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Feb. 6: CVS to drop tobacco products

  • Article by: Adam Belz
  • Star Tribune
  • February 6, 2014 - 10:16 AM

CVS will stop selling cigarettes and other tobacco products as part of an effort to emphasize its role as a health care provider.

The nation’s second-largest drugstore chain said Wednesday that it is giving up about $2 billion a year in revenue by phasing out tobacco. But the company, which has several dozen locations in the Twin Cities, said its decision is part of a larger shift to retool itself as part of the health care system and build partnerships with hospitals and doctors.

“The sale of tobacco products is inconsistent with our purpose,” said Larry Merlo, CEO of CVS Caremark Corp. “In addition to removing cigarettes and tobacco products for sale, we will undertake a robust national smoking-cessation program.”

The move is the latest evidence of a big push in the drugstore industry that has been taking place over several years, as major chains have been adding in-store clinics and expanding their health care ­offerings.

Their pharmacists deliver flu shots and other immunizations, and their clinics now manage chronic illnesses like high blood pressure and diabetes and treat relatively minor problems like sinus infections. CVS has been working to team up with hospital groups and doctors to help deliver and monitor patient care.

Still, dropping cigarettes will cost CVS in the short-term. The company notches about $1.5 billion annually in tobacco sales, but it expects a ­bigger hit — a total of roughly $2 billion — because smokers often buy other products when they visit stores.

The firm brought in more than $123 billion in total revenue in 2012.

CVS declined to say what will take tobacco’s prominent shelf space behind cash registers at the front of its stores, but said it will test some items and may expand smoking-cessation products that are sometimes sold near cigarettes.

The decision to stop selling tobacco was applauded by anti-smoking groups.

“It just makes it less accessible, less visible, and that’s a good thing,” said Mike Sheldon, a spokesman for the group ClearWay Minnesota. “Hopefully it sets an example for other retailers who sell tobacco products.”

While the move is a symbolic blow to the $100 billion tobacco industry, drugstores sell a relatively small share of the cigarettes purchased in the country. Gas stations and convenience stores account for about two-thirds of all U.S. tobacco sales, said Thomas Briant, executive director of the Minneapolis-­based National Association of Tobacco Outlets, which represents 2,000 tobacco stores and 26,000 convenience stores in 50 states.

He said drugstores as a whole account for only 5 percent of the U.S. cigarette market.

“If one chain in that group decides to no longer sell cigarettes and other tobacco products, there are other retailers that are available,” Briant said. “This is a business decision by CVS, and I don’t think you should read more into it than that.”

CVS competitors Walgreen Co. and Rite Aid Corp. both sell tobacco and smoking cessation products like nicotine gum, as does the world’s largest retailer, Wal-Mart Stores Inc., which also operates pharmacies.

But Target Corp., the Minneapolis-­based retail giant that also runs its own pharmacies, has not sold tobacco since 1996.

Steven McMillan, who was smoking Wednesday outside a downtown office building, said there are still plenty of places for him to get cigarettes. He said he prefers Walgreens for pharmacy visits, and buys his cigarettes mostly at gas stations and grocery stores.

“It doesn’t affect me,” McMillan said. “I don’t even go to CVS.”

Several cities, including San Francisco, Boston and many smaller Massachusetts communities have considered or passed bans on tobacco sales in stores with pharmacies. Other places, such as New York City, have sought to curb retail displays and promotions and raise the legal age at which someone can buy tobacco products.

Both Walgreen and Rite Aid representatives said Wednesday that they are always evaluating what they offer customers and whether their products meet their needs.

Trish Gober, who was smoking outside U.S. Bank Plaza in the cold on Wednesday, said she also does not shop at CVS, and that smokers will always find cigarettes.

“They will find a way,” she said. “I roll my own, and it’s way cheaper.”

 

The Associated Press contributed to this report.

Adam Belz • 612-673-4405 Twitter: @adambelz

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