CVS CAREMARK has decided to cease the sale of cigarettes and other tobacco products in its more than 7,600 nationwide stores beginning on Oct. 1 a move that will cost the company about $2 billion in annual revenue.
CVS's decision to stop selling cigarettes is based around the fact that it is an entity which foremost promotes the general health and well-being of its many customers.
According to the Ohio Department of Public Health, Ohio ranks sixth in the U.S. among adult smoking rates, which is about one in every four people. One out of every five deaths in the state is related to smoking, and the habit is responsible for more than 480,000 deaths annually in the United States.
Considering the high adult smoking rate in Ohio, CVS stores in the area might take a harder revenue hit than stores in states with a lower smoking rate. However, this might be the type of gutsy move that pays off in the long run, even in states with a higher adult smoking rate.
"We don't break out sales information by market so we cannot comment on the financial impact in a specific state or region," said Michael DeAngelis, director of Public Relations at CVS Caremark. "But we have identified incremental opportunities that are expected to offset the profitability impact."
CVS representatives have stated that the removal of cigarettes and other tobacco products from their shelves will aid in their relations with hospitals, doctors and suppliers. Additional cooperation and willingness by these healthcare providers to do business with CVS Caremark could eventually lead to more profits for the company, but it could take some time for the numbers to straighten themselves out.
Furthermore, CVS could also increase the amount of products it sells that help its consumers to kick the habit, such as electronic cigarettes or nicotine patches, to help curb the revenue loss from its tobacco shoppers. However, that decision is one for the future, and it will depend on how the Food and Drug Administration decides to regulate electronic cigarettes.
"We do not currently carry e-cigarettes," DeAngelis said. "But we are continuing to monitor what the FDA decides in regard to these products."
There is no evidence thus far which shows that electronic cigarettes contain harmful carcinogens, like those that are present in real tobacco products. Nevertheless, the FDA has not explicitly stated that e-cigs are less harmful that the real thing, even though that is the general consensus among consumers.
Despite the decision to create a healthier CVS by refusing to sell tobacco products, CVS Caremark has no plans to do away with other items that could be detrimental to its customers' well-being, such as alcohol and wine.
"We have no plans to end the sale of alcohol," DeAngelis stated. "Unlike these other products, which are okay in moderation, no amount of tobacco use is safe."
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