MONTREAL, CANADA – On May 17, Imperial Tobacco Canada announced plans to begin shipping its products to retailers through direct store delivery (DSD) in August 2006, according to a press release.
“At this time in our history, this important initiative makes good business sense for Imperial Tobacco Canada. In recent years we have undertaken measures to become more efficient in an increasingly competitive and challenging environment," said Benjamin Kemball, president and CEO of Imperial Tobacco Canada.
Kemball added that DSD is “the logical next step” to allowing the company to manage products more effectively from the point of manufacture to delivery and protect the company’s “competitive position.”
Imperial Tobacco Canada will become the first tobacco company in Canada to implement DSD nationally, notes the press release. Retailers “who wish to do so” will be able to place orders directly with the company or continue having products shipped to them through cigarette wholesalers.
Meanwhile, the National Convenience Stores Distributor Association (NACDA) shared its concerns about Imperial’s decision noting that the move to DSD will jeopardize Canada’s food distribution industry, specifically those businesses that distribute to convenience stores.
“We are surprised and disappointed by Imperial Tobacco's decision. While we have been partners for more than 100 years, we have learned about this decision by means of a press release yesterday. Yet, an important part of our distributors' sales comes from the distribution of tobacco products. Some of them will find it difficult to make good the important losses brought about by ITC's decision,” said NACDA President Marc Fortin in a press release.
According to NACDA, Imperial Tobacco’s decision “is likely to result in the loss of thousands of jobs in the distribution industry throughout Canada, in addition to creating an upward pressure on the price of other products sold in convenience stores and grocery stores.”
“Ultimately, we are concerned that these regions will pay dearly for Imperial Tobacco's new [DSD] ‘strategy,’ since some wholesalers who serve remote areas may not be able to survive,” Fortin commented.