R.J. REYNOLDS TARGETED KIDS, RECORDS SHOW

Despite repeated public denials, R.J. Reynolds Tobacco Co., the nation's
second-leading cigarette manufacturer, targeted teenage smokers as young as
13 in an attempt to regain market share during the last 25 years, according
to internal company documents released Wednesday.

One memo from 1987, stamped "RJR secret," describes a plan to develop a new
wide Camel cigarette targeted at "younger adult male smokers," primarily
the 13-24 age group, then smoking Marlboro, Philip Morris' leading brand.
RJR subsequently brought Camel Wides to market.

Another memo from a 1974 presentation to the board of RJR Industries by
C.A. Tucker, the vice president of marketing, said flatly: "This young
adult market, the 14-24 age group . . . represent tomorrow's cigarette
business. As this 14-24 age group matures, they will account for a key
share of the total cigarette volume--for at least the next 25 years."

After the papers, spanning 1973 to 1992, were released, Reynolds continued
to deny that it has targeted underage smokers and said the documents
released Wednesday were being taken out of context.

The documents were released by Rep. Henry A. Waxman (D-Los Angeles), a
longtime industry critic. He got the papers from attorneys in California
who obtained them from RJR in a case settled last September that accused
the company of using deceptive marketing practices, including youth
targeting, in its highly successful Joe Camel campaign. The papers' release
also heightens the possibility that the proposed $368.5-billion national
tobacco settlement will be stiffened in Congress, in particular with
enhanced penalties on tobacco companies if they fail to reduce youth
smoking.

The documents also are likely to have an impact on the Justice Department's
criminal investigation of the industry and numerous lawsuits against the
cigarette companies, including Minnesota's massive suit against the
industry, scheduled to start next week.

Strongest Proof of 'Smoking Gun'

Waxman and David A. Kessler, former commissioner of the Food and Drug
Administration, said the new documents represent the strongest proof to
date that the cigarette industry targeted minors after studying them in
depth.

"If you're looking for a smoking gun on youth targeting, you need look no
further than these documents," said Kessler, now dean of the Yale
University Medical School. "It's very hard to read these documents and then
say that the industry should get any special legal protections from
Congress," Kessler said. The industry's key legislative goal this year is
to obtain congressional ratification of the national litigation settlement,
which would prohibit all future class-action suits and punitive damages
against the cigarette companies.

The papers also may intensify the Justice Department's investigation of
whether cigarette officials misled the government about the nature of their
products and industry marketing practices. Waxman said he would send the
material to Atty. Gen. Janet Reno and ask her to broaden the current
Justice Department probe.

Among other matters, Justice and FBI officials are investigating whether
the industry misled government officials by telling them that they never
deliberately marketed their products to children. Among the incidents being
reviewed is whether former RJR President James W. Johnston lied in
testimony to a House subcommittee on April 14, 1994. On that day, Johnston
testified that "we do not market to children and will not." He also
testified that "we do not survey anyone under the age of 18." Johnston, who
resigned as chief executive of RJR's worldwide tobacco operations in June
1996, did not return calls Wednesday.

However, the new documents "present a very different picture of RJR's
actions" than Johnston conveyed, Waxman said. Additionally, a 1973
marketing memo states that the company should use comic strips to help
entice "younger smokers" away from Philip Morris' Marlboro, which had
become the leading teenage brand. That document described "younger smokers"
as 14 to 24.

Survey of Teen Smoking Habits

In another instance, RJR commissioned a "Smokers Screening Profile" that
surveyed the smoking habits of more than 11,000 teenagers, ages 14 to 17,
including data on their brand of cigarette, cigarette purchasing habits,
age, sex, religion, residence, household income, education and occupation
of parents. The memos clearly reflect deep concern at RJR about their
competitors Philip Morris and Brown & Williamson showing "unusual strength
among these younger smokers," which "suggests continued growth for Philip
Morris and B&W as their smokers mature."

On the other hand, the memo notes that RJR's two major brands, Winston and
Salem, "show comparative weakness . . . among these young smokers." Tucker
goes on to say that the company's market share will erode "unless this
situation is corrected."

Several documents reveal the thought process that led up to RJR's 1988
launch of its highly successful and controversial Joe Camel campaign and
how the campaign operated. An August 1988 memo states that outdoor
advertisements should be placed wherever young people congregate, with the
ideal locations being sites near fast-food restaurants, convenience stores,
urban basketball courts, video game arcades and record stores.

Reynolds issued a formal statement saying the documents were being
misconstrued. For example, the company asserted that the 1987 document
contained a typographical error and that, in reality, the memo should have
said "18- to 24-year-old male Marlboro smokers."

The company reiterated its long-standing position that it does not target
teenagers. "While attitudes toward smoking have changed over the last
several decades, Reynolds Tobacco Co.'s position and policy have remained
constant: that smoking is a choice for adults and marketing programs are
directed at those above the legal age to smoke," the company said in a
written statement.

"Not only is it unfair to the employees of Reynolds Tobacco to strip these
documents from the context and perspective of the broad company record as
well as the social standards of the times in which they were created, it is
unfair to the American people and serves only the agenda of some who seek
to benefit from a broad misperception of how this company has conducted
this business."

Additionally, Reynolds said a small number of documents had been
"cherrypicked" from about 100,000 produced in the Joe Camel case in San
Francisco. The company also said it had turned over all these documents to
the Federal Trade Commission.

Companies Agree to Avoid Cartoons

In May, the FTC charged that Reynolds' highly successful Joe Camel campaign
illegally induced children and adolescents to smoke. By a 3-2 vote, the
commission asked an administrative law judge to issue a cease-and-desist
order to prevent RJR from using the cartoon camel in ways that "would have
a substantial appeal to children and adolescents below the age of 18."
Reynolds said it would vigorously challenge the FTC's order.

However, less than a month later, RJR and the nation's other leading
cigarette manufacturers reached the $368.5-billion litigation settlement
with state attorneys general that included a term barring the use of
cartoon characters such as Joe Camel in future industry marketing. Even
though that settlement is still pending in Congress, Reynolds announced in
July that it was retiring the hip character. At the time, company officials
said they were looking for a new advertising strategy.

Wednesday's document release was not the first time Reynolds was accused of
targeting youths. In 1995, some internal company documents surfaced that
raised some of the same issues. In one 1973 memo, RJR assistant research
director Claude E. Teague Jr. wrote that, "if our company is to survive and
prosper, over the long term we must get our share of the youth market." The
memo laid out a strategy to appeal to what Teague called "learning
smokers."

At the time, company officials said Teague's ideas did not represent
company policy and were not implemented. They also said Teague did not
interact with company marketing officials. However, a June 1974 document
released Wednesday shows that Teague, along with RJR internal marketing
people and outside advertisers, met to discuss cigarettes designed for the
"beginning smoker."

A July 1980 memo from the company's executive vice president, G. H. Long,
to company Chairman Edward A. Horrigan reflects the company's growing
concern about losing market share to Philip Morris and in particular
laments the fact that Philip Morris has 59% of the 14- to 17-year-old
market and that RJR's share of that market has slipped to 19.9%.

Long's memo said he expected that company initiatives that year would
increase RJR's share of that market.

Most Smokers Start Younger Than 18

A large body of academic research shows that the vast bulk of
smokers--about 89%--start before age 18. Thus, the companies need to
attract smokers at the earliest age possible. RJR officials have
consistently denied--particularly in response to criticism of the Joe Camel
campaign--that they target kids under 18.

On numerous occasions, they have said the term "younger adult
smokers"--which appears in a number of RJR documents released earlier--is a
reference to people 18-24, not to younger teenagers. Still, one 1980
document reflects that RJR was growing worried that some company documents
were referring to the 14- to 24-year-old market. A memo discussing "Younger
Adult Smokers--Terminology" suggested changing certain terminology used in
the company's internal communications.

"The specific terms that were to be erased from RJR's vocabulary were
redacted from the copy of the document produced" in the Joe Camel
litigation, said San Diego attorney Patrick Coughlin, the lead lawyer for
the plaintiffs. However, the document notes that "it is important that we
do not do anything that would leave the false impression that our real
intentions" are to market to those under 18.

A year later, an internal memo directed RJR employees to continue to track
underage smokers but not to refer to them that way. But the next year RJR
contracted with a company to develop a model called "AGEMIX" that could be
used to determine smoking incidence and smoking rates for individuals 12
and older.

"The true significance of these documents is that they show that RJR kept
track of young smokers and took action to try to get the share of the youth
market it felt it needed to survive in this industry," Coughlin said.

Copyright Los Angeles Times