The $1.5 billion decision that redefined CVS’s brand

It’s once again the time of year for gratitude, appreciation and grace. In business, gratitude isn’t measured by words or turkey-day posts. It’s measured by what a company is willing to give up to serve something bigger for the greater good. True thanks is demonstrated, not just said out loud. It’s an opportunity to do what’s right even if it costs you something.

More than a decade ago, CVS faced a $1.5 billion question that put its values to the test. I recently heard the inside story of the decision to eliminate cigarette sales from Laura Stone, the consultant who initiated the conversation.

How CVS turned sacrifice into brand strength

Stone remembers the moment vividly. The entire leadership team was in the room: the heads of marketing, retail, pharmacy, operations and even the soon-to-be CEO, Larry Merlo. They had just articulated and agreed on a new company purpose: to improve the health of the customer.

“I didn’t think it was very impressive,” Stone said. “But for them, it was enormous. Because for the first time, they were aligning every part of the company around a shared idea of better health.”

Then came what she calls the paradox process, the uncomfortable work of holding your stated purpose up to the mirror and asking, “What tensions or contradictions does this expose?” 

That’s when Stone said the words that changed the company’s history, “If I let you out of this room without talking about tobacco, you’ll have mud on your face. You’ll be seen as hypocrites.”

Silence. No one had dared say it. Not one executive had brought up cigarettes, even though those pesky smokes were the elephant in the room: a $1.5 billion line item on the P&L. From that moment — that tension between purpose and profit — came one of the boldest brand decisions in modern business: CVS would stop selling tobacco products entirely.

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Stone urged Merlo to set up a skunkworks team, a small secret task force to explore what it would take. She warned him, “If you come second to market, it’s nothing. If you come first, it’s historic.”

And it was. When CVS announced its decision, Wall Street winced. The company’s stock dipped. But then came the wave of gratitude from President Obama, the U.S. Secretary of Health and Human Services, the American Cancer Society and millions of customers.

Within five years, the company had recouped the $1.5 billion in revenue it had generated by selling tobacco products. Ten years later, CVS’s top line has doubled. What changed wasn’t just its product mix. It was its moral authority.

How action creates brand credibility

The great Roy Spence of Austin, Texas, ad agency GSD&M wrote a seminal book about the importance of purpose to an organization titled “It’s Not What You Sell, It’s What You Stand For.” As he said, “It’s your reason for being that goes beyond making money and it almost always results in making more money than you ever thought possible.”

Brands earn deeper emotional connection when they do something proactive that their audience didn’t expect. And this deeper emotional connection helps them weather economic storms, earn customer advocacy and strengthen long-term customer value. And that brings us back to Thanksgiving.

Thanksgiving is about appreciation born from sacrifice. It’s about giving up comfort, time or profit for something greater — community, connection, health, humanity. CVS’s choice wasn’t just a business move. It was an act of corporate gratitude. Gratitude for the people whose trust the company depends on. Gratitude for the communities they serve.

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The irony is that the gratitude flowed both ways. When CVS gave up cigarettes, the public gave back belief. Employees gave back pride. The world gave back respect. That’s the paradox at the heart of all meaningful branding, the courage to act against short-term profit in service of long-term truth (and growth).

Eliminating cigarettes improved CVS’s brand image, gave employees something to be proud of, customers something to believe in and competitors something to think about. It also rewired the marketing industry’s understanding of purpose. Purpose isn’t the paragraph on your website. It’s not saying what you believe. It’s not lip service. It’s the decision you’re willing to take that proves you mean it.

That’s why, when CVS said to the world it was about better health, people believed them because they could see the proof. Branding begins with words. But belief comes from deeds.

Gratitude becomes reciprocal

Deeds earn appreciation for the effect they have on the world. It’s a long game that pays off far better than what I like to call the cowardice of quarterly conversion. And that’s a lesson worth remembering this Thanksgiving.

As marketers, we love to thank our customers in posts, in emails, in slogans. However, the brands people truly appreciate are those that sacrifice margin for meaning, knowing that money follows good actions.

CVS didn’t issue a press release about launching its new “We care about the health of the customer” purpose. They did something unignorable. They proved it.

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