NACS Daily News Articles for Apr 25, 2012

Competing Fuels and Vehicle Requirements May Doom CAFE and RFS
The more than 120,000 convenience stores selling motor fuel will face the brunt of the competing objectives of the RFS and CAFE standards unless changes are addressed.

ALEXANDRIA, VA - The requirements mandated by the Renewable Fuels Standard (RFS) and the proposed Corporate Average Fuel Economy (CAFE) standards are likely to create a situation in which one or both of these programs will fail unless significant concerns are addressed, according to NACS.

The Future of Fuels: An Analysis of Future Energy Trends and Potential Retail Market Opportunities

The complete 48-page report, The Future of Fuels: An Analysis of Future Energy Trends and Potential Retail Market Opportunities, which includes projections and analysis using the U.S. Energy Information��s 2011 Annual Energy Outlook, is available at nacsonline.com/futureoffuels.

"RFS and CAFE policies cannot coexist without substantial changes in the retail and vehicle markets to accommodate significantly higher concentrations of renewable fuels, an unlikely scenario given that we may not even meet current requirements as they stand in 2012," said John Eichberger, NACS vice president of government relations and the author of the new NACS whitepaper, The Future of Fuels: An Analysis of Future Energy Trends and Potential Retail Market Opportunities.

NACS is dedicated to ensuring that convenience stores remain the dominant choice for consumer refueling for decades to come. The more than 120,000 convenience stores selling motor fuel �" an estimated 80% of the fuels purchased in the United States �" will face the brunt of the competing objectives of the RFS and CAFE standards, said Eichberger, noting that the two regulations cannot coexist without dramatic revisions.

"NACS members strongly support efforts to enhance the nation��s energy security and don��t oppose improving the fuel efficiency of the nation��s vehicle fleet. However, we are very concerned that the policies being enacted and drafted are not effectively coordinated and could compromise each other. The result could force countless small businesses to examine whether they want to invest hundreds of thousands of dollars to retrofit their existing fueling equipment or exit the business. Either way, the consumer ultimately loses," said Eichberger.

The Renewable Fuels Standard, revised by Congress as part of the Energy Independence and Security Act of 2007 (EISA), requires that increasing amounts of qualified renewable fuels be integrated into the motor fuels supply, culminating at a minimum of 36 billion gallons in 2022. This mandate was expected to increase renewables to approximately 20% to 25% of the overall gasoline market in 2022, about double the rate of 10.4% last year.

Meanwhile, in 2011 the Obama administration proposed new CAFE standards, which are expected to be finalized this summer, that seek to increase the average fleet fuel efficiency to an equivalent of 54.5 miles per gallon by 2025. The cumulative effect of the two mandates is that renewable fuels will be required to represent a significantly greater share of the market than originally anticipated �" perhaps as much as 40%, or four times higher than today.

"This level of renewable fuels penetration in the market will impose significant economic burdens on the retail fuels market and consumers," said Eichberger. "To meet such a high renewable fuels concentration, it is likely that most retailers in the country will have to replace their underground storage tank systems and fuel dispensers. For the convenience industry alone, this will require a minimum infrastructure investment that will add nearly $22 billion to the cost of retailing fuels."

Even after this enormous infrastructure investment, it still may be impossible to satisfy the RFS, considering that only one in six consumers will drive vehicles capable of running on the mandated fuels. The U.S. Energy Information Administration (EIA) projects only 16% of on-road vehicles in 2022 will be flexible fuel vehicles.

"Unless something dramatic happens, we will hit the 'blend wall�� within the next two years and will not be able to meet RFS requirements. This will trigger massive fines throughout the petroleum distribution system that will increase the cost to sell motor fuels," said Eichberger.

Eichberger called upon Congress to initiate a comprehensive review of regulations affecting the motor fuels and passenger vehicle industries to determine their compatibility with one another and to develop a comprehensive national motor fuels policy. "Such a policy must coordinate legislative and regulatory requirements to ensure that the objectives of one policy support, rather than undermine, the objectives of another," he said.

"We don��t believe that improved efficiency, enhanced sustainability, national energy security and economic growth are mutually exclusive objectives. But if they are not pursued in a strategic, coordinated effort they can lead to unintended consequences that can derail progress towards all of the objectives," said Eichberger.

Looking into the future, it is likely that the government will play an even heavier hand in determining what consumers drive and what energy they purchase to fuel these vehicles, noted Eichberger.

Senate Fails to Overturn Ambush Elections
The National Labor Relations Board's rule could stifle job creation.

ARLINGTON, Va. - Yesterday the U.S. Senate failed to pass a joint resolution, S.J. Res. 36, that disapproved of the National Labor Relations Board��s (NLRB) ambush elections rule.

"This rule is basically a backdoor way to card check," said Carin Nersesian, NACS director of government relations. NACS opposes legislation that would replace secret ballot elections with "card check" election.

The Retail Industry Leaders Association (RILA) also expressed its dissatisfaction with the Senate��s failure to pass the resolution. "While we are disappointed with the outcome of today��s vote, we will continue to fight to overturn the NLRB��s ill-conceived decision," said Katherine Lugar, executive vice president, in a statement.

RILA noted that the ambush elections rule undermines due process and employee and employer rights, unfairly tilting election outcomes in favor of unions.

According to NLRB data, the average unionization election occurs 31 days after valid petitions are presented. The ambush election rule could shorten that period to as little as 10 days. Absent congressional actions, the ambush elections rule will take effect April 30.

These issues are particularly important in retail, where many among the executive ranks started their careers working on the floor of a store. Retailers encourage employees to learn about their business by working in multiple departments. They recognize the value of a workforce that is cross-trained and employees appreciate the variety in their day-to-day work activities. It is especially important in the current economy, when many are looking for additional shifts, which are more available when free movement between departments can take place.

The White House had indicated it would have vetoed any legislation that overturns this rule, saying it would "ensure that workers deciding if they wish to be represented by a union have a fair vote in a reasonable amount of time."

Read more about the legislation and NACS��s stance here.

Indiana Association and State Work to Lower Late-Night Retail Workplace Violence
The Indiana Petroleum Marketers and Convenience Store Association will participate in the Department of Labor's INSafe program.

INDIANAPOLIS - The Indiana Petroleum Marketers and Convenience Store Association (IPCA) has agreed to be a part of the Indiana Department of Labor��s INSafe program, the Chesterton Tribune reports. The initiative attempts to lower late-night retail workplace violence.

The agreement spelled out several goals for the two groups, including the department��s willingness to give information on preventing and recognizing workplace hazards to IPCA via workshops, meetings and trade shows. The DOL will also provide data and statistics that would assist in lowering workplace illnesses, injuries and fatalities.

INSafe will help IPCA and select member companies with developing and delivering group-wide occupational safety and health outreach and training programs. The association in turn will communicate info about best practices and effective ways to stem workplace violence. IPCA also will promote and encourage members to participate in INSafe programs.

"Convenience store operators place the highest priority on the safety of their customers and employees. This partnership with state officials will further enhance our existing efforts," Scot Imus, executive director of IPCA, told NACS Daily.

The agreement came about at the efforts of Lori Torres, DOL commissioner, after a spat of violence at convenience stores in Indiana. Torres created the Late Night Retail Working Group, which in addition to the DOL and IPCA, counted the Indiana Association of Beverage Retailers, the Indiana Grocery and Convenience Store Association and the Indiana State Police as members. The other two retail groups are in agreement discussions as well.

A Natural Evolution
The pendulum is swinging toward the natural in beverages.

CHICAGO - Most people forget that water is really the only beverage you need to survive. It nourishes and refreshes, and is in abundant supply. But that hasn€™t stopped beverage manufacturers from creating a wide variety of thirst-quenchers, such as soda, energy and sports drinks, juices, smoothies, lemonades, and alcohol concoctions, FastCasual.com reports.

Now, with consumers thinking more about what they eat and drink, the trend toward more natural flavors and ingredients has become front and center in the beverage market. Real or unrefined sweeteners are making a comeback in drinks, including agave nectar, cane sugar and raw sugar. For example, Wendy€™s has an All-Natural Lemonade made with real sugar cane, and Roam Artisan Burgers€™ makes sodas in-house with agave nectar.

Smoothie stores are also promoting the healthful qualities of their ingredients. Jamba Juice has added more fresh fruit and vegetable smoothies.

But water, especially tap water, has been the most popular beverage of choice in restaurants lately. "Over the past five years, tap water has been one of the fastest growing beverages in American restaurants, representing 10% of the 50 billion beverage servings ordered," according to NPD Group.

Appetite for Children's Meals Wanes
Restaurants are seeing a decline in orders from kids' menus.

ST. CLOUD, Fla. - The popularity of children��s meals are decreasing, especially in QSRs, the Orlando Sentinel reports. In 2011, children��s meals with toys declined 6%, according to NPD Group, which cites perception of such meals as unhealthy, attempts to save money by ordering piecemeal, and adults sharing their meals with kids as reasons for the drop.

Also, experts point to kids eschewing children��s meals at even younger ages. "That's not necessarily what kids today want," said Bonnie Riggs, restaurant analyst for NPD. "They've become more sophisticated in their palettes. They're looking for smaller versions of some of the things mom and dad order."

At Nature��s Table restaurants, children��s entrees such as PB&J and grilled-cheese sandwiches dropped 40%. Parents simply ordered adult meals and split them with their kids, said David Hasselberger, who runs the restaurants.

At Subway, children��s meals have stayed between 2% and 3% of sales, said Curt DiPasqua, who runs more than 300 Central Florida locations. "Kids like to emulate adults," he said. "As soon as they're 5, 6, 7 years old, they want to choose their sandwich off the menu."

Some restaurants are considering adding menus that cater to older children, such as Texas Roadhouse��s "Ranger Meals," despite evidence that orders for those meals are also taking a nosedive, dropping 16% last year.

U.S. Organic Market Surpasses $31 Billion
In 2011, the organic industry grew by 9.5% overall, which suggests that consumers are willing to pay for value-added products.

WASHINGTON - Driven by consumer choice, the U.S. organic industry grew by 9.5% overall in 2011 to reach $31.5 billion in sales. Of this, the organic food and beverage sector was valued at $29.22 billion, while the organic non-food sector reached $2.2 billion, according to findings from the Organic Trade Association��s (OTA��s) 2012 Organic Industry Survey.

"The U.S. organic sector continues to show steady and healthy growth, growing overall by 9.5% during 2011, and, for the first time, surpassing the $30 billion mark," said Christine Bushway, OTA��s executive director/CEO.

"Consumers are increasingly engaged and discerning when they shop, making decisions based on their values and awareness about health and environmental concerns. For them, it matters whether foods are genetically engineered, or produced using practices that are good for their families. Price is still an issue, but with the wide availability of private label products and many venues for organic products, they have many choices for where to shop and a variety of products from which to choose," she said.

Overall organic product sales growth of 9.5% continued to outpace total sales of comparable conventionally produced food and non-food items, which experienced 4.7% growth. The growth in organic sales is proof the consumer is willing to pay for value-added products.

Organic food sales experienced 9.4% growth in 2011. The easing of the recession, consumer price inflation due to input price increases, and consumers�� increasing desire for convenience products were all factors that elevated growth for the year. The organic food sector grew by $2.5 billion during 2011, with the fruit and vegetable category contributing close to 50 percent of those new dollars. The fastest-growing sector was the meat, fish & poultry category, posting 13% growth over 2010 sales, but still remaining the smallest of the eight organic food categories.

Organic food sales now represent 4.2% of all U.S. food sales, up from 4% in 2010.

Meanwhile, organic non-food sales, which reached $2.2 billion in 2011, experienced strong 11% growth, while total comparable non-organic items grew only 5%. Prospects for 2012 and 2013, as indicated through the 2012 survey results, indicate that organic food and non-food sales will continue to sustain growth levels of nine percent or higher.

"With 94% of organic operations nationwide planning to maintain or increase employment in 2012, the organic sector will continue to fuel jobs, rural economies and consumer choice," said Bushway.

Alabama Approves Restriction of Cold, Allergy Meds
The legislation applies to allergy and cold medication that has ephedrine or pseudoephedrine, which can be used to make the drug meth.

MONTGOMERY, Ala. - The Alabama House and Senate have approved a bill that restricts the sale of allergy and cold medications that contain ephedrine or pseudoephedrine, the Associated Press reports. The move is an attempt to curb production of the illegal drug methamphetamine (crystal meth).

Gov. Robert Bentley is looking over the bill before he decides whether or not to sign it, said Jennifer Ardis, the governor��s press secretary. The legislation is the latest attempt to root out meth manufacturing.

Rep. Blaine Galliher, who sponsored the bill, said allergy and cold medications with pseudoephedrine or ephedrine could only be sold in stores with pharmacies; the medicines would be behind the counter. Small retailers and convenience stores would be prohibited from carrying those medications.

"Alabama has an epidemic of meth in all 67 counties," said state Sen. Roger Bedford, who was unsuccessful in trying to get the Senate to add a prescription requirement to the bill.