WASHINGTON --Scott Gottlieb, commissioner of the U.S. Food and Drug Administration (FDA), has created a conundrum for convenience-store retailers.
According the FDA’s November 2018 proposal, c-store operators can continue to sell flavored electronic cigarettes, vaping products and other electronic nicotine delivery systems (ENDS), but only in age-restricted areas where the product is not visible to underage customers. The age-restriction proposal does not include tobacco retailers and vape shops that prevent entry of persons under 18.
The FDA also proposed banning menthol in combustible cigarettes and cigars and banning flavored cigars. The agency contends that flavored tobacco and vaping products appeal to kids. It has been focusing its scrutiny on certain manufacturers of flavored vaping products and, among retail channels, the c-store industry.
“We did the biggest ever enforcement operation in the history of the agency three months ago, targeting sales of e-cigarettes in convenience stores to kids,” Gottlieb said on a media call. Although he believes e-cigarettes are “a less harmful alternative” than combustible tobacco products, “any accommodation can’t come at the expense of addicting a generation of young people to e-cigarettes,” he said.
Gottlieb identified two problems: “One of access—these products are too accessible to kids; and one of appeal—these products are too appealing to kids. The primary vehicle by which these products have appealed to kids are the fruity flavors, and we need to address that.
“For convenience stores, our goal is to make sure that these fruity flavors are not accessible to kids in those retail sites, period. No exceptions,” Gottlieb continued. But he stopped short of proposing an outright prohibition of the sale of the flavored products in the c-store channel.
Gottlieb said if a c-store wants to continue selling fruity flavors, it could consider options such as creating a separate structure or room “But a curtain is not going to cut it,” he said. “The goal here is to make sure that fruity flavors are not going to be accessible to kids and bought by kids at those retail sites—and that is what this policy is designed to do.”
Part of the Problem?
Brian Hannasch, president and CEO of Alimentation Couche-Tard Inc., Laval, Quebec, said on a recent earnings call that although he is “excited at the consumer response” the chain is seeing on lower-risk products, some have been “too successful” in that they have “clearly ended up in the hands of too many underaged individuals.”
Couche-Tard also is focused on making sure it’s “not part of the problem.” It has revised its processes and practices to make sure it doesn’t sell to minors. “Our next step is collaborating with our partners to understand how we can bring reduced [risk] products back into the stores, continue to offer innovation, but make sure those devices only end up in the hands of [adult] consumers,” he said.
Many retailers, including Hannasch, believe the FDA is unfairly singling out c-stores among other retail channels. “Our channel does a very solid job of managing age-restricted sales, and we don’t think that’s a significant part of this problem. So we don’t support any FDA moves to favor one channel over another,” he said.
In a Tobacco Talk survey released Nov. 26, Bonnie Herzog, managing director of consumer equity research for Wells Fargo Securities, New York, said most respondents disapproved of the FDA’s proposed initiatives on flavored and menthol tobacco and vape products. Of the respondents, who represent 55,000 convenience stores, 90% believed that if carried out, the proposals would negatively affect their businesses.
Responding retailers called the proposals “far too extreme,” an “overreach” of authority and “knee-jerk,” Herzog said. More than 50% of the retailers are taking a “wait and see” approach and have no immediate plans to implement significant changes in stores or to their current sales practices.
Nearly 80% of retailers disagree with the FDA’s decision to enforce age-restricted access points within the store, and nearly 90% of retailers expect their business to be negatively affected as a result of the FDA actions, despite e-cigarettes being a relatively small contribution (less than 3%) of overall in-store sales.
“The agency is unfairly targeting convenience stores while allowing these products to still be sold in vape stores and online. This assault on our stores must be stopped,” said Anna Ready, director of government relations for Alexandria, Va.-based NACS, in an email urging retailers to contact their members of Congress “to ask them to protect the vital role our industry plays as responsible retailers of legal products.”
Several c-store operators and advocates spoke out against the FDA proposals on flavored e-cigarette sales:
“The c-store industry checks more IDs daily than any other businesses in America, yet the FDA wants to limit a variety of legal products to age-restricted stores. This makes no sense, as c-stores provide many hours of training on this topic to employees.”
—Paul Hardin, president and CEO, Texas Food & Fuel Association, Austin, Texas
“[The FDA] should not pick economic winners and losers by determining who should be able to sell and who shouldn’t.”
—Tom Robinson, president, Robinson Oil, Santa Clara, Calif.
"FDA and CDC studies show that 86% of minors that use e-cigarettes do not get them from any store at all. Instead, they get them from people who are old enough to buy them or from the Internet. … We hope the FDA reconsiders its position and reaches out to all involved parties to develop an even-handed approach.”
—Ryan McNutt, CEO, SIGMA, Fairfax, Va.
"We believe the FDA should fully restrict products they believe are unhealthy and should be illegal, but as proposed they are simply tilting the playing field against the convenience-store industry in favor of vape shops and online retailers.”
—Ryan Howard, COO, truenorth, Brecksville, Ohio