Couche-Tard may bring fuel-saving gas to North America

LAVAL, Que. – Alimentation Couche-Tard said Wednesday that it may introduce to North America a fuel-saving gas developed in Europe after it completes a planned rollout to its 2,300 locations in Scandinavia and Eastern Europe.

The Quebec-based convenience store operator said after its annual meeting Wednesday that additives included in its Miles-branded fuel sold in Europe reduce fuel consumption by two to three per cent and cut auto maintenance costs.

Couche-Tard (TSX:ATD.B) obtained the fuel’s European patents after buying Statoil Fuel & Retail last year. The product had been in development for five years before the acquisition from oil giant Statoil.

CEO Alain Bouchard said he was blown away when details of the fuel were shared with company executives by a research team in Norway.

He said the priority is to extend where the fuel can be purchased in Europe next year before deciding on the potential timing of a North American launch. Currently, the company has no patent on the product in North America.

“We will start by covering Europe. We will introduce in countries that aren’t covered now starting in 2014,” he told reporters.

The fuel price is the same as product not containing additives. The Miles fuel is available in different grades and in diesel.

“Margins are a little less because of the additives but the goal is to grow the market share.”

Bouchard declined to say where the fuel is made or what form of additives create the operating savings.

Meanwhile, Bouchard said Couche-Tard will focus in the coming year on further integrating its operations with Statoil Fuel & Retail to reach up to US$200 million in annual cost-savings, cutting debt and continuing U.S. acquisitions. It plans to buy about 200 stores and build 70 to 75 new locations.

“Large acquisitions are always long-term negotiations” and nothing is foreseen at the moment, he said, pointing to strong competition in North America.

The company has also been working to expand its fresh food offering, especially in Quebec, where progress has lagged its other operations. Several new products will be introduced in the coming months.

Bouchard described last year’s fifth consecutive year of record earnings as the biggest in the company’s history. But he said the expansion to Europe, which now accounts for about 36 per cent of its operations, was emotionally challenging.

“It prevented me from sleeping some nights,” he said. “It was a lot, the biggest acquisition we have ever done, with the management and culture that was very different.”

During the meeting, shareholders rejected a proposal requesting that the company prepare a report on the costs and benefits of unionization at its stores. Couche-Tard has repeatedly blocked unionization efforts at locations in Quebec and faces several proceedings before the province’s labour relations board.

Several union representatives denounced the company’s approach while members protested outside the hotel where the meeting was being held.

Meanwhile, Bouchard criticized the Ontario government’s unwillingness to allow beer to be sold in convenience stores, thereby favouring brewers that own the Beer Store network. The company had promised a major investment in new stores in the province if it were allowed to do so.

“I am so surprised that they are allowing a duopoly or triopoly to sell beer in Ontario exclusively. It doesn’t make sense.”

He also said he’s not concerned that Loblaw’s (TSX:L) acquisition of Shopper’s Drug Mart, which has enlarged its grocery offering, will further pressure convenience store sales in Ontario.

“What we have proven over the years is that we can compete and gain market share. … It’s the weaker players that suffer and eventually disappear, so when this happens, we win,” he said.

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