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Tobacco Co. Beginning Direct Sales

October 13, 2000

LOUISVILLE, Ky. (AP) _ Brown & Williamson Tobacco hopes to do for cigarettes what L.L. Bean has done for khakis.

In what is believed to be a first, B&W is beginning to sell its less-popular brands through catalogs. The intent is to maintain customer loyalty to its second-tier brands, many of which get squeezed out by tough competition and are not regularly stocked by retailers.

Critics of B&W’s plans accuse the company of devising a creative way to undermine regulations aimed at protecting children from the marketing of tobacco products.

Like it or not, adult smokers in nine states will soon be able to order B&W brands, such as Misty and Capri, by phone, fax or mail, and eventually over the Internet. The company said Thursday that it has formed a subsidiary, BWT Direct LLC, devoted to catalog sales.

Thousands of catalogs will be mailed by the end of next week.

``Most retailers limit the cigarette brands and brand styles they stock, displaying only those with a significant market share,″ said John Heironimus, president of BWT Direct and vice president of its parent company. ``The result has been that many loyal, longtime customers of some of B&W’s traditional products have difficulty locating those products.″

But tobacco critics are suspicious of the venture, saying it seems aimed at wooing new customers. Anti-smoking advocates are particularly concerned about protecting children from direct sales.

``What they are doing with catalog sales is opening up a potential whole new way to market their product,″ said Ahron Leichtman, executive director of Citizens for a Tobacco-Free Society.

``And while the industry says it is putting in place a strategy to prevent those sales to minors, in the past they have proven to be ineffective in prohibiting those illegal sales,″ Leichtman added.

Karen Brotzge, BWT Direct’s executive vice president, said the company will only send catalogs to smokers whose ages have been verified and that it will only sell to people 21 or older. She said the company has hired a database firm to verify that customers are adults.

In cases where BWT cannot independently verify a potential customer’s age, the company will send out an age-verification packet, she said. The packet must be returned with a copy of a driver’s license or other government-issued identification card.

B&W brands to be sold in catalogs are Carlton, Misty, Capri, Barclay, Tareyton, Raleigh, Belair, Tall and Silva Thins. Combined, those brands account for 3.5 percent of the U.S. cigarette market, said B&W spokesman Mark Smith.

B&W is setting a minimum two-carton purchase through direct sales. Prices will not be less than what people pay at retail stores; excise taxes will be included.

The company’s best-selling brands _ Kool, Lucky Strike and GPC _ will not be sold in catalogs.

David Adelman, a tobacco industry analyst with Morgan Stanley Dean Witter, credited Brown & Williamson with developing an unusual way of attempting to prevent customers from switching to more accessible brands.

``These are brands that are losing distribution,″ Adelman said. ``There are people who would like to continue smoking them, but they can’t find them. I think it’s a reasonable alternative.″

Direct sales will begin in nine states _ California, Kentucky, Florida, Georgia, Michigan, North Carolina, Texas, Oregon and Massachusetts _ but will expand later, the company said.

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On the Net:

Brown & Williamson: http://www.bw.com/home2.html

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