For a slow-growth industry, the tobacco sector has been busy recently. The biggest players have been taking advantage of their size to acquire smaller rivals and emerging products that could threaten their core fran chises even in a small way.

British American Tobacco (AMEX: BTI) stole a march on the global tobacco leader Philip Morris International (NYSE: PM). The U.K. tobacco company scooped up Colombia's second-largest tobacco player, Productora Tabacalera de Colombia, for $452 million. Philip Morris agreed to purchase the company in 2009, but the Colombian government rejected the takeover on antitrust concerns last year.

The purchase positions British American as the second-ranked tobacco company in the nation, behind Philip Morris. Emerging markets such as Colombia represent a good growth opportunity for established tobacco companies, which are facing significant pressures in developed markets.

Philip Morris has been on its own acquisition path, despite the setback. The company has purchased the global patent rights to a technology that delivers nicotine to the lungs without smoking. The company will work with the technology's developer to create a commercially viable product, but don't expect anything soon. The company said it could take a few years before a product becomes available.

Philip Morris, British American, and Reynolds American (NYSE: RAI) have been moving into products that deliver nicotine without the actual burning of tobacco and the associated noxious substances created by smoking. In April, British American established Nicoventures to develop nontobacco nicotine products, while in 2009 Reynolds acquired Niconovum, a Swedish producer of smoking cessation aids. Such acquisitions position tobacco companies to nab any growth on the margins of their core franchises as the industry faces regulatory challenges.

A similar trend has been playing out in oral tobacco, as players such as Reynolds and Altria (NYSE: MO) increasingly market smokeless snus as a substitute for smoking in the face of smoke-free workplace regulations. While these products have seen some growth, they comprise just a small portion of tobacco companies' sales.

Another player, Star Scientific (Nasdaq: CIGX), is focused heavily on non-traditional tobacco products. The company manufactures dissolvable tobacco products and is developing a process for curing tobacco that eliminates the carcinogens. Given the interest of Big Tobacco in defending its turf, could Star Scientific be a future acquisition? Is tobacco the place to invest in now?

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