Very interesting story. CVS Pharmacies about a year ago announced it would no longer be selling any tobacco products.

It’s just one drug store chain, right? No big deal, right? Well, it turns out that decision resulted in a 1 percent reduction in cigarette sales in 13 states … that’s 95 million packs of cigarettes. That means smokers weren’t just running to other outlets; it actually helped cut the number of cigarettes being sold.

Hey, you see 1 percent, I see 95 million packs of cigarettes. Every little bit helps. 95 million packs is 1 percent. That gives you a clue to the shocking amount of cigarettes still being sold in the U.S.

From a Washington Post article:

Troyen Brennan, chief medical officer for CVS Health, said many people thought that smokers would simply go elsewhere to buy cigarettes once the chain stopped selling them. “What this research shows is that we were right,” he said. By removing a convenient place to buy cigarettes, he said, “we had an overall impact on sales of tobacco products.”

CVS did its own study that showed the pharmacy chain once controlled 15 percent of the drug store tobacco sales market in 13 states.  Most of these states were in the Deep South.

From the Post article:

“I think people would be surprised that a single store, even one as large as CVS, could have a direct and measurable effect on tobacco use in the community in which it has a significant presence,” said Matthew Myers, president of Campaign for Tobacco-Free Kids.

A 1 percent drop in sales may not seem like a big number, he said. “But given the number of smokers, it’s an extraordinary impact,” he said. He said the organization will be calling on other major retailers to take similar action.

This is an awesome story.

When CVS Pharmacies cut out tobacco sales, everyone fully expected the company’s revenues to drop, including CVS. Instead, the opposite has happened.

In the fourth quarter of 2014, the first full financial quarter after CVS banned tobacco sales, the company’s revenues didn’t go down, they went up 12.9 percent to a record $37.1 billion.

Apparently, one of the reasons for the increase in revenues was the Affordable Care Act.

From this Forbes article:

CVS, which stopped selling cigarettes and related products in September, previously generated an estimated $2 billion in annual tobacco sales. But sales in the pharmacy segment alone in the fourth quarter jumped 21.7 percent to $24 billion buoyed by an early flu season with an ineffective vaccine that caused flu victims to search CVS for other treatment options. CVS also saw increased paying customers under the Affordable Care Act.

The newly insured Obamacare customers and increased drug sales helped overcome a dip in revenue from the front-end of the store where customers used to buy cigarettes and other tobacco products.

Also from the Forbes article:

The end of tobacco sales has improved the company’s image and helps in discussions attracting employers to its pharmacy networks and its prescription management business. In the fourth quarter, pharmacy benefit management sales were up 21.7 percent to nearly $24 billion.

The CVS decision has also put pressure on other retailers like Walgreens Boots Alliance (WBA) and Wal-Mart (WMT). “It’s opening up some doors to some unique opportunities,” CVS CWO Larry Merlo told analysts.