While numerous news organizations reported earlier this week that Costco Wholesale (COST) was set to follow in the footsteps of CVS and exit the tobacco category, a report by Fortune found such claims were false.
What is true is that Costco has greatly reduced the number of stores selling cigarettes and other tobacco products over the last few years. Fortune pointed out that of the chain’s 488 locations, currently only 189 Costco locations—including its business centers—sell tobacco products
But the move was due to a decrease in consumer demand—not a decision to phase out the category. “We’re not phasing out of tobacco,” Bob Nelson, Costco’s vice-president of financial planning and investor relations told Fortune. “There’s no grand phase-out plan. For all merchandise, we have regional reviews on a quarterly basis.”
Whether or not market forces continue to cause Costco to further drop tobacco products from additional locations remains to be seen. But if it happens it will be due to market pressures as opposed to a CVS-style health-conscious move to reposition in the market place.