In ending cigarette sales, CVS risks revenue loss for PR gain

The pharmacy chain is looking to raise its profile as a brand that promotes its customers’ health, so it’s kicking the habit of selling tobacco products.


Beginning this fall, customers at CVS will no longer have the option of picking up a carton of smokes with their prescriptions. In a Wednesday press release, the pharmacy chain announced it would end sales of cigarettes in its 7,600 stores by Oct. 1. “Ending the sale of cigarettes and tobacco products at CVS/pharmacy is the right thing for us to do for our customers and our company to help people on their path to better health,” Larry J. Merlo, president and CEO of CVS Caremark, said in the release. “Put simply, the sale of tobacco products is inconsistent with our purpose.” Although the move seems like a sure boost to CVS’s reputation as a health-conscious company, it will come at a huge expense. CVS estimates it will lose $2 billion in revenue per year, which may not sit well with shareholders. CVS’s release does state that it has “identified incremental opportunities” to offset the big losses, though. CVS has fully embraced its decision on Facebook, where it has adopted a stylized graphic of a no-smoking symbol as its profile picture. A separate post also includes that graphic, as well as the slogan, “CVS quits for good.” The comments on the post largely praise the company for its decision (the words “bold” and “brave” are thrown around quite a bit). A few are complaints that CVS is infringing on personal rights, and there’s the occasional accusation that it isn’t fully practicing what it preaches. “Health care company?” one commenter wrote. “So you will be getting rid of chips, soda, candy and anything else that is bad for one’s health? Yeah right.” Forbes points out that CVS’s decision to stop selling cigarettes might be directly related to the company’s 2007 merger with Caremark, making it a pharmacy benefit manager, which means it works with insurance companies to control drug costs.

“CVS can extract better savings and offer better care to patients, saving employers money both by cutting costs and by making people healthier,” the Forbes report states.

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