The following is an excerpt from he following is an excerpt from an article that ran in the August 2017 issue of NACS Magazine. The article was written by NACS with support from Reynolds American Inc. Trade Marketing Services Company (RAI-TMS), a NACS Gold Hunter Club member.
By Melissa Vonder Haar
There’s an old saying, attributed to the Greek philosopher Pericles: “Just because you do not take an interest in politics doesn't mean politics won't take an interest in you.” Retailers facing business-crushing tobacco regulations today understand this statement all too well.
While major tobacco regulations used to only come out of Washington D.C., retailers now must deal with even more aggressive measures targeting them from their local governments. Increasingly, the greatest current threat to the hardworking men and women who provide their communities with not only milk and produce and gas, but also good paying jobs and crucial tax revenue, is the local city council.
In municipalities across the country, local governments are resorting to guerilla-like tactics to dictate what products retailers can sell—even going as far as an outright ban on tobacco— regardless of the cost to businesses and communities.
What does this all mean? It means the game has changed!
David Riser, vice president external relations for Reynolds American Inc. Trade Marketing Services Company (RAI-TMS), highlighted this looming threat, saying, "While federal regulation can move relatively slow, it’s just the opposite at the local level. A bad idea can quickly become law within a matter of days.”
The recent situation in California is a perfect example. Several cities and counties have proposed tobacco flavor bans that target menthol, wintergreen and mint flavors. These regulations, if enacted, could have very dire consequences for convenience retailers, their bottom lines and the communities they serve.
“Tobacco products represent about one-third of in-store sales in convenience stores,” said Steve Kottak, senior director external relations for RAI-TMS. “Ordinances that impose punitive restrictions on retailers and bans on the sale of legal tobacco products exacerbate an already challenging economic climate facing retailers, and may create an environment that encourages the illicit sale of tobacco products. If this occurs, a huge portion of a retailer’s sales could go down the drain and out into the street.”
Perhaps most troubling for the convenience industry, this flurry of activity is hardly limited to tobacco. Riser said 14 different municipalities proposed sugary drink taxes last year, with other groups angling for a “fat tax” or even a meat tax supported by the People for the Ethical Treatment of Animals (PETA).
When Local Doesn’t Stay Local
With local governments changing tactics, retailers must also adapt to the new reality if they want to remain economically competitive and stay in business. While these regulations might be implemented in a municipality or state far from you, it’s only a matter of time until they begin to “trickle up” to the federal level, affecting retailers in states that aren’t prone to pass strict local regulations.
This “trickle up” is exactly what happened with menu labeling. After spending years unsuccessfully pushing for a national menu-labeling mandate, activists moved to get the legislation passed in numerous cities, counties and towns. This patchwork of laws created a compliance nightmare for national chains like McDonald’s.
“Local menu labeling began to look a little bit different from city to city,” said Lyle Beckwith, senior vice president, government relations for NACS, adding that it eventually prompted leading fast food chains to go to Congress and ask for a national menu-labeling law that would pre-empt the local regulations. “It was pretty easy for Congress to include it because they had both sides agreeing.”
“Whether it’s tobacco, whether it’s labor, whether it’s food—it doesn’t matter,” said Beckwith. “The playbook has been written and it’s to go to the city level and enact things in the middle of the night to create a patchwork that eventually winds up back on Capitol Hill.”
To read the full version of this story, visit NACSMagazine.com.
Melissa Vonder Haar is the senior account manager for iSEE Store Innovations.