Black Market Cigarettes Threaten Independent Canadian C-stores

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Black Market Cigarettes Threaten Independent Canadian C-stores

MONTREAL -- Despite being able to survive competition from large chains and supermarkets, Quebec's iconic dépanneurs, or "deps," independent convenience stores, are finding they are not invincible to illegal cigarettes from Mohawk reserves, the Globe and Mail reported.

One such dep owner, Jun Guo, keeps his store open seven days a week from 8 a.m. until 10:30 p.m., where he is the sole full-time worker. The store nets about $25,000 a year, with profits amounting to $4.76 per hour, according to the report.

When he started the business three years ago, 40 percent of his business came from cigarettes. Currently, that number has been cut in half. His $9 packs of cigarettes cannot compete with contraband smokes selling for $1 a pack.

"I can still eat and put a roof over our heads, but barely," said Guo, who is married with two sons.

About one-third of Quebec's 6,000 dépanneurs are in Montreal, and an estimated 70 per cent of those are run by recent immigrants from Asia.

The Canadian Convenience Store Association estimates roughly 40 percent of Quebec's cigarette sales are now black market, and in Ontario, the figure is closer to half.

The organization is urging the government to cut taxes on legal cigarettes to reduce the competitive advantage of illegal smokes, the report stated.

Quebec has about 6,000 deps, down from 7,200 four years ago.

"We are losing one dépanneur a day now in Quebec, and it's no coincidence that the contraband cigarette market went from negligible to 50 percent of the market in four years," Michel Gadbois, vice-president of the Quebec dépanneurs association, told the paper. "It's easily 80 percent of the problem."

He added the cheap cigarettes took $260 million in profits out of Canadian convenience stores last year, mainly in Quebec and Ontario, according to the report.

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