n ·r FROM: C, Brobman TO: R, Bexon C. McBIide R,D. Brown H. Roubicek P, Ounn S. H.assey C.E. Minshull W.E. Sanders J, Uniecke May 18th, 1988 RE: Project VISA Attached is a paper which reflects the future direction for Project VISA in both Marketing and Product Development terms. The first wave of rasaalch willoceur in ealry 3une. Should you have any comments or q~estibns, please do not hesitate to contact any of the undersigned. c. ~Brohmanl H. Ro~h·icek Attachment cc: A. Chan A, Porter 8. Rose T, Smith Q BATCo document for Legal Services : Health Canada 20 May 1999 Project VISA Ray 9Lh, 1988 Prepaied by:C, McBride H, Roubicek BATCo document for legal Services : Health Canada 20 May 1999 TABLE OF CONTENTS Page i, 1 2, AREAS OF EXPbORAT~ON..,,~~....~.....~..~.~...··~~ 3 2.1 Reduced Side Stream.......,,,,.,.,~...~II,· 3 Marketing Aspects.,,..~.......~.~.· 3 2.1,2 Technical Aspects.....,,.,,,,~.1~~~ 8 2,2 Enhanced Rraa,,...l~..~..~.. ~...~~~1.~~~.~ 16 2.3 Nicotine Alternative Products 17 3, NEXT STEPS.....,.......,.,,,.,,.,..~~~.,1~,111~., 19 3.1 Research Objectives,,,,,,,...~~.....~.~.~I~ 19 3.2 Tentative Schedule...,,....,.,,....,,~.1~.~ 21 4, APPENDIX (Research Concepts) 4.1 Reduced Side Stream Concepts.....,,..,.~~.~ 22 4,2 Enhanced Aroma Concepts..,.,.......,..~I~~. 29 4.3 Nicotine Alternative Product Concepts.,,~.~ 32 BATCo document for Legal Senrices : Health Canada 20 May 1999 ___ I___ i, BrA08001D ~~1 lddresrel de op30rtunity faraProduct th~it~ ~e innedn~rc~r~~onJ ~athaodala~ ieqislat!onl ~ar " smoker faces on the use of ci~a:ettes. The focus for vISA is to develop options which can ease the dissonance a smoker faces in today's hostile anti-smoking en~iroone~t, I~ the present time, our marker consists of no produet alternatives which can help alleviate the social pressures a smoker is confronted with. Tbe only rsco~r~e a smcke: presently has is to actually refrain from sneiing. Hence ~IS~ will look at various solutions which can provide the consumer with a less socially irritating product. The ideal VISI solution is in fact one which ultimately satisfies non-smokers concerns. Therefore, initially PISA will be approached Iron hnth vantage points - smokers and aon-snokers. The motivations will of course be different for each groop, however the whole VISA opportunity has been created and is fueled by nen-~okers. They, thus, will be involved in the early VISI dkvelopPant. The time is certainly ripe for vIS~. Rt no time in our history have smokers been confronted by more social antagonism and there is no [~~escea easing of this pressure. providing slnokers with an OJtiOP that satisfies these concerns surely reflects an important Marketing opportunity. The Monthly Monitor information reflects tha: in april/nay 1987, 831 of smokers were aware of the "passive smoking" issue, up f~p3 521 ~) a scant II months earlier. Furthermore, about (t) project II~INC 1 BATCo document for legal Services : Health Canada 20 May 1999 one in five smokers considered passive smoking ~oae of the most serious health hazards". The results suggest the issue has developed into an emotional issue, one which rational, logics: reasoning can no longer address. This is not surprising given the level of anti-smoking literature, news reports, press releases, etc, which have succeeded in transforming smoking into one of society's foremost problems, TWIGSY research conducted last summer painted to the fact~thar smoking is "ine:easingly becoming a cause of peer group rejection", tta~ snokers have been made to ieel "hoth conssicuo~s and sensitive" and that non-smokers "now ieel newly confident and justified in acting forcefully towards smokers", Correspondingly, "smokers are ve:Y much feeling the results", Hence, YISA will address product opportunities which can reduce this dissonanee by reducing the social pressure associated with cigarette smoking, G BATCo document for Legal Services : Health Canada 20 May 1999 2, AREAS oz EXPLDRATIOI The perfect VISA solution may not exist, or it may he something yet to be conceived, however the first step will be to assess solutions we have at our disposal and to assess how much of the problem these alternatives can solve. As an outcome of the early development work, we will also learn more about the specifics of the social problems, It is felt the product opportunities which exist, at present, fall under three "solution" umbrellas: t Reduced side-stream, t Enhanced aroma. Nicotine Alternative Products (NAP). 2.1 REDUCED SIDE-STREAM 2.1.1. Marketing Aspects A reduced side-stream product was attempted in Canada via Passport and was a resounding failure. It is felt Passport failed for several key reasons; off-taste, chalky ash, non-credible trademark, a non-snaker's cigarette, etc, In the intervening yeats, developments in the paper area have resulted in product enhancements which alleviate the majority of product related problems Passport had, BATCo document for Legal Services : Health Canada 20 May 1999 At-tally, out 3h3 department has developed reasonable reduced side-stream products which would be launch candidates following further Product development [See Technical Rspectsi ~ However,:he concept development has not yet been initiated. Eior do we know a: this paint how significant a solution a reduced side-stream product can be. we suspect there is a Sraup of smokers who Would be interested in this concept, and:ba~ a reduced slde-strean cigarette can improve the soeia~ acceptability of smoking to a certain extent. Therefore, we will soon conduct research to explore this area, The first step will be to examine the problems which can be alleviated by this concept, if any, there is a fear that smokers have become such pariahs that any sol3:ion of this nature will be rejected as not being significant enough to modify consumer behaviour. Secondly, we will examine strategic issues: Assuming the concept is viable, should the product be below 5 ~g of tar, around 9mS or around the 13mg level? No doubt, R&0 is capable of producing a cigarette at these varying levels, however the Marketing implications are quite different. The below 5mg opportunity addresses a more health-oriented population while more share notential elis:s around 13ng. although, we do not know ii T/Y level is indicative of perceived social pressure, we do know that younger people have very high awareness of the issue and, more inportantly, they feel sassive smoking is one of the most serious health hazards. The seriousness of the issue is actually most pronounced among young females, BATCo document for Legal Services : Health Canada 20 May 1999 MALES FEEY~tES AWARE AWARE of OBE OF OF ONE OF pASSIVE THE MOST PASSIVE THE MOST SMOKING SERIOUS SHORING SZR(OUS ~ 39 741 ZB~ 899 331 28-24 841 195 89P 34% 25-34 85$ iZ$ 841 24% 35~ 78% 2Bt 851 11% As a result of the above information, conceptual development at this stage is being tat4etted to people under the age of 35, These s~okers appear to be particularly dissonant and they represent a g:4up whose needs we wish to continue to satisfy, As stated earlier, it is felt more share potential exists for a reduced side-stream concept around the 13;ag level simply due to the sheer size of that Segment of the market. M+f (35 13mgf 58.6% 8-12mg 22,7% (5m9 1.6% others, menthol, plain 14,1$ We do not know at this point whether smokers around 13mg, 9mg or the 4m9 level would respond differently to ~ VISA solution or whether they would be motivated to adopt the concept for varying reasons, As a result, the initial wave of research will assist in assessing and understanding the interest level for reduced sidestream at each of the 3 critical tar areas shown above, Following the first phase, specific product development direction will be determined, BATCo document for Legal Services : Health Canada 20 May 1999 In the first wave of research, we will be examining the concept executed as a dunautier line extension. Essentially, this strategy implies that the concept is a dunaurier in everything it represents plus it has an added feature, something extra, in effect, a bonus for the smoker in that theoretically this is a more socially acceptable dunauriet~ This use of an established trademark for reduced side- stream is felt to be key to its success. The focus is not on legitimizing a prodllct innovation Sut ra:he: on improving a conventional product. bn interesting historical parallel was the launch of Player's Light. It carried all the lifestyle imagery and taste characteristics of Player's Filter but it was a "milder" i,e. "healthier" alternative. The strategy we are adopting for a dunaurier reduced side-stream product follows the same course - it will offer all the experience of a duMaurier but in a more socially acceptable format. Undoubtedly, one of the key reasons for passport's failure was the lack of any equity in its name. Therefore, with dunaurietr we avoid any problems associated with a free-standing entry. We have adopted a line extension approach at this point: as opposed to an endorsement strategy largely as a result of the potential awareness problems an endorsed product has which a direct line extension tends to overcome. It is also felt that, from a competitive position, the use of dunaurier as the first entry in what will surely become a reduced side-stream stampede, is a definite advantage. As reduced side-stream papers are not proprietary, the opposition can, and actually is, developing similar products. It is not inconceivable 6 BATCo document for Legal Services : Health Canada 20 May 1999 that a new market segment of reduced side-stream which will parallel the e~oluticn products will emerge Theoretically, every major of "light" cigarettes, tndeaark will have its "passiYe smokingl brand at some point in the fdture. Should this occur, dunaurier will be well ?jsitioned to compete with apposition entries. duMaurier is the logical choice of a trademark given our stable and the specified target of pe"ple under 35~ duMauriet is androgynous, it promises taste, it is very popu:ar among our target group, it represents quality and, relatively speaking, is strategicallY the best fit with the concept. we uill assess the dunaurier parentage in the npcolning research. It will be particularly important to will have of the understand the expectation a consumer duHaurier product and whether we eafi, in fact, deliver what is anticipated· The area Pi reduced 5ide·strea, development has the highest prioritY within Project rlISR due to the proxisity to a possible launch. In the first phase of vrsa research, we will be exanioing the feasibiljIty of this conceptual area as a VISA solution jn itself and also in a relative fashion versus other potential solution,; i.e~ enhanced aroma and nicotine alternative products, BATCb document for Legal Services : Health Canada 20 May 1999 2,1,2. Technical Aspects project visa is a response to the reduced social accep:abilitl of smoking, an important aspect of which is the issue or passive smoking. visa is fueled by the concerns expressed by non-sma;cers, and perhaps smokers, about inhalation of second hand or environmental tobacco smoke (ETS1. In addition to perceived health risks associated with exposure to ET5t complaints include aroma, irritation and overall annoyance. In order to propose appropriate solutions, the causes, or at least the influential factors governing these perceived negatives should be addressed, There are two sources of sTS; exhaled mainstream snake and sidestream smoke. Exhaled mainstream smoke is that smoke which is taken in by the smoker and subsequently exhaled into the environment. Sidestrean smoke is that smoke which is emitted from the burning end of a cigarette but which does not pass through the cigarette to the smoker's mouth. There is potentially more direct control, through product design, over sidestream smoke than exhaled mainstream smoke. furthermore, sidestreac smoke is a greater contributor to ETS both in teres of visibilty and concentration of components, than is exhaled mainstream smoke, History has indicated that truly unconventional products, such as ?~vor, are risky ventures, Consumers do not seem prepared to forgo traditional usage and sensory rewards, For these reasons the technical salution(s) for Visa will focus on the significant reduction/an~elioration and/or elimination of sidestream smoke while remaining conventional in form and usage, BATCo document for legal Services : Health Canada 20 May 1999 Technology cuI:en:ly exists which provides the means to reduce sidest:eam smoke in an otherwise conventional product. Thereforer the primary effort in RbD is directed towards this solution. It is recognized that such a reduced sidestream product may not be sufficiently significant in the eyes of the consumer to he a viable solution, However, the development of a Imbrketable" reduced sidestream prdduet is an important interim solution providing the apportunity to gauge consumer response and to appropriately direct further product research and development work. REDUCED SIDESTRERM Sidestxeam smoke is composed of two phases: - a particuiate phase giving rise to the visible sidestream smoke and a gaseous or vapour phase which gives rise to the invisible sidestream s;noke, Dleimately it is important to reduce both phases of sidestream smoke as the negatives perceived by~ consumers are associated to a greater or lesser degree with both phases. Indeed there is most likely a synergism between the two phases. By their nature, the corpponents of the vapour phase of silestream smoke ate more difficult to identify, measure and control. putthermore, it is the particdla:e or visible phase of sides~reaP amoke which provides an Obvious Signal to trigger negative perceptions. Therefore, in the initial product BATCo document for Legal Services : Health Canada 20 May 1999 development the reduction of visible sidestream smoker primarily the particulate phase, has been identified as a starting point. There are currently three approaches to reduce sidestream smoke: 1) Specialty papers which act as barriers to the particulate phase components preventing their escape to the environment. These types of papers were first used commercially in 1984 on Passport. The early papers were associated with poor mainstream smoke taste quality and very poor ash characteristics, However recent developments, especially by Ecusta, have produced papers which show marked improvements in both these subjective qualities. The Product Research Group of ITL has worked with reduced sidestream papers from various suppliers since 1983 and it is apparent that the newest papers from Ecusta are the mast acceptable. 21 Reduced tobacco density recipes which effectively_ burn less material and the:eforegenerate less smoke. By including expanded tobacco, such as DIET, or potentially Steam Treated Stem (STS), in a cigarette recipe, cigarettes can be manufactured to acceptable ~irmness with less absolute weight of tobacco than conventional recipes. Since less tobacco is present in the cigarette, less tobacco is burnt and therefore, less smoke is generated. There are current market samples whose recipes include 15$ DIET and the Product Development Group has experimented with levels up to ZS$. Production capabilities are such that 30$ DIET could be included in a recipe. This would result in a signifcant reduction in all components of sidestream smoke both particulate and vapour phases. BATCo document far Legal Services : Health Canada 20 May 1999 1 3) Combine very low permeability p_apers with very high levels of expanded tobacco. Cigarettes made with very low petmeability papers (less than 10 Coresta Units coPpared to conventional products a: 38 Coresta Units) burn very slowly, thus generating very little smoke but giving abnormally high puff numbers. Cigarettes made with these papers tend to extinguish between puffs and to have very high deliveries tin the order of 20 mg. of tar and greater) due to their puff numbers. Extremely high levels of expanded tobacco (9:eater than 50$) must be included in the tobacco recipes to lower puff number, Sides:ream reductions are greater than these that have been achieved in the past but subjective acceptability, taste and irritation for example, is quite poot. This approach is being explored by BAT but still requires a long product development/product research endeavour. ST%RTEGY The strategy adopted by ITb is a combination of the first and second approaches, a cigarette made with a reduced tobacco density recipe and a reduced sidestream paper. ~ FoUr product criteria have been set out to ensure that the most technically and subjectively successful product is developed. The first two criteria illustrate the novel elements, relative to traditional product development projects, associated with Project visa. They are examples of the type of information the Product Research Group of ITL can provide for Project Visa. The last two criteria are the foundation an which all ITL Marketing/Product Development projects are based; the best possible smoking quality, and a clearly defined target group. II BATCo document for Legal Services : Health Canada 20 gay 1999 ii loves: possible visible sides:ream as measured scientitically and as perceived as aceeptable by the consumer. BAT experiments have shown that a red;,ction of less than 381 in sidestream particulates~ as measured scientifically, is not perceived by the consumer as a:eduction relative to conventional products. Scientifically measured reductions between 36 and 508 are perceptible to the cwsumer only when compared to a conventional product~ At reductions of greater than or equal to 509 , the consumer perceives an obvious reduction in sidestreal ssoke without any reference to a conventional product. Reductions of greater than 88$ would render the sidestream smoke invisible. These figures provide targets for Product Research. However, given the physical and chemical nature of a conventional cigarette, it is doubtful if reductions of greater than 76 to 75% could be achieved. 2) In line with current market samples. It is essential that during the development of a low sidestream product, other inportant considerations such as carbon monoxide delivery and biological activity are not elevated beyond srren:ly accepted market levels. Simple grade substitution within a recipe, or the reformulation of current recipes will not necessarily alter biological activity. The current approaches involve the use of novel papers or, in the end, some kind of tobacco treatment. Both of these techniques could affect biological activity and the delivery of nother noxae" in a way not previously experienced. It is important, therefore, to be aware of all effects on the product. idestream smoke must both 3) The mainstream and the s tream sme e nus be very subjectively acceptable, the mainstream in terms of smoking qualities and the sidestream smoke in terms of irritation, aroma and annoyance. O BATCo document for legal Services : Health Canada 20 May 1999 (I The smoking qualities of the mainstream smoke must be consistent with the identified endorsing b:and possibly at 13, 9 and 4 mg, tar delivery. STATOS At the present time, two prototype products have been developed at 4 and 9 mg. tar delivery~ These products were designed using special sidestream paper and a moderate amount of expanded tobacco (159), In terms of the stated product criteria, these products reduce sidestream smoke particulate phase components by approximately 5B$ as measured scientifically, On a perceptual scale, they fall just vithia the category of obvious reduction without comparison to a conventional cigarette (Criterion !)I Preliminary studies of the biological activity o[ the test products have shown that the mainstream ss9ke is not affected by the use of the special papers, Furthermore, it appears that the biological activity of the sidestream smoke is somewhat reduced by the use of these papers, Mainstream delivery of carbon monoxide tends to be elevated relative to market samples; however this can be rectified through relatively minor changes in product design 1Criterion The test products are acceptable in taste and smoking quality terms for testing purposes only. There are areas where improvement is needed, The specialty paper tends to nfratten" the taste profile of the tobacco. A higher taste level with more "high notes" and a better strength/taste balance are required. These are perhaps the most difficult attributes to achieve when developing a product, especially at the higher tar delivery levels. A fairly lengthy product P 13 O BATCo document for Legal Services : Health Canada 20 May 1999 development exercise, therefore, Is still required before a viable market product is attained, There is however, a reduction in the irritation and aroma associated with sidestream of these products (Criterion 3), Following from the discussion c~ Criterion 3r it is felt that the test products do not as yet meet the criterion of being consistent with the smoking qualities of the endorsing brand (possibly duna~rier,triterion 4), To reiterate, the test products are acceptable but not good enough for ~T~ to launch, The next steps in the development of a viable reduced sidestream product address this criterion and provide for the option of a product at 13 mg, tar delivery, FUTURE P68NS Based on the information from the prototype products,the next step will be tobacco recipe development, The new recipe must be one with the cleanest, highest tobacco flavour available to overcome the effects of the paper, It must also have the minimum density/maximum DIET possible to reduce sidestream emissions and biological activity, Two master blends based on a ripe dunaurier recipe have been proposed, Cigarettes will he designed, initially at the 9 mg. tar delivery level with an option to increase to 13, using the reduced sidestream 5~ paper fron Ecusta. and four tobacco recipes having expanded tobacco (DIET) levels ranging from 20 to 38$, Prototype samples of se least one of these recipes =i should be available by the end of Hay, Cn BATCo document for Legal Services : Health Canada 20 May 1999 Alternative tobaccos such as U,S, and/or Btazillian may be considered if an all Canadian blend is insu[ficient, However, costs associated with foreign tobaccos can be prohibitive, quality and quantity may not be consistent and legislation regarding pesticide residues, for example, differ from Canadian laws, Furthermozel the addition of these tobaccos could result in a non-Canadian taste, which may not be desirable, Therefore, although an option, foreign tobaccos should be considered only if it becomes apparent that an all Canadian blend cannot be developed, A tentative time frame to develop a viable low sidest:eam product, meeting consumer expectations of, for example, a dunauriet product at 9 and 13 mg, tar delivery, is approximately 9 to 12 months, Support costs for such a brand would be considerably greater than a conventional product, The recipes currently being proposed are equivalent in cost to Player's Special Blend, The paper is estimated to be 3 to 5 times the cost of conventional paper, BATCo document for Legal Services : Health Canada 20 May 1999 2.2 ENHANCED AROMA The smell associated with cigarette smoking generally emerges as a dislike when talking to consumers (f). This complaint ranges from the smell of stale smoke lingering in a room to a dislike of the smell of smoke on your hair, fingers, breath, Hence, it has a social as well as a personal relevance. There ale numerous ways of enhancing the smell of cigarette smoke which ranges from an aroma-no taste change to an aroma +.taste change. Needless to say, the exploratory work involved in th'is area can be enormous. Howeverl there ale some known areas of interest. For example, pipe tobacco is perceived as having a rich aroma Albeit, aromatic tobacco must be added to conventional cigarettes to produce such an aroma and a taste change is implied, It is felt that as taste segmentation is Project SATORN, the role of VISR will be to address whether in fact enhanced aroma, as a by-product of taste segmentation, is a solution to social problems emerging from smoking and how salient a solution it is. Hence, the two projects can be developed in tandem although the orientation would be different. Potentiarly, SATURN could be marketed as a VISA solution. Therefore, in the enhanced aroma area, conceptual development will proceed in vISA, although the product development work will be covered under SATURN. This is not to suggest that the range of aromas will be restricted to SATURN's flavor list. Theoretically, the flow will work both ways. Should VISA work uncover an interesting area, b surely it would be incorporated under SATURN. (t) Project VIKING O\ BATCo document for Legal Services : Health Canada 20 May 1999 Again, the first step will be to assess the level ct interest which exists [or such a product in the context oi a visa alternative, lollawing initial research, we will establish future development work, TERNATIVE PRODUCT (NRP) 2,3 NICOTINE hb Nicotine Alternative Products tall, in our definition, into two areas: A, Smokeless tobacco - plug, snuff, etc,, a, FRVOR/Rls type products· A. Smokeless Tobacco - PLUG, SNUFF These products stray from the conventional tobacco world into areas which may he breaking new ground in terms of introducing new ways o[ "smoking" or may involve tao much of a sacrifice of the sensory pleasures associated with cigarette smoking to hold much promise, They are, in either casec legitimate YISA alternatives, Snuff and plug are not products which have an appealing image and their sales performance in this b country reflect that image, In tact, the products O have an image as being out-dated, not pleasant C tasting, and inconvenient CO use, ["I U project VIKING 11 BATCo document for Legal Services : Health Canada 20 May 1999 Undeniably, the normalizing of this p"ctice would be an uphill battle and it surely would not occur over-night, However, it is felt that an opportunity may exist for these products given a positioning based on their ability to be a solution to social problems. It is possible that given a valid reason for being, people would be more willing to adapt to this form of tobacco consumption. B, FAVORIRJR Products FAlrOR, essentially a nicotine plug, is incomparably the smokeless cigarette, it does remove, however, most of the ritualistic pleasures associated with smoking. It is not lit, there is no ash, it remains a tube, The RJR concept is very similar although one does light the end and a form of snake is produced. The latter more closely replicates a "normal" smoi(ing experience. These products vill be examined from a conceptual perspective. We are not able to manufacture a similar type product at the molent, and past market attempts have failed, however there may be opportunities in this area which ale being explored in Project DAY, However, from a defensive viewpoint, we will assess these concepts to gauge consumer reactions to these alternatives as VISR solutions in the upcoming ;5 research. O BATCo document for Legal Services : Health Canada 20 May 1999 3, NEXT STEPS In early June 1988, we will conduct the first wave of researeh to each of the erploratary areas to evaluate consumer response and to gain specific direction in the reduced side-stream area, Following this phase, developmeor Priorities will be set~ the evolution of the project, we In the interim and throughout will be monitoring opp0sitien activity for indications of advancement in particuiar areas and any "eW ideas which may arise, It is envisaged that VISA, initially defined as an all-encompassing Project, will ultimatelY splinter into sub-projects involving separate development areas. 3.1 RESEARCH OBJECTIVES to each development areal a) Evaluate consumes response What problems are solved, it any? How signiiicant a solution to problems are these? j) Are compromises willing to be gade! in what areas! Sensory, taste, inconvenience of use, et-. C) Are smokers at varying T/N levels more or less interested in potential Eoluticns! Hales vs females? yaunq versus old? Is willingness to eomplonile different across these various groups! dl Evaluate non·smokers reactions: Oo the solutions ease some of their concerns' Would they tolerate smokers using the YlSA alternativesl 19 BATCo document for Legal Services : Health canada 20 May 1999 e) Evaluate dunuariel as the uadematk to he utilized, What expections are reflected (tn product terms, taste, 4Uality, imagery)l fl Occasional versus regular usage: How would consumers use the productl Under what circumstances would it be used' Regular smokers versus "social" smokers2 g) Evaluate consu~er response to pr0toeype product sample: I Acceptability vs regular cigarette .Specific product attributes vs own (taste, irritation, etc.) - Response to reduced side·stream, BATCo document for legal Services : Health Canada 20 May 1999 3.2 TENTATIVE SCHE~OIE June FIRST STAGE OEOEIOIHENT 1-2-3-6 Initial research wave and specific product probe for reduced side·stream, Sept, SBCONO STAGE OEVEIDPMENT (assuming reduced side-stream concept is viable as a VISA solution), Concept Product Nov. THIRD STRCE OEVEfOPMENT Concept Product Jan./March QOANTITA"IYE PRODOCT TEST 1989 Finalize concept development June/Sept. pOTENT!AI TEST MARKET BATCo document for Legal Services : Health Canada 20 May 1999