CAMARILLO, Calif. -- The U.S. average retail price of regular grade gasoline is up 4.04 cents per gallon (CPG) in the past two weeks to $2.2523. The increases have totaled 8.86 cents since the recent bottom seven weeks ago, according to the most recent Lundberg Survey of approximately 2,500 U.S. gas stations.

The new price puts the discount to one year ago at a dime, narrower now due to prices crashing last year while rising this year, but still enough to give motorists an average savings of $1 per 10-gallon fillup vs. a year ago.

Retail margin regained 3.5 cents, but it still sits below 18 CPG on regular grade, a far cry from the 23 to 27 CPG it often reached earlier this year. Recovery from five weeks ago, when it was a skinny 10.34 cents, amounts to 7.55 CPG. On average, retailers are within comfortable but not celebratory margin territory.

Refiners regained more gasoline margin as well, but levels remain inferior to those enjoyed last spring. For now, both downstream sectors appear to have steadied themselves in safer waters. Meanwhile, gasoline demand growth is good, while fall maintenance projects at refineries are near completion, which is boding well for supply.

Within the latest 4-cent pump-price boost, the Colonial Pipeline break played a role along with other price inputs. The average retail price was already rising pre-break. The resolution of that problem has been accomplished well in advance of the end of the Environmental Protection Agency’s (EPA) specs waivers, which endure through early October. Also, Sept. 15 brought the retail market’s end to summer-grade Reid vapor pressure (RVP) specs generally, so that the Southeast’s Colonial-driven EPA waivers dovetail with the national easing of vapor-pressure specs. Lower gasoline cost to refiners is now flowing through the system and represents a down influence for gasoline prices.

At the same time, oil prices have slipped modestly in the past two weeks. They continue to gently bump and up and down on their mooring of about $40 to $50 per barrel, as they have for many months. Because the market seems to doubt that OPEC's discussions this week in Algeria will bring a production freeze or cut, and because crude is the biggest slice of the gasoline price pie, oil can arguably be removed from a list of probable causes of a continued U.S. retail price increase.

Over coming weeks, absent an oil price surge and considering a likely flush supply of lower-RVP, lower-cost gasoline taking over the market, the average price may soon cease rising if it has not already.

Camarillo, Calif.-based Lundberg Survey Inc. is an independent market research company specializing in U.S. petroleum marketing and related industries. Click here for previous Lundberg Survey reports in CSP Daily News.

Brought to you by Ovention.

The convenience-store industry’s curiosity surrounding what millennials want and how they want it continues to surge. And as answers emerge, new questions arise for the subsequent generation.

The millennial and Gen Z generations are large, and their opinions are nuanced but strong. Gen Z’s habits and needs are taking shape as they age into their spending power. And though their needs are varied, both generations share a desire for customizable food that’s prepared when they order.

According to SmartBrief, “Millennials love customizing, and customize everything from apparel to music to news feeds.” Similarly, “Gen Z is do-it-yourself oriented. … They’re interested in opportunities to customize their food,” according to a recent report from CSP.

The secret to meeting the needs of these generations is to create opportunities for customization within your fresh-prepared foodservice program and use equipment that can keep up with generations who demand instant gratification.

1. Toppings: Build your foodservice program around foods that are inherently customizable. A customer craving pizza, sandwiches, paninis, quesadillas or flatbreads will expect to be in control of their own toppings before they walk in the door. According to the Technomic 2015 Flavor Consumer Trend Report, more than 50% of millennials prefer mashups and combinations of different flavors, so expect them to switch up their customization with every visit. Meet their expectations by offering an array of freshly made produce and protein toppings, as well as on-trend sauces such as Sriracha, chimichurri or chipotle mayo.

2. Bowls: Younger generations love bowls because they are customizable and showcase a protein without the carbs of a burrito. “As diners continue to look for personalized plates, the build-your-own-bowl trend offers an attractive alternative,” according to Packaged Facts. Bowls featuring made-to-order proteins and freshly roasted vegetables feed consumers’ desire for food that’s fresh, fast and tailored to their needs. 

3. Combos: Creating the opportunity for customers to mix and match allows them to customize their healthy-to-indulgent ratio. Gen Z “[likes] indulgent foods such as frozen carbonated beverages, doughnuts and pizza, but they also want healthy options such as cereal, fruit and yogurt,” according to CSP. Made-to-order dishes such as nachos give customers the option to control the ratio of healthy and indulgent. They can also opt in for ingredients such as habanero or ghost peppers, both gaining popularity as “spicy” grew on convenience-store menus by 14% last year, according to Technomic’s MenuMonitor.

4. Speed: Young generations know what they want and they want it now; speed is an attractive quality to this generation, which seeks instant gratification. But how is it possible to deliver on speed when 57% of Gen Zers, according to CSP, are more inclined to buy from a convenience store if their food is high quality? The key is to invest in cooking equipment, such as a ventless, hoodless Ovention Matchbox Oven, that promises both speed and fresh-made quality. 

A foodservice program that meets the customizability needs of its guests isn’t possible without equipment that can cook high-quality food quickly. Brian Donoghue, director of foodservice for Wiegel Stores Inc., does just this using an Ovention Matchbox 1718 Oven. He said that using this oven “is a fresher way of preparing food, and it’s a couple-minute transaction.” The stores’ open kitchen adds to the customer’s involved food customization experience because they can “see the oven. … It’s got a cool, hip, ‘wow-factor’ to it,” Donoghue said.

Ovention’s Precision Impingement technology can shave cook times from 15 minutes to just two and a half for a freshly baked pizza with customized, customer-selected toppings. This award-winning technology is primed to satisfy hungry millennials and Gen Z consumers with fresh food made fast. 

ATLANTA -- Jerome Sedelmeyer, regional sales manager for The Pinnacle Corp., Arlington, Texas, has been selected to share a personal message at this year’s Annual Interfaith Prayer Meeting on Oct. 19 at the 2016 NACS Show in Atlanta.

Open to convenience-store industry professionals of all faiths, the event takes place rom 7 to 8 a.m. in room A41 of the Georgia World Congress Center. Food and refreshments will be served.

Sedelmeyer has also worked for CMi Solutions, Charlotte, N.C., Dresser Wayne/Tokheim, Austin, Texas, and other technology companies.

For more information, contact Tom Severson of Severson Oil at (507) 452-3402, ext. 214, or at toms@seversonoil.com.

The 2016 NACS Show runs from Oct. 18 through Oct. 21.

NEW YORK -- As convenience stores and supermarkets hustle to secure the visitation and loyalty of the coveted millennial consumer, new findings are emerging that show how shifts in the way this base uses foodservice is changing the game for retailers.

In a company release, the Private Label Manufacturers Association (PLMA) unveiled key takeaways from a nationwide survey of more than 1,800 millennial shoppers in the United States. In its report, “How America’s Eating Habits are Changing,” PLMA found that millennials largely eat during unscheduled occasions and factor food consumption into a wide range of daily activities.

This has led to a rise in snacking and sourcing smaller meals and bites from convenience stores and supermarkets. In addition to prepared foods and portable options becoming the priority, PLMA reports that millennials want these items to be “fresh and healthy,” as well as “done their way.”

There are a number of retail options available to millennials in search of food with these attributes, but PLMA’s research shows that, for this group, the primary destination is the supermarket. Nine of 10 millennials surveyed said they food shop in only one or two stores. And when they do, they specifically head to the dairy, deli and bakery departments. Three out of four shoppers buy deli items when they do their regular grocery shopping, 77% buy dairy items and 59% purchase goods from the bakery.

Asked about their foodservice purchases at both convenience stores and supermarkets, one-third told PLMA that they “always or frequently” purchase heat-and-eat foods; 29% say the same from prepared/ready-to-eat foods; and 27% select grab-and-go fare.

But what types of retail foods are they gravitating toward? While “fresh” is a ubiquitous descriptor that can mean different things to different people, it appears to still hold some sway for this demographic group. For meals or snacks, 57% say that they “always or frequently” opt for fresh fruits, 35% select fresh-baked bread or bakery products, 30% choose freshly prepared meals and 30% go for fresh, chilled salads in the deli.

Reflecting on these findings, PLMA pointed to an increased need for retailers to adapt to the preferences of millennials. This could range from offering more opportunities for them to sample foods in-store, or grabbing their interest via cooking demonstrations that show food being freshly prepared or by expanding selections of portable offerings.

And because millennials are now tightening their preferences and limiting their visits to only one or two stores when they shop, there is a wider avenue for retailers to promote their own store brands over national brands. According to the study, millennials report that their awareness of store brands and national brands are essentially the same, at 84% vs. 86%, respectively.

For retailers, addressing this finding is key, said Brian Sharoff, president of PLMA. “Store brands remain the retailer’s most potent weapon in developing strategies for this age group,” he said. “It offers flexibility and opportunities to be creative with product assortment and concept without waiting for national brands. But it requires an understanding of what this age group likes and will buy.”

DULUTH, Ga. -- Mark D. Benjamin is joining NCR Corp. as president and COO, the company has announced.

Benjamin will report to chairman and CEO Bill Nuti, and he will be responsible for sales, industry solutions management, product development, services and supply-chain operations.

He joins NCR from Automatic Data Processing Inc. (ADP), where he spent 24 years in a series of global assignments. He joined ADP as an account representative and moved up in several leadership positions, including ADP’s small business and employer services divisions. Most recently, Benjamin served as the president of ADP’s Global Enterprise Solutions division, leading a team of 20,000 employees and managing a multibillion-dollar portfolio of businesses serving clients in more than 100 countries.

“Mark brings relevant experience and a great track record of leadership and performance to NCR,” said Nuti. “Mark’s knowledge of cloud-based services, building strong recurring revenue models, the global environment and our go-to-market industries will be invaluable to this next phase of our growth. I’m proud to have a person of his integrity and background joining my team. This is the right time to add this critical role at NCR. The company is performing well, we have established momentum in key markets and solutions, and a continued focus on execution is our top priority.”

Duluth, Ga.-based NCR is a major provider of omnichannel solutions. With its software, hardware and portfolio of services, NCR enables more than 600 million transactions daily across retail, financial, travel, hospitality, telecom and technology and small business. It does business in 80 countries.

CHICAGO -- PepsiCo’s Tropicana is joining the probiotic beverage crowd, essentially launching one of the most accessible entries in the beverage category yet in the United States.

The juice maker this week announced the coming launch of Tropicana Essentials Probiotics.

Tropicana Probiotics is made with 100% juice and 1 billion live and active cultures per serving. It will be available in three flavors: Strawberry Banana, Pineapple Mango and Peach Passion Fruit.

Combining 100% juice with the functional benefit of probiotics, each 8-ounce serving contains more than the recommended daily value of vitamin C and has no added sugar, preservatives or artificial flavors.

“We are thrilled to be the first to bring probiotics more commonly seen in yogurts, supplements and kombuchas to the mainstream juice aisle,” said Bjorn Bernemann, vice president and general manager for Tropicana North America, Chicago. “As a heritage brand rooted in innovation, Tropicana is dedicated to launching significant innovation within the rapidly evolving health and wellness space.”

Tropicana Probiotics will be available in multiserve (32 ounces) and single-serve (10 ounces) sizes next to other refrigerated juices nationwide in early 2017, with limited early distribution in select retailers in October of this year.

ARLINGTON, Texas -- The Pinnacle Corp., a supplier of technology automation solutions for retail convenience stores and fuel inventory management, has launched a consumer-facing mobile application for c-store retailers.

The company has designed the consumer mobile app as a vehicle for retailers to engage customers and influence their buying habits. The app addresses several key areas important in a consumers’ decision to visit a store:

• Location. Identify where stores are located.
• Amenities. Determine what services each location provides.
• Gas prices. Specific store pricing.
• Promotions. Digital offers to lure buyers into the store.

“Pinnacle’s mobile app increases consumer loyalty, builds a competitive advantage for c-store retailers and drives profits while significantly reducing the cost and time barriers that have plagued deployment of mobile applications in the past,” said Melissa Fox Hadley, director of product management for Pinnacle.

“Through partnership and collaboration with clients, Pinnacle created a mobile platform with the flexibility, ease and control that retailers demand,” she said. “The app is built in a way that enables us to continually expand the feature set and add incremental value for all clients--without having to retrofit each individual client’s app--so they can start taking advantage of new features immediately.”

Built on the same Pinnacle mobile platform as SkimDefend, Pinnacle’s anti-skimming application, Pinnacle developed its mobile solution to design and deploy a branded and customized app for a c-store retailer quickly and at minimal cost.

Arlington, Texas-based Pinnacle provides automation technology to the convenience-store and petroleum industries. It delivers products that automate the spectrum of c-store operations and supply-chain management of fuel operations. Thousands of convenience and fuel marketers use the company’s products and services to automate their store operations and to increase efficiency in the management of fuel delivery.

Brought to you by Van’s Kitchen.

From Japanese to Chinese and Korean to Thai, Asian foods and flavors—specific to their country and region—continue to trend among U.S. menus. With more consumers clamoring for ethnic-inspired dishes (two-thirds to be exact, according to Technomic), convenience stores have the same ample opportunity as fast casuals and other restaurants to bump up their foodservice offerings, excite young and new customers and, as a result, bring in more profits.

Specifically, Southeast Asian flavors continue to trend, according to the National Restaurant Association’s (NRA) 2016 What’s Hot chef survey. And, according to research firm Datassential, interest in Asian cuisine beyond the better-known Japanese and Chinese flavors continues to grow, with more menu incidents around Vietnamese and Korean dishes and flavors. Korean kimchi and bulgogi and Vietnamese banh mi sandwiches and pho are all experiencing growth, the research firm reported.

Asian Foods Going Fusion

When it comes to other trending Asian foods, restaurants and other operators are focusing on specific regional favorites, as well as fusing Asian flavors and ingredients with more mainstream American and Mexican favorites, such as tacos.

First popularized by street-food vendors such as Kogi BBQ, Asian fusion tacos (think spicy pork with kimchi in a taco) continue to pop up at food trucks and fast casuals nationwide.

According to NRA’s What’s Hot survey, ethnic-inspired breakfast items, such as those incorporating Asian-flavored Syrups and condiments continue to trend as a whole, up 68% in trending marks since last year.

Trending points of Asian noodles, such as soba, udon and ramen, decreased by 6% (to 45%), but NRA said this could be due to these dishes becoming more of a mainstream, perennial favorite, chiefly among fast casuals and other quick-serve outlets.

As of late, dumplings—Asian and beyond—are winning the popularity contest, according to Technomic, as restaurants and chefs attempt to elevate what was once considered ethnic “peasant fare.” Chinese-style bao (buns) stuffed with pork, chicken and other proteins and garnished with spicy Sriracha and other Asian condiments and sauces have also exploded in popularity as the new Asian “taco” or mini sandwich of sorts, offering c-stores an opportunity to satisfy consumers’ growing cravings for ethnic foods but also portability.

And egg rolls, forever an Asian favorite food, continue to remain popular. In fact, 63% of consumers say egg rolls are their No. 1 favorite snack, according to Technomic, and with three out of four consumers purchasing Asian-style fare at convenience stores at least once a month, it makes sense for c-stores to offer these tasty, portable treats. Egg rolls also make room for new, Asian-style dipping sauces as value-added flavors. The fastest growing flavors, according to Technomic’s 2016 MenuMonitor study, are lobster-ginger (+43%), sriracha (+35%), soy-sesame (+22%) dragon (+17%) and miso (+5%).

Trending Asian Ingredients

Ample opportunities exist for c-stores to bump up their menus or topping bars with more Asian-inspired flavors and add-ins.

Togarashi, the Japanese chili pepper, has exploded in popularity, up more than 200% in menu mentions over the past four years, according to Datassential. It’s a flavor that continues to grow each year as operators beyond Asian cuisines use it to add flavor to any number of dishes, but especially vegetable appetizers and sides.

Japanese matcha, a finely ground powder of specialty green tea, has also grown in menu mentions in the past year (57%), according to Datassential. The highly concentrated and nutritious tea powder is often used for beverages, but also in desserts and, to a lesser degree, breakfast items such as granola and oatmeal.

Asian Condiments Going Mainstream

Sriracha continues to grow with a 37% increase in menu mentions nationwide, according to Datassential. The condiment also has been incorporated into mayo (with an increase of 30% in menu incidents in the past year) and aioli (up 49% in the past year) to introduce the flavor to an even broader audience.

According to Technomic, this condiment has even gone mainstream as a spicier replacement for ketchup on burgers or as a garnish to give those ever-popular Asian-fusion tacos a little kick.

This “Sriracha effect,” as the research firm calls it, has led to chefs and food developers scouting the world for other assertive flavorings and condiments to bring new life to more American dishes, as well as mainstream Asian favorites such as pot stickers and egg rolls.

Technomic and other trends experts point to gochujang, the Asian chili sauce made from fermented soybeans, dried chilies and garlic, as the next Sriracha, and suitable as a topper for burgers and dipping sauces for other Asian and non-Asian appetizers and snacks.

Thai sweet chili sauce, often called out on menus as sweet chili sauce, also continues to climb as operators look to add a touch of uniqueness but not so much spice that it alienates consumers, according to Technomic.

And Southeast Asian sambal, a hot sauce made with chili peppers and often shrimp paste, fish sauce, garlic, ginger, shallot and other aromatics, is growing in popularity among chefs in the United States and others experimenting with ethnic flavors.

While some of these items are more accessible than others, they all share one common trait: Consumers love them. Fast casuals and other restaurants have already capitalized on this; now, c-stores have the opportunity.

ALTOONA, Pa. -- As the popularity of cold-brew coffee grows, Sheetz is launching a cold-brew offering to be available at all of its stores beginning on National Coffee Day (Thursday, Sept. 29).

“Cold brew is, without a doubt, the best way to make cold coffee, because the flavors have a chance to infuse rather than burn,” said Matt Gray, coffee concepts manager for Altoona, Pa.-based Sheetz.

Sheetz’s cold brew starts with fresh coffee ground in-house and later infused in cold water for 10 hours to ensure the balanced blend of sweet and bitter. The process results in a naturally smooth and sweet flavor with less acidity. 

“Sheetz's method takes no shortcuts, nor attempts to cheapen the product in any way, and the result is a delicious flavor profile accessible to all coffee drinkers and rivaling any cold-brew experience out there,” Gray said.

Retail sales of cold brew grew 115% from 2014 to 2015, reaching $7.9 million in sales, according to Chicago-based Mintel. The research firm also found that 24% of consumers currently drink retail-purchased cold-brew coffee, and millennials (55%) and men (30%) stand out as groups most likely drinking this type. 

"With millennials drinking more specialty coffee than any other generation out there, we hope to fill more of their cups and also introduce other coffee drinkers to cold brew,” said Ryan Sheetz, director of brand strategy for Sheetz.

Sheetz’s made-to-order approach (MTO) will extend to its cold brew, with every cup tailored and hand-poured directly for the customer.

In celebration of National Coffee Day on Sept. 29, Sheetz will offer one free small cold brew while supplies last to customers who show their My Sheetz Card, a loyalty card that offers in-store specials, exclusive perks and 3 cents off every gallon of gasoline. 

Established in 1952 in Altoona, Pa., Sheetz is one of America's fastest-growing family-owned and operated convenience-store chains, with more than $6.9 billion in revenue and more than 16,000 employees. The company operates more than 500 store locations throughout Pennsylvania, West Virginia, Virginia, Maryland, Ohio and North Carolina.

LEUVEN, Belgium, & LONDON -- Anheuser-Busch InBev's merger of SABMiller took a significant step forward this week with overwhelming backing from both companies' shareholders.

London-based SABMiller approved the deal with 95.5% of its shareholders voting in favor. AB InBev shareholders also approved all resolutions related to the $104 billion transaction. With these results, AB InBev has all the approvals it needs to complete the acquisition. The deal is expected to close Oct. 10, more than a year after AB InBev first submitted a bid to purchase SABMiller in September 2015.

"We are pleased that our shareholders’ vote brings us one step closer to combining our companies, teams, strong heritage and passion for brewing," AB InBev CEO Carlos Brito said. "We are committed to driving long-term growth and creating value for all our stakeholders."

Belgium-based AB InBev also announced that the combined group will retain the name Anheuser-Busch InBev SA/NV following completion of the acquisition.

ALLENTOWN, Pa. -- CrossAmerica Partners LP has closed on its $45 million acquisition of State Oil Co. and certain related retail assets and wholesale fuels distribution business.

Libertyville, Ill.-based State Oil’s portfolio consisted of three company-operated retail convenience stores, 50 lessee dealers, 24 supply accounts, two nonfuel tenant locations and three nonoperating sites. The transaction included the real estate at 57 locations and the leasehold interest at one site.

The seller-financed land contracts associated with five of the company’s supply accounts were also included in the transaction.

With the exception of one site located in Wisconsin, all of the stores are located in the greater Chicago metropolitan area.

In separate but related transactions, State Oil sold or is under contract to sell four locations owned in fee simple to three other unrelated buyers.

After buying State Oil in 1973, Peter and Bill Anest grew the company over more than 40 years into one of the largest petroleum distributors in the greater Chicago area.

In the past five years, State Oil worked with Richmond, Va.-based merger-and-acquisition advisory service Matrix Capital Markets Group Inc. as its owners have evaluated their strategic business plans, which ultimately culminated in the decision to sell the company.

Allentown, Pa.-based CrossAmerica Partners is a leading wholesale distributor of motor fuels and owner and lessee of real estate used in the retail distribution of motor fuels. Its general partner, CrossAmerica GP LLC, is a wholly owned subsidiary of CST Brands Inc., San Antonio. Formed in 2012, CrossAmerica Partners LP is a distributor of branded and unbranded petroleum for motor vehicles in the United States and distributes fuel to more than 1,250 locations and owns or leases more than 800 sites. Its geographic footprint covers 29 states.

Recently, Laval, Quebec-based Alimentation Couche-Tard announced that it is acquiring U.S.-based c-store retailer CST Brands Inc. for $4.43 billion including the value of CST’s equity participation in CrossAmerica Partners LP.

DALLAS -- Providing it with an entry into new markets as well as adding to its existing footprint in Oklahoma, Empire Petroleum Partner LLC has acquired the Missouri, Oklahoma and a portion of the Kansas wholesale distribution rights of Sunshine Fuel LLC, a distributor that supplies branded fuel to gas stations primarily in the Kansas City market, as well as other Missouri and Oklahoma locations.

As reported in a McLane/CSP Daily News Flash, Empire Petroleum purchased a portfolio of leasehold interests in 21 convenience stores with gasoline, along with sublease/fuel-supply interests in the stores.

It also purchased two fuel supply agreements providing gasoline to two fuel-supply-only stores.

The properties were leased from third-party landlords under long-term agreements, and Palm Beach, Fla.-based Sunshine Fuel subleased the sites to individual dealers.

The deal also increases Empire Petroleum's existing supplier partnerships with Shell and Phillips 66.

"Empire is excited to add such a high-volume dealer base to its existing distributor network with the acquisition of Sunshine,” said Michael O'Brien, Empire Petroleum's vice president of mergers and acquisitions. “We are pleased to add both the quality of dealers associated with Sunshine to our network in addition to opening up new markets such as Kansas City. This portfolio of dealers continues Empire's strategy of strengthening our presence in key markets, such as Oklahoma, as well opening up new market opportunities in Kansas and Missouri. Sunshine's dealer operation was a great opportunity to expand our footprint.”

Empire Petroleum is a motor fuels distributor of brands including Shell, Chevron, Texaco, Valero, Sunoco, BP, ExxonMobil, CITGO, Marathon, Gulf and Phillips 66. Based in Dallas, it distributes motor fuel to more than 1,300 gas stations in 27 states.

Chicago-based NRC Realty & Capital Advisors LLC, coordinated the sale.

“These stores are selling 18 million gallons annually,” said Evan Gladstone, NRC’s executive managing director. “This should be a good fit for Empire as it expands its network into the central U.S.”

In a separate deal, NRC said that Thomaston Land Co., Washington, Pa., has sold four convenience stores with gasoline and one Papa John’s quick-service restaurant (QSR) in Maryland and Pennsylvania to a multisite operator based in Pennsylvania.

Lot sizes range from 16,400 square feet to 1.25 acres, while store sizes range from approximately 1,280 square feet to 1,580 square feet.

NRC did not disclose the name of the buyer.

Brought to you by Inter-Continental Trading Co.

In recent years, buzzwords such as “clean,” “local” and “craft” have risen to prominence in a number of convenience-store categories. Consumers have repeatedly demonstrated that they’re willing to spend money on more premium and natural products, as shown by booming craft-beer sales and an increased interest in locally sourced food.

Tobacco is no exception. Nielsen data shows superpremium cigarettes have enjoyed double-digit growth in units and dollar sales over the past year.

According to Tom Burns, a sales and marketing executive for Inter-Continental Trading Co., Mount Prospect, Ill., the phenomenon is not limited to cigarettes. It’s occurring in OTP as well.

“It would seem that tobacco and healthy are polar opposites,” he said. “(But) tobacco is absolutely one of those categories where customers see ‘premium,’ see ‘all-natural,’ and that grabs their attention.”

Though the trend is admittedly being driven by younger millennials, these natural OTP offerings are grabbing the attention of consumers across the board. Ben Reinhart, vice president of merchandising for Seymour, Ind.-based Kocolene Development Corp., says his smoke-shop customers aren’t the stereotypical demographic for superpremium OTP. However, he says, “Even though the demand is minimal, it is growing.”

Lower prices at the pump and an improving job market likely are contributing to that demand.

“There’s a little extra money in people’s pockets because of that,” Burns said. “Trends show that, when gas prices come down, consumers will go for more premium products.”

To address this trend, there’s a number of “craft” manufacturers popping up throughout tobacco, as well as established companies producing more natural premium product lines. Inter-Continental, for example, is offering a preservative and additive-free line of premium pipe tobacco and filtered cigars, OHM Au Naturalle.

“That’s the key: taking a product and making it with better ingredients, better manufacturing processes,” Burns said of the company’s OHM Au Naturalle line. “People gravitate toward that cleaner label.”

The Case at Retail

As to the retail benefits of investing in superpremium OTP products, Reinhart said it’s simple: “They provide higher rings and higher margins.”

While varying state and local excise taxes make it difficult to pin an exact figure on the margins superpremium pipe tobacco and cigars offer retailers, Burns said the retail price on such products tends to be several dollars higher than nonpremium options.

“It is significant,” he said. “With a premium line, consumers expect to pay more, which means you can build in a higher margin.”

The segment, however, is not without its challenges. As with any segment not called “cigarettes,” those challenges boil down to space and education.

“There’s a challenge in finding space because you’re committing to a premium filtered cigar that doesn’t have the market size that cigarettes have,” Burns said of the spatial limitations.

Manufacturers can help justify the space by offering coupons and promotions to help attract new customers to the segment, Reinhart said.

“This lets the consumer try the product before making the decision to pay more for it,” he said.

In terms of education, the challenge with premium natural pipe tobacco and cigars in convenience is that these products, as Burns put it, require “a bit of salesmanship” with consumers.

“If a customer is going to pay more for a premium product, he or she wants to understand the benefits that make that product worth it,” Reinhart said.

As such, Burns said “probably the biggest thing” Inter-Continental can offer is ongoing education for both consumers and retailers, “from the person behind the counter all the way up through management.”

For all its challenges, perhaps the biggest case for superpremium OTP is that demand will almost certainly continue to grow—especially as the economy continues to recover and health-conscious millennials become higher earners.

“This has been trending for years,” Burns said. “[Consumers] certainly aim for healthy and good for you. If you can have products that are more natural, more premium, that’s an easy path.”

MASTIC, N.Y. -- Montauk Native Gas, Mastic, N.Y., is reimaging and will be the first gas station on Long Island to brand with VP Racing Fuels, as well as the first to distribute VP’s race fuel blends on the island.

The station also co-sponsors an NHRA Funny Car and a Top Alcohol Funny Car team, both of which will provide marketing support for the station and the VP Racing Fuels brand.

“I founded Montauk Native Gas three years ago to help support our racing programs, which in turn provide exposure for my station,” said owner and operator Andre Hardy. “I couldn’t pass up the opportunity to brand with VP and leverage the strength of the VP brand to build my retail business, provide more robust support for our racing and ultimately enable me to achieve my dream of driving an NHRA Top Fuel car.”

VP’s retail branding program is designed to enable gas stations and convenience stores to reduce their credit-card processing expenses and lower their cost of supply, as well as increase revenues with new profit centers built on VP-branded products.

“We look forward to making VP’s race fuels available to all the performance enthusiasts on Long Island who until now had a difficult time getting access to them. With our location on the water, we also anticipate supplying a great number of the marinas and boating enthusiasts in the area,” he said. “Our plans include adding a speed shop to our Montauk Native Gas site, providing customers with a source for engines, parts and accessories, along with race fuels for their racing needs. Over time we plan to brand additional stations on Long Island with VP as well.”

Alan Cerwick, president of San Antonio-based VP Racing Fuels, called the deal “a perfect marriage of business models.”

VP is the official racing fuel of the WeatherTech SportsCar Championship, AMA Supercross, World of Outlaws Sprint Cars and Late Models, Pirelli World Challenge, Formula Drift, NMRA, NMCA PDRA and Rally America, among more than 60 VP-sponsored series and sanctioning bodies.

Gas stations and convenience stores that join VP's retail branding program also distribute VP’s other product lines, including ethanol-free VP Small Engine Fuels, formulated for two-cycle and four-cycle outdoor power equipment; VP Madditive performance chemicals; VP PowerWash and more. It also markets VP PowerMaster hobby fuels for radio-controlled (R/C) racing.

WASHINGTON -- The U.S. House of Representatives has voted to delay adoption of pending overtime pay rules by six months, passing legislation that pushes back the start date to June 1, 2017.

The measure—which passed 246 to 177, nearly along party lines—has yet to be taken up by the full Senate, and President Barack Obama has already issued a statement promising to veto it.

Retailer, restaurant and other small-businesses groups hailed the passage of the Regulatory Relief for Small Businesses, Schools and Nonprofits Act (HR 6094) as a victory. The National Retail Federation (NRF) praised the House passage of the legislation. Prior to the vote, NRF told lawmakers in a letter that action on the legislation would be included in its annual voting scorecard.

“Lawmakers from both parties recognize that the administration’s radical changes to overtime rules are too much, too fast,” said David French,  NRF senior vice president for government relations. “With the Dec. 1 compliance deadline looming, the window for congressional action is quickly closing. Pushing pause on implementing these one-size-fits-all regulations would provide welcome breathing room for retailers large and small struggling to comply with the changes during the holidays, their busiest time of the year. We urge the Senate to help millions of employers and employees by stepping in to help fix or delay the overtime rules."

The new regulations will require employers to pay overtime to most workers who make up to $47,476 per year when they work more than 40 hours a week, more than double the current threshold of $23,660.

“We all agree we need to modernize our nation’s overtime rules, but small businesses … should not be hurt in the process,” said U.S. Rep. Tim Walberg (R-Mich.), who sponsored the bill. “The department needs to abandon this flawed rule and pursue the balanced approach we’ve been fighting for from the start. Instead, they are forcing those who have to deal with the real-world consequences to make significant changes before an arbitrary December deadline. While the department continues to ignore widespread concerns, the House has taken an important bipartisan step to provide hardworking Americans more time to implement this expansive rule. The administration should do the right thing and approve this much-needed delay.”

“While this bill seeks to delay implementation, the real goal is clear—delay and then deny overtime pay to workers,” the Executive Office of the President, Office of Management and Budget, said in a statement. “With a strong economy and labor market, now is a good time for employers to provide these essential protections for workers, who cannot afford to wait. If the president were presented with HR 6094, he would veto the bill."

The NRF and other retail groups recently filed a lawsuit on behalf of the millions of employers—including convenience stores and restaurants—and their employees who will be drastically affected if the changes to the federal overtime rules go into effect on Dec. 1. A coalition of 21 state attorneys general also has filed a lawsuit challenging the new overtime rule.

Brought to you by Curtis Coffee Equipment.

Beverage sales mean profits. But with so much fierce competition in the foodservice arena, not just any beverage will do. Offering the right mix of beverage choices, from hot- and cold-brewed coffee to slushies and frozen drinks, cappuccinos, milkshakes and more, plus opportunities for customization, are the keys to boosting bottom lines.

Sheetz, a leader among c-stores when it comes to foodservice, has for years played up the wide selection and customization options for its many beverages.

Many c-stores are “going after the millennials and young mothers these days, but it’s still important to cater to all types of customers when it comes to beverage,” said Matt Gray, coffee concepts manager for Sheetz. “One way in which we do that is through customization. With whatever we offer, we try to make each beverage personal for everyone, so our customers can get what they want and how they want it when they want it.”

Variety is also important for La Crosse, Wis.-based Kwik Trip Inc., which seeks to respond to growing consumer demands for new and exciting offerings.

“You want to accommodate the 80th percentile, of course. But to stay competitive and take more dollars away from the QSRs of the world, you also have to look across the entire spectrum beyond just basic soda fountains and brewed coffee,” said Jim Bressi, Kwik Trip’s director of research and development, who often works with beverage consultants for insights into trends, new equipment and products. “We’re finding someone might go and get a breakfast sandwich from the quick-serve across the street and then come in here for their coffee or beverage, and vice versa. It’s important to try to get them to come in for both.”

Fast and Frozen

In addition to its wide variety of iced and frozen coffee drinks and all-natural fruit smoothies and frozen creams, Sheetz has introduced a line of Greek yogurt smoothies. 

“The Greek yogurt smoothies in particular [have] helped define us as a different type of c-store that can offer a healthy version along with other, more indulgent products," said Gray.

Those indulgent flavors include Sheetz’s recently added Reese's f'real Peanut Butter Cup Milkshake, a PB&J smoothie and a Toasted Marshmallow Mocha—available in hot or frozen form—for s’mores fans. In late summer, to keep in line with a back-to-school theme, the chain introduced pumpkin and gingerbread milkshakes ahead of the fall season.

“We do as much as we can within our scope and footprint to offer something for everyone,” says Gray. “Our company culture is different in that we’re able to play with different flavors and have a lot of fun introducing new products.” This has helped the company stay on top of trends and cater to a wider consumer base, he said.

Customizable and Cold Coffee

With so much potential business in the coffee arena, expanding its variety makes sense, but it must be done right.

“Competition is too steep in coffee these days to offer an inferior product,” says Mike Lawshe, president and CEO of Paragon Solutions, a retail design and consulting firm. “The rewards are so high, it’s worth the effort to offer great coffee, but when trying to expand into different types of coffees and cold coffee, you have to make sure you’re doing that correctly. Otherwise, if you end up offering a less-than-superior product, you can turn even existing customers away."

Last year, Sheetz began offering a proprietary coffee line that includes a light breakfast blend, medium classic roast, a dark French roast from Central and South America and a Sumatra blend from Indonesia. Sheetz also strengthened the amount of coffee used for brew and grinds its beans fresh before use.

To add to the customization effect, it also rolled out nearly 20 creamer and flavor options, adding up to 1,000 ways to customize a cup of coffee.

The chain has also introduced authentic espresso beverages including cappuccinos and lattes, as well as frozen specialty coffee drinks, created on traditional Italian espresso machines and made to order by trained baristas. It also leveraged better equipment with enhanced touchscreen technology to expand its self-serve offerings for customers wanting to skip all the “coffeehouse jargon,” said Gray.

At Kwik Trip, expanding into cold coffee drinks has helped the c-store chain widen its variety and customer base. “We’re seeing more afternoon customers and of course younger, coffee-centric generations looking for something other than soda,” Bressi said.

It purchased new, programmable equipment and revamped its recipes to offer consistently stronger, fresher iced coffee beverages.

What’s more, Kwik Trip has recently begun the legwork for introducing cold-brew coffee, which might not require new and expensive equipment but does require some additional staff training.

“You have to consider long-lasting trends,” Bressi said when explaining why the chain is adding cold-brew coffee. Cold brew has been around for years, but with Starbucks and Dunkin’ Donuts now offering it, the beverage seems most certainly here to stay.

Monitoring Sales

Knowing what, when and how much to offer is all part of the variety game. Many c-stores study POS data, but there are other tricks to this trade.

At Kwik Trip, Bressi researches what sells and what doesn’t by monitoring movement through the warehouse, rather than trying to determine individual in-store purchases. “All sodas are priced the same, so you don’t know what your customers are filling in their cups,” he said.

Instead, by noting the most and least popular SKUs through warehouse documentation, he can determine which flavors to keep buying and which to drop. After a grace period with a new flavor, it’s easy to tell if it’s selling this way. It’s even possible to monitor sales for certain coffee beans, flavor shots and frozen creations.

Some more advanced self-service coffee machines can digitally monitor sales for certain types of drinks offered, such as cappuccinos or mochas.

Sheetz studies trends to determine new potential flavors and products to add to its beverage portfolio.

“Space is the name of the game—you really only have so much of it, so every ingredient has to earn its footprint,” said Gray. “We do as much work as we can ahead of time to make sure we’re going to launch something that should work, and after that it’s all about watching the numbers and seeing how well it tests.”

Brought to you by McCain Foodservice

Fuel prices are dropping and convenience stores are feeling the difference, as more customers come in for a bite after fueling up. And they’re often looking for hot food.

According to market research company Technomic, almost nine out of 10 c-store foodservice customers regularly purchase hot foods, and 69% do so at least once a month. What's more, 44% of them indicate they're buying hot food at c-stores more often now than a year ago.

C-stores are uniquely positioned to capture on-the-go dining occasions with hot foods, making them more of a destination around meal times.

“Convenience stores are directly competing with fast-food restaurants so they need adequate foodservice programs to capture those consumers,” said Teri Broyles, customer marketing manager for McCain Foods USA.

A study from Technomic this year shows that eight in 10 c-store operators report they’re investing in their foodservice programs. In fact, manufacturers such as McCain can help them with incentives and rebate programs to help offset the cost to purchase equipment.

“Our turnkey program includes everything from consumer packaging to merchandising, equipment incentives, training, customer support and culinary expertise,” Broyles said.

The manufacturer taps into its half a century of foodservice expertise to provide operators with insights into consumer demands and sales- and profit-driving tools.

McCain also offers products with long hold times for daylong hot foodservice, from hash browns and other hand-held items for breakfast to potato sides that can be bundled into combo meals or served as savory and sweet snacks.

Broyles also offered the following tips for a hot foodservice program:

• Make sure the products you’re offering have an adequate hold time—three to four hours is optimal—so foods don’t go stale or lose their taste or composition.
• Offer combo meals, which shows you’re a competitor to fast-food restaurants.
• Draw attention to your hot foodservice program and any specials (think combo meals) through window and pump signage. Also use signage inside at the point-of-sale and throughout the store, “so customers know you offer foodservice wherever their destination in the store,” Broyles said. “You’re upselling and enticing them at the same time.”
• C-store operators need to stay on top of the latest trends to ensure they are meeting consumers’ expectations. Millennials and Gen Z are the target consumers that are more likely to purchase prepared/hot foods from c-stores. Food offers must appeal to this generation.
• Dayparts are blurring due to demanding schedules, varying work shifts and time constraints. Consumers need all things available all the time (e.g., all-day breakfast offerings).
• Offer customization to compete with quick-service restaurants, because this is an expectation of millennials these days—to have it their way.

To get started with hot foodservice, you don’t have to make any big investments. “The easiest way for an independent operator to get started is via the breakfast daypart,” Broyles said. This is because, she said, 76% of consumers, according to Technomic, purchase coffee from a c-store at least once a month. “You already have loyalty, so you can just offer breakfast sandwiches that you pop in a microwave. That can be your starting point for hot foodservice.”

CHICAGO -- More than 500 convenience retailing executives, including C-suite operations (CEO, CFO and COO), managing partners, owners and presidents, will attend the 2016 Outlook Leadership Conference in the fall from Nov. 9-11 at the Fairmont Princess in Scottsdale, Ariz.

“Convenience at a Crossroads” is the theme for 2016 and is reflected in a carefully crafted agenda that will help retailers navigate today’s challenges and capitalize on opportunities.

This year, the event is covering topics that include natural/organic, technology, the presidential election, talent diversity, finances and TV success.

Prominent speakers include:

• Susan Adzick, vice president of sales and marketing, foodservice, McLane Co. Inc.
• Al Carey, CEO, North America, PepsiCo Inc.
• David Gregory, journalist and former moderator of NBC’s Meet the Press
• Hattie Hill, president and CEO, Women’s Foodservice Forum
• Steven Levitan, creator, writer and director of ABC’s Modern Family
• David Winter, director of business development, SPINS, Chicago

View all speakers and full bios at www.outlookleadership.com/speakers.

Other agenda highlights include an election viewing party, the C-Store Product Gallery featuring a new “Better for You” pavilion, charitable golf tournament benefiting Children’s Miracle Network Hospitals, Outlook Leadership Catalyst Awards and more.

Check out full agenda details at www.outlookleadership.com/agenda.

• For retailers to register, visit www.outlookleadership.com or contact Jacob Winsor at jwinsor@winsightmedia.com.

“Outlook is one of my favorite conferences to attend. Each year I walk away refreshed and ready to address the issues in multiple areas of my business,” said previous attendee Megan Cardine, vice president of retail operations for convenience-store retailer Top Star Inc., Emmaus, Pa.

This event would not be possible without the generous support of its sponsors, particularly the title sponsors, which include:

• Altria Group Distribution Co., Richmond, Va.
• Anheuser-Bush, St. Louis
• Mars Chocolate North America, Hackettstown, N.J.
• Matrix Capital Markets, Richmond, Va.
• McLane Co. Inc., Temple, Texas.
• PepsiCo Inc., Purchase, N.Y.

All supplier partners are listed at www.outlookleadership.com/sponsors.

Chicago-based Winsight LLC is a business-to-business media and information services company specializing in the convenience-retailing, restaurant and noncommercial foodservice industries. Winsight has a media portfolio including CSP, Convenience Store Products, Restaurant Business and FoodService Director magazines; a suite of digital products such as websites, e-newsletters (CSP Daily News, Restaurant Business Daily and others) and webinars; plus video products, mobile and tablet apps, custom marketing solutions and the convenience-retailer intelligence tool, CSPedia. The Winsight Events group produces six exclusive large-scale, executive-level conferences—Restaurant Leadership Conference, FARE Conference, Outlook Leadership, Convenience Retailing University, FSTEC and Global Restaurant Leadership Conference—in addition to more than 12 major EduNetworking conferences and advisory meetings. Winsight recently acquired Technomic Inc., Chicago, a food-industry provider of primary and secondary market information and advisory services.

TORONTO -- Private-equity firm Onex Corp. has made the best acquisition offer in an auction for Save-A-Lot, the hard-discount, limited-assortment grocery chain that Supervalu Inc. has been considering divesting, people familiar with the matter told Reuters.

Supervalu is considering a sale of Save-A-Lot to Onex as an alternative to a spinoff and is expected to make a final decision on the future of that business in the next two weeks, the people said on Thursday.

Sources previously indicated that Save-A-Lot could be valued at as much as $1.8 billion. The sources requested anonymity because the deliberations are confidential.

Supervalu and Onex did not immediately respond to requests for comment.

Shares of Supervalu were up 8.7% at $4.95 in late morning trading in New York on Thursday, giving the company a market capitalization of $1.3 billion.

Supervalu announced its intention to spin off Save-A-Lot a year ago. Supervalu said it would consider an outright sale of Save-A-Lot after receiving interest from private-equity firms.

Toronto-based Onex has approximately $22.6 billion of assets under management, including $6 billion of Onex's capital. 

Earth City, Mo.-based Save-A-Lot operates approximately 475 stores, with about 900 additional stores operated by its licensees, mostly in the southern and eastern United States, according to the latest regulatory filing on its planned spinoff.

Supervalu has undergone significant management changes since announcing its intent to spin off Save-A-Lot, with Eric Claus, formerly CEO of supermarket company Great Atlantic & Pacific Tea Co., joining as CEO of Save-A-Lot, and Mark Gross, previously a co-president of grocery distributor C&S Wholesale Grocery, joining as CEO of Supervalu.

Eden Prairie, Minn.-based Supervalu is one of the largest grocery wholesalers and retailers in the United States, with annual sales of approximately $18 billion. It serves customers across the United States through a network of 3,395 stores, including 1,854 independent stores serviced primarily by the company’s food distribution business.

CANTON, Mass. -- Dunkin’ Donuts used Sept. 29, National Coffee Day, to announce that it will launch a line of Dunkin’ Donuts-branded ready-to-drink (RTD) coffee beverages in-store and in convenience stores and other retailers in early 2017.

The Coca-Cola Co. will manufacture, distribute and sell the product.

This product marks Dunkin’ Donuts’ first entry into the RTD coffee category. The agreement supports Dunkin’ Donuts’ goal of strengthening its position as a coffee authority and further extends the Dunkin’ Donuts brand into new distribution channels, it said.

“We are delighted to be working with The Coca-Cola Co., a world-class partner that will provide us with world-class consumer access by bringing ready-to-drink Dunkin’ Donuts coffee to the refrigerator cases of grocery, convenience stores and mass merchandisers, as well as inside Dunkin’ Donuts restaurants, across the United States,” said Dunkin’ Brands chairman and CEO Nigel Travis. “This new product introduction will increase consumption of Dunkin’ Donuts coffee and increase our brand relevance with existing and new consumers, including many younger customers, which we believe will, in turn, drive incremental visits to our restaurants.”

Coca-Cola will produce Dunkin’ Donuts RTD coffee beverages according to Dunkin’ Donuts specifications, including using Arabica coffee blends. Coca-Cola’s network of bottling partners will sell and distribute Dunkin’ Donuts ready-to-drink beverages, which will include real milk and sugar in a variety of flavors.

Dunkin’ Donuts also announced that it would equally share with qualified U.S. Dunkin’ Donuts franchisees its net profits from the sales of RTD coffee through outlets outside of its restaurants.

“We are an almost 100% franchised company, and our mission is to drive our brand relevance and to drive the profitability of our Dunkin’ Donuts franchisees,” added Travis. “Our research has clearly shown that ready-to-drink coffee consumption is a separate occasion from the purchase of our restaurant-brewed iced coffee. That same research also shows that having a ready-to-drink coffee product builds brand loyalty. We strongly believe that this product launch is good for customers and for our franchisees.”

Dunkin’ Donuts has partnered with Coca-Cola since 2012 to serve Coca-Cola products, including soft drinks, juices, enhanced waters and energy drinks at Dunkin’ Donuts restaurants in the United States and select markets around the globe.

Founded in 1950, Dunkin’ Donuts is a market leader in the coffee, doughnut, bagel and muffin categories. The company has more than 12,000 restaurants in 44 countries worldwide. Based in Canton, Mass., Dunkin’ Donuts is part of the Dunkin’ Brands Group Inc. family of companies.