Each year, provincial finance ministers hold pre-budget consultations. The ACSA has always actively participated in this process, meeting personally with finance ministers, attending public consultation meetings, and submitting briefs.
This year will be no different and the ACSA will be focusing on several issues, including: a) the negative impact of increasing tobacco taxes to try and increase government revenue; b) cracking down on contraband tobacco as a more effective strategy to increase tobacco tax revenue; c) the negative impact that increasing fees for licenses and permits has on businesses; and d) the negative impact that government red tape has on businesses.
Congratulations to the industry winners at this year’s Industry Conference and Awards Gala:
PepsiCo Beverages Canada
Industry Partner (Regulatory):
PEI Liquor Control Commission
Red Bull Editions
Nestlé Skinny Cow Dreamy Clusters
Independent Convenience Store Operator of the Year
Fred Saoud, Big General Store, Halifax, NS
Corporate Convenience Store Operator of the Year
Margie Boone, Kenmount Corner Store, St. John’s, NL
Emerging Convenience Store Business/Operator of the Year
Chad & Nic Howatt, Howatt’s Shell, Borden-Carleton, PE
A second “butt study” in September commissioned by the ACSA as a follow-up to a similar study in June confirmed the presence of high levels of illegal tobacco in New Brunswick.
“There are always people who say that the results of one study can be a fluke,” says David Knight, a senior consultant with the ACSA, “so we commissioned the second study to find out.”
Overall, there was a 19.7 percent average presence of illegal tobacco at 23 sites tested in September. These same 23 sites had an average presence of illegal tobacco of 15.7 percent in June.
Four additional sites were added in the September study and these new sites had a 30 percent average presence of illegal tobacco.
The research findings are based on a “butt study” technique conducted by NIRIC, an independent, Montreal-based research firm. The research firm collected and analysed cigarette butts obtained from locations in the communities of Grand Falls, Edmunston, Campbellton, Miramichi, Moncton, Oromocto, Fredericton, Sussex, Rexton and Saint John.
In the September study, a total of 3,981 samples were collected and analysed. Overall findings are considered to be accurate to within 1.8 percentage points 19 times out of 20.
The Royal Canadian Legion in Miramichi, City Centre Mall in Campbellton, and Dairy Queen in Edmunston had the highest presence of illegal tobacco at 40 percent each. The lowest presence of illegal tobacco was 4 percent at Quispamsis Town Hall and Fredericton’s Kings Place Mall.
“As a local retailer and resident of Fredericton, I’m concerned when one in four cigarette butts at sites like Dr. Everett Chalmers Hospital are illegal,” says Doug Urquhart, a Fredericton convenience store owner.
“It’s a crime to sell contraband tobacco and the provincial government needs to be doing more to crack down on dealers,” said Urquhart. “We need to get to the point where the risk for dealers isn’t worth the profit, but we’re a long way from that point.”
While the Prince Edward Island Liquor Control Commission posted its 16th consecutive year of profit, it fell 5 percent short of its $102-million sales target.
The commission’s expanded network of private agency stores can’t be blamed, however, as they were strong performers and contributed more profit per dollar of revenue to the commission since agency operating costs to the commission are lower than government retail stores.
“We understand that the expanded network of private agency stores did cannibalize sales at some government retail stores to some extent,” says ACSA president, Mike Hammoud. “But overall the private stores made a meaningful positive contribution to the commission’s revenues and profits. We’re also hearing that the private agency stores have really benefited business-wise having beverage alcohol as a new product offering.”
All liquor commissions in Atlantic Canada are under pressure from provincial governments to contribute more profit from beverage alcohol sales to government coffers. Private agency stores are one way of doing that and there is talk of Prince Edward Island looking at expanding their private agency network again.
“Our position has always been that all convenience stores who meet the standards and want to should be able to retail beverage alcohol,” says Hammoud. “Another expansion to the private agency store network in PEI is another step in the right direction and it could set the stage for bigger changes. We would love to see a pilot project, where all convenience stores who meet the standards and want to should be able to retail locally produced, craft beers, wines and spirits. This would create more local production jobs and more retail store jobs. I am sure Tourists would also appreciate the added convenience too,” added Hammoud.
Convenience Store Day recognizes the contribution that convenience stores make to the communities they are located in and honours the hardworking owners, managers and staff in these stores.
Convenience Store Day 2013 was a great success…the number of showcase stores increased to nine from three in 2012; stores in all Atlantic provinces were showcased; the number of politicians participating and working behind the counter increased to 48 in 2013 from 14 in 2012; and the funds raised for local charities tripled in size.
“Convenience Store Day is a great way to increase awareness of our industry, and everyone participating has a lot of fun,” says Mike Hammoud, president of the ACSA. “Our success has other regions talking and there’s potential for a nationwide roll-out in 2014.”
Provincial governments are rushing to introduce tougher restrictions on the sale of flavoured tobacco products. At the same time, special interest groups are pressuring governments to implement a total and wide spread ban, including menthol cigarettes, like the Alberta government did in November.
“The rationale is to protect underage youth,” says ACSA president, Mike Hammoud. “Underage youth should not have access to tobacco, period. But it’s our position that Alberta’s action is over-reaction. Where is the discussion about the rights of adult consumers to purchase flavoured tobacco products if they want to? Where is the discussion about access by underage youth to other restricted products?
“We recently met with Nova Scotia’s Department of Health and Wellness and didn’t realize until we were preparing for the meeting that in 2012, 35 percent of underage youth in grades 7 to 12 reported using cannabis, while only 13 percent report using tobacco of any kind.”
At this meeting, Hammoud also briefed the department on the huge amount of contraband flavoured tobacco product that has flooded the market as tougher restrictions on the legal sales have come into effect.
“If there’s demand for unflavoured tobacco from underage youth then criminals are going to supply that demand as long as the profits outweigh the risk,” says Hammoud. “We have to have tough and effective deterrents on all types of illegal tobacco products.”
After a long process that started in May, the NBEUB’s review hearing into retail gas margins concluded on December 17th after 2½ days of actual hearings.
“We think the industry made a strong argument for a retail margin increase greater than what the EUB’s consultant was recommending,” says ASCA president, Mike Hammoud.
“And making that argument was a team effort on the part of the industry because there were lots of people involved, including the many owners, managers and staff who drove through some ugly road conditions to be in attendance at the first day of the hearing.
“The big issue is still floor pricing and it’s unfortunate that the EUB can’t do anything about that. But in the meantime it’s equally important to get as reasonable a retail margin as we can.”
No date has been given by the NBEUB for a ruling.
Work has started on prepping for New Brunswick’s 2014 provincial election.
“Election day is Monday September 22,” says ACSA’s senior consultant, Steve Dunne, “we have to make sure that all candidates seeking office know what our priorities are.”
A key issue for the upcoming election will be a crackdown on contraband tobacco.
“New Brunswick’s proximity to the illegal tobacco market in Québec hurts honest c-store retailers in New Brunswick and it hurts provincial tobacco tax revenues,” says Dunne. “A provincial election is a good time to get both the current government and the opposition parties to make commitments to taking tougher action on the trade in illegal tobacco. It’s our job to make it an election issue.”
Dialogue continues with the Newfoundland and Labrador government on the introduction of a handling fee for beer bottle returns and percentage-based sales commissions.
“We don’t have much choice but to be patient,” says Steve Dunne, a senior consultant with the ACSA. “We’ve been asked by government officials for estimates on the number of beer bottle returns handled annually by the convenience retailing industry and we provided that, so we know that analysis is being done and that the file is active.”