250 Drug Store News, June 16, 1997

•

TOBACCO SENDS MIXED SMOKESIGNALS TO DRUG CHAINS

Tobacco is in the spotlight more than ever, and- it's not a pretty picture for the tobacco indus-

try-except maybe when Demi Moore has acigar in her mouth. .

With stunning speed, the once invincible to-bacco industry has proven to be vulnerable. It allbegan in May 1994 when Mississippi's attorneygeneral filed the suit seeking reimbursement forMedicaid costs for treating sick smokers. Even-tually 29 states filed suits-and drove tobaccomakers to the bargaining table.

In March, one of their own broke ranks. Tobaccomanufacturer Liggett Group conceded what hadlong been thought, but never proven in court:Smoking is addictive and it does lead to disease. '

In the landmark settlement, Liggett agreed tolabel cigarette packages with the warning "smok-iing is addictive." It is also obligated, among otherprovisions, to actively assist plaintiffs' counsel byproviding internal documents, testimony andwitnesses in future tobacco-related litigation.

Another landmark court decision occurred as aresult of the tobacco industry's attempts to staveoff President Clinton's moves to eliminate ciga-rette marketing and advertising to youths.

'Instead of getting relief, a judge.in the U.S.district court in North Carolina did -uphold 18 asthe nation's legal age for buying tobacco and therequirement of merchants to card tobacco buyersunder the age of 27, a provision retailers haveibeen following since February.

Beyond that, the judge also ruled that tobaccoand nicotine do fit the definition of a drug. The rul-ing was the first court backing of Food and DrugAdministration regulation of tobacco as a drug.

Tobacco makers did accomplish a few goals:The court decision stayed the ban on storecounter displays holding tobacco product, FDA:plans to label toabcco products as nicotine deliv--ery systems, the virtual ban on cigarette vendingmachines and the ban on Joe Camel from bill-boards, as well as the ban on sports sponsorshipsby tobacco companies.

Implications for drug retailersThe revelations by Liggett and the decision of

the North Carolina judge that moves the nationtoward the regulation of cigarettes as a drug,and a harmful one, intensifies a dilemma for thedrug chain industry.

On the one hand, cigarettes provide a conve-nience demanded by a percentage of a drug chain'scustomers. In 1996, drug stores soldjust over $2 bil-lion in the category, up slightly from the year before

according to exclusiveDrug Store News research.On the other hand, selling cigarettes is at odds

with a drug store's wellness image-now morethan ever. And soon it could become an illegalmessage.

Is all this negative media exposure about ciga-rettes changing the way drug chains handletheir tobacco business?

So far, it looks like the answer is a resounding no.Most mass merchants, food retailers and major

drug chains, such as Walgreens, American DrugStores, CVS and Longs, sell cigarettes chainwide.

Whether to sell tobacco products is an individ-ual chain decision, noted Phil Schneider, manag-ing director of public affairs for the NationalAssociation of Chain Drug Stores. "Our objectiveis to work with our members and various regula-

. tory agencies to ensure that onerous or burden-some regulations are not imposed on retail oper-ations." He added, "You have to balance thepublic's demand for products that are legitimate-ly available for retail sale."

Between 25 percent and 30 percent of the popu-lation smokes, a percentage that has remainedvirtually flat in recent years. Today, cigar sales aresurging, spurred in part by consumer demandfrom baby boomers and advertising campaignsthat make the product galmorous and sexy. Youthhave responded to the message. A recent study re-leased by the Centers for Disease Control and Pre-vention indicated that more than 25 percent ofAmerican high school students have smoked all orpart of a cigar in the last year, and about 2.6 per-cent reported smoking at least 50.

Now that merchants are required to card alltobacco purchasers under the age of 27, a rulingupheld by the recent North Carolina districtcourt decision, perhaps those statistics will di-minish. At least that's what the Clinton adminis-tration is hoping, along with the establishmentof 18 as the nationwide legal minimum age forpurchasing tobacco products.

Pockets of tobacco-free storesIn a sweeping move last August, Target Stores (a

division of Minneapolis-based Dayton HudsonCorp.) announced that it would discontinue the saleof cigarettes in all its 714 stores in 37 states. By thetime the discounter made its announcement, abouta quarter of its stores had already stopped sellingcigarettes. According to Target, the tobacco banwas a business decision driven by decliningprofitability and increased capital requirements.

For more than a dozen years, the 18-store

Drug Emporium franchise in Washington ghave not sold tobacco products. "It was incoi:,IBtent with the business we were in," saidpiiedent Jeff Meder. It's not a fact the drug cIlpublicizes. "These are no signs, other thaR~come in and you don't find it," Meder said. 'stores don't sell beer and wine either. '

Dropping cigarettes means a loss of revenbut not always a loss of profit. Meder said twhen he exited the cigarette business 15 yeago, "We owned the price side of the businessa discount operator so that was something ethat helped us make the decision. It wasn't hll,ly profitable."

A half dozen PayLess stores, in the Rite .MThrifty PayLess chain, do not offer cigarettessome central California cities, including San ]jObispo, three nearby communities (AtascaderMorro Bay and Paso Robles) and two stores'Sacramento. Its first store in San Luis ObisRopened tobacco-free around four years ago. i'"

But a reverse case for PayLess occurred whtested removing cigarettes from some of itsstores, which serve a health-conscious custobase that tends to avoid liquor and caffeine.a substantial percentage of consumers requecigarettes, they were reinstated.

Outside pressureHowever, within the pharmacy professi

signs of increasing pressure not to sell tobproducts in a pharmacy setting have appeareck

In March, the Washington State Departmefof Health voted to support the goals of a tobaccQ-free pharmacy campaign, which has been promoted by the Washington State PharmacistAssociation since 1987. In its resolution, tl1estate board urged all pharmacists to remoV;.etobacco products from stores and health carefacilities. Of course, this did not make it illegalWsell tobacco in drug stores, but it did create morepublic awareness. .

In the future, some chains will decide to trea~the decision to sell cigarettes on a market-by-marjket basis. Some may treat it on a product-by- pr(jd~·uct basis. Still others may choose a unilateral to;-bacco-free policy such as the one at Target and tM20 D~g Emporium stores in the Northwes~. ;~

Until the government decrees otherwise, tltedrug channel's emphasis on customer conv~-nience, and the arguable principles of choice a;):Cilpersonal responsibility, remain at odds witll~1)idecision to remove tobacco products from tlI!lshelves of a drug store.