"We''re being very careful about not rushing the scientific development," said evp and chief counsel Paul Perito. "We''re looking at the issue of proving that reduced exposure to toxin equals reduced risk. In the meantime, we''re very conservative and are recommending that other companies refrain from making health claims."Brown & Williamson contracted to buy 1.5 million pounds of the Star-cured tobacco, about half the expected harvest from this year''s growing season, ending in October. The No. 3 producer of Kool, Capri, Misty and GPC will have low-nitrosamine cigarettes on the market within a year. Other firms are buying smaller amounts, while R.J. Reynolds is field-testing its own process for reducing tobacco toxins. Separately, Star this month will debut activated charcoal filters on all its brands.The focus on nitrosamines comes amid legislation pending in Canada proposing to add more information on labeling about tobacco''s toxic constituents and specific warnings about nitrosamines being the most active cancer-causing agent in cigarettes. Also, a World Health Organization gathering in May recommended that cigarette brands unable to conform to a standard ceiling of nitrosamine content should be excluded from markets.

If you thought the 1998 Master Settlement Agreement succeeded in putting Big Tobacco in its place, think again. As part of the settlement, tobacco giants Philip Morris, R.J. Reynolds, Brown & Williamson, Liggett Group and Lorillard Tobacco agreed to pay $246 billion to 46 states suing the industry to recoup Medicaid costs. The cigarette companies also promised to adhere to a ban on outdoor advertising and curb youth-oriented marketing programs involving product placement, branded merchandise and multiple sponsor-ships.While heralded as a huge victory by anti-smoking groups, the MSA has not stopped the tobacco industry from getting its message through to consumers. A recent report by the Federal Trade Commission indicated the Big Five tobacco giants spent a record $8.24 billion on advertising in 1999, $1.5 billion more than in 1998. Print advertising, the only remaining mass-media outlet for cigarettes, soared 37.8% to $428.3 million. Still, that was a mere 5% of the total spending in the category.

So where is the rest of the money going? A huge portion--more than $3.5 billion--is being pumped into retail outlets through price promotions and merchandising contracts. And that''s where the tobacco giants are turning up the heat with aggressive--and some say bullying--tactics, to squeeze out rivals."The Big Two are more aggressive about dictating what goes on the store shelves," said a Southern operator of a tobacco outlet chain." Honestly we used to joke about the ''Philip Morris police.'' The Philip Morris reps would come around and wreak havoc on anything that was wrong with the store, or if their market share wasn''t what it should be, or if a competing brand had an extra sign or something. They would just have a fit."Now, R.J. Reynolds is trying to flex its muscles in similar fashion. "I took our Reynolds rep outside recently and showed him the sign on our store," the operator said. "I told him when R.J. Reynolds'' name is on that sign, then you can tell me what is and what is not going in here and how much I can sell it for."

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