with convenience stores making up less than 1%. “This report confirms what we have been saying for months; convenience stores are not the source of vaping products for youth,” says Kothawala.

However, the backlash continues, with Health Canada earlier this month moving ahead with new rules banning the promotion of vaping products in places young people can access.

Calling nicotine a “public health hazard,” Dix did acknowledge the role vaping could play in helping adult smokers reduce risk. “Vaping is of course, for some people, harm reduction. And if you are a lifetime smoker, it can have that impact, it can reduce the harm from smoking…. But if you are a young person, if you are under 19, it is not harm reduction, it is just harm.”

A Canadian student tobacco, alcohol and drugs survey found youth vaping among students in grades 10-12 increased in B.C. from 11% in the 2014-15 school year to 39% last year. Across the country, the increase was from 9% to 29%.

Other changes introduced by the B.C. government include restricting the amount of nicotine in the pods and ensuring c-stores will only be allowed to sell vapour products in plain packaging with health warnings.

In a statement, the Canadian Cancer Society welcomed the announcement. “The high levels of nicotine in e-cigarettes are an important factor contributing to skyrocketing rates of youth vaping in Canada. It is hoped that the action by the B.C. government will prompt the federal government to establish the same maximum nicotine level for all of Canada.”

The CICC maintains the proposal to reduce nicotine concentrations could force adult customers of vaping products back to cigarettes.

“Our industry sales data shows that over 90% of adult smokers who switched from tobacco to a reduced risk vaping product chose a flavoured option with a nicotine concentration that matches that of a cigarette,” says Kothawala. “While we fully support any efforts to combat the increase in youth vaping, restricting the ability of convenience stores to offer the products our adult customers need to successfully quit smoking is not only misguided, it is dangerous public policy.”

Meanwhile, most of the changes, including the nicotine and flavouring regulations, will be immediately enforced in British Columbia, while remainder of the regulations will be implemented starting Sept. 15.

“There is still time for the B.C. government to implement policies that will actually work, but until the government addresses the true sources of youth access to vaping products from online retailers and vape shops that continually violate federal laws, they will not address the youth vaping issue and will fail to meet their harm reduction strategy,” says Kothawala.

  • with files from The Canadian Press

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PHUs have ‘discretion’ when enforcing Ontario’s new vape rules: Ministry

C-stores not in compliance run the risk of being charged

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It’s fair to say the messaging around Ontario’s new vaping regulations is confusing for operators and other industry stakeholders. As, CSNC has reported, implementation of the new regulations kicked in July 1, after being delayed from May 1.

READ: Ontario sticks with July 1 for new vaping rules

Industry advocates had asked for more time, citing concerns about the pressure operators were under to keep their businesses up and running as essential services during the pandemic panic, as well as ongoing need for social distancing between vendors and operators.

READ: Ontario agrees to delay enforcement of new vaping rules

The Ministry of Health agreed to focus on initial education, rather than in enforcement and in a statement last month said: “The Ministry expects businesses to continue to make best efforts to comply with these upcoming regulatory changes despite the circumstances and is not delaying the implementation of these amendments. The Ministry is however encouraging PHUs (public health units) to work with retailers to ensure compliance by providing and prioritizing education and awareness in the first few months of implementation. Consideration should be given to employing this approach until December 31, 2020.”

However, with PHUs in charge of oversight, it is important for c-store operators to note that this “consideration” will differ across the province.

In a new memo (printed in its entirety below), Dianne Alexander, director Health Promotion and Prevention Policy and Programs Branch, Office of the Chief Medical Officer of Health, Public Health Ministry of Health, attempts to clear up any confusion,  writing: “This means that SFOA inspectors maintain their discretion to lay charges for non-compliance with the new regulatory requirements where circumstances warrant.”

This latest statement appears to contradict the earlier messaging from the Ministry, which talked about leeway until December 31.

The bottom line is that c-stores are responsible for compliance and run the risk of facing charges at the discretion of their local PHU. With that in mind, it’s worth stressing that, as of July 1, operators are no longer permitted to sell:

  • Various flavoured vapour products, such as mango (c-stores can only sell tobacco, menthol and mint flavoured vapour products);
  • Vapour products with high nicotine concentrations (greater than 20 mg/ml).
From the Ministry of Health:
Dear Industry Stakeholders,
The Ministry of Health (‘ministry’) has recently been made aware of communications circulating among retailers from industry representatives about the implementation and enforcement of the Smoke-Free Ontario Act, 2017 (SFOA, 2017) regulatory amendments that came into effect on July 1, 2020. The ministry takes this opportunity to provide clarity to ensure that the industry representatives and retailers are aware of the expectations for compliance with the regulatory amendments.
As previously communicated, the ministry is aware of the impact that COVID-19 is having on the normal operation of businesses. However, despite these circumstances, the Ontario government is not delaying the implementation of the regulatory amendments to the SFOA, 2017 that came into force on July 1, 2020. This means that, as of July 1, 2020, businesses are expected to comply with the regulatory amendments and Public Health Unit SFOA inspectors will be responsible for assessing compliance.
As with any requirement under the SFOA, 2017, SFOA inspectors will employ a progressive enforcement approach to achieve compliance with the new regulatory amendments through a balance of education, inspection and the use of warnings and graduated charging options to reflect the frequency and severity of non-compliance.
The ministry acknowledges that the timeline for achieving compliance may be impacted by the reduced or limited operational capacity of retailers during this time. Therefore, the ministry has asked SFOA inspectors to first prioritize education and awareness of the new requirements to support compliance among businesses. The ministry is encouraging SFOA inspectors to work collaboratively with non-specialty retailers to ensure prohibited vapour products are removed from stores, which may include returning flavoured vapour products and high nicotine-containing vapour products to suppliers (e.g., manufacturers and wholesalers) in order to comply with the new SFOA, 2017 regulatory requirements.
SFOA inspectors are provincial offences officers under the Provincial Offences Act and exercise independence in their approach to enforcing the SFOA, 2017. This means that SFOA inspectors maintain their discretion to lay charges for non-compliance with the new regulatory requirements where circumstances warrant.
The ministry hopes this information has been helpful and provides clarity with respect to enforcement of the new regulatory amendments. The ministry requests that you clarify the expectations around compliance with your respective retail partners as soon as possible.
Dianne
Dianne Alexander
Director, Health Promotion and Prevention Policy and Programs Branch
Office of the Chief Medical Officer of Health, Public Health
Ministry of Health