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Longs Drug Stores to stop selling tobacco

By Michael Felberbaum & Tom Murphy

AP Business Writers


POSTED:
LAST UPDATED: 03:04 p.m. HST, Feb 05, 2014


CVS Caremark, the parent company of Longs Drug Stores in Hawaii, is kicking the habit of selling tobacco products at its more than 7,600 drugstores nationwide as it focuses more on providing health care.

The company's decision to pull cigarettes and other tobacco products from its stores could ripple beyond the nation's second-largest drugstore chain.

The move, which drew praise from President Barack Obama, doctors and anti-smoking groups when it was announced today, puts pressure on other retailers to stop selling tobacco as well. But first they have to overcome their addiction to a product that attracts customers.

"They don't make much money on tobacco, but it does draw people into the store," said Craig R. Johnson, president of the retail consultancy Customer Growth Partners.

CVS Caremark Corp. said it will phase out tobacco by Oct. 1 in its 7,600 stores nationwide as it shifts toward being more of a health care provider. CVS and other drugstore chains have been adding in-store clinics and expanding their health care offerings. They've also been expanding the focus of some clinics to include helping people manage chronic illnesses like high blood pressure and diabetes.

CVS CEO Larry Merlo said the company concluded it could no longer sell cigarettes in a setting where health care also is being delivered. In fact, as CVS has been working to team up with hospital groups and doctor practices to help deliver and monitor patient care, CVS Chief Medical Officer Dr. Troyen A. Brennan said the presence of tobacco in its stores has made for some awkward conversations.

"One of the first questions they ask us is, 'Well, if you're going to be part of the health care system, how can you continue to sell tobacco products?'" he said. "There's really no good answer to that at all."

CVS, based in Woonsocket, R.I., follows a precedent set by other drugstores. Most independent pharmacies abstain from tobacco sales, according to the National Community Pharmacists Association. Pharmacies in Europe also don't sell cigarettes, and neither does major U.S. retailer Target Corp., which operates some pharmacies in its stores.

But the world's largest retailer, Wal-Mart Stores Inc., which also operates pharmacies, does sell tobacco. So do CVS competitors Walgreen Co. and Rite Aid Corp.

Health and Human Services Secretary Kathleen Sebelius called on others to follow the CVS example. "We need an all-hands-on-deck effort to take tobacco products out of the hands of America's younger generation, and to help those who are addicted to quit," she said in a statement.

Both Walgreen and Rite Aid representatives said today that they are always evaluating what they offer customers and whether that meets their needs.

The question of whether to sell tobacco is complex for retailers because it's a revenue driver. Dollar stores such as Family Dollar have started selling it over the last couple years, and they note that smokers make more frequent stops at retailers in order to buy tobacco. That's an important factor because these customers also may pick up other items when they visit.

In fact, CVS said that while it has about $1.5 billion annually in tobacco sales, it expects to lose about $2 billion in annual revenue by removing tobacco because smokers also buy other products when they visit. Overall, the company brought in more than $123 billion in total revenue in 2012.

But CVS is in a unique position from some of its peers. While it trails only Walgreen in terms of number of drugstores, it draws most of its revenue from its pharmacy benefits management, or PBM, business. PBMs run prescription drug plans for employers, insurers and other customers.

Having the PBM business made it easier for CVS to disavow tobacco, according to Morningstar analyst Vishnu Lekraj. He noted that Walgreen, Rite Aid and other mass retailers depend more on convenience goods for their sales. Even so, he said he thinks Walgreen may eventually follow CVS and remove tobacco because it also has emphasized its role as a health care provider.

Gabelli Funds analyst Jeff Jonas agrees. "I think once one chain does it, the other one really has to follow," he said. Gabelli noted, though, that Rite Aid may be less likely to do so because it hasn't made the same in-store investment in clinics as the other chains.

Either way, the move by CVS highlights the pressure companies that sell tobacco are facing to kick that habit. Tobacco is responsible for about 480,000 deaths a year in the U.S., according to the Food and Drug Administration, which gained the authority to regulate tobacco products in 2009.

The federal government has renewed efforts to reduce the death and disease caused by tobacco use on the heels of the 50th anniversary of the landmark 1964 surgeon general's report that launched the anti-smoking movement. A new 980-page report issued last month by acting Surgeon General Boris Lushniak also urged new resolve to make the next generation smoke-free.

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 like New York City have sought to curb retail displays and promotions and raise the legal age at which someone can buy tobacco products.

The decision by a company such as CVS to stop selling tobacco products is a move of "great corporate social responsibility," said Dr. Richard Hunt, director of the Mayo Clinic's Nicotine Dependence Center.

But the decision didn't seem to faze Tim Watt, who walked out of a downtown Indianapolis CVS store today with a fresh pack of Pall Malls. Watt, 54, collects unemployment and is on a budget, so he buys most of his cigarettes from CVS, where Pall Malls are 20 cents to a dollar cheaper than at other places.

"I'll just find someplace else," he said.

Murphy reported from Indianapolis. Felberbaum reported from Richmond, Va. AP Writer Carlo Piovano in London also contributed to this report.







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st1d wrote:
that is a giant leap in the right direction for cvs/longs.
on February 5,2014 | 04:09AM
wahine wrote:
I agree. The next step would be for them to sell medical marijuana that is prescribed by a doctor and administered by their pharmacists.
on February 5,2014 | 05:53AM
GoldenRule wrote:
Hahahahahaha! So right on.
on February 5,2014 | 06:58AM
paradisetax wrote:
I liked the "old " Long's before CVS took over. Store merchandise had a more local variety.
on February 5,2014 | 11:14AM
kiragirl wrote:
I like their mantra that health is more important than sales. Right on Longs!
on February 5,2014 | 04:49AM
KeithHaugen wrote:
CVS/Longs is clearly establishing itself as THE leader in community health. Halting the sale of tobacco products will ultimately result in more people choosing to shop in Longs. Right on.
on February 5,2014 | 05:08AM
GoldenRule wrote:
Is an alcohol ban next? Sugary soft drinks? They sure sell a lot.
on February 5,2014 | 06:59AM
kainalu wrote:
I see it differently. I see Long's losing business. There's a reason that proven-killers like alcohol and tobacco are still alive and well. The Government at all levels too-dependent on the HUGE tax-revenue from these products. Long's bottom-line will definitely shrink. Alcohol and tobacco are huge revenue-makers, still pushed as sure-fire investments by brokers. We just seen it with Bruno Mars - supply and demand. There's a demand for tobacco. Those buyers will have to get it from somewhere.
on February 5,2014 | 07:35AM
Bdpapa wrote:
Hopefully other stores will follow.
on February 5,2014 | 05:09AM
droid wrote:
Don’t hold your breath. Every other drug store spokesperson interviewed in this article postured as if to swoop in take a piece of that $2 billion in lost tobacco revenue. Kudos to CVS, though.
on February 5,2014 | 05:54AM
DowntownGreen wrote:
Good for them. And no one "forced" them.
on February 5,2014 | 05:18AM
cojef wrote:
Free PR for just the announcement.
on February 5,2014 | 10:44AM
DowntownGreen wrote:
Yup. Another reason it's a smart business move.
on February 5,2014 | 11:14AM
kekelaward wrote:
CVS has been shilling for obamacare all along. And like obamacare, most of it is noise that doesn't really do anything for healthcare. If we logically continue CVS' thinking, they'll stop selling liquor, soda, junk snack food and get rid of the entire double aisle of candy they have in every store, as those are also unhealthy choices.
on February 5,2014 | 03:29PM
hawqaiicorvette wrote:
good for them hopefully every store in america and around the world will follow their lead
on February 5,2014 | 05:26AM
rayhawaii wrote:
If other stores follow the lead then someone going to make billions extra like 7-11 and mom and pop stores. They all smiling because plenty profit to be made.
on February 5,2014 | 06:58AM
HLOEWEN wrote:
Tobacco should be legislated out of existence by the US government, but it will not be, too much money involved. Political corruption.
on February 5,2014 | 05:32AM
GoldenRule wrote:
I concur. It is already known nicotine is addictive and causes ALL kinds of illnesses. Tobacco is a serial killer so let's execute it once and for all.
on February 5,2014 | 07:01AM
cojef wrote:
The tax revenue precludes legislative action, likewise alcohol.
on February 5,2014 | 10:47AM
fishnfool wrote:
Publicity stunt, nothing more. It might help their bottom line for a short time because of posters like the above crew, but in a little while that will go away. Its hard to see how limiting the numbers of customers walking through your doors helps your revenue side. Besides the sale of tobacco products ( which are still legal as far as I know) that smoker walking in might also buy a tube of toothpaste, drug products, or other items for sale in the store. If they are also getting prescriptions at Long's, they will probably switch to Wally World or some other store so they can also conveniently pick up some smokes at the same time. Now if Long's is really serious about people's health care, they will also ban alcohol sales to show their sincerity. But you can bet that's not going to happen- too big of cut to the bottom line. Besides, Long's understands smokers are a hated and steadily shrinking group and they can afford to pile on. Long's is as serious about people's health as Obama and the D-Rats are about providing real, affordable healthcare for all Americans. BTW- I don't smoke and never have. I just hate hypocrisy when I see it.
on February 5,2014 | 05:33AM
niimi wrote:
Have you spoken to the CVS folks about your assumption? Thought not.
on February 5,2014 | 05:52AM
kekelaward wrote:
What for? CVS now considers you a "patient', not a "customer ". So they are a little befuddled about definitions right now.
on February 5,2014 | 03:34PM
HIE wrote:
You must hate looking in the mirror each day...
on February 5,2014 | 06:49AM
fishnfool wrote:
HIE:I should have added I don't care for ignoranuses either but without folks like you the Dema-Rat party wouldn't have any voters.
on February 5,2014 | 11:25AM
krusha wrote:
Great to see a company do something for the greater good instead of to bolster the bottom line.
on February 5,2014 | 05:40AM
DowntownGreen wrote:
It may also bolster the bottom line when people choose to reward them with their business because of this decision. Now if I have the choice between Walgreens or Longs, I'll go to Longs.
on February 5,2014 | 06:28AM
niimi wrote:
I will now only shop at Longs Drugs out of principle.
on February 5,2014 | 05:50AM
niimi wrote:
Longs Drugs is the thought leader in this market. Way to go! They have an even more loyal customer now.
on February 5,2014 | 05:50AM
GoldenRule wrote:
I love that they have an in-house nurse to help you treat illnesses without going to a doctor's office. The Hawaii Kai nurse helped diagnose a chronic allergic rhinits that has been going on for years. Prescribed me some drugs and they are finally helping. I have been paying doctors for years to help me with my nasal and throat problems just to hear them tell me it is just old age. Doctors are so useless, and their numbers are increasing. They should have expiration dates. Do see this gal. She is sincere, listens very well, and tries to explain how she comes to a diagnosis and treatment so you will understand your disorder. Let's support this new medical service. It is so convenient to get this kind of attention in your favorite drug store.
on February 5,2014 | 07:07AM
Manoa_Fisherman wrote:
Just wait, Longs will be selling medical marijuana as soon as it is legal to do so. Out with the bad, in with the worse! What hypocrites politicians are. If tobacco products are so bad, why don't they just ban or outlaw tobacco like illegal drugs? Because the State of Hawaii gets $100 million from taxes from tobacco sales, they want people to smoke to collect their taxes. Unlike drug dealers and pimps, politicians can talk out of both sides of their mouths and not only sound sincere about caring about people's health, but can profit from the victim's misery and illnesses.
on February 5,2014 | 06:31AM
livinginhawaii wrote:
Looks like our over paid politicians will have to re-forecast the budget. Sadly, the State has become dependent upon the tax revenues generated from CVS tobacco sales. I would anticipate a shift to many of the smaller black market venues where tobacco products seem to be missing the State's green stamp.
on February 5,2014 | 06:36AM
rayhawaii wrote:
How they going to make money helping people get better? That's the purpose of selling drugs to make money from sick people. That's why someone invents a computer virus so he can sell the program to get rid of it. Might as well work on stop selling alcohol. At least Longs will make money off people going somewhere else to buy cigarettes.
on February 5,2014 | 06:55AM
myviewofthings wrote:
i hope they dont stop selling alcahol
on February 5,2014 | 06:59AM
myviewofthings wrote:
alcohol
on February 5,2014 | 07:00AM
WizardOfMoa wrote:
What a brave and noble action. Thank you CVS Caremark to initiate a practice most beneficial to society.
on February 5,2014 | 07:04AM
ahi1pfb wrote:
Good job cvs, giving up 2 billion in sales to make a point.
on February 5,2014 | 07:10AM
tim5fl wrote:
GOOD ! !
on February 5,2014 | 07:37AM
Maneki_Neko wrote:
Outstanding.
on February 5,2014 | 07:50AM
salsacoquibx wrote:
Good business move CVS
on February 5,2014 | 08:16AM
Skyler wrote:
Wow. They just went up a few notches in my book. But will they stop selling alcohol? Not hardly.
on February 5,2014 | 08:36AM
awahana wrote:
Alcohol, soda, and milk should be next.
on February 5,2014 | 08:50AM
Mahalo wrote:
WAY TO GO!!! I will shop at CVS even more now!!
on February 5,2014 | 10:09AM
cojef wrote:
About the same, rather go to Rite-Aid, they sell ice-cream cones and have more flavors than I can remember. Inexpensive too. I cheat on my diabetes.
on February 5,2014 | 11:01AM
gmejk wrote:
Won't change my buying habits--whoever has it cheaper has my business.
on February 5,2014 | 11:49AM
kekelaward wrote:
That is exactly what most posters on this thread will do, no matter what they say
on February 5,2014 | 03:39PM
kekelaward wrote:
It's good that president priorities was able to make a statement on this faster than the attack on our consulate in Benghazi, and the murder of our ambassador.
on February 5,2014 | 03:42PM
fishnfool wrote:
Well the to be fair to Emperor Nero, the bodies of the four Americans killed were found to be smoking after the attack. Maybe he figured they had it coming after such heinous behavior.
on February 5,2014 | 05:04PM
honopic wrote:
The most important number in this article is 480,000 -- the number of deaths each year caused by tobacco use. If divided equally by states, that's 9,600 people per state who are killed by tobacco. And it doesn't include the other health problems directly related to smoking that have not (yet) resulted in death. Smokers are playing Russian roulette each time they light up. It would be bad enough if they were only hurting themselves, but their addiction affects their family members and anyone else they come in contact with. It also hurts us all in the pocket -- taxpayers, insurers, health-care facilities. If there was any other poison that killed as many people, would we allow stores to sell it?
on February 5,2014 | 09:30PM
Jiujitsu_Fighter wrote:
Took guts for CVS-Longs executives to make this decision.
on February 6,2014 | 11:28AM
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