Chapter 26, Part 1

By Frank Tursi, Susan E. White and Steve McQuilkin
JOURNAL REPORTERS
© 1999 Winston-Salem Journal

F. Ross Johnson had in 1987 what he thought was a secret weapon. Scientists at R.J. Reynolds Tobacco Co. had been working for five years on a revolutionary cigarette -- code-named Project Spa -- that would smite Marlboro, turn the tide on the anti-smoking forces, and reverse RJR's declining market share.

The R.J. Reynolds Tobacco Co. was once the largest cigarette company in the United States with a powerhouse of best-selling brands: Winston, Salem and Camel. But times changed, and as the case against smoking became more pronounced in the 1960s, RJR failed to adapt to the marketplace. Its rivals would eventually rush past it, and RJR's efforts to catch up would have a profound impact on the company and the cigarette industry.

Johnson had a year earlier used the project's secrecy and the $68 million spent on its development to foment dissent on the company's board of directors, which had been kept in the dark about the new cigarette by J. Tylee Wilson. The board forced Wilson to retire as president and CEO of RJR Nabisco and installed Johnson in his place. As did Wilson and others in the company, Johnson saw the new cigarette as a major breakthrough that could lead RJR past Philip Morris and, more important, light a fuse under the company's slumbering stock. ''You get some guys who are obsessed over women. His obsession was the value of the stock,'' said Jerry Long, the president of the tobacco company at the time.

Shrugging aside objections from Long and other underlings that the cigarette still needed years of work, Johnson sped up its timetable. Impatient and sometimes impetuous, Johnson couldn't wait years to perfect the product. He began handing out samples to his golfing buddies and left packs on airplanes. As he had hoped, word spread on Wall Street of RJR's secret cigarette. Company lawyers advised Johnson that securities regulations required full disclosure of any new product that could materially affect the price of the stock.

The new cigarette, named Premier, was duly trotted out before the world amid much fanfare and hype at a press conference in New York's Grand Hyatt Hotel in September 1987. Armed with charts and cutaway diagrams, Dick Kampe, who headed the Premier development team, explained that Premier lit, tasted and smoked like any other cigarette, but it left behind no ash, produced virtually no smoke and, if left unattended, would eventually go out without burning down the house. In another room, Edward A. Horrigan, the chairman and chief executive of Reynolds Tobacco, boasted to financial analysts that Premier was ''the world's cleanest cigarette.''

It certainly was the most ingenious. Though it looked like a normal cigarette, Premier didn't burn tobacco, but heated it. Smokers lit a carbon element at the tip. Heated air inhaled through the tip passed over a small aluminum capsule that contained tobacco extracts -- nicotine in particular -- flavorings and glycerin. A cellulose-acetate filter, like those found on regular cigarettes, was attached to the end.

Because nothing burned in a Premier, the cigarette produced virtually no tar and just a fraction of the chemical compounds found in cigarette smoke that had been linked to cancer. Though Premier was designed to be less hazardous than other cigarettes, the company could never market it that way. ''Premier was to be made a cigarette that delivered a good taste without having any tar or adverse effects,'' Long explained. ''It was never meant to be a safe cigarette because we couldn't possibly indicate it was a safe cigarette. That would imply that your regular cigarettes were unsafe, and the law department inside and outside was rather fanatical about it.''

Company executives called it a ''smokeless cigarette'' instead and resorted to double-talk -- never saying Premier was safer than cigarettes on the market but certainly implying that it was. ''We're not saying it's a safe or safer cigarette,'' Horrigan told the analysts. ''We're saying many allegations about the burning of tobacco and the elimination of those compounds should be greatly reduced with this product.''

Marketing wasn't the only problem with Premier. For more than 30 years, health advocates had urged tobacco companies to eliminate or at least reduce harmful compounds in cigarette smoke. Here, finally, was a cigarette that did so, but Dr. C. Everett Koop, the U.S. surgeon general, and Ronald Davis, the director of the federal Office of Smoking and Health, were hostile to the new product when Reynolds lawyers and executives met privately with them a week after the press conference. It was just a taste of the moral ambivalence that anti-smoking groups would have toward Premier, which was a serious effort to produce a plausibly less dangerous cigarette.

''We really thought that the world would welcome us with open arms,'' said J. Donald deBethizy, a RJR toxicologist at the time who worked on Premier. ''We went out to the best scientists with this message and we were hugely disappointed at the reaction.''

The success of Premier, though, would ultimately rest with smokers. Would they accept this radical new design? Taste tests done in the United States and Japan while Premier was being developed found that smokers didn't particularly like the way the cigarette tasted or smelled. RJR surveyors in Japan soon learned to translate one sentence: ''This tastes like shit.''

Johnson got an idea of the problem he faced when he passed out Premiers to some of his upper-crust buddies at the company villa at the Castle Pines Golf Club near Denver in August 1988, just weeks before he was to roll out the cigarette in national test markets. The guests included Peter Ueberroth, the commissioner of baseball, race car owner Roger Penske, and golfers Fuzzy Zoeller, Raymond Floyd and Ben Crenshaw. (Burrough footnote, description of the Premier taste test.)

''Smells like burning lettuce,'' one cracked.

''Boy, this is hard to draw,'' said another.}

''I don't think I can get through a pack,'' someone else said.

Johnson pulled Horrigan aside the next day. ''We may have the P.R. squared away now,'' he said, ''but I think this is going to be one long haul. We're going to stay with it. We're going to hold its hand. But I have a feeling those test markets are going to give us trouble.''

The Back of the Bus

As the 1980s dawned, the RJR brain trust was worried. Philip Morris was on the verge of overtaking Reynolds as the country's top tobacco company. Its Marlboro brand appealed to hip, younger smokers, while RJR's brands had the stodgy image as the smokes of older, blue-collar types.

But there was another growing threat to the kingdom. A new front was opening up in the tobacco industry's war with anti-smoking activists. The industry had so far held off its foes by shoring up its political alliances and constantly challenging the science. Those tactics had the dual benefit of confusing the public while reassuring customers. The strategy would work, though, only if people continued to believe that smokers harmed no one but themselves. It was their right to kill themselves by inches if they desired.

A new offensive, however, had started to take shape in the late 1960s that challenged the industry's position because, if successful, it would brand smokers as public menaces whose habit endangered innocent bystanders. In an era of heightened environmentalism, smokers could become air polluters or, worse, social pariahs who had to be segregated from other people.

That tireless reformer, Ralph Nader, fired the opening salvo in 1969 when he asked the Federal Aviation Administration to ban smoking on commercial airlines, arguing that smoke annoyed nonsmokers, threatened their health and posed a fire hazard. The FAA and the U.S. Department of Health, Education and Welfare studied the matter and concluded that there was no ''persuasive evidence'' to indicate that the health of nonsmoking passengers was harmed by tobacco smoke. Pan American Airlines that year, though, established the first no-smoking sections on its jumbo jets. United Airlines did the same two years later. (Kluger footnote, description of the development of environmental tobacco smoke as a health issue.)

Jesse Steinfield, the U.S. surgeon general, fanned the embers of the smoldering issue in his 1972 report on smoking and health, which was the first to dwell on the potential dangers of secondhand smoke -- the stuff that smokers exhaled or emitted from the tips of their burning cigarettes. Though he lacked hard scientific evidence, Steinfield in his public appearances called for a ban on smoking in restaurants, bars, buses and other enclosed places.

Encouraged by the surgeon general's pronouncements, Nader in 1972 petitioned the Civil Aeronautics Board, which was more sensitive to consumers than the FAA, to separate smokers from other passengers on commercial flights. Though noting that the scientific evidence was scanty, the board approved the first federal restriction on smoking in public places because its surveys found that 60 percent of passengers were annoyed by tobacco smoke.

The Interstate Commerce Commission in 1973 segregated smokers on interstate trains and at Nader's prompting the following year limited them to the back 20 percent of seats on interstate buses.

A more unsettling development to the industry took shape in some Western states. Arizona in 1973 became the first state in modern times to ban smoking in such places as libraries, concert halls and museums. A much more comprehensive ban in Minnesota two years later made it illegal to smoke in almost all confined public places. Less sweeping laws followed in Utah, Nebraska and Montana.

None of the bans was based on any hard evidence that secondhand smoke was harmful. In fact, the science at the time seemed to indicate that Nader and the other activists were themselves blowing smoke. Researchers at Harvard in 1975, for instance, found that nonsmokers in bars, restaurants and railroad cars, depending on the length of their exposure, took in from 1/100th to 1/1,000th of the tar and nicotine yield of a filtered cigarette smoked directly. Even Dr. Ernst Wynder, the most assiduous researcher in the field of smoking and health, waved off the dangers. ''Passive smoking can provoke tears or can be otherwise disagreeable,'' he wrote in 1978, ''but it has no influence on health (because) the doses are too small.''

RJR and the other tobacco companies slowly roused to meet the new threat that a Roper survey done for the Tobacco Institute in 1978 identified as ''the most dangerous development to the viability of the tobacco industry that has yet occurred.'' The industry dispatched its lobbyists to state legislatures to beat back additional bans. Reynolds researchers, starting in the early 1970s, began hauling large monitors into restaurants, bars and bowling alleys to measure secondhand smoke. It would be the start of more than 20 years of company research into the chemistry and toxicology of what became known as environmental tobacco smoke, or ETS. RJR's scientists would patent smaller and smaller monitors that would be sold to other researchers. They would devise better air-filtering systems for bars and restaurants and would study the concentrations of various components of ETS in the urine and bloodstream of people exposed to the smoke in company smoking chambers.

No company or government agency would do more to try to understand the chemistry of ETS and its effects on people, said Michael W. Ogden, an RJR scientist involved in the research. ''A singular point that I would want to make here today is that breathing ETS is not the same as smoking a cigarette,'' he said. ''There are differences in the smoke, physical and chemical differences.''

The first epidemiological studies of ETS in the 1980s seemed to confirm that point. Most concluded that nonsmokers exposed to ETS took in a fraction of the toxic substances found in tobacco smoke that active smokers did. Gauging the health hazards of such exposure was difficult at best, noted a blue-ribbon panel with the National Research Council of the esteemed National Academy of Sciences in 1986.

That didn't stop Koop that year from writing in the preface of the surgeon general's report, The Health Consequences of Involuntary Smoking: ''It is certain that a substantial portion of lung cancers that occur in nonsmokers are due to ETS exposure.'' Koop went even further when he released the report at his press conference. The threat was so real, he said, that everyone should work in smoke-free environments.

The authors of the report, though, were far less strident in stating their findings. Healthy adults exposed to ETS, they noted, ''are unlikely to experience clinically significant deficits in pulmonary function as a result of ETS exposure alone. . . .''

As an executive in RJR's public-relations department at the time, David Fishel had the job of helping fashion the company's response to the pronouncements of Koop and other anti-smoking activists. He could only marvel at their strategy. ''It was a brilliant public-relations move, absolutely brilliant. There was almost no basis in fact. But the guys on the other side don't have to be very careful about what they say,'' Fishel said. ''They can make a pronouncement and all of sudden there's Dan Rather and Tom Brokaw sitting there. . . The really hardcore guys on the other side will try and sit there and say, `These are evil, corrupt people. They sit there every day. They know their product is killing people and they go right on doing it. They're trying to hook your kids. They're blowing all this stuff into the air. They don't care.' That's bullshit. . . but it's a very brilliant, very well executed public-relations campaign.''

The murky science had to be countered with an equally brilliant campaign that encouraged and supported the right to smoke and stressed courtesy instead of segregation wherever smokers and nonsmokers mingled. At Horrigan's urging, that message started appearing in Reynolds' ads in the mid-1980s.

''Save you from yourself. My goodness, strap yourself into the seat, put the kids in the back. I don't want to sound like I'm a real contrary guy, but as they say in New York, `Enough already.' So I have a real problem with all those external forces that control, dominate, you know, tell you how to live your life,'' Horrigan said. ''There are two sides to every issue. My feeling then was we're not heard from in a fair way, so if we have to buy space to have our feelings heard then we'll buy space.''

Ultimately, though, it would take more than some magazine ads to turn the tide. A new weapon was needed. Horrigan and Jerry Long got their tobacco people together in 1982. ''Is there another way to configure a cigarette to meet the challenges?'' they asked.

• Coming Friday: A New Weapon