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Author Topic: CVS’s Decision Isn’t Really About Smoking  (Read 1914 times)

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Offline RobJohnson

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CVS’s Decision Isn’t Really About Smoking
« on: February 18, 2014, 03:34:31 AM »
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When CVS Caremark Corp. Chief Executive and President Larry Merlo announced that his drugstore chain would stop selling tobacco products, one of the first to respond was the president of the United States.

The speed of the president’s statement indicates that CVS’s decision was likely coordinated with the White House. Every day, countless business decisions are made without any comment from the White House. Something unusual was going on.

This is troubling. It gives the appearance of preference for those who curry favor with the powerful, and it squeezes out smaller entrants who can supply innovative products and services to consumers.

The president said: “I applaud this morning’s news that CVS Caremark has decided to stop selling cigarettes and other tobacco products in its stores, and begin a national campaign to help millions of Americans quit smoking instead.”

The president congratulated Merlo by name, as well as “all who helped make a choice that will have a profoundly positive impact on the health of our country.”

As long as businesses are acting within the law, they should not be trying to please the federal government. Nor should they refrain from acting because they expect government’s praise. There is no upside to such behavior, and much downside.

As everyone knows by now, CVS, the No. 2 drug store chain, will give up $2 billion in revenues by halting sales of tobacco products. CVS’s stock declined in response to the announcement, but it is not clear that shareholders’ long-term interests will be undermined.

The management of CVS might not be able to tell shareholders about the pressures the chain may face to win favor with the government, especially in the context of the newly implemented Affordable Care Act. Of course, health groups have been trying for years to limit tobacco sales and advertising.


http://www.economics21.org/commentary/cvs%E2%80%99s-decision-isn%E2%80%99t-really-about-smoking?utm_source=outbrain&utm_medium=referral
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Offline txradioguy

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Re: CVS’s Decision Isn’t Really About Smoking
« Reply #1 on: February 18, 2014, 06:06:58 AM »
I wonder what Merlo's personal contribution was to OFA in 2012?
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Offline Jmartin

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Re: Re: CVS’s Decision Isn’t Really About Smoking
« Reply #2 on: February 18, 2014, 06:11:15 AM »
Whatever don't care. The package store right down the road sells them a $1.50 less a pack, and I can buy a fifth of Jack Daniels or Wild Turkey while I am there.
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Offline Ralph Wiggum

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Re: CVS’s Decision Isn’t Really About Smoking
« Reply #3 on: February 18, 2014, 08:47:44 AM »
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As everyone knows by now, CVS, the No. 2 drug store chain, will give up $2 billion in revenues by halting sales of tobacco products. CVS’s stock declined in response to the announcement, but it is not clear that shareholders’ long-term interests will be undermined.

It is my understanding that the profit margin on tobacco products is very very thin.  But still, giving up tobacco sales will hurt in ancillary purchases.
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Offline RobJohnson

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Re: CVS’s Decision Isn’t Really About Smoking
« Reply #4 on: February 18, 2014, 04:43:34 PM »
Quote from: Ralph Wiggum on February 18, 2014, 08:47:44 AM
It is my understanding that the profit margin on tobacco products is very very thin.  But still, giving up tobacco sales will hurt in ancillary purchases.

True.

There are clever ways that the chains profit off tobacco from the tobacco companies. RJ Reynolds pays to have their products put on the top shelf, etc.

The markup is low on liquor and beer but CVS is keeping that.
« Last Edit: February 18, 2014, 04:45:51 PM by RobJohnson »
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Offline JohnnyReb

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Re: CVS’s Decision Isn’t Really About Smoking
« Reply #5 on: February 18, 2014, 04:57:23 PM »
Making brownie points with "The One".
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Offline Fourwinds

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Re: CVS’s Decision Isn’t Really About Smoking
« Reply #6 on: February 18, 2014, 09:37:52 PM »
I dip and I have no shortage of tobacco shops in my area. So CVS can fark right off
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Offline thundley4

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Re: CVS’s Decision Isn’t Really About Smoking
« Reply #7 on: February 18, 2014, 10:07:40 PM »
Will CVS get preferential treatment from medicaid and medicare?  Will insurance companies on the exchanges be force to give CVS preferred status?

Funny how Obama supports their "anti-smoking" ploy, but said pot was just a bad habit.
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Offline obumazombie

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Re: CVS’s Decision Isn’t Really About Smoking
« Reply #8 on: February 18, 2014, 10:54:40 PM »
Tobacco is part of owebuma's green energy program.
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Offline Karin

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Re: CVS’s Decision Isn’t Really About Smoking
« Reply #9 on: February 21, 2014, 10:30:08 AM »
Meh, don't care about this either.  Personally, it doesn't feel "right" to buy smokes at a pharmacy so I never have.  It's just not fitting.  Convenience stores advertising the lowest prices, and Indian reservations are the places to go.  Trading wampum for tobacco seems appropriate.   :-)
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Offline Ralph Wiggum

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Re: CVS’s Decision Isn’t Really About Smoking
« Reply #10 on: February 21, 2014, 11:15:42 AM »
Quote from: Karin on February 21, 2014, 10:30:08 AM
Meh, don't care about this either.  Personally, it doesn't feel "right" to buy smokes at a pharmacy so I never have.  It's just not fitting.  Convenience stores advertising the lowest prices, and Indian reservations are the places to go.  Trading wampum for tobacco seems appropriate.   :-)

Walgreens has the second lowest prices around these parts, from what I have gathered.  There is a really inconvenient liquor store not too far away that has them cheaper, but the neighborhood & clientele is a little sketchy to say the least.
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Offline RobJohnson

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Re: CVS’s Decision Isn’t Really About Smoking
« Reply #11 on: February 21, 2014, 08:14:08 PM »
Quote from: Ralph Wiggum on February 21, 2014, 11:15:42 AM
Walgreens has the second lowest prices around these parts, from what I have gathered.  There is a really inconvenient liquor store not too far away that has them cheaper, but the neighborhood & clientele is a little sketchy to say the least.

I don't smoke but I have been told that Walgreens is the second lowest price point in our town. The only place with lower prices is a 24/7 mini casino and they only take cash. The casino is kinda a shithole and you have to be buzzed in after dark! There is a so called tobacco outlet but one of my friends went there and said they were all off brand smokes and they tasted like  :censored: and were really dry.
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