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    The Convenience Market

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    Kyle Langsley
    The convenience store industry faces pressures from increasing government regulation in key product categories like tobacco, alcohol, and food/beverages. The document outlines government focus on these categories and discusses factors like proposed tobacco tax increases, alcohol retailer fees, and menu labeling regulations. It also summarizes trends in the convenience store industry size, sales, and importance to the US economy. Motor fuels remain the largest sales category but have declined as a percentage of total sales, while food service and snacks are growing categories that face government nutrition initiatives.

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    The Convenience Market

    Uploaded by

    Kyle Langsley
    147 views23 pages
    The convenience store industry faces pressures from increasing government regulation in key product categories like tobacco, alcohol, and food/beverages. The document outlines government focus on these categories and discusses factors like proposed tobacco tax increases, alcohol retailer fees, and menu labeling regulations. It also summarizes trends in the convenience store industry size, sales, and importance to the US economy. Motor fuels remain the largest sales category but have declined as a percentage of total sales, while food service and snacks are growing categories that face government nutrition initiatives.

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    The Convenience Market

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    The convenience store industry faces pressures from increasing government regulation in key product categories like tobacco, alcohol, and food/beverages. The document outlines government focus on these categories and discusses factors like proposed tobacco tax increases, alcohol retailer fees, and menu labeling regulations. It also summarizes trends in the convenience store industry size, sales, and importance to the US economy. Motor fuels remain the largest sales category but have declined as a percentage of total sales, while food service and snacks are growing categories that face government nutrition initiatives.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    147 views23 pages

    The Convenience Market

    Uploaded by

    Kyle Langsley
    The convenience store industry faces pressures from increasing government regulation in key product categories like tobacco, alcohol, and food/beverages. The document outlines government focus on these categories and discusses factors like proposed tobacco tax increases, alcohol retailer fees, and menu labeling regulations. It also summarizes trends in the convenience store industry size, sales, and importance to the US economy. Motor fuels remain the largest sales category but have declined as a percentage of total sales, while food service and snacks are growing categories that face government nutrition initiatives.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 23

    The Convenience Market:

    Under Pressure from


    Washington
    John Eichberger
    Vice President, Government Relations,
    NACS
    Executive Director, The Fuels Institute
    Size of Industry
    2012 Store Count
    149,220
    150,000

    112,500

    84,526

    75,000

    45,665
    40,727
    37,053
    37,500
    23,421
    13,025 10,374
    7,243
    1,261
    0
    Convenience
    Category
    Stores Killer
    Liquor Store DrugSupermarketDollar Superette
    Cigarette
    Mass
    Outlet
    Merchandiser
    Wholesale Club
    Industry Performance

    $800.0
    2012 Industry Sales: $700.3 Billion

    $600.0
    Billions

    $486.9$501.0
    $400.0 $450.2 $385.2
    $405.8$408.9
    $328.7
    $344.2
    $262.6
    $220.8
    $200.0 $171.0$181.3

    $199.3
    $132.1$151.1$163.3$168.5$173.9$182.4$190.4$195.0
    $112.0$109.3$116.2
    $0

    200120022003200420052006200720082009201020112012
    Inside Fuels
    Industry in US Economy

    4.5% of U.S. GDP


    1 of every $22 spent in U.S.
    160,000 million transactions per day
    U.S. population every day
    Nearly 40 million fill-ups per day
    More than 80% of U.S. gasoline
    consumption
    $171 billion in federal, state, local
    taxes collected
    Top Categories
    Motor Fuels 71.5% total sales
    Inside Store - 28.5% total sales
    Inside Sales
    Other
    10.8%

    Foodservice
    15.8%
    Tobacco
    40.7%

    Beer Pack Bev


    Center Aisle 7.6% 14.7%
    10.4%
    Top Ten Categories

    Cigarettes
    Packaged Beverage
    Beer
    Other Tobacco Products
    Salty Snacks
    Candy
    Packaged Sweet Snacks
    Milk
    Ice Cream
    General Merchandise
    Inside Sales Growth

    Bread 6.4%

    Other Tobacco Products 6.5%

    Pack Bev 7.0%

    Frozen Dispensed Bev 7.5%

    Commissary 8.7%

    Salty 9.4%

    Sweet Snacks 10.3%

    Cold Dispensed Bev 11.3%

    Liquor 11.6%

    Alt Snacks 12.2%

    0% 3.3% 6.5% 9.8% 13.0%


    Government Officials Focused
    on Several Key Categories
    Tobacco:
    40.7% Inside Sales, $58k/mo

    Still largest category, but under


    pressure
    FDA Regulatory Authority
    Graphic Warning Labeling
    Requirements
    SCOTUS Denied Challenge Last Month
    Tobacco Tax:
    President Proposed 94 cent per pack
    increase
    Alcohol:
    Beer 7.6% inside sales; 11% growth since 2010;

    Special Occupational Tax


    $250 to pay for Civil War
    10 year battle
    Repealed in 2004?
    Presidents Proposal:
    Reinstate an alcohol retailer user fee
    Past proposals = $300 per outlet
    Pay for enforcement activities
    Myriad state beer bills
    Food Service and Nutrition:
    Snacks 10.4%, $12k/mo; Foodservice 15.8%;

    Among most important categoriesand


    growing
    Foodservice sales up 24% since Jan 2010
    Menu Labeling Regulations
    FDAs Proposal
    50% floor space dedicated to food sales
    Includes pre-packaged, labeled products
    NACS Counter Proposal
    50% of sales restaurant type food
    Pre-packaged, pre-labeled excluded from
    numerator
    All sales included in denominator
    Food Service and Nutrition

    Local Efforts
    Mayor Bloomberg tries to ban 16 oz sugary
    beverages
    DC trying to follow NY lead
    Cities and locals using federal grants to run ad
    campaigns against foods considered unhealthy
    CA bill 1 cent per ounce = $1.44/12pk
    Federal Efforts
    Lets Move
    Sugar taxes
    Salt restrictions
    Portion control
    Motor Fuels:
    $501 billion, 71.5% of sales

    Source: U.S. Energy Information Administr


    Highlights: Next 28 Years
    US Population will increase 28% = 404
    million
    US GDP will increase 95.9% = $26.6 trillion
    LDV inventory will increase 26.7% = 283.7
    million
    VMT will increase 39.9% = 3.7 trillion
    miles
    US Energy consumption will increase 12.0%
    Transportation energy consumption will
    increase 1.8%

    Source: US Energy Information


    Liquid Fuel Market Changes

    Net Change in Liquid Demand: -4.8%

    Source: U.S. Energy Information


    RFS Then and Now
    2007 EIA RFS as % of
    Total RFS as % of
    Forecast 2013 EIA Forecast Forecast Market
    Forecast Market
    Gasoline Gasoline Demand (excl. biodiesel/
    (excl. biodiesel)
    Demand E85)

    2012 153.7 9.24% 133.8 10.5%


    2013 155.7 9.99% 133.8 11.5%
    2014 157.7 10.87% 131.8 12.4%
    2015 159.9 12.20% 131.2 14.2%
    2016 161.9 13.13% 130.6 15.5%
    2017 164.0 14.03% 130.0 16.9%
    2018 166.1 15.05% 129.2 18.6%
    2019 168.3 16.05% 128.5 20.3%
    2020 170.4 17.01% 127.9 22.2%
    2021 172.7 18.53% 126.2 24.8%
    2022 174.9 20.01% 124.5 27.4%
    Motor Fuels Profitability
    Mobile Commerce

    Coming to the market quickly


    51% of consumers own smart phones
    All stakeholders trying to own
    system:
    Card networks
    Cell networks
    Device manufacturers
    Mass merchandisers
    How security system is structured will
    Swipe Fees

    $12.0
    $11.1 $11.2

    $9.0
    $9.0 $8.4
    Billions in Fees

    $7.6 $7.4
    $6.6
    $6.0 $5.4

    $3.8
    $3.2
    $3.0

    $0
    2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
    Swipe Fees

    $12.00
    Durbin Amendment saved $320 million $11.10 $11.20

    $9.00 $9.00
    $8.40
    $7.60 $7.40 $7.2
    Billions

    $7.0
    $6.60 $6.6
    $6.00 $5.9
    $5.40 $5.2
    $5.0 $4.8 $4.8
    $4.0 $3.80
    $3.5
    $3.00 $3.20

    $0
    2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
    Fees Pre-Tax Profit
    Swipe Fees

    Legislative Status:
    Senate effort to repeal Durbin failed last
    Congress: Vote 54 45
    No current congressional efforts
    Legal Status:
    Settlement of $7.2 billion
    NACS opposing and opting out of
    Settlement
    Court to decide sometime this year
    Speakers Corner:
    The U.S. Congress
    Questions?

    John Eichberger
    NACS
    [email protected]

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