MONTREAL -- The Ultramar convenience store chain is looking to challenge rival c-store retailer Alimentation Couche-Tard Inc. by adding hundreds of private-label brands currently sold in the United States and building new stores in Ontario and Quebec, reported the Canadian Press.
"I think we can compete with Couche-Tard at any corner," Kim Bowers, chairwoman and CEO of CST Brands Inc., told the news agency.
The San Antonio, Texas-based company is the second-largest publicly traded fuel and convenience retailer in North America after Couche-Tard, with 1,900 outlets in the United States and Canada, including 278 corporate stores in Canada and arrangements with nearly 500 dealers.
But it lags far behind its Laval, Quebec-based rival, posting $12.8 billion (U.S.) of revenues last year, compared with $35.5 billion by Couche-Tard, including $5 billion in Canada and $19.4 billion in the United States, said the report.
CST plans to invest $60 million this year and add eight new Depanneur du Coin and Ultramar retail locations and 15 dealers, CP said.
Bowers conceded that the company has a long way to go to catch up with Couche-Tard, which operates more than 6,200 stores in North America, including some 1,900 in Canada.
"They are certainly a well-run company and their stores are well run. [But] I think our stores are very competitive and what we have to offer, consumers are looking for," she said in an interview with the news agency.
She said the company's focus is growing the number of customer visits by expanding its offering of fresh food and private-label products like a new sports drink and signature fresh-baked kolaches and whoopie pies.
"Today we service over 500 million customers every year, and I'd like to see that double and triple in the next five years," Bowers told the news agency.
On the company's first-quarter 2014 earnings call earlier this week, Bowers said, "We are taking steps to better manage our inside sales and margin capture in our Canadian stores. One example is our recent introduction of our first private-label packaged item in Canada--our popular U-Force sports drink."
On the same call, senior vice president and chief marketing officerHal Adams said, "[U-Force] is being introduced at a very attractive price to the consumers. It came out in about mid-April to very encouraging results very similar to market share to the competitive national brand that we see in the U.S."
In terms of other products, he said, "We've had several meeting with our team in Canada to prioritize items that we'll be bringing out in the future. Of course, we have a little bit of a challenge in the fact that most of the product that we have co-packed for our private-label will have to be made across the northern border, so we're creating new relationships with manufacturers and co-packers and investigating what those opportunities are. … We're encouraged with the initial launch, and we are definitely dedicated to moving forward and making our private-label offering more robust in Canada."
CST Brands is the exclusive seller of the Ultramar brand in Canada. It also operates nine Shell locations acquired from Sobeys.
Spun off last year from Valero Energy Corp., CST Brands is looking for growth opportunities, but it won't be in the running for transformational deals until 2015, including Hess' c-stores, which are up for sale.
The Hess retail network would be "too big a bite" at this time, Bower said.
CST Brands is one of the largest independent retailers of motor fuels and convenience merchandise in North America. Its retail outlets throughout the southwestern United States and eastern Canada offering a variety of convenience merchandise, beverages, snacks and fresh food. In the United States, CST Corner Stores sell Valero fuels and signature products such as Fresh Choices baked and packaged goods, U-Force energy and sport drinks, Cibolo Mountain coffee, FC Soda and Flavors2Go fountain drinks. In Canada, CST is the exclusive provider of Ultramar fuel and its Depanneur du Coin and Corner Stores sell signature Transit Cafe coffee and pastries.
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