3 Upbeat Tobacco Trends Seen at Circle K

LAVAL, Quebec — Just as major federal and state precautionary measures set in during the outbreak of COVID-19 in the United States, Alimentation Couche-Tard Inc., parent company of the Circle K chain, reported several positive trends regarding the tobacco category during its most recent earnings call.

While answering questions about its coronavirus response plans during the company’s March 18 earnings call, Brian Hannasch, president and CEO of the Laval, Quebec-based chain, reported increases of 3% in same-store merchandise revenue compared to the year before. Within those results, the tobacco category in particular showed several positive trends …

Citing both the federal move to raise the tobacco buying age to 21 and the U.S. Food and Drug Administration (FDA) pulling flavored vape pods (with the exception of tobacco and menthol) from stores, Hannasch said the tobacco category was experiencing “significant” change. That said, Circle K is seeing “robust growth” in other tobacco products (OTP), in particular with modern white nicotine products or pouches, which have been a key driver of U.S. growth in the category, he said.

While Circle K was not seeing any supply chain or inventory issues in mid-March, Hannasch said the company has strong relationships with supply partners. He said suppliers have done a great job communicating and adjusting their operations to meet Circle K’s needs. But they’ve seen demand rise. “We’ve certainly seen some items of higher demand,” Hannasch said. “And you can think about kind of the staples that people are stocking up on, [like] water, tobacco products, even beer.”

Another promising area within the tobacco category is with innovative products. Nicotine in varying shapes and sizes “has driven strong comps versus last year,” Hannasch said.

Circle K last year launched the heat-not-burn device IQOS and the Juul-branded e-cigarette into Canada. “A year later, [we] continue to see very strong traction there,” Hannasch said.

• Couche-Tard is No. 2on the Top 40 update to CSP’s 2019 Top 202 ranking of U.S. c-store chains by number of retail outlets. CSP will release the complete 2020 list in June.