Getting Burned by Underage Sales

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Getting Burned by Underage Sales

By John Lofstock - 05/27/2002
A young man plunked down a few bucks for a pack of Marlboros last spring at a Williams Express convenience store in Anchorage, Alaska. He was 18, a year shy of the legal age for buying cigarettes in that state. The clerk rang up the sale without checking his I.D.

The young man was a decoy helping police in a sting operation.

The clerk was cited for selling tobacco to a minor and was fired. But that wasn't the end of the matter. Alaska, like other states, is being pressured by the federal government to crack down on underage tobacco sales, and clerks there have been caught selling to teens at a higher rate than every other state.

Now Alaska is turning to a powerful weapon. The state is looking to suspend a store's permit to sell tobacco, which can cost a business tens of thousands of dollars. Just ask Speedway SuperAmerica, which had its license to sell tobacco at a Burnsville, Ohio, convenience store suspended after its fifth violation for selling tobacco to a minor. Company officials said the ruling could cause the company to shut down an extremely profitable store.

Although retailers say they are stepping up tobacco training, the CSNews/NFO Shopper Panel reported that the number of smokers asked to show ID at c-stores dropped 5 percent in 2001 (see chart).

"With all of the negativity surrounding tobacco sales to minors, it's hard to comprehend that the number of consumers asked for ID before buying cigarettes at convenience stores is dropping," said Dick Meyer, president of Neenah, Wis.-based Meyer & Associates, a convenience store consulting firm. "This should be a wakeup call again for retailers that asking for ID isn't something they can afford to slack off on."

Alaska and Ohio are the two latest examples of states that are looking to generate revenue in tough economic times through the sale of tobacco products, either from new taxes or fines on illegal sales to minors.

Alaska is going after the tobacco permits of eight Williams stores, four Tesoro stores and three Chevron stations. At one Chevron location the state has proposed yanking the tobacco permit for 225 days.

The state approved a suspension of Williams' tobacco permits at five Anchorage stores for 45 or 90 days, depending on whether they were repeat offenders. The suspensions will go into effect June 1.

Tesoro argued at a hearing last year that 45-day suspensions were too severe, considering the stores didn't have prior offenses, said Ron Noel, vice president of Tesoro Northstore Co. Tesoro requires ID checks for anyone who looks under 30 and trains and retrains employees on tobacco sales.

"Human beings sometimes make mistakes. That's what they were. We're willing to stand up and be responsible. We're willing to stand up for some suspension time. We just ask them to be reasonable," Noel said. Tesoro is awaiting a decision.

Williams is mulling an appeal regarding the five stores, said Jeff Cook, vice president for external affairs, adding company officials are still reviewing the state's proposal and weren't prepared to comment.

William has increased employee training on tobacco sales and established a policy requiring clerks to card everyone seeking to buy tobacco, no matter how old he or she looks. "We have a no-tolerance policy. That's why every one of those employees was terminated immediately," Cook said.

Tobacco sales are a major revenue source at Williams stores in the Anchorage area. Company officials said cigarette sales constituted 40 percent of its gross revenue, outside of gasoline sales. In 2000, cigarette sales at Williams stores statewide generated $2.9 million in gross revenue. The company has 29 Alaska stores.

Ensuring that the stores do not sell tobacco to minors has become a source of revenue for the state. Alaska is among 19 states in jeopardy of losing federal grant money due to a poor record of selling cigarettes to minors.

"Financial shortfalls are driving the states' aggressiveness," said Chris Girard, president of Beaverton, Ore.-based Plaid Pantry Inc. "It's our responsibility to make sure our employees don't make the mistake of falling into their trap."