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Written by Puff Staff

Sunday, 16 February 2014

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cvstobacco regulation


Last week’s announcement from CVS/Caremark that tobacco products will no longer be sold in their stores as of October 1 came as a bit of a shock to some customers. The corporate decision has gotten mixed reviews from smokers as well as praise from anti-smoking factions. What does this tobacco ban mean to competitors and what does it bode for the future?


Lovers of premium cigars aren’t likely to be shopping for smokes at their local CVS, but in addition to cigarettes and pipe tobacco, the chain currently carries brands like Al Capone, Backwoods, Phillies, Dutch Masters, Muriel, Macanudo miniatures and Cohiba miniatures. The biggest beneficiary of the coming CVS tobacco ban could be tobacco shops located in the vicinity of CVS stores. Smokers who can no longer purchase their inexpensive cigars at the drugstore may be tempted to check out the nearest B&M, where they’re sure to find higher quality smokes, the kind that can convert casual smokers into true cigar aficionados.

 



Some smoke shop owners are already looking forward to higher sales when the CVS ban goes into effect. Brandy Toth, acting manager f loose-leaf tobacco shop Smokes in Bradenton, Florida, told a reporter, “Our business should go up.”

Also looking ahead is Geoffrey Yalenezian, who owns Brennan’s Smoke Shop in Taunton, Massachusetts. He hailed the CVS ban as “great news for the smoke shop business.” After years of struggling with competition from online tobacco retailers, Yalenezian stated, “It’s a declining industry. We’ve had to drop our prices to stay alive.”

Eric Newman of the J.C. Newman Cigar Co. agrees that the move by CVS could be a boon to the B&M. “There is a CVS today virtually near every smoke shop in the country. What’s going to happen to these CVS cigar smokers? Where are they going to go to find their favorite cigars? Should be to a local cigar shop or tobacco outlet. Most of our tobacconists have already added value-priced handmades like our Quorum to their product offering. And now with the budget-minded CVS cigar smoker forced to look elsewhere for his cigars, this ill-advised decision by CVS could very well be a shot in the arm for our brick-and-mortar retailers.”

 



Also likely to see sales rise after the CVS tobacco ban goes into effect are the discount chains Dollar General and Family Dollar. Both discount giants began selling tobacco products in 2012 in hopes of luring budget-conscious smokers. The average dollar store customer has a yearly income of less than $40,000, and as Family Dollar CEO Michael Bloom noted, “our customer research tells us that Family Dollar customers overindex on cigarettes and tobacco products.”

According to brokerage firm Stern Agee, “This may provide a significant opportunity for both (Dollar General) and (Family Dollar) to gobble up these sales from tobacco shoppers that CVS will lose particularly in the Southeast—where the dollar stores are well established.” Other retail outlets likely to pick up business from the CVS tobacco ban are convenience stores and gas station mini marts.

Another group poised to seize on the marketing opportunity created by the CVS exit from the tobacco field are the makers of electronic cigarettes. Andries Verleur is the CEO of VMR Products, maker of V2 Cigs, and he made the suggestion that CVS substitute his merchandise for the soon-to-be-missing cigarettes. “We applaud CVS for their bold and thoughtful decision to no longer sell traditional tobacco products, like combustible cigarettes. Decades of research have confirmed the harmful and deadly effects of inhaling burning tobacco and we believe in the mission to create a tobacco-free generation. With this in mind, we are also pleased that CVS will continue to emphasize the importance of alternatives to tobacco and hope that they will ultimately recognize the impact of electronic cigarettes, which do not contain tobacco, in this category.”

 

 


Other drug chains are hedging their bets, probably waiting to see what happens to CVS’s bottom line over the next year or so. In an email, Walgreen spokesperson Emily Hartwig stated, “We have been evaluating this product category for some time to balance the choices our customers expect from us, with their ongoing health needs. We will continue to evaluate the choice of products our customers want, while also helping to educate them and providing smoking cessation products and alternatives that help to reduce the demand for tobacco products.”






Comments 

 
0 # Not a bad thing.Joel Brothers 2014-02-19 16:15
No great loss. They don't keep cigars or pipe tobacco properly anyway. The only time I ever bought cigars there, I wasn't sure if they were sold for smoking, or for kindling.

I do think their reasoning is dumb, like "Every time we make it more difficult to purchase a pack of cigarettes, someone quits.”....Whoever told them that is an idiot. People just buy them somewhere else. But either way, it's a non-issue. Maybe this will help create more local tobacco stores. The nearest one to me is over 30 miles away.

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