TOBACCO STRATEGY RFVIEW TEAM
BENSON & HEDGES
FFVTEW OF 1991.
1. SUMMARY
% VAR
1990 1991 % VAR YEAX Vs.
ACTUAL ACTUAL VS.'90 BUDGET BuDGrr
y
Domestic 12971.8 12527.0 -3.4 13222.6 -5.3 1 2-
Export 5961.0 5654.8 -5.1 6648.0 -14.9 6
TOTAL 18932.8 181 -4.0 19870.6 8.5
8 ~1 8) (1 E4C 11V
XAI C-
(a) Overafl:
The year end variance was -8.5% against budget and
-4.0% against 1990,
with export business sigr~ficand.' underperforming
the domestic operations.
(b) r)omestic:
The House ended the year -3.4 % against 1990 and
-5.3 % on budget. The
principal factors influencing this result were:
Australia (-11.7%, 91 vs. 90)
where the weak economy has continued the trend
away from premium
products towards the value for money 35's, 40's
and 50's packs. N[alaysia
7.7%, 91 vs. 90) where unlike Dunhill, B&H has
been unable to capitalise on
the move away from the low price segment. Finally,
in Germany (-2.8%, 91
vs. 90). all prestige prc-Jucts ha%-.- suffered a
decline in popularity. However.
this has been partIaLly offset by significant
volume gains in South Africa
(+9.1%, 91 vs. 90) where the Mild variants
continue to make sobd progress.
(c) ExRgrt:
House 1991 export Wes volumes were -5.1 % down on
1990 and -14.9%
below budget. Exports to French West Africa remain
depressed by the
political instability in the region and T.E.1
licensed manufacture. Far East
exports are well ahead of 1990, although still
below budget, wUst European
exports have remained adversely affected by the
decline in tourism in the
wake of recession and the Gulf War.
MN. TSRTI
Ln
Cr.
CID
Lr-
BATCO document for Province of British Columbia 26
October 1999


2. MAJOR MARKET COMMENTS
Australia: With the economy showing no discernible
signs of recovery, the
trends in the market towards the value for money
35's, 40's and 50's packs
continued apace, impacting all prestige brands,
and 1991 volume for the
E&H House ended 11.7% lower than in 1990 and 11.2%
below the full year
budget. However, in the fourth quarter there was
an improvement in B&H's
performance following the correction of the price
imbalance between B&H
and Winfield and some Xmas promotional activity.
New 7,niand: Anticipated trade buying in the
run-up to Xmas did not
material~ise and House volumes finished 1991 -7.3
% down on last year and
-8.2% against budget. T"he whole market has been
impacted by the excise
increme announced at the end of July and ended the
year 14.1 % down on
1990. However, B&H House -1-LQZg
Mplavsia: B&H house volumes were 7.7 % below 1990
and 7.3 % below
budget in 1991. ne brand has been unable to
capitalise on the uptrading
occurring from the low price segment to the same
extent as Dunhi1l. As a
result market share has sUpped slightly from 11.6%
to 11. 1 %.
France: Full year volume of 870.8m was -1.8%
against both budget and
1990, finishing the year with an unchanged 0.9%
share of market. A switch
ir, r-.;-dia spend a~,.ay from other B&H
del_i~,atives to concentrate on the
parent SF brand resulted in an increase in its
volumes at the expense of Ultra
Mdd and Menthol, which has now been withdrawn. On
a comparative basis,
fourth quarter volumes were hit by the effects of
the big sell-in conducted in
Q4 1990, although overal] volumes for the year
remained basicaBy stable. A
5% price increase in October had relatively little
impact, although it did
prompt some slight downtrading to Selta brands.
Germanv: Full year volume of 1544m units is just
2.8% below 1990, but
is 4.9% below budget whilst total national market
share has declined
marginally from 1.06% to 1.01 %. However, this
performance stems from Un
two separate underlying trends. In W.G-.rmany B&H
market share has fallen
U-1
MN. TSRT1 00
BATCo document for Province of British Columbia 25
October 1999
Singapore: Full year volume of 89.4m was -1.7%
against last year, but
-r- 7c up on budget. The buoyant -zonomy, together
with the removal of
Duty Free privileges, led to a + 2.6 % increase in
the total market. The third
quarter 20 cent industry price increase appeared
to have little impact on


in line with that of other prestige brands
reflecting the general decline in
popularity of overtly prestige brands amongst
younger smokers, market share
has consequently dropped from 1. 23 % to 1. 16 %.
By contrast, in E.Germany,
B&H has posted a share gain from 0. 16 % to 0.21 %
and the brand has now
overtaken Philip Morris KS in the region.
South Africa: FuU year sales of 2914.2m were 9.1 %
ahead of 1990 and
0.4% ahead ofbudget. 'ne Mild segment of the
market was the only segment
to show growth in the year, + 3.7 %, driven by the
broad appeal of the
Special Mild arid Ultimate Lights B&H variants
which continued to make
very strong progress, up+ 11.7 % and over +30.0%
respectively, posting
record twelve month average shares in December.
Overall House market
share of 9.2 % comfortably exceeded 1990 share of
8.3 %. 71he total market
performed in fine with expectations, given the
weak state of the economy,
finishing the year 10% down on 1990.
BATUKF: Volume for the year was -3.9% on 1990 and
-16.4% on budget.
Far East volumes are up strongly on last year, +
16.6 %, but nevertheless
remain 7.7% down on budget, and Middle Eastern
volumes, despite the
impact of the Gulf hostilities, were just 0.4%
down on 1990 and wereI0.3%
up on budget. African sales volumes, however, have
been impacted by the
political unrest in West African markets and by
T.E.1 licensed manufacture
and finished the year -11.15 % on 1990 and -32.6 %
on budget. This was the
principaJ factor in the 16.N% shortfaiI against
budgeted toW export volumes
outlined above. I-
K'FY FUTURF ACTIVMES.
1. Product:
Project Superioritv to identify a B&H Special
Filter blend achieving
superiority o%tr its leading competition brand in
se,-,-ral ke% markets is
progressing. (Set- TaJ Hirji's TSRT submission for
further details). Key
markets and key competition brands have been
identified and product testing
has been completed in Malaysia, data is being
processed regarding Australia
and fieldwork is about to commence in Cyprus.
Other probable markets
where testing may be undertaken include Germany,
France, Greece, South
Affica and Nigeria.
Prq*t T Pss to determine the viability of a
consumer benefit of a low
sidestream version of B&H Ultra Lights is
progressing. A product test, both
with and without consumer knowledge of the
perceived benefit, has now
started in France. Results are expected in March.
Un
MN. TSRTI
(DO
Ul
N)
BATCo document for Province of British Columbia 25
October 1999


R&-D are investigating the applicability of a low
sidestream benefit across the
whole brand range with a view to consumer testing
in key priority markets.
Prolect Feline to idendfy a suitable new brighter
6pping colour for B&H SF
to replace the existing one, which has been found
to appear dull and grey in
comparison with Rothmans' tipping paper, is now
well underway. Testing is
in progress in Nigeria.
2. Packaeing
Pack T ine-Up.
Given the decision to move to four drive brand
variants (see B&H strategy
submission for the TSRT), all of which will
incorporate an essentially gold
pack, work has now started on developing a pack
design which will retain the
basic gold pack but will still differentiate the
four variants from each other.
Peter Schmidt has been retained to develop
possible pack designs.
In addition the designers are also producing
various different pack executions
to investigate the possibility of modernising the
B&H SF pack.
Eco-Friendlv Packaging.
Two possible printed board alternatives to the
current foil board used in dw
B&H SF packaging have now been identified to try
and pre-empt a move in
the industn- to e nv iron me ntally friendly
packagln,,,,. Two further possible
cheaper alternatives are also currently being
investigated as to their viability.
Once all the printed board alternatives have been
isolated production testing
will begin in Germany and is anticipated to start
by the end of February.
Die Printine
Mgy~g_qiUn qs*fi3 have now been approved for
applicafion
. _!~g: . _
W
across the whole of the B&H range. Consumer
testing is due to start in the
near future in Malaysia as soon as sufficient
product has been manufactured.
3. Advertising
New Campaign
A new advertising proposition has been developed
that involves 'owning
gold'. The proposition has in principal been
accepted by Germany,
BATUKE, Malaysia and Australia. Although precise
executions of the
campaign are yet to be decided upon, several
possible executions are being
investigated to provide acceptable material for
consumer tests in the key drive
markets.
NIN. TSRT1
Lrl
CD
IN.)
cp.
00
U-!
BATCo document for Province of British Columbia 25
October 1999


MARKET M ARKET 1991 1"1 1991
DOMESTIC 1990 SILkRE % 1991 SELARE % VAL% VS VAL%
VS BUDGET
1990 BUDGET
AUVrXkUA 3350.5 1"% 3133.4 9-2% .11.7% -11.2%
3330.0
50 =1 AFRICA 267Z-' 8.3% 2914-2 9-2% 9.1% 0.4%
2903.6
MALAYSIA 2225.3 11.7% 2034.1 11.1% -7.7% -7.3%
121L4
GERMANY 1598.4 1.3% 1143.9 N/A -L3% -4.9% ISZ4.0
=
CE
997.0
0.9%
970.3
03%
-tJ%
-IA%
U7.0
NEW ZEALAND 3610.8 12.6% 3191 13.6% -7.3% 4L2% "&4
FIJI 347.6 68.2% 360.9 69.7% &3% LZ% 943Z
PAPUA NEW GVTNF-A 36Z.1 44.1% 337.0 4L0% -1.4% L1%
U9.5
CANARY MIANDS 151.7 3.1% 157.4 L3% L8% ILI% 13&0
SP.AJ:N Iz&I 0-2% 123.1 4LL% .2.3% -19.3% Isu
SINGAPORE 90-9 L6% 99.4 2.3% -1.7% L7% 5"
.NMIERLANDS 79.3 M% 79.3 &.5% -1.0% -IOLS% SLO
SWrrZERLAN-D 65.4.4 0.4% 64.3 0.4% -0.2% L5% 6"
BELGIUM & LUXEMBOURG 4&.3 0.3% 4L6 "% 4.6% Ij% 4U
MALTA 53.D 7.2% 47.2 7.3% -10-9% _4A1% 47.3
ITFRUS(GR=) 36-5 L3% 39.1 2.1% 7.1% -15.0% 4L0
DMONESIA . 30.4 0.2% 31.5 0.2% 3.6% .-1.6% 3LD
SONG KONG Z&O 0.4% Z4.0 0.5% -14.3% LI% zu
TILNIMAD 20.7 L5% 20.7 2-2% 0.0% 15.E% 17.9
JA.MLA1CA I&S 1.4% ILS 1.5% 0.0% 9.2% 17.1
MALAWI 17.1 1.7% 17.1 Ijm &n _30A% ZLT
BARBADOS 10.6 W% 9.5 7_9% -10.4% -9.5% IQj
ic,.URMUS 0.1 -100.0% -100.(M &a
NIGERIA 0.0 &a
TOTAL DOMESTIC 12971.7 12527.0 -3.4% 41.3% 132" S
I"I I"t I"I
1990 VAJL% VS VAJL% VS BUDGET
1990 BUDGET
LUMM
GREECE 0.0 0.0 La
TOTAL UCENCE CLO ga u
LV-0ZT,T1-,n* FREE
&ArUX&E 3334.5 5147.4 .3-9% -ILI% 91=4
- PAR FAST 890.6 1027.0 ILE% -7.7% 111L9
-EUROPE 1989.6 17mi -&7% 4L2% 1961.5
MIDDLE LAST 469.1 467.2 A4% 10J% 4=.6
AFRICA 1940.1 1716.6 -11.5% 4L6% 234LS
W. HVdXSPIIEZE IT3.1 173-3 4L9% -7.2% I"_9
ALS"I'RALLA 146.0 143.7 -1.6% IU% 13CLO
WWGAPOILE 131.9 93.1 -37.0% -31.0% 12=
NEW ZEALAND 79.1 77.1 _L3% -ZA% T"
BRUM 73.' , 74.4 -1.7% -9-"% 51j
GERh(AxY 31.2 23.6 -6U% 113J% ILD
CYr2U!S(GXE= 20.5 20.4 -"% -1&4% 2=
SONG KONG 1" 17.1 -0.5% 4).6% 17.2
S&I LANKA 10.3 IL6 IL-I% -1.6% Izj
(~A " 0.4 11.3 2-,n.o% 0.0
71.MB.kBWE 19.6 10.S -41-9% L0% 10.0
3-_kB.kDOS 5.9 L4 U% U% L9
L -LiIDAD 3.4 LA SL2% _2L1% L9
MA LAWI 0.4 9z 1=.D%
F&A 3.5 4.1 17.1% 17.1% 3.5
M.A URrrn1S 2-9 4.0 37.9% 37.9% L9
BRUNEI (D/F) 1.1 1.3 I L2% 93% L2
MACAO 1.1 1.1 0 .0% 10.0% LA
SWITZERLAND 0-9 1.0 11 .1% 0.0% 1.0
PANAJKA 3.3 0.3 -73.8% ZOX% 1.0
SIM IUM & LUXLMDOURG 0.9 CL7 .22.2% -12-5%
T40TAL EXPO]rT/DUTY FREE 5961.0 SSUA _LI% -14.9%
664U
TOTAL LIC.SXP/DF 5961.0 56SCS 4LI% -14-9% 664&a
GZAND TOTAL 13932.7 18181.3 42% 41.5% 1987aA
SHARE OF WTnTES
- SHARE OF IMPORT SEG MENT
(-n
(z)
i1 j
(Ji
BATCo document for Province of British Columbia 25
October 1999


0
0
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0
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0
T
0
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0
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0
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IIENSON & IIEDGES: PRGIONALANALYSI
1991 1991 1991
MILLIONS 19" 1991 VAIL% VS VAIL% VS BUDGFr
1990 UUDGE7r
EUROPE 5029.8 4786.7 -4.9% -4.2% 4997.8
F.EAST/AUST 8534.1 8012.6 -6.1% -7.9% 8698.3
L AMERICA 3.4 6.4 98.2% -28.1% 8.9
W. WEM / CARIBBEAN 234.1 229.4 -2.0% -4.1% 239.3
INDIAN SUB-CONT. 10.8 12.6 16.7% -1.6% 12.8
AFRICA 4651.4 4668.0 0.4% -16.0% 6489.9
MIDDLE EAST 469.1 467.2 -0.4% 10.3% 423.6
TOTAL 18932.7 18181.8 -4.0% -8.5% 19870.6


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DIRECT AATUKE SHIPMENTS BENSON & HEDGES - DECEMBER
1991
Zone DECEMBER YTD
---- --------
AFRICA ASSCOs .0 7.5
AFRICA STORES .0 18.3
AFRICA SUNDRIES .0 .8
ALGERIA DUTY FREE .0 3.0
BENIN DOMESTIC .0 19.4
DJIBOUTZ DOMESTIC 25.2 155.3
EGYPT DUTY FREE .0 9.0
GAMBIA DOMESTIC .0 5.8
GUINEA .0 21.5
INDIAN OCEAN OTHERS 8.4 50.6
IVORY COAST DOMESTIC 4.2 41.1
LIBERIA DOMESTIC .0 8.4
MOROCCO DOMESTIC .0 1.2
MOROCCO DUTY FREE .0 .3
NIGER. DOMESTIC .0 12.3
OTHER EZST AFRICA .0 17.9
.HER NTH AFRICA DOM .0 2.5
.UNION DOMESTIC 8.8 96.5
REUNION DUTY FREE .0 .8
SENEGAL DOMESTIC 3.5 14.6
SEYCHELLES .0 1.3
SOMALIA 8.4 16.8
SUDAN DOMESTIC .0 12.0
SUDAN DUTY FREE 2.0 42.0
TOGO =C-STIC .0 46.2
TUNISIA DOMESTIC .0 3.4
TUNISIA DUTY FREE 3.0 8.2
W.A- UNIT 1 108.0 1,037.3-
W.A. UNIT 2 7.6 65.5
ATRICA
179.0 1,719.6
77 OTHERS DIRECT 5.1 102.8
PAN DUTY FREE .0 2.4
~L--TAYS-T.z STORES .0 70.9
S.U.T.L. 17.4 657.7--
SINGAPORE STORES .0 17.1
SOUTIE KCREP 13.0 161.4
THAILAND 5.2 14.6
FAR EAST
40.6 1,027.0
ABU DRAB-7 DOMESTIC .0 41.7
ARABIA GT .0 17.2
BAHRAIN DOMEST---C .6 7.0
DUBAI DOIA-ESTIC .0 56.5
IRAN DOKESTIC .0 6.4
KUWAIT DOMESTIC .0 22.8
NORTH ARABIA D/F .0 4.8
OMAN DOMESTIC 2.6 35.3
OTHER LEVANT D/F .0 .7
QATAR DOMESTIC 1.5 15.7
SAUDI ARABIA DOM. 15.0 219.8
SOUTF ARABIA D/r .5 39.1
YZ-YE-,,i DUTY FREE .0 .2
BATCo document for Province of British Columbia 25
October 1999


DIRECT BATUKE SHIPMENTS BENSON & HEDGES - DECEMBER
1991
Zone DECEMBER YTD
---- -------- ---
MIDDLE EAST
20.3 467.2
AUSTRIA/GERMANY D/F 5.1 77.1
BELGIUM/LUX D/FREE 5.4 83.6
CENTRAL EUROPE D/F .5 21.7
DENMARK DOMESTIC .2 5.3
DENMARK DUTY FREE .3 4.6
EIRE DUTY FREE 2.5 33.5
FINLAND DUTY FREE .1 .5
FRANCE DUTY FREE 1.6 22.5
GERMANY DOMESTIC .0 1.2
GUERNSEY DOMESTIC .0 25.4
GUERNSEY DUTY FREE .6 5.5
POLLAND DUTY FREE 4.8 38.5
ELAND DUTY FREE .0 .4
j.ERSEY DOMESTIC .0 53.5
JERSEY DUTY FREE .1 3.5
NORWAY DOMESTIC 1.4 13.9
NORWAY DUTY FREE .6 5.2
SWEDEN DOMESTIC .2 4.3
SWEDEN DUTY FREE .0 2.0
UK AIRLINES 10.5 140.8
UK CARGO 4.9 46.5
UK DIPLOMATIC .2 4.8
UK DUTY FREE SHOPS 9.2 168.4
UK FERRIES 13.8 214.2
UY, FORCES - MILITARY .9 111.7
UK FORCES - NAVAL 1.5 16.1
NORTH EUROPE
64.3 1,104.8
DORRA .0 7.2
BULGARIA DOMESTIC .0 14.2
CZECHOSLOVAKIA DOM .9 2.7
FRANCE DOMESTIC .3 6.5
GI3RALTTAR 2.8 23.5
GREECE DOMESTIC 11.6 150.1
GREECE DUTY FREE .0 25.4
ISRAEL DUTY FREE 1.1 5.3
ITALY DOMESTIC 5.2 94.4
ITAILY DUTY FREE .0 7.2
MADEIRA .5 1.0
MALTA DUTY FREE 1.6 20.7
OT't=-R BDU EUROPE D/F .0 .2
POLAND DOMESTIC .0 12.2
PORTUGAL D014ESTIC .0 12.4
PORTUGAL DUTY FREE 1.1 19.9
ROM.;LNIA DOMESTIC .0 3 5. 9
SPAIN DUTY FREE 2.6 42.8
SWITZERLAND D/F .0 23.2
TURKISH CYPRUS D/F .5 4.5
TUR.-KISH CYPRUS DOM 11.3 130.7
YUGOSLAVIA DUTY FREE 1.7 18.3
SOUTH EUROPE
41.2 658.3
Ln
C.0
BATCo document for Province of British Columbia 25
October 1999


DIREC17 BATUKE SHIPMENTS BENSON L HEDGES -
DECEMBER 1991
Zone DECEMBER
-------- YTD
---
CARIBBEPN OTHERS 3.7 44
8
CARICOM 8.1 .
8
51
FRENCH CARIBBEAN 7.0 .
74
9
LATIN AMERICA .
2.0
WESTERN HEMISPHERE
*TOTA-T HOUSE BH 18.7 173- 5
3
64.1 o
5
150.4
PQ
(JI
00
Un
BATCo document for Province of British Columbia 25
October 1999