Walgreens in a tight spot, but won't quit tobacco

The announcement Wednesday that CVS/pharmacy (NYSE: CVS) would stop selling tobacco products put pressure on Walgreens (NYSE: WAG) to follow suit. But the retailer quickly issued a statement affirming the nation's largest pharmacy chain would continue to sell tobacco.

The company has been evaluating its tobacco line for "some time," Walgreens spokesman Michael Polzin said in an emailed statement. "(Walgreens) 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 reduce the demand for tobacco products."

In other words, Walgreens thought it over but, no thanks. It will continue to serve smokers, non-smokers and in-the-process-of-quitting smokers alike.

CVS/pharmacy's position is that selling tobacco products is not good business. "Tobacco products have no place in a setting where healthcare is delivered," said Larry Merlo, president and CEO. "Ending the sale of cigarettes and tobacco products at CVS/pharmacy is simply the right thing to do for the good of our customers and our company."

It's also a good move to bring its growing in-store clinic program more in line with the Affordable Care Act. Partnering with insurers and hospital systems is a crucial part of the MinuteClinic expansion, selling cigarettes is a strike against the chain's credibility.

So while CVS/pharmacy is giving up a $2 billion business, it stands to benefit from a growing revenue stream as the ACA rolls out. It also plans to launch a smoking cessation program this spring. Walgreens has also announced a partnership with GlaxoSmithKline Consumer Healthcare to launch a free, Internet-based smoking cessation program called Sponsorship to Quit. The program will provide smokers with customized tools to track their progress in quitting smoking.

For more:
-See this Business Insider story
-See this Chicago Tribune story

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