LAVAL, Quebec —Electronic cigarettes and other tobacco products, most notably nicotine pouches, were pluses for the parent of the Circle K chain, which reported double-digit growth for OTP in general.
OTP growth was strong despite San Francisco-based Juul Labs pulling four flavors from retail late last year, said Brian Hannasch, president and CEO of Laval, Quebec-based Alimentation Couche-Tard Inc., during a Sept. 5 first-quarter earnings call.
In the United States, Circle K saw an overall increase in the same-store merchandise revenues of 2.5% compared with the same quarter last year, with solid performances in most of its business units, Hannasch said.
Here are three biggest drivers within the tobacco category for Circle K in its first quarter …
Hannasch described continuing success with OTP, calling out nicotine pouches. “You’ve got pouch growth in products like [Swedish Match’s] Zyn and other products that continue to see growth,” he said.
The increases in OTP are a welcome respite from continuing declines in cigarette volumes, Hannasch said. “Specific on cigarettes, it has been more of a challenge … you see results from [R.J. Reynolds] and Altria,” he said. “Volumes are softer and that translates into relatively flat sales.”
Lift boosts upselling
Lift, the chain’s new upselling tool, is in almost all of the chain’s U.S., company operated network, Hannasch said, with the Canadian rollout set for the company's fiscal third quarter.
“We think … we’re just beginning to scratch the surface,” Hannasch said. “We’re pleased with the early results and we’re seeing a very good conversion rate, averaging over 8% of customer transactions incorporating some sort of Lift promotion.”
At the company’s last earnings call, Hannasch mentioned a strong correlation between the Lift program and improved results within the tobacco category.