Cigarette sales in the US are facing a significant decline due to rising vape use and health concerns, affecting the operations of convenience store giants.
In return—stores like 7-Eleven, owned by Seven & i, are receiving acquisition offers from Couche-Tard, which also owns Circle K. This would help the convenience store dominate US cigarette sales and negotiate better prices for tobacco,
As shared by Reuters, while Seven & i already turned down Couche-Tard's offer, the merger will increase store counts in the US to over 20,000. However, this is likely a challenge for both companies as Marlboro's rate in the country has risen to almost 30% since 2019.
Convenience Stores Respond to Rising Vape Sales
The Reuters report shared that besides 7-Eleven, Circle K is one of the largest US convenience store chains, with both being critical players in tobacco sales.
In 2023, 21.5% of convenience store sales are from cigarettes, while vapes only make up around 8%. Experts believe that combining the two will help lead to better tobacco manufacturer deals and decreased price rates against the rising sale of vapes and other nicotine pouches.
Smokers switching to vapes led tobacco companies and retailers to compete in the shrinking market. They agreed to provide 7-Eleven and Circle K financial incentives to prioritize shelf space and keep cigarette prices affordable. In 2022, tobacco suppliers paid them $247.2 million over promotions and $5.74 due to discounts.
To counter declining tobacco sales, Couche-Tard has been providing adjusted prices and loyalty programs while also focusing on other popular products that are considered alternatives to cigarettes. Interestingly—smoking has gone down over the years, with vaping dominating the industry.
A merged 7-Eleven and Circle K will boost profits by heavily advertising their newly-focused products. The remaining challenge, however, is the rise of online retailers and black markets selling vapes.
Join the Conversation