Busy Bee Is Creating a Buzz

The Florida convenience retailer was recently chosen as the best truck stop in the country based in part because the growing chain specializes in both small-town touches and modern innovations. By David Bennett, Senior Editor It’s too easy to compare Johnson & Johnson Inc. to a hive of activity. That’s not to say the Madison,

Protein-Powered Profits

Convenience retailers hoping to stay in step with consumers’ changing preferences for meat snacks must do their due diligence. By David Bennett, Senior Editor A recent study from Nielsen Co. finds that sales of total-channel meat snacks, including jerky and convenience-packaged dry sausage sticks, has grown at the same time chip sales have slowed. Broken

Deli Is Taking Center Stage

In their quest to craft hardy deli programs, more c-stores are combining the drawing cards of freshness and authenticity with their ace in the hole: convenience. By David Bennett, Senior Editor Freshness is on everyone’s mind lately, including Amazon, which last month announced its intention to buy Whole Foods Market for $13.7 billion. Fresh is

Couche-Tard Closes CST Deal

Circle K will run its largest U.S. business unit, the Texas Business Unit (BU), from San Antonio. The Texas BU will manage close to 700 stores in Texas.

By David Bennett, Senior Editor

Quebec-based Alimentation Couche-Tard Inc., on June 28, announced that it has successfully closed on its deal for CST Brands Inc., following approval from the Federal Trade Commission this week.

On Monday, Couche-Tard announced it obtained clearance from the FTC for the $4.4 billion acquisition of San Antonio-based CST Brands.

The merger clears the way for a bulk of former CST holdings in Texas to become part of Circle K Stores Inc., a subsidiary of Couche-Tard, said Marie-Noëlle Cano, senior director of global communications at Couche-Tard.

“Circle K will run its largest U.S. business unit, the Texas Business Unit (BU), from San Antonio. The Texas BU will manage close to 700 stores in the state of Texas, with more than 170 of them located in San Antonio,” said Cano. “Circle K looks forward to continuing to invest and grow in Texas from this base in San Antonio. Circle K’s Texas Business Unit will be located in the present CST Service Center on Bulverde Road in San Antonio.”

As part of winning antitrust approval, Couche-Tard agreed to sell 70 of CST’s Corner Store locations this week.

As Convenience Store Decisions reported yesterday, those locations are being purchased by Dallas-based fuel distributor Empire Petroleum Partners LLC, and Getty Realty Corp. is providing acquisition lease-back funding to Empire to facilitate its acquisition of properties from Circle K.

Getty Realty Corp. entered into a definitive agreement providing for acquisition lease-back funding to Empire. The company, through a subsidiary, will acquire fee simple interests in 49 convenience store and gasoline station properties for $123 million under a unitary lease. The transaction is expected to close before the end of the third quarter of fiscal 2017.

The 70 CST convenience stores with fuel stations are spread over Arizona, Colorado, Florida, Georgia, Louisiana, New Mexico and Ohio and Texas. The divested locations represent about 6% of the 1,178 stores, which fell under CST Brands in the U.S. Couche-Tard also operates almost 4,700 convenience stores in the U.S., primarily under the names Circle K and Kangaroo Express.

Additionally, Couche-Tard is now selling some CST Brands’ Canada retail assets to Parkland Fuel Corp.



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Dewbre Resigns From CST Brands Board

The industry veteran’s resignation was reported in a SEC notice filed today.

Rocky Dewbre, a veteran with decades of experience in the energy, distribution and convenience store sectors, has resigned from the board of directors at San Antonio-based CST Brands Inc.

According to the June 8 SEC filing, “effective June 5, 2017, Rocky B. Dewbre resigned his position as a member of the company’s board of directors. Mr. Dewbre’s resignation was not because of any disagreement with the company.”

Two phone messages to Lisa Koenig , director of communications for CST Brands, seeking more information weren’t returned before this article was posted.

Dewbre had served as a member of the CST’s board since March 2016 and was a member of the compensation committee. From 2014-2015, Dewbre served as executive vice president, channel operations of Sunoco LP at the time Susser Holdings Corp. was acquired by Energy Transfer Partners in 2014.


Last year, the parent company of the Corner Store convenience brand was facing growing pressure from two investment groups—Houston investment firm JCP Investment Management and investment group Engine Capital L.P.—and both have raised questions about whether CST stockholders would see solid return on some big business deals that occurred in rapid succession in the last year before the company was acquired Alimentation Couche-Tard Inc. last fall.

This was after CST Brands had run off a growing string of c-store acquisitions since enlisting general partner CrossAmerica GP LLC, a wholly owned subsidiary of CST Brands, with the partial purpose of doing dropdown transactions involving bolt-on acquisitions such as the highly touted Flash Foods Inc., a 164-store chain based in Waycross, Ga.

At the time, CST Brands had announced that it has entered into an agreement with JCP Investment Management and Joshua Schechter pursuant to which Thomas Dickson, former chairman of the board of directors of The Pantry, Inc., and an agreement with Engine Capital pursuant to which Dewbre were each appointed to the CST board. Both were touted for the experience and ability to help lead the rapidly growing convenience store company, going forward.

It was not long afterward that Couche-Tard in August 2016 agreed to purchase CST Brands for almost $4 billion, using its biggest-ever acquisition to expand into Texas. Among its many retail operations, Couche-Tard also owns the Global Circle K brand.

As part of the deal, Couche-Tard will acquire 1,146 CST Brands c-stores, primarily operating under the Corner Store, Nice N Easy and Flash Foods banners, and also control the general partner of Allentown, Pa.-based CrossAmerica Partners LP. Additionally, Couche-Tard is now selling much of CST Brands’ Canada retail assets to Parkland Fuel Corp.


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Renewable Fuel Helps C-Stores Stay on Top of the Sustainability Trend

By Jon Scharingson, Renewable Energy Group Inc.

If it seems like the sustainability trend is everywhere, that’s because it is.

  • Walmart recently launched Project Gigaton, with a stated goal of reducing emissions in its supply chain by 1 gigaton by 2030.
  • The Hershey Company is on the Dow Jones Sustainability Indices, which select companies based on their long-term economic, social and environmental asset management plans.
  • LEED certification has become an aspiration for many convenience stores opening new buildings.
  • California’s Low Carbon Fuel Standard (LCFS) calls for the use of cleaner-burning transportation fuels. (Read the new REG white paper on biodiesel’s role in the LCFS by downloading it here.)

From fleets to individual drivers, from companies to public organizations, the sustainability trend has taken hold and shows no sign of slowing down. Forward-thinking c-stores are already tapping into their customers’ desire to be green by adopting sustainable practices both inside their stores and out.

“I think the sustainability factor is very important,” Jim Pirolli, Vice President of Fuels at the Kum & Go c-store chain, said in a CSD blog post I wrote last fall. “Reducing carbon emissions and replacing fossil fuels with something that’s more environmentally friendly is a message that a lot of people can get behind, whether they’re fleets or individual drivers.”

One of the environmentally friendly solutions his company offers is biodiesel blends ranging from 5 to 20 percent at its diesel dispensers. “Everything we do on fuel is based on customer demand and quality, foremost,” Pirolli said

Perhaps the best glimpse at the future of sustainability and fuel is found in California, where so many trends start. The LCFS aims to reduce the carbon intensity of transportation fuels by 10 percent by 2020. Obligated parties and fleets are turning to biodiesel as a solution. Biodiesel volumes in California increased 1,196 percent over the past six years, and the average biodiesel blend level in the state recently experienced a 65.7 percent year-over-year increase.

These stats and other insights are found in the new white paper from REG, “Lower Carbon Intensity Solution — How Biodiesel Has Become the Answer to Emission-cutting Initiatives.” Download it by clicking here.

No matter where you do business, you’d be well-served by understanding what’s happening in California. Shelby Neal, Director of State Governmental Affairs at the National Biodiesel Board, says in the white paper that “there is a distinct growth trend with respect to low carbon policies,” and he says they come up frequently in his conversations with lawmakers across the U.S.

I’d welcome the opportunity to talk with you about this or other topics. Contact me at (515) 239-8042 or jon.scharingson@regi.com.

Jon Scharingson is Executive Director, Sales & Marketing, at REG. Visit regi.com for more information.


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Apple to Introduce Peer-to-Peer Payments

Providing U.S. consumers another payment option, Pay Cash will allow one user to pay another user through their smartphone.

CNBC recently reported that Apple announced that its new iOS 11 mobile-operating system will support peer-to-peer payments through a new feature called Pay Cash, making it a direct competitor to similar services offered by Square Cash, PayPal, Venmo and Facebook.

Peer-to-peer payments allow one user to pay another user through their smartphone for things like splitting a meal at a restaurant. Apple’s Pay Cash will allow users to send money to family and friends, transfer money to and from their bank account, and use it to access Apple Pay for purchases.

The technology will be available later this year.


The Verge reported that “there’s a catch” with Pay Cash, in that peer-to-peer payments with Apple Pay will live inside iMessage, and it’s unclear at this time whether Apple will allow users to perform the payments outside of its own messaging app.

According to the Verge, money will be transferred to an “Apple Pay Cash Card,” noting that Apple has not verified whether money can then be transferred to a user’s own bank account.

“That means Apple is not only coming for the Venmos of the world, but maybe the banks themselves,” stated the report.


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Tobacco Accessories Face the Unknown

Tied to the fortune of cigarettes, sales of tobacco auxiliary products begin an uphill climb.

By David Bennett, Senior Editor

Given the market for tobacco accessories, lighters, rolling papers and other product lines produce an excellent margin for convenience retailers—between 40-50% in some cases. More importantly, sales have been steady for the past decade, despite the decline of cigarette smoking.

Private-label lighters and other accessories have done well in the c-store channel during the last few years.

According to Information Resources Inc. (IRI), convenience store sales of tobacco accessories for the 52-week period ending March 19, 2017 totaled $252.4 million, a 0.96% increase compared to the same period a year ago. Tobacco accessories include everything from lighters, cigarette-rolling machines, humidors, pipes and pipe cleaning supplies to tobacco pouches, cigar cutters and rolling papers.

Often, cigarette sales have a direct effect on c-stores’ tobacco accessory profits. When cigarette sales dip, rolling papers at times will spike. However, lighter sales—by far the most popular segment—often dip, too.

Current trends show that many consumers are moving back to purchasing in patterns more characteristic of past years, where premiumization and volume sales were down. Some industry analysts project a deceleration of cigarette sales in 2017, resulting in an estimated 7% decline.
Reasons for the deceleration vary, but include the growing passage of local and state tobacco regulation. For example, Californians last year voted to increase taxes on cigarettes and other tobacco products by $2 per pack.

Tobacco regulations aren’t restricted to just the state level. Tobacco users are seeing sharp price increases in military stores in some states under a 2016 U.S. Department of Defense (DoD) policy being implemented in a further effort to discourage tobacco use.

Current law requires that military exchanges, commissaries and other resale outlets on installations sell tobacco at prices set no lower than the lowest price in the civilian community. But the civilian tobacco price used for comparison doesn’t currently include state and local taxes. The federal cigarette tax of $1.01 is included in the manufacturer’s price, so it’s paid by military customers.
Gregory Moore, senior tobacco buyer, Army & Air Force Exchange Service (AAFES), said the added cost will likely affect every tobacco category.

“The most pressing challenge to the category for accessories in 2017 is the declining use of cigarettes in the military as well as the recent DoD changes in pricing policy,” said Moore. “As customers will purchase their accessories at the same place as their tobacco, the need for accessories will diminish along with the sales of tobacco.”

There are 700 AAFES stores on U.S. military bases throughout the U.S. and abroad, which include Exchange Express convenience stores.

AAFES’ tobacco sales are expected hit a significantly lower plateau this year.

“Tobacco accessory sales are expected to decline at the same rate as cigarettes,” said Moore. Therefore, we expect a 7% decline in sales in fiscal year 2017.”

As tobacco endures an onslaught of challenges, an evolving business segment could positively impact tobacco accessory sales as pockets of consumers help the market expand in states such as California, Colorado and Maine.

VMR Products, a manufacturer in the vapor technology industry, last month announced the results of a commissioned study examining cannabis users’ opinion on the impact that the Obama and Trump presidencies have had—and will have—on cannabis legalization.

When respondents were asked their thoughts on the best approach for marijuana regulation in the U.S., 70% felt that the U.S. should have national legalization and cannabis should be regulated the same way as alcohol and tobacco. Moreover, 22% felt the issue should be decided state-by-state and don’t agree with national legalization.

For the survey, 300 adult cannabis users across the U.S. were polled.

In April 2016, Pennsylvania passed legislation to legalize medical marijuana, bringing the number of states, including Washington, D.C., with some form of legal pot to 24. Similar measures are being consider in multiple other states.


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