CVS has lost almost $2 billion a year in potential revenue by becoming the first national drugstore chain to voluntarily stop selling cigarettes and other tobacco products. The chain made their decision in early February and will institute it by October 1st, 2014. Many state attorney generals have been putting pressure on businesses and CVS was the first major brand to cave. State attorney generals have not tried legal action but this has happened before with another addictive substance, think soda and NYC. Mayor Bloomberg’s attempt to limit the size of soft drinks failed because legally he couldn’t dictate what consumers could purchase. The same may be said of cigarettes, however they have a much more adverse affect on health than soda. Regardless of whether the use of cigarettes can be legislated, drug stores are feeling great pressure to stop offering them to customers.
Other pharmaceutical retailers that sell cigarettes and other tobacco products include Wal-Mart, Walgreen, Kroger, Rite Aid, and SafeWay. The Attorney Generals have been putting pressure on each of these chains to stop offering tobacco products in their stores. Each of these companies will lose a great deal of revenue if they stop the sale of tobacco products, so what is the incentive? CVS was happy to lead the charge because they have reaped the benefits of positive press coverage and receiving goodwill from many consumers. Losing tobacco may hurt the company’s annual sales for a while, but they are confident they will catch up again.
The other two major chains, Rite Aid and Walgreens are now in a tough position. If a second chain goes tobacco free they will miss out on the positive press that CVS received because they will be second. Additionally, if two major pharmacies are tobacco free it leaves all of the tobacco business with the third. Either way, there is increasing pressure from possible legislation so someone will have to act soon.