Convenience stores could benefit from e-cigarette ban, say analysts

TORONTO — A growing move to ban flavoured e-cigarettes due to health concerns particularly in youth could actually benefit convenience stores in the long run, say retail analysts.

“We believe the FDA’s plan to remove mint/menthol e-cig flavours (in addition to all other non-tobacco flavours) would without question encourage a return to combustible cigarettes,” Bonnie Herzog of Wells Fargo Securities wrote in a report after conducting a survey of retailers.

A large majority of retailers surveyed believe the removal of e-cigarettes would migrate smokers to combustible cigarettes that represent a larger portion of convenience store sales.

One-third of retailers surveyed also expect mint and menthol smokers would switch to combustible cigarettes because those consumers tend to want to stick with menthol products.

Almost half of the retailers believe the removal of flavoured e-cigarettes won’t help to reduce youth usage as kids likely move to the black market. Yet some 40 per cent of retailers say they are seeing some deceleration in Juul sales and nearly 20 per cent are seeing more combustible cigarette sales as news reports increase about health issues with vaping.

Some U.S. states are moving to ban or curtail vaping but Herzog said she is “cautiously optimistic” that a complete ban on e-cigarette flavours will be imposed by the Food and Drug Administration.

In Canada, the country’s public health officer said last week at least three reports of potential vaping-related illnesses were being investigated.

Quebec health officials confirmed Friday the province’s first case of severe pulmonary illness linked to vaping. That followed a report from the Middlesex-London Health Unit that a teen from London, Ont., who was using e-cigarettes daily, suffered a severe case of pulmonary illness, the first confirmed case of vaping-related lung disease in Canada.

Herzoz added that 67 per cent of retailers believe the removal of e-cigarette flavours would increase the competitive advantage of IQOS, a heat-not-burn cigarette alternative made by Philip Morris International that has received FDA premarket approval.

Even if e-cigarettes aren’t banned outright, large convenience store chains such as Alimentation Couche-Tard would be helped in the long-term by increased regulations of e-cigarettes because they have the ability to absorb the additional costs, wrote RBC Capital Markets analyst Irene Nattel in a report.

“Given cost of compliance/administrative burden associated with regulated products…we’d expect chains with financial flexibility to gain share over time, not unlike what happened to breweries during the last century,” she wrote.

Tobacco represents about 38 per cent of merchandise store sales at convenience stores and about 40.5 per cent at Couche-Tard, Nattel said. However, electronic devices represent less than 25 per cent of other tobacco products, which account for less than 20 per cent of tobacco sales

Couche-Tard CEO Brian Hannasch said that while these products aren’t currently “material” to its revenues, the Quebec-based retailer hopes they remain available for adults to give smokers “an avenue of lower risk as they pursue nicotine.”

The company only sells closed vaping systems that already contain liquid, instead of ones that allow consumers to use their own liquids.

“We know there’s demand there but if flavours are attracting children we’re OK with it going away,” he told The Canadian Press after its recent annual meeting.

“It’s the right thing for society and we just want it to be done on a thoughtful fashion and based on facts.”

Just Posted

Red Deer’s Dream Centre for addictions treatment is approved on appeal

Several conditions are attached to the approval

Derailed train in Saskatchewan released 1.5 million litres of oil: TSB

LANIGAN, Sask. — The Transportation Safety Board says Monday’s fiery Canadian Pacific… Continue reading

Alberta NDP wants new ethics review of government over election watchdog firing

EDMONTON — Alberta’s Opposition is renewing its attempt to have the ethics… Continue reading

Alberta premier says energy war room will be respectful as it takes on critics

CALGARY — Alberta’s United Conservative government has opened its war room to… Continue reading

New trial ordered for Ottawa man, ex-lover convicted in grisly murder

Ontario’s top court has ordered a new trial for an Ottawa man… Continue reading

Your community calendar

Friday The Annual Old-Fashioned Country Christmas is being held Dec. 13 at… Continue reading

Derailed train in Saskatchewan released 1.5 million litres of oil: TSB

LANIGAN, Sask. — The Transportation Safety Board says Monday’s fiery Canadian Pacific… Continue reading

Alberta NDP wants new ethics review of government over election watchdog firing

EDMONTON — Alberta’s Opposition is renewing its attempt to have the ethics… Continue reading

Leonard scores 23 points to lead Clippers to 112-92 rout of Raptors

Clippers 112 Raptors 92 TORONTO — On a night Kawhi Leonard was… Continue reading

Alberta premier says energy war room will be respectful as it takes on critics

CALGARY — Alberta’s United Conservative government has opened its war room to… Continue reading

New trial ordered for Ottawa man, ex-lover convicted in grisly murder

Ontario’s top court has ordered a new trial for an Ottawa man… Continue reading

Report suggests agriculture needs changes to save climate and farmers

Farming needs to change to help save the climate and farmers themselves,… Continue reading

Police investigate after woman, two young sons found dead in east-end Montreal home

MONTREAL — Police officers who showed up at an east-end Montreal home… Continue reading

Most Read