SUBSCRIBE to Capitol Fax      Advertise Here      Mobile Version     Exclusive Subscriber Content     Updated Posts    Contact
CapitolFax.com
To subscribe to Capitol Fax, click here.
The benefits of not selling cigarettes

Thursday, Feb 6, 2014

* Joe Cahill has an interesting insight into the decision by CVS to stop selling cigarettes at its pharmacies. He calls it a “smart strategic play.” Here’s why

CVS Caremark, which is based in Woonsocket, R.I., and Walgreen are working to position themselves as go-to partners for health care providers. But there’s a problem. Partnerships with drugstores require hospitals to get over their reservations about joining forces with purveyors of a chief cause of sickness and death. Cigarettes have been a drugstore staple for generations.

That just changed. Hospitals looking for a partner now can choose between a leading national chain that sells cigarettes and one that doesn’t. All other things being equal, I think hospitals will take the chain that doesn’t sell cigarettes.

CVS Caremark’s chief medical officer emphasized the strategic rationale in an interview yesterday with the Wall Street Journal. Troyen Brennan said cigarette sales often come up in discussions with potential hospital partners, adding, “They’re a little bit suspicious of us because we sell cigarettes.” Dropping smokes, he said, “gives us a competitive advantage because it shows our commitment to health care.” […]

President Barack Obama, U.S. Health and Human Services Secretary Kathleen Sebelius, the American Medical Association and the American Cancer Society all praised CVS yesterday, underscoring Walgreen’s growing isolation from the broader health care community on the issue. […]

Walgreen is in a tough spot. While it doesn’t break out sales numbers, cigarettes almost certainly mean more to the bottom line at Walgreen than they do at CVS Caremark, which also operates a large pharmacy benefit management business in addition to 7,600 drugstores.

Thoughts?

- Posted by Rich Miller        


37 Comments
  1. - Been There - Thursday, Feb 6, 14 @ 10:12 am:

    ===Walgreen is in a tough spot. While it doesn’t break out sales numbers, cigarettes almost certainly mean more to the bottom line at Walgreen than they do at CVS Caremark===
    I don’t think they are too worried about being in a tough spot. A large number of smokers who shopped at CVS are not going to take their business to Walgreens. Not just for the smoke but all their business. Not much difference between the two places so why make two stops.


  2. - wordslinger - Thursday, Feb 6, 14 @ 10:13 am:

    Smart move by CVS. They got a jump on Walgreens.

    I know for a fact that there have been ongoing discussions at Walgreens about getting rid of smokes. They stopped selling them at their in-house store at corporate hq in Deerfield more than a year ago.

    Cigarettes, like gasoline, make people stop in, but they are not high-margin products. You’re mostly a tax collector. You hope people buy other junk when they stop.


  3. - Been There - Thursday, Feb 6, 14 @ 10:13 am:

    Sorry, I meant to say the smokers who shopped at CVS ARE going to take their business to Walgreens.


  4. - Stones - Thursday, Feb 6, 14 @ 10:14 am:

    I found it to be similar to Walgreen’s decision years ago to stop selling alcohol in their stores. A couple of years ago, Walgreen’s quietly began selling not only beer but package liquor. I suspect if it hurts the bottom line CVS will regret their decision.


  5. - Anonymous - Thursday, Feb 6, 14 @ 10:18 am:

    However, they will continue to sell alcohol and sugar-sweetened beverages.

    http://tbo.com/news/business/cvs-to-stop-selling-tobacco-products-20140205/

    And cigarettes are low-margin.
    http://www.chicagobusiness.com/article/20140206/NEWS07/140209883/why-it-makes-sense-for-cvs-to-quit-smokers

    But - still a good thing.


  6. - PoolGuy - Thursday, Feb 6, 14 @ 10:19 am:

    I’m sure sales at CVS will drop some and the Wall Street guys will complain. but honestly if Walgreens sales pick up because of cigarettes, let them have it. when you go to a store to buy cigs and pick up your heart medicine or blood pressure pills, that’s just odd.


  7. - Huh? - Thursday, Feb 6, 14 @ 10:21 am:

    The NPR news reports about this story are saying that it will cost CVS $2 billion, but they weasel it by saying that it is a small part of the overall CVS income. The stories also say that CVS will stop selling the cigarettes by October.


  8. - Healthy One - Thursday, Feb 6, 14 @ 10:23 am:

    Pool guy, how much different is that than picking up your diabetes strips right next to the candy aisle? Or perhaps your liver disease medicine next to the liquor.

    I’ve never quite understood how cigarettes have been singled out amongst our public health problems. Other than they stink awful.


  9. - FormerParatrooper - Thursday, Feb 6, 14 @ 10:25 am:

    It’s just a business decision. I don’t see anything nefarious in the decision. If it helps the bottom line, go for it.


  10. - PoolGuy - Thursday, Feb 6, 14 @ 10:27 am:

    HO, to me candy and alcohol can be enjoyed in moderation. can cigarettes?
    but you do have a point.


  11. - Pot calling kettle - Thursday, Feb 6, 14 @ 10:27 am:

    ==Partnerships with drugstores require hospitals to get over their reservations about joining forces with purveyors of a chief cause of sickness and death.==

    Will the candy aisle be the next to go?


  12. - Hatless - Thursday, Feb 6, 14 @ 10:28 am:

    I am seriously considering switching all of my family’s prescriptions to CVS from Walgreens. I appreciate what they are doing.


  13. - PoolGuy - Thursday, Feb 6, 14 @ 10:30 am:

    candy, potato chips, alcohol may eventually go if they are going to stick with that path.


  14. - A guy... - Thursday, Feb 6, 14 @ 10:30 am:

    Someone already got the jump on this; today it’s cigarettes, tomorrow it’s potato chips, and the next day it’s soda pop. I predict Walgreens will hold it’s ground on this area and has the girth to be more price competitive than anyone else. Ultimately, that’s who will win the lion’s share of the biz. Stores stock stuff people buy, period. CVS is taking a risk that I don’t think is worth it to a majority of the market. Non-smokers and health nuts buy their granola bars and energy drinks in the same places others buy their Marlboros and Newports. I’ve never seen a fight over it. I don’t think many care.


  15. - Liandro - Thursday, Feb 6, 14 @ 10:33 am:

    So, over the years, CVS will strengthen its brand reputation as a health-focused drug store, and Walgreens may get pushed towards a more drug-store-plus-7/11 reputation?

    There’s money to be made in either direction, but I think the long term maneuver by CVS is good. They are clearly making a strong, positive contrast with their competitors in a way that directly applies to their industry focus. Walgreens must be thinking hard.


  16. - wordslinger - Thursday, Feb 6, 14 @ 10:37 am:

    –candy, potato chips, alcohol may eventually go if they are going to stick with that path.–

    Those are all high-margin products. And I think most health-care providers recognize that they can be consumed safely in moderation.

    Walgreens will dump cigarettes. They are currently remaking themselves as a higher-end store. Think Target, not WalMart.

    Check out the new store at State and Randolph, that’s the future.


  17. - Liandro - Thursday, Feb 6, 14 @ 10:39 am:

    PoolGuy - Thursday, Feb 6, 14 @ 10:30 am:

    “candy, potato chips, alcohol may eventually go if they are going to stick with that path.”

    Possibly; I would hope they’ve gameplayed such scenarios. But if only tobacco was a problem with their negotiations with health care partners then I don’t think that’s right. Alcohol, maybe…but even that doesn’t have the stigma in the medical field that tobacco has.

    The risk here for others, if they don’t mimic the move, is that CVS may start getting a corner on lucrative long-term relationships with various health care partners. I would assume they’ve already set a plan in action to do just that. I guess the question is: how much are those long-term relationships worth vs. “junk” sales?


  18. - A guy... - Thursday, Feb 6, 14 @ 10:43 am:

    Slinger, think of all of the locations they have where they’re not only the drug store, but the grocery store and general dry goods and tool shop in deserts that they’ve committed to serve. Cigarettes will stay until there’s no value of having them as a convenience leader, or the margin is too thin. Don’t kid yourself about the margin on Cigs at Walgreens vs. the smoke shops, gas stations, and 7-11’s. Walgreens is higher. Cause they can. BTW, I’m a non-smoker.


  19. - Newsclown - Thursday, Feb 6, 14 @ 10:46 am:

    Most smokers get their coffin nails at a gas station. That 2 billion dollar figure might include the taxes and not the actual profit margin. CVS sees something they can sell more of, with a higher margin.


  20. - Small Town Liberal - Thursday, Feb 6, 14 @ 10:47 am:

    - Walgreens is higher. -

    Not in my experience, and I am a smoker.


  21. - Jaded - Thursday, Feb 6, 14 @ 10:50 am:

    E cigarettes are the future. In fact, I just smoked one online last night.


  22. - wordslinger - Thursday, Feb 6, 14 @ 10:51 am:

    Sorry, A Guy, I’m quite certain the wheels are already in motion on smokes. I’m sure some high-level execs are honked that CVS stole a march on them.

    As I said, Walgreens pulled smokes out of their in-house store at corporate hq. On the corporate level, they are very active in anti-cancer efforts.

    They are now at the “corner of happy and healthy.” Smokes don’t fit the brand image anymore.

    They are changing. You’ll see. The future is fewer products, higher margins, less clutter. They don’t want to be 7-11.


  23. - 47th Ward - Thursday, Feb 6, 14 @ 10:56 am:

    ===Partnerships with drugstores require hospitals to get over their reservations about joining forces with purveyors of a chief cause of sickness and death.===

    It’s nice that CVS took this stand, but I think it’s bad for business. Let’s face facts: smokers need more healthcare services than non-smokers. Everything from CT scans to chemo to radiation to prescriptions, smokers represent a growth market for hospitals and pharmacies. Who is going to fill all of those beds if everyone adopts a healthy lifestyle?

    So let’s all applaud CVS for taking a principled stand, but if the hospitals/physician networks are smart, they’re going to hope this doesn’t become a trend. Walgreens should continue to operate its business with lead-pipe cruelty, and think strategically about growth: cancer = customers.


  24. - Jake From Elwood - Thursday, Feb 6, 14 @ 11:13 am:

    This is all about the optics.
    CVS did get the good press and should not suffer too badly financially.
    Plus they are rid of the financial hassle of collecting and tendering all those taxes to states and local governments.


  25. - Cincinnatus - Thursday, Feb 6, 14 @ 11:22 am:

    The stockholders and bottom line will determine the smartness of this move. That’s how the market works.


  26. - Judgment Day (Road Trip) - Thursday, Feb 6, 14 @ 11:48 am:

    Most tobacco products are sold at (a) gas stations, and (b) convenience stores. Some stats place the percentage as high as 75%.

    So CVS frees up inventory /shelf space by not carrying tobacco, they get to eliminate all the paperwork required for a highly taxed product which is always being audited, and they get to avoid additional regulatory responsibility.

    CVS not selling tobacco could actually help their bottom line, because all the sudden, there’s a noticeable reduction in all the ongoing administrative and regulatory costs for handling tobacco..

    Focus on where your business is - and it’s not tobacco.


  27. - wordslinger - Thursday, Feb 6, 14 @ 11:52 am:

    JD gets it.


  28. - BIG R. Ph. - Thursday, Feb 6, 14 @ 11:59 am:

    Gee big chains. Get into the 21st century. We stopped selling cigs probably 25 years ago.


  29. - Kathryn - Thursday, Feb 6, 14 @ 12:17 pm:

    No one ever died from breathing air from second hand potato chips or candy, that can’t be said of second hand smoke from cigarettes, and then there is the damage to the smoker. It is ridiculous to compare them. Bravo to CVS they will be getting all my business instead of Walgreens.


  30. - VanillaMan - Thursday, Feb 6, 14 @ 12:53 pm:

    It is a little creepy that we’ve decided to applaud the discrimination of a legal product made by a chain store because we don’t like it. CVS sells a boatload of crap a lot of people don’t like, but chose this particular item.

    Frankly, as long as they sell as much booze as they do, CVS shouldn’t be claiming their anti-tobacco decision was based on their concerns about health.

    Hey - its their store and I don’t buy smokes there, so its no skin off my nose. But I’m not going to bat my eyes and act all goofy about their decision to snub out smokes like its a new era in personal health or something. I’m not that gullible.


  31. - Sunshine - Thursday, Feb 6, 14 @ 12:56 pm:

    I’m here to pick up my heart medication and a pack of Marlboros please.

    Never could understand the logic of putting cigarettes right in front of the store and prescription drugs way in the back?

    Now, I do think Snickers have a place in front, replacing smokes. I’m here to pick up my cholesterol drugs and diabetic pills…..and a couple of those large snickers please!


  32. - Cook County Commoner - Thursday, Feb 6, 14 @ 1:15 pm:

    In my end of the world, most smokers buy at dedicated shops which beat major retailer prices by $2.00 a pack. Next most economical purchase point is some gas stations that trim tobacco prices and also carry snacks. And the bootleggers are starting to show.
    I’m curious what the net revenue is on a pack at a major retailer, considering the extra cost with behind-the-counter display and handling by the register operator and tax accounting.
    CVS may be getting out of a diminishing business that will trend to smaller stores and bootleg vendors with untaxed smokes or those brought in from low tax areas.
    CVS seems to be doing smokers a financial favor by forcing them towards a cheaper source.


  33. - Devastated Young Man - Thursday, Feb 6, 14 @ 5:13 pm:

    In the past I worked at Walgreens, and as others pointed out, cigarettes are low profit margin. However, stores sell so much of them, oftentimes they have more gross product than any other department in the store, including the pharmacy.


  34. - Anon - Thursday, Feb 6, 14 @ 5:58 pm:

    If the chief criterion is harm done to other people by isers, then alcohol beats cigarettes hands down. No one commits a crime because he’s under the influence of tobacco.


  35. - Just The Way It Is One - Thursday, Feb 6, 14 @ 7:13 pm:

    One small step for Health (although a good step which could even ultimately reDUCE medical care costs for those whose condition gets UGLY due to lightin’ up), but one GIANT LEAP toward reducing Illinois $IN TAX REVENUE from all those $mokes that won’t be sold as a result…Ouch!!


  36. - Devastated Young Man - Thursday, Feb 6, 14 @ 8:38 pm:

    product should say profit… sorry bout the typo


  37. - Arthur Andersen - Thursday, Feb 6, 14 @ 10:26 pm:

    The pharmacy is in the back so you have to walk by all the other crap, er, merchandise, to get there. That layout has cost AA many a Milky Way or Lemonheads. #DriveThru


Sorry, comments for this post are now closed.


* Reader comments closed for the weekend
* *** UPDATED x1 *** The dirty little secrets about Facebook video views
* Life on a ledge
* Question of the day
* Our totally inspiring and uplifting US Senate race
* Trump piles on Chicago, but he may want to ask his running mate about Indiana
* Don't hold your breath
* More ugliness
* Today's number: $105,733
* SUBSCRIBERS ONLY - Supplement to today’s edition, fundraiser list and a campaign roundup
* SUBSCRIBERS ONLY - Today's edition of Capitol Fax (use all CAPS in password)
* Yesterday's blog posts

Support CapitolFax.com
Visit our advertisers...

...............

...............

...............
<


Search This Blog...

Search the 98th General Assembly By Bill Number
(example: HB0001)

Search the 98th General Assembly By Keyword

  
* MediaTek launches Helio X30, P20, P25 chipsets
* Android-Chrome merger may be previewed at Pixel event
* Oculus faces developer backlash over founder’s politics
* The hopes and headaches of Snapchat’s glasses
* Taking a swing for the Grammys with the new Lip Sync Battle app
* Prices for Google Home and new 4K Chromecast have leaked
* Hands-on with Pictar, which adds buttons and wheels to your iPhone camera

* Frazier hits HR, Quintana solid in Sox win
* Amid struggles, Sox close in on milestones
* Frazier hits HR, Quintana solid in Sox win
* Rodon hopes to derail Indians in finale
* Eaton jolted after slamming into wall
* Pitching for Team USA in WBC intrigues Sale
* Pair of homers not enough vs. 1st-place Tribe

...............


Main Menu
Home
Illinois
YouTube
Pundit rankings
Obama
Subscriber Content
Durbin
Burris
Blagojevich Trial
Advertising
Updated Posts
Polls

Archives
September 2016
August 2016
July 2016
June 2016
May 2016
April 2016
March 2016
February 2016
January 2016
December 2015
November 2015
October 2015
September 2015
August 2015
July 2015
June 2015
May 2015
April 2015
March 2015
February 2015
January 2015
December 2014
November 2014
October 2014
September 2014
August 2014
July 2014
June 2014
May 2014
April 2014
March 2014
February 2014
January 2014
December 2013
November 2013
October 2013
September 2013
August 2013
July 2013
June 2013
May 2013
April 2013
March 2013
February 2013
January 2013
December 2012
November 2012
October 2012
September 2012
August 2012
July 2012
June 2012
May 2012
April 2012
March 2012
February 2012
January 2012
December 2011
November 2011
October 2011
September 2011
August 2011
July 2011
June 2011
May 2011
April 2011
March 2011
February 2011
January 2011
December 2010
November 2010
October 2010
September 2010
August 2010
July 2010
June 2010
May 2010
April 2010
March 2010
February 2010
January 2010
December 2009
November 2009
October 2009
September 2009
August 2009
July 2009
June 2009
May 2009
April 2009
March 2009
February 2009
January 2009
December 2008
November 2008
October 2008
September 2008
August 2008
July 2008
June 2008
May 2008
April 2008
March 2008
February 2008
January 2008
December 2007
November 2007
October 2007
September 2007
August 2007
July 2007
June 2007
May 2007
April 2007
March 2007
February 2007
January 2007
December 2006
November 2006
October 2006
September 2006
August 2006
July 2006
June 2006
May 2006
April 2006
March 2006
February 2006
January 2006
December 2005
April 2005
March 2005
February 2005
January 2005
December 2004
November 2004
October 2004

Blog*Spot Archives
November 2005
October 2005
September 2005
August 2005
July 2005
June 2005
May 2005

Syndication

RSS Feed 2.0
Comments RSS 2.0
WordPress

Loading


* Education funding lawsuits may show what's ahea.....
* Chuck Sweeny: We need to standardize marijuana .....
* Study says video gaming has generated about $78.....
* Steven Reick, John Bartman seek to succeed Jack.....
* Illinois Safe Roads Amendment will end raids on.....
* Illinois state representative warns of more sto.....


* Parolee charged with killing 2 Chicago men earlier this year
* Police: 5 shot, 1 dead, after fight at Illinois campus party
* EXCHANGE: Deputies in right place to save life of woman
* EXCHANGE: Roselle family calls safe haven mothers 'angels'
* Iowa State president damaged school plane on personal trip
* Illinois man arrested in kidnapping of teenager and baby
* Family of Chicago man found dismembered files lawsuit
* Experts: May be hard convicting Tulsa cop of manslaughter
* Record number of Illinois youths killed while in DCFS care
* South Chicago suburbs try to curb video gambling businesses

* Planning underway locally for Illinois' 200th birthday
* Attack on state senator leads to arrest of murder suspects
* Illinois Supreme Court overturns law allowing 6-member juries
* Local unemployment of 4.6 percent still lowest in state
* Elderly frozen-treat seller gets $380,000 from GoFundMe page
* Creation of Amish history museum in central Illinois underway
* Privately funded Executive Mansion work will follow traditional wage, bidding rules
* 'Memorandum of agreement' outlines restoration rules for Executive Mansion work
* Gov. Rauner uses Facebook Live to announce bicentennial plans
* Environmental groups push for lead testing of water in schools

* How Presence Health cracked the code on telehealth
* Merz Apothecary at your door within hours
* Where did the bankruptcy wave hit hardest?
* Seven years after selling the Cubs to the Ricketts family, Tribune's tax battle is in extra innings
* Meet the Dems' chief weapon against remap reform: Michael Kasper


* Police: 25-year-old man found shot to death in Ashburn
* Marlins All-Star Jose Fernandez dies in boating accident
* Man shot waiting to cross street in Austin
* Mundelein man killed in shooting on U. of I. campus
* Tracking turtles and habitat use: Study in Cook County
* Man shot in Gage Park
* No injuries reported in Back of the Yards house fire
* Person shot in the neck in Calumet Heights
* Man shot in Back of the Yards
* Man wounded in Logan Square shooting


* Windsor school 'tasting menu' a big hit with students
* Jane Pauley succeeds Charles Osgood as host of 'CBS Sunday Morning'
* Gennifer Flowers won't attend presidential debate after all, Donald Trump camp says
* 7 overdose deaths in 1 day reported in Cleveland-area
* Self-driving trucks threaten one of America's top blue-collar jobs
* LINDA C. BLACK HOROSCOPES for 9/25/16
* Scope of Donald Trump's falsehoods unprecedented for presidential candidate
* Man critically wounded in shooting near Millennium Park among 22 shot citywide
* Marlins ace Jose Fernandez killed in boating accident Sunday; game Sunday vs. Braves canceled
* Man found dead on Southwest Side


The widget AQL4JYGHIY powered by Feed Informer does not exist.


* Bernard Schoenburg: Interesting twists in Troemper-Reid circuit judge race
* Statehouse Insider: Do you remember where you were during Rauner's Facebook Live session?
* Compass for Kids supports at-risk children
* Innovate Springfield gives boost to new businesses
* Eric Zarnikow: Aid changes mean students should act now
* Planning underway locally for Illinois' 200th birthday
* Attack on state senator leads to arrest of murder suspects
* Illinois Supreme Court overturns law allowing 6-member juries
* Local unemployment of 4.6 percent still lowest in state
* Bernard Schoenburg: Policy institute criticized for secrecy in Madigan project


* Campus Shooting
* Witness to shootings: 'No one knew what was going on'
* Your share of Illinois’ debt: Simply write a check for… how much?
* Education funding lawsuits may show what’s ahead for Illinois
* Getting Personal: Eric Snodgrass
* Bystander killed in on-campus shooting
* Sept. 25 Asmussen Top 25
* Conservation factors into river management
* PFOP: ‘Angel of the West Side’ met daycare needs a century ago
* School tax plan is just too big


* Mundelein man killed in shooting near University of Illinois campus
* Injuries leave Bears defense plugging up holes
* Marlins say star pitcher Jose Fernandez has been killed
* Trump, Clinton backers in suburbs taking nothing for granted
* The Latest: Charlotte protests remain peaceful another night

* House lawmakers overcome hurdle on key tra...
* Rodney Davis talks funding with Bloomingto...
* The agency that fought Illiana gets a new ...
* Rep. Dold takes educational cruise down Ch...
* Lawmakers decry high turnover rate of VA h...
* CBD Oil, and politics
* Simon considering state Senate bid
* Killer Congressman Tom MacArthur trying to...
* Shutdown? State may not notice
* Rep. Bob Dold

* Illinois/Wisconsin briefs - Dubuque Telegr......

* Senators Introduce Legislation Aimed at Bo......
* Report questions accuracy of Kirk, Duckwor......

* John Dillon on re-districting reform.
* Stop-and-frisk.
* Sunday chowdah.
* Rumdum
* Putting A Fresh Face On The Uptown Theater
* Attempted Hold-Up Of American Metro Bank On Friday
* "A Taste Of Uptown" Is Coming In October
* Carol's Pub Closes (At Least For Now) - One Of Uptown's Last Appalachian-Era Hangouts
* Blues people (an art project).
* Teachers (an art project).


* IDOT Hiring in Preparation of Winter Weather - Temporary help needed to assist with snow-and-ice removal, public urged to apply
* Illinois Department of Insurance Reminds ‘Land of Lincoln Health’ Customers to Enroll In New Coverage - The deadline for ‘Land of Lincoln Health’ customers to enroll in a new plan is September 30, 2016; Consumers could experience a gap in health care cove
* Governor Rauner Celebrates Illinois’ Hunting Heritage on National Hunting and Fishing Day
* Governor Signs Executive Order Creating New Illinois Bicentennial Commission
* State of Illinois Announces Online Enrollment Platform for Group Insurance Programs - MyBenefits Marketplace continues Illinois’ digital transformation, improves state employee experience




      Hosted by MCS SUBSCRIBE to Capitol Fax Advertise Here Mobile Version Contact Rich Miller