Tobacco Sales Remain Important to C-Stores
By Angela Altass
In a world where fewer people are smoking cigarettes, price remains a deciding factor for consumers who are tempted by contraband products and alternate options, such as vaping and oral nicotine pouches.
“Cigarette and other tobacco products (OTP) have been on a steady decline for the last five-plus years,” says Scott Sibbet, vice president, retail operations, Gas King Oil Co. Ltd. “The contributing factors are primarily contraband products, fewer people smoking, and the switch to vaping products. The number one question we hear from consumers is what is the lowest priced package of cigarettes that you have? There is a good variety of value-priced products available in our stores and our customer service associates are trained to let consumers know what brands those are.”
Although fewer people are smoking, tobacco sales remain a very important revenue stream for convenience stores, says Sibbet.
“Tobacco sales account for approximately 35 per cent of in-store sales,” he states. “However, tobacco sales will likely continue to decline until accessibility to contraband tobacco products is removed from the market or, at the very least, significantly controlled.”
All Gas King employees are trained to ID consumers that appear to be under 25 years old and are attempting to purchase an age restricted product, says Sibbet.
“The consumer must provide government-issued photo identification, or the sale will be declined,” says Sibbet. “In addition to asking and verifying ID, the POS system will flag any age restricted product and ask the employee to confirm that the consumer is of legal age.”
Tobacco sales are critical to the financial health of Canadian convenience stores, although their value is often miscalculated, says Steven Bouchard, national sales and marketing director, Century Tobacco Company (CTC).
“The direct profit margin for tobacco sales is low, a function of heavy taxation, but they are the preeminent traffic driver in the c-store model,” says Bouchard. “The true financial value lies not in the few dollars of profit on the pack, but in the guaranteed frequent customer visits. These visits are essential for facilitating high-margin add-on sales, such as coffee, foodservice, and snacks, which power the store’s overall profitability.”
The narrative around tobacco remains complex, says Bouchard.
“While the long-term trend of smoking prevalence continues to decline, estimated at around 11 per cent for adults aged 18+ as of 2024, the rate of decline has noticeably slowed down, with daily smoking hovering near eight per cent,” says Bouchard. “For retailers, this translates into a highly competitive market, making the fight for market share more intense than ever before.”
To maximize profit from the tobacco category, the objective must shift from profit per pack to total basket value, says Bouchard, who offers the following advice:
Leverage traffic: “Treat the tobacco purchase as the foundation for selling high-margin impulse items.”
Optimize the cigarette super-value segment: “Recognize that value drives volume. Retailers must be agile in stocking products that meet today’s price-sensitive consumer demands.”
The future of tobacco sales will be defined by value and flexibility, says Bouchard.
“As brand loyalty dissolves, the competition to lead the super-value category is paramount,” says Bouchard. “We anticipate a necessary and overdue re-evaluation of current commercial relationships. Historically, retailers were bound by restrictive floor pricing clauses in legacy contracts, limiting their ability to competitively price match. This is changing. Retailers are demanding pricing flexibility and a commitment from manufacturers to ensure a fair and sustainable gross margin, moving away from rigid agreements to true, collaborative partnerships.”
Imperial envisions a future where cigarette sales are a thing of the past, says Michael Bonelli, senior vice-president, sales and marketing, Imperial tobacco Canada.
“We remain unwavering in our commitment to transform our business in line with public health objectives,” states Bonelli. “In collaboration with responsible retailers, we believe we can play a meaningful role in helping build a smokeless Canada by 2035. As part of that transformation, we have diversified our portfolio to including smoking cessation aids, such as nicotine pouches for adult smokers who are looking to quit.”
In 2023, ZONNIC became the first nicotine pouch authorized by Health Canada as a smoking cessation aid, says Bonelli, adding “it is designed specifically for adult smokers and is subject to strict manufacturing, labelling and sales controls. Unfortunately, under the current regulatory framework, ZONNIC is restricted to behind pharmacy counters, which has unintentionally limited access for adult smokers while leaving the door wide open for illegal products sold through unregulated channels.”
Imperial Tobacco Company works closely with retail partners, including convenience stores, to support the responsible, legal sale of age-restricted products to adults, says Bonelli.
“We provide age-verification training nationwide, ensuring retailers are confident and equipped to enforce age restrictions effectively,” says Bonelli. “Convenience retailers are trusted community businesses that follow the law, verify age, and play a critical role in ensuring regulated products are sold responsibly. We value that partnership and the role retailers play in protecting youth. The real and growing concern is the illicit market. Today, approximately 30 per cent of tobacco products and nearly 70 per cent of nicotine pouches in Canada are illegal, unregulated and sold outside the legal retail system.”
The illicit products are the primary reason tobacco and nicotine products continue to be accessed by young people, says Bonelli.
“Unlike licensed convenience stores and pharmacies, the illegal market has no age verification, no product standards, and no accountability,” states Bonelli.
Protecting youth and helping adult smokers quit are not competing goals, says Bonelli. “We believe modernized, evidence-based regulation can do both by expanding access to authorized cessation products for adults where cigarettes are already sold, including convenience stores, while strengthening enforcement against the illicit market that undermines public health and fuels youth access.”
The current tobacco landscape in Canada is being heavily shaped by contraband and unregulated sales, states J.F. Turcotte, president, Nuvona.
“Illicit products are more accessible than ever through online platforms, social media, and informal delivery networks, diverting volume away from legitimate convenience stores,” says Turcotte. “This creates a difficult environment for retailers who follow the rules. It’s nearly impossible to compete against products that avoid taxes, flavour restrictions, and age verification. It’s one of the biggest pressures on the legal tobacco market today.”
A decade ago, cigarettes were the engine of tobacco sales in convenience stores, driving most of the volume and daily traffic, notes Turcotte.
“Today, cigarette sales have steadily declined due to higher taxes, increased regulation, and changing consumer habits,” says Turcotte. “Even so, tobacco remains a foundational category for Canadian c-stores and, in many markets, still drives loyalty. What’s changed is where the growth is coming from. We’re seeing a shift toward innovative oral pouches, which is an emerging segment that we believe will continue to grow as consumer awareness expands.”
Convenience retailers should stay closely attuned to where adult tobacco consumer demand is moving, says Turcotte.
“Modern oral products are an important area of growth and deserve dedicated space as awareness continues to build,” says Turcotte. “At the same time, strong compliance practices are essential. Consistent age verification and carrying only fully compliant products in compliant packaging help protect both the retailer and the integrity of the category. Invest in staff training. This ensures adult tobacco consumers have a positive in-store experience.”
While traditional tobacco volumes will likely continue to decline, new formats will play a growing role in the category, says Turcotte.
“I think the future of tobacco in Canada will be shaped by continued innovation and a gradual shift toward smoke-free alternatives,” he states. “The long-term health of the legal market will depend heavily on strong illicit market enforcement and fair regulation. If the right frameworks are put in place, there is a path for the category to continue to evolve in a responsible and sustainable way.”
