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CVS's Decision To Ban Tobacco Means Next To Nothing... For Now (CVS, WAG, PM)

Steven Perlberg

This morning, CVS announced it will remove tobacco products from all its stores nationwide by October 1.

That will cost the pharmacy chain an estimated $1.5 billion a year, only a tiny portion of CVS's $123 billion in 2012 revenue.

It's an even tinier portion of global retail sales. Excluding duty free and China (the market there is essentially closed to outside tobacco companies), global retail sales topped $554 billion in 2012, according to Citi.

And only 16% of that — $89 billion — came from U.S. sales.

So how upset are tobacco companies about CVS and its $1.5 billion? It's hard to say.

Smokers who can't buy their cigarettes from CVS will likely go elsewhere for their fix.

The more serious concern for big tobacco is waning demand in America. U.S. tobacco sales are decreasing as a portion of global sales.

That's why tobacco companies have long targeted other regions as growth opportunities.

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