Being true to your brand promise can be expensive in the short run but profitable in the long run. CVS Caremark, the largest integrated pharmacy company in the United States, has decided to forgo $1.5 billion in annual tobacco sales and an additional $.5 billion in sales tobacco purchasers buy when they come into a drugstore. With 7,600 stores in the U.S., this is quite a statement and game changer for the drugstore industry. We applaud CVS for honoring its brand promise! Dr Richard Hunt, Director of the NicotineDependenceCenter at the Mayo Clinic says the decision was an act of “great corporate social responsibility.”
CVS faced a real challenge to their developing brand image as a leader of the health care community. How could they offer pharmacy-benefits management programs, also known as PBMs, for employers, insurers and customers and still sell a product the Surgeon General says causes lung cancer, heart disease, emphysema and, according to the FDA, is annually responsible for about 480,000 deaths in the U.S. alone? That would be in stark contradiction to their brand promise of helping people on their path to better health.
In order to address an expanding health care market, CVS has increased the number of in-store clinics and programs to help people manage high blood pressure and diabetes. So they could simply no longer condone the sale of tobacco. Dr Troy Brenan, CVS Chief Medical Officer, said they had no good answer to the question, “If you’re part of a health care system, how can you continue to sell tobacco products?” They couldn’t.
Maybe it all comes down to a business decision. We like to say, “If you really want people to change, put a buck on it!” The Surgeon General’s warning has been out for 50 years, yet businesses trying to sell themselves as health conscious are only now making the change. Why? We are now living in a transparent age where more knowledgeable consumers “vote with their money.” In order to stay in business in the future, businesses who sell health products and services will have to do what CVS has done; be true to their brand promise.
According to the National Community Pharmacists Association, most independent pharmacies already abstain from tobacco sales. So do European pharmacies. So does the U.S. major retailer Target, which has some pharmacies in their store. Progressive cities like San Francisco and Boston are considering or have passed bans on tobacco sales in stores with pharmacies.
For CVS, the second largest drug store chain in America, to make this move, they are sending a clear message to all the other big drug store chains, “You’re next!” The pressure is on for both Walgreens and Rite Aid to follow suit. But CVS will be always be seen as the pioneer. This is why it’s so important to not just “play it safe” and “wait and see” on these issues, but to take the lead! Be the first in your industry to protect your brand promise. Bravo CVS!
Now we will see more progress on this issue than we have seen in 50 years because now, thanks to CVS, there is an economic reason to make the change. If you are a non-smoking drug store customer who can choose where you want to spend your money, are you going to “vote” in favor of the company that is more true to its brand promise or less true? Finally, we are beginning to see that making the right decision make dollars and sense!
Who Are We.
Having built and sold a bestselling national brand, we appreciate the value of brands and everything it takes to make them successful. Companies are valued by their brand equity. Achieving and maximizing brand equity requires tremendous respect for all your customers, from your wholesaler to your end user.
Starting in our laundry room with no money and no knowledge of the industry, we built the famous Barefoot Wine brand. We learned a lot they don’t teach in school and much of it the hard way. Although our success was in consumer products, our real world experience will be helpful to anyone looking for information and advice about brands.
We have written the New York Times Bestselling Business Book, The Barefoot Spirit: How Hardship, Hustle and Heart Built America’s #1 Wine Brand, which chronicles the history of the famous brand from its inception through its acquisition. Our book is now required reading in schools of entrepreneurship across the country. We hope this book will provide inspiration and encouragement for all those contemplating starting a brand or wanting to improve their existing brand.
Michael Houlihan and Bonnie Harvey
-Barefoot Wine Founders