2014-02-05

Co.Exist

Want A Smoke? You Won't Find One At CVS, As The Chain Pulls Tobacco From Its Shelves

The drugstore chain is taking a stand against smoking. A public health benefit, but what will it do to the bottom line?

In a major move that aligns its business strategy and values but may hurt its short-term revenues, CVS, the nation’s second largest drug store chain, announced today that it would stop selling cigarettes and tobacco products by October.

That’s a pretty gutsy decision, considering, according to the Wall Street Journal, CVS estimates it will lose $2 billion in revenue as a result--a small, but not-insignificant percentage of the $123 billion revenue it brought in last year.

But it makes sense for the long-term outlook of the pharmacy. As health care costs skyrocket and the market for preventative and treatment services booms, CVS is looking to become more of a health care provider than simply a retail store. From the Wall Street Journal:

"Cigarettes have no place in an environment where health care is being delivered," said Mr. Merlo, a 58-year-old former pharmacist who became CEO of CVS Caremark in 2011. "This is the right decision at the right time as we evolve from a drugstore into a health-care company."

As the top preventable cause of death and disease, smoking is a major reason for rising health care costs in the country. The U.S. Surgeon General states it accounts for almost $290 billion a year in both medical care and lost productivity.

Other national chains such as Target have stopped stocking cigarettes in the past for business reasons, but CVS is the first company to do so for health reasons and is also the largest chain to make the decision. It won’t stop people from buying cigarettes, but if other pharmacies also go this way, it could be a big deal.

[Image: Cigarettes via Shutterstock]

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2 Comments

  • Tony Young

    'Well, if you're going to be part of the health care system, how can you continue to sell tobacco products?'" he said. "There's really no good answer to that at all."

    So, they'll stop selling candy and cereal soon, too?

    Everybody eats, not everybody smokes.