CVS Caremark Corp has found a way to stop the Energizer bunny. It will discontinue sales of the company's alkaline batteries early next year.

The national drug store chain will still offer customers lithium batteries produced by Energizer Holdings Inc , but the move comes as CVS and other retailers narrow the variety of products they sell.

After testing various options in the battery category in a number of stores, we found that our customers responded best to an offering which included a single 'national brand' alkaline, plus Energizer lithium and our own private label batteries, a spokeswoman said.

CVS said it decided to sell Procter & Gamble Co's

Duracell alkaline batteries and would continue to sell Energizer lithium batteries in all of its stores.

A spokeswoman for Energizer did not return calls seeking comment.

Alkaline batteries account for the majority of U.S. battery sales. Duracell Coppertop is the leading alkaline battery in the United States, with a 41.6 percent share, followed by Energizer Max, which has a 27.8 percent share, according to Information Resources Inc., a Chicago-based market research firm.

IRI's data covers the 52 weeks ended on November 1. It includes sales at supermarkets, drugstores and mass market retailers, but excludes sales from Wal-Mart, club stores, gas stations and convenience stores.

Last month, Deutsche Bank analyst Bill Schmitz said he expected retailers to make shelf space decisions over the coming weeks. He expected Energizer to get additional space at Wal-Mart Stores Inc and Safeway Inc stores and said it could see a potential loss at CVS.

According to Schmitz, Energizer had about $25 million in sales at CVS.

Major U.S. retailers, including CVS, have been putting more emphasis on their private label products. Such goods typically carry lower prices than their branded rivals but are more profitable for the stores. Store-branded household goods have gained popularity during the downturn, as shoppers try to curb their spending.

Private label alkaline battery sales rose 5.5 percent, in dollars, to a 18.9 percent share during the latest 52 week period, according to IRI. Sales of Duracell and Energizer's top alkaline batteries declined 4.6 percent and 1.9 percent, respectively, during the same period.

(Reporting by Jessica Wohl, editing by Gerald E. McCormick, Leslie Gevirtz)

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