Why Can’t Drug­stores Quit Cigarettes?

Why Can’t Drug­stores Quit Cigarettes?·Fortune

Ever since CVS Health ditched tobacco products in 2014—sacrificing $2 billion in sales to bolster its image as a health company—Rite Aid and Walgreens have been facing pressure to follow suit.

The companies recently raised their minimum tobacco sales age from 18 to 21—aiming to reduce minors’ access to them. But the moves came soon after a lashing in March from the FDA, which found both chains, with a combined fleet of 15,000 stores, to be among 15 major retailers selling cigarettes to minors.

Beyond the brickbats and bad PR, declining sales would be a valid reason to exit the category: Cigarette sales fell to 252.7 billion sticks in 2017, from 292.7 billion in 2012, according to Euromonitor International.

Cigarettes are a modest and declining business for U.S. drugstore chains—total sales of about $1.6 billion based on Euromonitor International data—but they’re a desperately needed source of foot traffic for Walgreens and Rite Aid. Both chains have seen comparable non-pharmacy sales fall in the past four quarters.

But in contrast, sales at CVS were up 0.5%, showing that there can be a healthy retail life after dropping a bad habit cold turkey.

For a nuanced look at the health of CVS: click here.

This article originally appeared in the June 2019 issue of Fortune.

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