CVS Pharmacy announced Wednesday that the drugstore chain will stop selling all tobacco products in its stores by Oct. 1 -- leaving the company's $1.5 billion in annual tobacco sales up for grabs.
Some Chattanooga retailers are ready to snap it up.
"We expect that people who used to get everything in a one-stop-shop over there may come here," said Kumar Patel, owner of Stop 'N' Go Discount Pharmacy and Stop 'N' Go Food Mart. He's right next door to the CVS Pharmacy on Ringgold Road in East Ridge, and he's hoping tobacco-buying CVS customers will switch their prescriptions to his shop come October.
"We've always had cheaper tobacco and cigarette prices than CVS anyway," he said.
CVS will phase out cigarettes, cigars and chewing tobacco in all of its 7,600 stores nationwide, including the company's 25 stores in the Chattanooga region. CVS officials hope cutting tobacco will help strengthen the company's push to become a healthcare provider.
CVS has been teaming up with hospital groups and doctor practices to help deliver and monitor patient care through its MinuteClinics, and Chief Medical Officer Troyen 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 already operates about 800 walk-in MinuteClinics in its pharmacies, and plans to add another 700 clinics by 2017. Pharmacists can now deliver flu shots and other immunizations, and clinics manage chronic illnesses like high blood pressure and diabetes and treat relatively minor problems like sinus infections.
It's a reflection of a larger positioning across the drugstore industry -- most major drugstore chains are adding clinics and expanding healthcare offerings, preparing for increased health care demand due to an aging U.S. population and the millions of people expected to gain health insurance under the health care overhaul.
"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," said Larry Merlo, CVS CEO. "Put simply, the sale of tobacco products is inconsistent with our purpose."
While CVS sells about $1.5 billion annually in tobacco products, the company expects to lose about $2 billion in annual revenue because smokers often buy other products when they visit CVS stores. Still, CVS brought in more than $123 billion in total revenue in 2012, and cutting tobacco won't affect its 2014 earnings forecast.
Dortha Spence, a Chattanoogan who smoked for about four years 30 years ago, said she's still dealing with the damage smoking did to her lungs, and she's glad CVS is dropping tobacco products.
"If I was still smoking, I'd be, well I'd be dead," she said, sitting in the CVS on Hixson Pike. "Tobacco is bad for you and they are a drugstore, so it's kind of contradictory to sell it."
The company's plan also drew praise from President Barack Obama, who said the decision will help his administration's efforts to reduce tobacco-related deaths, cancer and heart disease, as well as lower health care costs.
Tobacco is responsible for about 480,000 deaths a year in the U.S., according to the Food and Drug Administration. The share of Americans who smoke has fallen dramatically since 1970, from nearly 40 percent to about 18 percent. But about 44 million adults in the United States still smoke cigarettes.
"It was an incredibly bold move," said Chattanooga CVS customer Carol Putman. "I think it was a difficult business decision, but I also admire a company that will stand up for what they believe in. They're willing to sacrifice profit for what they believe in. It's nice to see a little integrity."
CVS competitors Walgreen Co. and Rite Aid Corp. both sell tobacco products, and both companies issued statements Wednesday that said they are evaluating what they offer customers and how products meet customers' health needs.
U.S. retail sales of tobacco, which is comprised largely of cigarettes, were about $107.7 billion in 2012, according to market researcher Euromonitor International. So on its own, the CVS move won't hurt cigarette companies much.
Drugstores overall account for only 4 percent of cigarettes sold. That pales compared to gas stations, which generate nearly half of those sales. But it's another in a long line of changes that have led cigarette sales to fall because of health concerns, higher prices and taxes, and social stigma.
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.
At Kingwood Pharmacy in East Ridge, store manager Joe Harper said the 69-year-old business sells a small amount of cigarettes and that the CVS decision won't have a large impact on his sales.
"Seems a little like a publicity stunt to me," he said.
The Associated Press contributed to this report.
Contact staff writer Shelly Bradbury at 423-757-6525 or email@example.com.