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Tobacco

OTP Growth Diversifies for Circle K

Positive contributions move beyond Juul, officials say
Photograph: Shutterstock

LAVAL, Quebec — The parent of the Circle K chain is noting double-digit growth for other tobacco products (OTP) beyond the success of Juul e-cigarettes, with the head of Alimentation Couche-Tard Inc. saying the increases are a respite to slowing cigarette volumes.

On a Sept. 5 first-quarter earnings call, Brian Hannasch, president and CEO of the Laval, Quebec-based chain, said the double-digit growth continues to be strong, despite San Francisco-based Juul pulling four of its flavored pods from retail late last year.

“There is lot of innovation … with other brands in the vaping space,” Hannasch said. “[And] you’ve got pouch growth in products like [Swedish Match’s] Zyn and other products that continue to see growth.”

In the United States, Circle K saw an overall increase in same-store merchandise revenues of 2.5% compared with the same quarter last year, with solid performances in most for its business units, Hannasch said. Regarding fuels, he said U.S. volumes increased by 0.6% compared to the same quarter last year and fuel margins “remain strong.”

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, speaking of the Winston-Salem, N.C.-based Reynolds and Richmond, Va.-based Altria Group. “Volumes are softer and that translates into relatively flat sales.”

Couche-Tard’s network consists of approximately 9,900 mostly Circle K convenience stores throughout North America. It ranksNo. 2 in the 2019 CSP Top 202 list of c-store chains by number of retail outlets.

 

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