SMOKERS CALL CIGARETTE PRICE HIKES 'A REAL DRAG'

SouthCoast cigarette smokers are fuming over two major tobacco makers'
decision to hike the wholesale price of their brands by 45 cents,
possibly to defray the cost of a $206-billion settlement with 46 states.

Locally, due to the state's fixed pricing of cigarettes, the increase
in price will have smokers paying nearly $3.50 per pack, depending
upon the store and manufacturers' sales promotions.

"This is horrible," said Jason Kasap of New Bedford.

"It is a real drag," said Bill DeMusz, the captain of the New Bedford
fishing boat, Robin's Nest.

Industry leader Philip Morris USA and R.J. Reynolds Tobacco Co. raised
wholesale prices by 45 cents a pack Monday, the same day they and
three other companies signed the settlement deal.

Other tobacco companies are expected to follow suit.

Many in the SouthCoast say they don't like having to pick up the tab
for the companies.

"It is ridiculous," said Stefanos Baxivanos, who is from Virginia --
Tobacco Country -- but is in the area clamming.

"I hate this. They got us addicted They ought to give us free patches
to quit instead of (making us foot their bills)," said Debi Sylvia of
New Bedford.

Some people vowed to quit.

"That is enough of that: It is too much," said Robert Davey of Fall
River. "I am going to quit after this. Pretty soon they will be
selling cigarettes like cigars -- $3 a piece."

But other smokers said it will take more than an increase in price to
get them to quit.

"I think I will smoke no matter how much it costs," said Melissa
Banville of Fall River.

"It really makes you think about quitting," said Jim Leverone of
Rochester.

Local cigarette retailers say that the increase will push smokers
toward some of the generic brands, which can sell at the state minimum
of $2.24 a pack.

"I think one of the things you will see is people buying more
generics," said Lou Jesus of the Peanut Store in New Bedford. "People
already are coming in asking 'Which is the cheapest cigarette on the
market?' People are not happy. I am glad I stopped smoking 32 years
ago."

Analysts had predicted a price increase of 35 cents to 40 cents a pack
to pay for the settlement. The increase Philip Morris announced,
effective immediately, was slightly larger than expected.

David Adelman, tobacco analyst for Morgan Stanley Dean Witter, said
smokers may be stuck with an even bigger price rise -- about 50 cents
a pack -- as distributors and retailers add a nickel to the wholesale
price hike.

He estimated the national average price of cigarettes would rise to
$2.45 a pack from the current $1.95 -- an increase of nearly 26 percent.

Mr. Adelman said the price increase more than offsets "Marlboro
Friday," the April 1993 decision by Philip Morris to slash the price
of its best-selling Marlboro brands by about 40 cents a pack to slow
the loss of market share to cheaper smokes.

Marlboro accounted for less than 25 percent of the market at that
time; it now accounts for 38 percent of U.S. cigarette sales. Philip
Morris controls 53 percent of the nation's overall cigarette sales.

Neither Philip Morris nor Reynolds offered any explanation for the
price increase. "We never comment on our pricing strategy," said
Philip Morris spokeswoman Mary Carnovale.

But Mr. Adelman said the main reason was "to fund the settlement
payment. That is a significant increase in the cost of doing business
and they have to pay for it."

He said the increase was also designed to make it less palatable for
states to boost cigarette taxes.

"Politically, it becomes very difficult if the cost of smoking has
already gone up significantly," Mr. Adelman said.

The tobacco makers signed the settlement with 46 states, the District
of Columbia and five U.S. territories, under which they would pay $206
billion over 25 years to settle state claims for Medicaid
reimbursements. Earlier, the companies signed four separate deals to
settle claims by Mississippi, Florida, Texas and Minnesota for a
combined $40 billion.

The earlier settlements had already driven up wholesale prices this
year by about 18 cents a pack.

The Associated Press contributed to this report.

Checked-by: Patrick Henry