Walgreens Rethinks Tobacco Sales

Amid a new primary care push, CEO says the drugstore chain is evaluating cigarette sales.

October 18, 2021

Walgreen's Store

NEW YORK—Walgreens could follow in the footsteps of rival CVS and abandon sales of cigarettes and other tobacco products, Roz Brewer, CEO of Walgreens Boots Alliance, told CNBC in an interview last week, following the company’s launch of Walgreens Health focusing on primary care, post-acute care and home care.

“Tobacco is one of those areas that’s under real scrutiny right now,” Brewer told CNBC as the drugstore chain evaluates the products it sells in its push to heighten its focus on health and wellness needs. “And so you’ll see more to come in that area.”

Walgreens stopped selling e-cigarettes in 2019 but continued to sell other tobacco products. Rival CVS stopped selling cigarettes in 2014.

Deerfield, Illinois-based Walgreens Boots Alliance has struck a number of deals and partnerships to offer primary-care and pharmacy services in its stores or co-located with them, including with UnitedHealthcare, Blue Shield of California and Clover Health.

On October 14, Walgreens Boots Alliance announced Walgreens Health, a new business segment enabled by investments in VillageMD and CareCentrix. Walgreens said it would reimagine “retail through expanded health and wellness offerings and mass personalization” and accelerate its brands and digital offerings.

Also last week, Walgreens announced a $5.2 billion investment in VillageMD to speed the opening of at least 600 Village Medical at Walgreens primary care practices in more than 30 U.S. markets by 2025 and 1,000 by 2027, with more than half of those practices in medically underserved communities, the company said.

Walgreens Boots Alliance and VillageMD have 52 co-located primary care practice locations and plan to open more than 80 by the end of 2021. The companies first announced a partnership in 2019 with the trial launch of five co-located practices in the Houston area.

In U.S. convenience stores, cigarettes are a top sales and profit generator, contributing 27.8% of inside sales in 2020, NACS State of the Industry data indicate. Cigarette sales in 2020 grew 3.6% over 2019, while the other tobacco products (OTP) category increased 4.5% in 2020, NACS Magazine reported in its June SOI issue.

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