As of this week, CVS is tobacco free. All other factors remaining equal, the company will make $2 billion less because of the change. CVS claims the change is due to tobacco products being incompatible with their values as a health-oriented chain. It was always ironic that CVS profited off both smoking and quitting (nicotine patches, etc), so the fact that smokers will no longer be tempted while trying to quit can only be seen as positive.
The key term above was all things remaining equal-- CVS clearly believes being on the right side of history in this regard will help their bottom line. And the company's stock price doesn't seem to argue (the official announcement came earlier this year). Is the market alone capable of ousting tobacco?
This relates to the topic of "sin stocks:" is it wrong to make a profit off people doing something that is wrong? If your answer is yes, where does the line get drawn? (Tobacco, alcohol, weapons contractors, private prisons, abortion, etc...)
http://www.forbes.com/sites/jonathansalembaskin/2014/09/05/cvs-tobacco-position-is-a-great-first-step-for-the-brand/
http://www.investopedia.com/terms/s/sinfulstock.asp
2 comments:
First off, I'm really proud of CVS for making this decision! They're choosing to do "the right thing" even though it's gonna cost them, which is a decision that many businesses have trouble making.
That being said, I do think it's "okay" for businesses to make money off of doing something "wrong." (The quotation marks are there because the definition of okay and wrong are context dependent and varies depends on the situation.) However, especially since CVS is supposed to be a health oriented drug store/pharmacy, they definitely should not sell any sort of health damaging products like tobacco, although whether it should be outlawed or not is a whole different issue.
As for other businesses, I think it's as simple as the line is drawn where the law is drawn. I don't think what stores are allowed to sell should be different from store to store; rather, there's a difference in what they should sell. However, I don't think it's plausible for some stores to be legally allowed to sell alcohol and tobacco and whatnot, while other stores cannot simply because of the other items contained in the store.
Morally, these sorts of "bad things" should have their own dedicated stores – which, for the most part, they do. Many small convenience stores are primary sellers of cigarettes, tobacco, and alcohol all together. Guns have their own stores, and then there are abortion clinics for abortions. These types of things shouldn't be put with mismatched items, like kids toys or clothing.
Definitely agree with Vivian on this one-props to CVS for knowingly losing a chunk of profit in order to stay within the boundaries of what they (the company, or those who run it) believe to be important.
I think that this will certainly help their reputation, however I'm a little skeptical of whether this will directly impact their revenue in a positive way. As we briefly discussed in class, people care more about local issues because those issues are much more likely to effect them directly-per say, a drought in the area rather than a war fought in a foreign land. Following this same vein, I doubt people will conciously make an effort to shop at CVS because they don't carry tobacco products anymore-the people who purchase these items will obviously go somewhere else to get them, and the people who don't purchase them are not affected anyway.
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