ITC’s cigarette business kicked the growth habit in fiscal 2011

Are smokers finally kicking the habit? Cigarettes remain ITC’s flagship business, but failed to deliver the customary boost to sales and profits in the March quarter.
During the quarter, cigarettes contributed to 68% of its consumer product sales, 43% of overall sales and, more importantly, 82% of profit before interest and tax. But the business grew at a relatively sedate pace of just under 13% year-on-year (y-o-y) during the March quarter, and around 14% in the full year.

The year that went by saw the full impact of price hikes taken to counter the 17% increase in excise duties in the Union budget of 2010-11. The industry was spared any excise duty hikes in this year’s budget, giving rise to hope of better sales growth in future. While price hikes have dampened growth, the March quarter cigarette sales also reflect a high base effect, as sales in the year-ago period had risen by 18%. Some of this may have been due to stocking up prior to March, when the excise duty hike was implemented.

The cigarette segment’s profitability improved, however, as the company implemented price hikes and launched new products. Profit margin improved 2 percentage points y-o-y in the March 2011 quarter to 53%.

ITC’s focus in 2010-11 in its non-cigarettes consumer business was to cut losses, which fell 14% to Rs. 68 crore in the March quarter, while sales rose by 17%. Competition has increased with firms such as P&G (Procter and Gamble Co.) and Hindustan Unilever Ltd upping the stakes for growing their share of the market. If ITC can grow sales faster in fiscal 2012, even as it cuts losses, it will send a positive signal to shareholders.

Among its other main businesses, hotels turned in a good performance with profits rising at a higher pace than its sales growth of 17%. Paper and paperboard had a subdued quarter with both sales and profits growing by 14-15%.

ITC’s overall sales rose by 14% during the quarter, and operating profit rose by around 17.5% during the quarter; but a near 70% increase in other income, only a 7% increase in depreciation, and lower tax incidence contributed to a 24% growth in its net profit.

Its share trades at around 29 times its fiscal 2011 consolidated earnings per share. With full year operating profit growth at 17%, and net profit growth of 20%, ITC will have to deliver higher growth to justify its valuation and investor faith.

Shareholders will be hoping its cigarette business rises to the occasion in fiscal 2012. If it does not, its shares are likely to underperform during the year. They fell by 2% on Friday, after the results were announced.

Feds charge 11 in NY contraband cigarette case

Federal prosecutors in New York say 11 people have been indicted on charges of conspiring to sell untaxed cigarettes.
The U.S. attorney's office says some of the cigarettes came from the Poospatuck Indian reservation on Long Island, where the state does not impose a tax.
The prosecutor says federal agents seized more than 3,000 cartons of cigarettes and $135,000 in the operation.
The indictment announced Wednesday says the defendants would obtain up to 1,000 or more cartons at a time. It says they stored the cigarettes at rented locations in Yonkers, Mount Vernon and elsewhere. They allegedly hired workers and rented vehicles to distribute them and even paid bail for those workers who were arrested.

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Cigarette tax could create dangerous atmosphere for smuggling tobacco

In a bid to keep money flowing for the state construction program, Illinois Senate President John Cullerton has floated a plan to raise the state cigarette tax to $1.98 per pack.
Fine, say some nonsmokers. We don't buy cigarettes, so we won't feel the pinch. But what if the hike resulted in more criminal behavior in Illinois, including the Metro East area?

A recent study by a Michigan research institute forecasts that a $1 per pack increase could result in rampant, large-scale cigarette smuggling. Across the country, the opportunity by criminals to profit from trafficking tobacco has led to violence against people and police, including small-scale retail cigarette theft, murder-for-hire schemes, the growth of a counterfeit cigarette market and even the financing of Middle East terrorist organizations.

Research shows smuggling occurs at higher rates when government increases prices -- usually through a tax -- and when the increased prices are significantly higher than in neighboring states.
In 2009, a modest 5.9 percent of all cigarettes consumed in Illinois were smuggled in from other states, according to the Mackinac Center for Public Policy. By contrast, Michigan's smuggling rate is more than 26 percent of total consumption -- the 10th-highest smuggling rank in the nation. Why? One reason is that Michigan levies a $2 per pack tax on cigarettes, which is higher than neighboring states.
Through 2009, Illinois ranked 30th in the nation when it came to smuggling. However, the state's smuggling rate could leap to 26.3 percent if the $1 cigarette tax increase passed, and Illinois would displace Michigan as having the 10th-highest smuggling rate in America.
Should Illinois' tax go to $2 a pack, Missouri's 17-cents per pack tobacco tax would make it worth criminals' time to up their smuggling into the Prairie State.
As with hard drugs, smuggling can lead to violence. And too often, blameless bystanders can get caught up in the mix.

In 2008, an elderly New York couple was accidentally killed in a high-speed chase between Canadian police and a suspected cigarette smuggler. In 2002, a would-be cigarette thief rammed a Michigan police cruiser, dragging the officer down the street. YouTube has plenty of videos showing thieves breaking into stores to steal cash and cigarettes.
Cigarette truck hijackings also have long been a problem. Mafia Don John Gotti's first major arrest was for stealing a trailer of cigarettes. In Michigan, several hijackings led Detroit's last remaining wholesaler to hire armed security teams.
In July 2009, the Bureau of Alcohol, Tobacco, Firearms and Explosives confiscated 12 million counterfeit cigarettes in Virginia alone. That same year, agents arrested two men for attempting to swap cocaine for 600,000 untaxed cigarettes. Perhaps worse, profits from contraband trafficking have been funneled to anti-American terrorist groups like Hezbollah in Lebanon.

Illinois has porous borders. Traffickers and consumers will find a way to acquire the products they want at the best price. Shortly after Florida hiked its tax, a prison guard was caught smuggling cigarettes for distribution to inmates. It is na've to think that the state's security apparatus could dramatically dampen the massive new inflow of illegal cigarettes.
Some believe a $1-per-pack cigarette tax hike would generate about $377 million in annual revenue. While a steeper cigarette tax could raise state coffers, smuggling alone could limit the take to about $250 million -- just two-thirds of what is expected.
Illinois lawmakers might crave new sources of revenue to keep the state capital program moving, but new spending should not come at the expense of public safety.

Plain cigarette packs won't work: company

British American Tobacco Australia (BATA) has attacked the federal government's cigarette plain packaging plans, saying there's no proof it will reduce smoking rates.

BATA chief executive David Crow said confidential documents the company had obtained under Freedom of Information (FOI) showed there was no evidence to back its experiment.

"What proof does the government have that their plain-packaging experiment will work?" Mr Crow said in a statement on Monday.
"Can the government give a 100 per cent guarantee that taxpayers' dollars won't be wasted on legal fees and compensation."

One of the documents showed there was no evidence to support the government's plain-packaging plan, the company said.

The document was a Senate Estimates Committee question on notice asking the Department of Health what the estimated reduction in smoking rates would be from the plain packaging measure.

The department couldn't answer, the company said.

The department responded: "this figure has not been calculated. As no other countries have implemented plain packaging for tobacco products, the actual impact on smoking behaviour is not able to be calculated at this stage", the company said.

BATA said another confidential briefing note indicated the government had budgeted $4.8 million to implement the legislation, but the figure did not include legal costs, estimated to be more than $10 million.

The note also said the figure did not include possible damages associated with defending a legal challenge to plain packaging from the industry.

"We don't want to see a situation where taxpayer dollars are being wasted," Mr Crow said.

"Unfortunately, this suggests the government has been planning a court case all along and is pushing us down the legal path."

He also warned that organised crime could profit from the plain-packaging plan, especially since the prevalence of illegal tobacco in Australia had grown 150 per cent over the last three years.

"When all cigarette packs look the same and lose their trademarks and distinguishing features, counterfeiters will have a field day mass-producing packets to smuggle into Australia."

Mr Crow said BATA was undertaking a media campaign to "draw attention to the potential unintended consequences plain packaging could have".

On Monday, the federal government clarified the colour of its proposed plain-packaging for cigarettes at the request of olive growers.

"I need to publicly say to the olive growers that we don't think that their products are in any way connected with the very unattractive product of tobacco," federal Health Minister Nicola Roxon told reporters on Monday.

When the legislation was announced earlier this year, the government said the plain packaging would be olive green, but olive growers objected.

The colour rumpus is just one of the issues the government will be taking into consideration before enforcing plain packaging for tobacco products later this year.

"There are lots of things in the legislation that people have views about ... but, ultimately, the fight we face with the tobacco industry is they don't want to see this measure be successful," she said.

"There is fundamentally no good news from the tobacco industry.

"They sell a product that kills people ... We want to make sure that the tobacco industry can't use a package to try to attract new smokers to their product."

British American Tobacco Australia is expected to launch its national media campaign on Tuesday.

Cigarettes returning to NASCAR

The product that once helped propel NASCAR from a regional southern sport to National prominence is returning.

The RJ Reynolds tobacco company through its Winston cigarette branding in NASCAR was once seen everywhere in the sport from the title sponsorship to the iconic red and white colors. As smoking began falling out of the popular culture however, the advertising for cigarettes changed and in 2004, RJ Reynolds tobacco left the sport and was replaced by Sprint, a telecommunications company.

Cigarettes may now be returning to the sport of NASCAR on a limited basis.

A manufacturer of electronic cigarettes, Green Smoke, will sponsor T.J. Bell in the 52nd running of the Coca-Cola 600 on Sunday, May 29th at Charlotte Motor Speedway through its Blu Cigs brand.
Green Smoke's sponsorship of Bell will mark its first NASCAR endeavor, as well as the first NASCAR sponsorship by any organization within the electronic cigarette industry.

"One of the world's signature televised sporting events, NASCAR's Coca-Cola 600 is the ideal global platform to showcase the partnership of Green Smoke and T.J. Bell, a talented NASCAR driver who is making the move to NASCAR's premiere division, the Sprint Cup Series," states Steven Arnold, VP of Marketing & Customer Satisfaction for Green Smoke, an industry leader in providing an authentic, alternative smoking experience. “

The electronic cigarette industry has been controversial with the FDA citing in a report last year that no company has yet submitted any clinical trial results for the product. In a report the FDA said the devices turn nicotine, which is highly addictive, and other chemicals into a vapor that is inhaled by the user. The State of California tried to ban the product unsuccessfully although the industry agreed to ensure the products weren’t marketed to minors.

Images released in Soquel marijuana collective firebombing

Surveillance images were released Monday of a marijuana collective whose lobby was torched by two men with a Molotov cocktail.
A security video shot just outside the Capitola Healing Collective at 3088 Winkle Ave. showed two men in hooded sweatshirts and bandannas over their faces approach the shop about 2:15 a.m., the Sheriff's Office reported.
One man who wore a dark sweatshirt shattered a glass door with a hammer, said Deputy April Skalland. The other man - who wore a light-colored sweatshirt with a design on it - lit a soaked rag in a bottle and threw it in the hole in the door, said Skalland.
The men then ran toward Winkle Farm Park, Skalland said.
Two chairs and a table in the lobby burst into flames, and the walls and floor of the shop were scorched, authorities said. Several surveillance cameras inside the shop also showed the destruction, and footage was released from those angles.
Chris Morganelli, the shop's co-owner, said the video would be useful even though the suspects were disguised.
"You can see their faces and body movements," Morganelli said.
Collective members and employees worked to clean up the damage on Monday, and Morganelli said they expected to reopen the shop on Thursday or later in the week.
A detective visited the shop Monday, and leaders of the collective offered at $7,500 reward for information leading to an arrest, Morganelli said.
David Thompson, an attorney with the Santa Cruz-based Cannabis Healing Association, posted a photo of the charred lobby on the association's website. He said patients who saw the damage at the shop began to help clean it up.
"I would like to see Santa Cruz come together and support the patients," Thompson said.
The shop had about $45,000 to $50,000 in damage, owners said.
The Saturday morning fire tripped alarms in the building, and authorities notified Morganelli and co-owner Brianna Kovach. The owners arrived and started to put the fire out with a garden hose before Central firefighters arrived and doused the blaze.
Firefighters had to cut out part of the ceiling and a wall as they fought the fire, said Battalion Chief Owen Miller.
Sheriff's deputies asked anyone with information to call investigations at 454-2311 or the anonymous tip line at 454 2847.
Surveillance videos can be seen at santacruzsentinel.com.

Illinois possibly close to legalizing medical marijuana

Illinois may be close to legalizing medical marijuana.
The Compassionate Use of Medical Cannabis Act gained new momentum last week in the Illinois House when state Rep. Tom Cross (R-Plainfield) shifted his support in favor of the bill.
Cross said he decided to collaborate with the bill's sponsor, state Rep. Lou Lang (D-Skokie), to "tighten the bill up" after hearing from constituents who said the use of medicinal marijuana is the only thing that eases their severe pain. The bill failed to pass through the state House in January.
If the bill passes, Illinois would have the strictest medicinal marijuana law in the country.
"You have to have a doctor's recommendation, and you have to have a bona fide relationship with this doctor," state Sen. Jeff Schoenberg (D-Evanston) said. "You have to take your medical records to the Department of Public Health that will scrutinize them before they give you the license."
If the bill passes, Illinois would join 16 other states and the District of Columbia in opposing federal rulings that explicitly prohibit marijuana usage for either recreational or medicinal purposes. Northwestern student Claire Thompson recognizes the conflict between federal and state laws but thinks legislative reform is necessary.
"I think having any sort of law legalizing marijuana usage is still better than having a law forbidding it across the board," the Medill senior said.
Illinois strict regulations are not ideal, Thompson said, but "necessary to get these kinds of things passed."
In an effort to win support for the bill, Lang agreed to change the original bill by placing stricter regulations on the plant's cultivation, removing the plants from patients' homes to dispensaries.
These new measures have helped garner support and dispel opposition from the bill. The Illinois State Police, Fraternal Order of Police and the Illinois Chamber of Commerce are among recent groups that have now taken a neutral position, a change from their previous opposition to the bill.
Medical cannabis organizations would cultivate and dispense cannabis to patients with valid prescriptions. The bill states there would be 59 such dispensaries, one per senate district. The dispensaries would be subject to random checks from the Illinois Department of Public Health and would incur large fines if their distribution programs were found to be "ineffective."
"There would be no additional cost to taxpayers," Schoenberg said. "The Medical Cannabis Organizations would be subject to application and licensing fees, which would cover the cost of regulating the facilities."
Opponents of the bill have used California, the first state to legalize marijuana for medical reasons, as an example of medicinal cannabis distribution run amok. Medill freshman Joshua Kopel said he finds this comparison frustrating.
"It is artificial to draw parallels between California and another state," Kopel said.
As to whether or not the legalization of medical marijuana could act as a gateway into eventual legalization of marijuana for recreational purposes as well, Kopel said he thought it was hard to say. Thompson remains hopeful that state drug reform, even for medicinal purposes, will serve as "baby steps" for larger scale reform.
"Drug policy is not going to get on the level of national reform until states can demonstrate that it works," she said.
However, Evanston resident and NU alumnus Collin Johnson said he favors stricter regulations such as the ones in the proposed bill.
"I'm okay with medical marijuana as long as it's highly regulated," he said. "I'm not a big fan of marijuana usage in general. I sort of look at it in the same way I do cigarette smoking."
Schoenberg said plans for marijuana legalization were limited to legalizing medical cannabis only, emphasizing strict regulations.
"I have no interest in moving in the direction of California's policy," Schoenberg said.
He said his goal is to allow patients in pain "the kind of quality of life that everyone else has."

A tried-and-tested method of tobacco control

The pro-reproductive health bill lobby group obviously has a huge public relations war chest amounting to millions.
The fact alone that they can afford to go into TV advertising is a clear indication of this.

I have not had the time to watch television lately but in the few times that I did, I was able to see that professionally produced and slick ad featuring one of the principal reproductive health bill advocates, senatorial wannabe Risa Hontiveros-Baraquel.

Now those TV ads are expensive to produce and even more costly to show. I heard that the average cost of a 30-second ad on primetime is P500,000.

It would be interesting to know who is funding those expensive TV ads of Hontiveros-Baraquel.

I don’t think it’s Hontiveros-Baraquel’s party list group Akbayan which is providing the millions, either.

Akbayan is overextended as it is now with its many advocacies from the impeachment of Ombudsman Merceditas Gutierrez to the postponement of the ARMM election

If not Akbayan, is it the pharmaceutical companies and the condom manufacturers who are funding the pro-RH bill ad? After all, these companies expect their business to grow significantly once the bill becomes a law.

The condom manufacturers were already running TV ads before, including one featuring action star Robin Padilla. Thus, it would not be a problem for them to divert some of their advertising budget for Hontiveros-Baraquel’s TV ads which is an even better investment for them,

Or is the TV campaign being funded by international agencies that have been pushing the Philippines to adopt a more aggressive and effective population control program?

For a long time, these international agencies have been providing hundreds of millions worth of free condoms and contraceptives. Certainly, their objectives will be served by the passage of the RH bill.

We hope that the ads are not being funded by the government. We know that President Benigno Aquino III has thrown his full support behind the passage of the bill. IN fact, he has announced that he would continue to do so despite talks that he could be excommunicated for this. The Palace must be warned, though, that there are possible legal implications for government funding for such an advocacy campaign.

Perhaps Hontiveros-Baraquel should just end the speculation by telling the public just exactly which group funded her TV ad.

A heavy smoker like President Aquino should know the health hazards of smoking. We’re sure that his doctors have told him often enough the health risks he is taking by continuing to smoke.

So it would not be surprising that even a smoker like the President would see the wisdom of the government implementing an honest-to-goodness program to reduce smoking in the country.

The Philippines has been identified as one of the countries which have a high smoking prevalence and weak tobacco controls. This was according to a study conducted by Professors Simon Chapman and K. Alechnowicz of the University of Sydney.

“The Philippines has seen some of the world’s most extreme and controversial forms of tobacco promotion flourish. Against international standards of progress, the Philippines is among the world’s slowest nations to take tobacco control seriously,” the study noted.

The Alechnowicz-Chapman study concluded that unlike its Asian counterparts, the Philippines lags far behind when it comes to tobacco control. The study pointed out, for instance, that it took decades before the Philippines could even put in place health warnings on the front panel of every tobacco product package even if this has long been the practice in other Asian countries like Brunei, Hong Kong, Thailand and Singapore.

The study said that ineffective tobacco controls have made the Philippines the largest consumer of tobacco products among countries in Southeast Asia. In the world, we rank 15th.

The President may be convinced of the need for a more effective tobacco use control program if he asks for a briefing from the Department of Health on the health and productivity costs of cigarette smoking.

He would be told that cigarette smoking is costing the health system billions every year to attend to smoking related diseases. The cost to productivity is of course billions more.

The tried-and-tested method of reducing cigarette and tobacco consumption is of course to raise the cost of cigarettes and tobacco through taxes.

No less than Philip Morris Fortune Tobacco Corp. President Chris Nelson has admitted this when he told media that despite higher excise tax rate this year on tobacco, actual government collections are likely to go down because higher cigarette prices will dampen consumption.

But government revenue from tobacco and cigarettes need not necessarily go down as claimed by Nelson even with reduced consumption. That is, if only the government could implement a more efficient tax collection scheme that would plug loopholes and prevent tax evasion by the tobacco companies.

Suspiciously, the cigarette manufacturers themselves have made proposals to the government systems that they saw would plug those tax collection loopholes.

Philip Morris, for example, has proposed to use bar codes to track and appropriately tax cigarettes as they leave the manufacturing plans. This proposal is apparently a big joke since bar codes can easily be tampered with. In fact, bar codes are available everywhere including Recto.

Another firm, the China-based Huagong Tech. Co. Ltd., is proposing a hologram-aided tax stamp.

It is important to note that the proposal to use bar codes and hologram tax stamp are coming from the tobacco companies themselves and not from independent parties.

Philip Morris has taken pains to explain that the bar code scheme would be run by third parties and would always be under the control and supervision of the Bureau of Internal Revenue.

As we said, a proposal coming from the cigarette manufacturers so that the government can collect the right taxes from them is highly suspicious, to say the least. The appropriate analogy here is putting the fox in charge of the chicken house.

Instead of adopting the dubious scheme proposed by Philip Morris, the government should put in place a truly independent and proven system offered by a true impartial party to plug the leaks on tobacco taxes.

One system that both the World Health Organization and the Global Adult Tobacco Survey proponents are recommending to help the government collect the right amount of taxes from tobacco product is the strip-stamp system.

This fool-proof, hi-tech system involves the use of sensors and strip stamps in all cigarette and cigar packs to electronically monitor the production and distribution of these products.

The global Swiss firm Sicpa Security Solutions SA has long proposed this cutting-edge technology to Malacañang, which it said would earn an additional P100 billion over a seven-year period alone via the more accurate collection that cigarette and tobacco companies are supposed to pay to the government.

This is not an empty boast. Sicpa has a track record in California, Turkey and Brazil to show. In these economies, the use of the Sicpa system has resulted in higher tax collections and curbed smuggling.

The best gauge that the Sicpa system would be effective is the vehemence of the objections of the local cigarette manufacturers to the Sicpa proposal. It seems that the cigarette manufacturers know it would work so they don’t want the government to adopt it.

Anti-tobacco group fights for funds

With just days to go until the end of the legislative session, supporters of an anti-tobacco program are working to restore its funding to the proposed state budget.

The two-year $28 billion budget proposal that cleared the Indiana Senate on Thursday eliminates the Indiana Tobacco Prevention and Cessation agency and cuts spending on tobacco-cessation efforts from its current $9.2 million funding to $5 million.

The Senate budget bill also shifts responsibility for the tobacco-cessation efforts to the state Department of Health in an effort to save an estimated $1 million in administrative costs.

Critics of the move say the proposed $5 million is just a fraction of the money that the state collects to fund anti-smoking efforts.

The source of the funding comes from a $4.5 billion settlement that Indiana received in 1998 after state attorneys general sued the tobacco industry. The Indiana Tobacco Prevention and Cessation agency was created in 2001, using money from the settlement.

Opponents of the cut say the first they heard about it was when they saw an amended budget bill that was released April 18 after the state budget agency revised its revenue forecast to reflect a $640 million increase in revenues.

“This is a decision that was made behind closed doors,” said Amanda Estridge, Indiana spokeswoman for the American Cancer Society’s Great Lakes Division.

Estridge said the funding cut, combined with the legislature’s decision to reject a statewide smoking ban bill, would reverse progress the state has made in reducing the number of smokers in Indiana.

In the 10 years since the Indiana Tobacco Prevention and Cessation agency was created with the tobacco-settlement funds, the percentage of Hoosiers who smoke have dropped from 28 percent to 23 percent, she said.

“Clearly the program has been successful in cutting the use of tobacco, which is the leading cause of lung cancer,” she said. “This would reverse the progress we’ve made.”

Sen. Luke Kenley, who helped craft the proposed budget and chairs the Senate Appropriations Committee that approved it, said the move to eliminate the Indiana Tobacco Prevention and Cessation agency was motivated by a need to cut costs, and not, as critics have charged, punishment for the agency’s advocacy for a failed smoking-ban bill. He said eliminating the agency would save an estimated $1 million, mostly in salaries and benefits paid to the agency’s 12-member staff.

“I hate to burst their bubble, but we didn’t do this because we love smoking and hate people who hate smoking,” Kenley said.

Kenley said shifting the funds to the state health department makes sense because the department already conducts some smoking-cessation programs. “It does away with the duplication of efforts,” Kenley said.

The proposed elimination of the Indiana Tobacco Prevention and Cessation agency mirrors a failed effort made in the 2010 legislative session to get rid of the agency as a cost-cutting move.

Funding for the agency dropped from $32 million in 2003 to $10 million in 2004. It’s remained close to that level since. Most of the funds are distributed as grants to local community-based programs that promote efforts to stop or prevent smoking and tobacco use.

Rep. Peggy Welch, a Democrat from Bloomington and a member of the joint House-Senate State Budget Committee, told the Associated Press that the funding has dropped through the years because it was seen as “low hanging fruit” when budget writers were looking for programs to cut.

“We have a hard time in this state investing money now for its long-term gains,” Welch said. “It’s going to save us money in the long run, but we’re not willing to make that investment now.”

If the funding is to be restored, it will have to take place soon since the legislature is set to adjourn April 29. The Senate version of the budget bill returned to the House after it was approved Friday and now goes to a conference committee where differences between the House and Senate version must be worked out before it goes to Gov. Mitch Daniels for his signature.

C-Stores Threatened by Swipe Fees, Contraband Tobacco

According to the recently released annual report from the Canadian Convenience Stores Association (CCSA), high credit card transaction fees, contraband tobacco, and regulation abuse are having a severe impact on Canada’s convenience store industry, forcing 350 to close last year, LFPress.com reports.

Last year, sales at Canadian c-stores without gas stations totaled $11.2 billion, relatively flat from the year prior, with those selling gas reporting an increase of 9.2 percent to $22.6 billion.

According to the CCSA, the Canadian government is failing to lend assistance and failing to address industry problems.

"If we want to retain the local family business model and maintain an essential channel to reach Canadian consumers, governments must do more and better to improve our business conditions," said CCSA senior vice president Michel Gadbois.

The CCSA said some progress had been made curtaining sales of contraband tobacco, but more work needs to be done. Smuggled tobacco costs the industry about $850 million a year.

Additionally, the CCSA called for the ability to sell alcohol from convenience stores.

"Our network has clearly shown it can control product sales to minors in an exemplary fashion," the report said. "Every percentage of market share in this environment would result in $150 million in sales for convenience stores."

The group also voiced strong concern over credit card transaction fees, noting they cost Canadian merchants $5 billion in 2009.

Finally, it urged industry members to band together to try to bring about change.

"In each federal riding there are on average 70 convenience stores," Gadbois said. "There's no denying we constitute a considerable political force. If we mobilize the federal and provincial governments will have no choice but to listen and act to protect the unique institution that is the convenience store."