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Brown & Williamson Fights NY Ban on Direct Cigarette Sales

Brown & Williamson Tobacco Corp. filed a federal lawsuit yesterday seeking to strike down a New York state ban on direct mail, Internet and telephone sales of cigarettes.

The law, enacted in August, is an unconstitutional regulation of interstate trade, according to Brown & Williamson, Louisville, KY. The ban illegally prevents the company from launching a multimillion-dollar direct sales campaign in New York, according to the suit.

A spokesman for New York State Attorney General Eliot Spitzer declined to comment until his office had an opportunity to review the lawsuit. However, New York Gov. George E. Pataki's office indicated it is ready to stand behind the direct sales ban.

“The law is an important public health measure that will help save lives by preventing young people from obtaining cigarettes illegally,” said Joe Conway, a spokesman for Pataki. “We're confident the law is constitutional and the lawsuit will be unsuccessful.”

Brown & Williamson plans to embark on a direct mail campaign to support its cigarette brands that the company said have generated limited retail sales due to fierce industry competition. An eight-page catalog, expected to roll out within the next few weeks, will be dropped in nine states, including California, Kentucky, Florida, Georgia, Michigan, North Carolina, Texas, Oregon and Massachusetts. Brown & Williamson plans to expand the campaign to other states.

New York is the first state to pass a law blocking the sale of cigarettes through channels that go beyond traditional retail outlets. Because of stiff competition for shelf space, many retailers refuse to stock lesser-known brands, said Brown & Williamson, which has concluded that sales can only be generated via alternate channels.

Brown & Williamson plans to offer its Carlton, Misty, Capri, Barclay, Tareyton, Raleigh, Belair, Tall and Silva Thins brands through the catalog.

The catalogs will go to consumers who have opted to be placed on Brown & Williamson's mailing list, said Steve Kottak, the company's public affairs manager. Brown & Williamson has a database containing information on millions of cigarette smokers, including those who smoke competing brands, Kottak said. He would not disclose the number of catalogs that would be sent as part of the upcoming campaign.

The catalog was tested in late 1999 and early 2000 in North Carolina. The success generated in North Carolina led to the company's commitment to a broader effort.

Brown & Williamson plans to offer smokers who buy through the catalog free shipping on their first purchase. The company also will offer discounts on some of its brands.

Consumers will be able to order via fax, mail or telephone. The company will not allow Internet orders at this point but is considering their use in the future.

All sales taxes will be included in the listed price of the cigarettes to ensure adherence to local laws. The catalogs sent to consumers in each of the nine states will be essentially identical, with prices altered to reflect local sales taxes.

Brown & Williamson promised that it would take steps to ensure that minors will not be able to purchase cigarettes through the catalog. To get on the mailing list, consumers must send the company a copy of a photo ID.

The average age of consumers who purchased from the catalog in the North Carolina test was about 50, Kottak said.

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