BA.T W.Kand EXPOrt) Limited Woking 2nd Apni NG-1 --- TO: CARLOS COSTAS JOHN DELANY C C: MARGARET SUREY FROM-1 RICHARD DAVIES Ef AM A L 771 WA RIVINGS I confhrm the rmults of ycstcrday's CE-CCM discussion on the aboveas set down:a Lbc armchcd. Ts F--C C-4 %.0 Lil -14 0 BATCo document for Legal Services: Health Canada 19 October 1999 NOTE FROM PUBLrC AFFAMS BAM MObank To: Ray Pritchard Copy: Barry Bramley Peta Clarke From: David Bacon Date: 1 April, 1992 Re: Health WarnMgs COnflrming OUr telephone conversation today regarding the above: As ex;=ted, Philip Morris declared their preferred approach to applying health warnings in markets within the EEC with no health warrurig requi=n=t (duty f=). It is: the compulsory warning from the EC directive, Tobacco sefiowly d==ges health, on the front of pacla in English, and,, the two warnings, which must appear in national lists, Smoking causes c:ancer, and Smoking causes heart dyease, rotated in equal inoporti on the back of pacim in aglish. TheY CxP=t that tile new warnings will start to appear towards the end of the year. This approach is different from the informafum contained in the 1991 PM Report and Accounts, which apparendy says thal the US Surgeon General's warnings will apply arotmd the world in market where there is no hwith warning requirezricaL PM said at today Is meeting that Walter 7boma W been given the discretion by New York to implement the warnings within the EEC as he saw fit. PM also conilrmed that to the best of their knowledge, the USSG warnings would apply in other mnr3= outside the EEC. L.-4 The RJR representative at the meeting also stated that RJR's preferred %-0 posztlon was the same as PIL U1 CC) Page I BATCo document for Legal Services : Health Canada 19 October 1999 As you know, we = considering applying the same niles to duty free as they apply in the domestic mari= in each EEC country, ie, no dLfference between domestic and duty free product This is a different approach from RJR mid PIL Gallah= have stated if PM, RJR and RAT go ahead, they Will follow but most lflxly along the same lines as BAT. Rothmans say they have not yet decided, but if they do, it will follow strictly the EEC directive as they interpret it (again the sam as BAT) but they will also consider applying wamingS in adv=ising. BATCo has agreed to bost a meeting on the sul~ecz soon but not until we have sorted out the application details internally. I hope this is helpful. If I can. assist fi=h= please call me. Mat is L?4 CD 1 I~z Nge 2 BATCo document for Legal Services : Health Canada 19 October 1999 re; HEALTH WARNINGS - PROJECT TFAM The attached DRAFT document has been produced in response to information requested by BATCO by 3rd April. In view of the nature of the requirements for this particular segment of the exercise, I approached the Marketing Teams to elicit the degree of sensitivity relative to their individual countries, judging this to be the most time-efficient approach. Nevertheless, at this stage the document is still in draft form and it has always been the intention to approach this issue from a Project Team basis. I would therefore, welcome your contributions/ comments by return to enable the final document to be presented with the mini-mum of delay. Margaret Surey 3.4.92. distribution: Project Team Marketing Managers L4 CD E %.0 0111, CD BATCo document for Legal Services - Health Canada 19 October 1999 BATUKE RESPONSE TO BATCO DIRECTIVE (2ND) DRAFT - REGARDING HEALTH WARNINGS A theoretical exercise was conducted by Marketing/Area teams to assess the likely impact on sales over a short term period These figures are based on the assumption that we would enter the market 4th atr 192 on a joint industry basis. Particular areas of concern have been highlighted by individual markets for consideration prior to any decision on final guidelines being formulated. One common concern is the formulation of an effective strategy for communication to governments/customers. Timing, where possible, should coincide with any IBM pack changes. A policy decision regarding stock write-off v. exhaustion would be required. Additional points have been covered by J. Bearman's document passed to R. Davies/A. Walker 11.3.92. Appendix I BDU IT Europe D/DF III West. Hem/US TV Far East V West Africa/ME VI Estimated loss Co. Plan 192 - 4th Qtr+ + duty.'ree figures only for Far East included in summary. Details can be supplied at a later date if required. (A C) M SUREY 2.4.92. Distribution: Project Team, Marketing Managers. _~a BATCo document for Legal Services Health Canada 19'October 1999 BDU Levant/Libya/Albania These are very sensitive areas, where customers discriminate against pack changes of any type. The introduction of a health warning in these =arkets would carry an extremely high risk to sales of all brands. 7f possible, these markets should, for the time If being, be defined as 'exempt'. 0, L4 CD %Z BATCo document for Legal Services : Health Canada 19 October 1999 RISK 4th qtr 92 BHSF Moroc Dom poss loss MOFKXZO DOM 8HSF Tunis Dom TUNISIA DOM BHSF Iran Dom NIL BHSM ran Dom JPSL 100 :ran Dom IRAN DCW LOW BHSF Yugo Dorn YUGO DOM PGL ~ Israel Drn 4.8 BHSF Israel Orn M2 NIL ISRAEL DOM 5.0 BHSF Lev Oth - DMSK Lev Oth - Embassy KS Lev Oth - JPS KSL Lev Oth - V HIGH LEVANT DOM - BHSF Moroc DIF 0.8 0.0 BHLM INT Moroc DIF 0.2 0.0 BHSM Moroc OF 0.2 0.0 JPS INT Moroc OF 0.1 C.0 JPS KS Moroc DIF 0.3 0.0 LOW MOF10= OF 1.4 0.1 BHSF Tunis DIF 1.8 0.1 BHSM Tunis D/F 0.2 0.0 JPS INT Tunis D/F 0.2 0.0 JPS KS Tunis OF 0.2 0.0 JPS 100 Tunis DIF 0.2 0.0 BHLM INT Tunis DIF 0.0 0.0 LOW TUNISIA DIF 2-5 0.1 SHSF Egypt DIF - SEFK Egypt DIF - BHSM Egypt D/F - JPS 100 Egypt D/F - JPS INT Egypt D/F - LOW EGYPT DIF - C:) BHSF Alger O/F - 0% LOW ALGERA D/F - .9::~- L.,4 I L^1 BATCo document for Legal Services : Health Canada 19 October 1999 Poss loss E3HSF Yemen Dom 3.4 0.2 SEFK Yemen Dom 1.1 0.1 LOW YEMEN DOM 4.5 0.2 BHSF Yemen DIF - SEFK Yemen D/F - LOW YEMEN DIF BHSF 20 6.1 0.3 -4.8% BHSM 0.4 0.0 -5.0% BMLM 20 0.2 0.0 -5.0% CUM SUPER~GJNGS - - PGL 4.8 - JPS KS 0.4 0.0 -5.0% JPSINT20 0.3 0.0 -5.0% JPS 100 0.2 0.0 -5.0% JPS LS LIGHT - - JPS 100 LIGHT - SEFK 20 1.1 0.1 -5.cr*/* EMBASSY KSF (Chiie) - TOTAL BD UNfT 13.5 0.4 -3.1% HIGH Libya Dom 48,000 HIGH Albania 13,000 BATCo document for Legal Services : Health Canada 19 October 1999 EEC DUTYFREE The EEC member states will not adopt their own national legislation for their individual dutyfree markets. This will remain a sensitivity. BATCO to address this issue from an industry viewpoint once a policy has been formulated. EUROPE DOMESTIC Few problems envisaged - may even reinforce authenticity in some markets. 0 LM CD %.0 C> ,Ln BATCo document for Legal Services : Health Canada 19 October 1999 a WESTERN HEM/USA In the Caricom. markets the possible use of local health warnings would be preferred. For TPS and L&B brands in Latin America a US Health Warning would provide authenticity should this be legally acceptable. 16 LPJ %.0 BATCo document for Legal Services : Health Canada 19 October 1999 RISK @k4th qtr poss loss 4th qtr BHS7-10 Caricom 4.6 0.2 BHS:- Caricom 7.5 0.4 BHSM Caricom 0.5 C.0 SE:-K Caricom 5.1 C.3 BHUVIINT Cancom 0.3 0.0 JPS INT Caricom 0.2 0.0 JPS so Caricom 0.1 0.0 SEFK 10 Caricorn 2.5 0.1 BHGM Caricom 1.4 0.1 SH Int I OD Cancom 0.3 0.0 LOW CARCOM 22-4 1.1 BHSF 10 Carib Oth 0.2 0.0 BHSF Carib Oth 2CI-9 1.0 BHSM Ceb Oth 0.8 0.0 JPS KS Carib 01th 0.5 0.0 SV'K Carib Oth 22.8 2-3 13HUVI INT CaribOth 0.5 0.0 JPS IN T Carib Oth 0.0 0.0 SE--K 10 Carib Oth 0.2 0.0 BHGM Carib Oth 0.7 0.0 40 SH Int 100 Carib Oth 1.0 0.0 LOW CARIBBEAN OTHS 47.6 3.5 BHS,- 10 Fr Carib 9.2 BHS7- Fr Carib 21.4 SMSM Fr Carib 1.0 ~IPS KS Fr Carib 0.9 SE-K Fr Carib 0.4 BHUM FrCarib 0.2 E~4w Fr Carib 0.5 HAS H. W. RENCH CARI BBEAN 33.6 SESM US Dom 1.5 Sz--?( US Dom 79.6 SES;! US Dom 0.2 SE Ira us DOM 10.0 SE 100 us Dom 1.7 Ru!;y Queen US Dom 23.2 US DOMESTIC 116.1 SF~K US W 1.1 SESM US W 0.1 JPS INT US DIF 0.4 JPS 50 US D/F 0.1 0 SE Irn Usw 0.1 JPS KS us D/F 0.3 SE100 US D/F 0.1 LOW US OT 2.2 RHSF Panama 0.8 SEF-K Panama 11.1 tA JPS INT Panama 5.2 0.5 CD .Ps so Panama 3.0 0.3 S-C Int Panama 0.5 JPS KS Panama Z5 0.3 F.B Panama 0.1 9018 Nal Panama 0.4 FILY N06 Panama 01 LOW PANAMA 23.7 MED L&B L Amer. prefer US H-W JFS L Amer BATCo document for Legal Services : Health Canada 19 October 1999 1 BHSF 10 14.D BHSF 2D 50.6 BHSM 2.3 BMLM 2D 0.8 BHGM 2-6 SHUM 0.2 Buq LNT 100 1.3 EhABASSY No. 1 KSF 0.4 JPS KS 4.2 JPS IN-. 2D 5.7 JPS INT 50 3.2 PLAYERS No.6 0.1 SEFK 10 2-7 SEFK 2D 120.1 SESM 1.6 SESF 0.2 SE 10.6 SE 10a 1.8 RUEY CUEEN 23.2 Z-~l-- GERMAN BRANDS 0.1 TOTAL WESTERN MEX - 24S.4 5.7 _Z71; I 0, U4 C-D BATCo document for Legal Services : Health Canada 19 October 1999 (3 WEEST AFRICA Majority of risk very low, with exception of Un.it I - Heritage MIDDLE EAST Nc change - health warnings already in existence throughout 0 LM CD 1-D a', BATCo document for Legal Services: Health Canada 19 October 1999 POSSIBLE LOSS C~4 RISK 0492 We BHSF Unit 1 281.4 28.1 HIGH Heritage Unit 1 4.0 0.4 UNIT 1 2135.4 28.5 BHSF 10 Unit 2 7.4 0.7 BHSF Unit 2 26.2 ze JPS INT Unit 2 SHLM INT Unit 2 BMSM Unit 2 - - Heritage Unit 2 0.6 0.1 UNIT 2 34.2 3.4 BHSF Afr.Sund SEFK Afr.Stind zo 0.2 AFFUCA SUNDRIES zo 0.2 LOW BHSF Atr.Assoc 4.2 0.4 AFRICA ASSOC COS 4.2 0.4 BHSF Afr.Saore 4.2 0-4 BHSIV Afr.Slore 0.2 0.0 SEFK Afr.Store 0.4 0.0 JPS INT Afr.Store 0.2 0.0 AFRICA STORES 4.9 0.5 BHSF Togo 12-6 1.3 SEFK Togo 12-6 1.3 Gad Expt Togo - - BHSM Togo - 2-S OGO 25.2 EHSF Benin 12.6 1.3 SEFK Benin 0.1 0.0 Glad Bnin - - EHSM Benin - - BENIN 12.7 1.3 BHSF C d Ivoir 8.4 0.8 SHSM C d Ivoir 1.0 0.1 C ci NOIRE 9.4 0.9 BHSF Liberia 4.6 0.5 Gad (nm) Liberia 1.5 0.2 HIGH LIBERIA 6.1 0.6 BHSF Senegal 12-6 1.3 BMSM Senegal - - JPS INT Senegal 4.0 0.4 J~b Gjad Senegal 4.4 0.4 LIQ LOW SENEGAL 21.0 0.8 o BATCo document for Legal Services: Health Canada 19 October 1999 RISK BHSF Guinea C 4.2 0.4 SEFK Guinea C 29.4 19 LOW Glad Guineac 35.0 3.5 Embassy KS GuineaC 33.S 3.4 GUINEA CON 102.2 S.9 BHSF Gambia 0,4 0Z GAMBIA 0.4 0.0 BHSF Niger 4.2 0.4 BHSF 10 Niger 8.0 0.8 Glad Niger - NIGER 12.2 1.2 BHSF Wb Dom 37.8 3.8 PGL Ofib Dom 50.4 5.0 BHSM Wb Dom 0.1 0.0 JPS KS Dfib Dom 0.1 0.0 D.JIBOU`T1 DOM 88.4 a.8 BHSF Sudan d/f 20.0 20 SUDAN OF 20.0 Zo EIHSF, Sornafia NIL SOMAUA BHSF 10 Roun Dorn BHSF Boun Dom BHSM Roun Dorn 0.5 0.0 SF---K poeun Dom 0.5 0.0 SHUM Roun Dom 0.1 0.0 BHGM Roun Dom 1.0 0.1 Glad Reun Dom 1.1 0.1 REUNION DOM 3.1 0.3 BHSF Comore$ 7.5 0.8 Gjad Comores 1.3 0.1 SEFK Comore$ 0.2 0.0 COMORES 9.0 0.9 BHSF mayallo 1.6 0.2 BFISM Mayor* 0.0 0.0 God Mayoft 0.6 0.1 SEFK Mayor* 0.1 0.0 MAYOTTE Z3 0.2 L4 ON -P~o L14 BATCo document for Legal Services : Health Canada 19 October 1999 RISK SHSF Seychells 0.2 0.0 BHSM Saychells 0.1 0.0 LOW BHSF Soychells 0.4 0.0 JPS KS Saychalls D.0 0.0 SEFK Saycholls 0.5 0.1 SUK 10 Saychalls 0.3 0,0 Giad Seyr-hells 0.3 0.0 BHUM Seychalls 0.0 0.0 SEYCHELLES 1.8 0.2 Ems;: Malagasy 3.8 0.4 SEFK Malagasy 2.0 0.2 8H Int 100 Malagasy zo 0.2 Glad Malagasy 8.0 0.8 MALAGASY 15.8 1.6 BHSF Pod Sea zo 0.2 Bp.SM F1&d Sea - - SEFK Pad Sea 1.0 0.1 JPS KS Red Sea 0.5 C.1 SHLMINT Red Sea 0.3 C.D RED SEA OTHERS DF 3.8 0.4 BHSF 10 15.6 1.6 -10.0% BHSF 20 448.6 44.9 - 1 D.0% OHSM 1.8 0.2 -10.0% BMLM20 0.3 0.0 -10.C% BHGM 1.0 0.1 -10.0% SHUM 0.1 0.0 -10.0% B&H ]NT 100 2.0 0.2 -10.0% PGL 50.4 5.0 -10.0% JPS KS 0.6 0.1 -10.M JPS INT 20 4.2 0.4 -10.014 SEFK 10 0.3 0.0 -10.0% SEFK20 48.7 4.9 -10.0% HERMAGE 4.6 0.5 Gacisione 52.2 5.2 -10~0% EMBASSY KSF 33.6 3.4 -10.0% TOTAL APRICA 664.0 66.4 CD (-q BATCo document for Legal Services : Health Canada 19 October 1999 FAR EAST It is assumed competition action will be by PMI/RJR/TEI only. Mon-international brands, e.g. Fine/Jet/Hero will not comply However it is necessary to distinguish between 3 types of business (DF/DP/Other) 1) The duty free purchased by the international traveller for his own consumption should be unaffected. the dutyfres purchased as a gift, e.g. Taiwanese/Chinese may be affected, i.e. devaluing the gift the dutyfree that 'leaks' onto domestic markets may be affected - commands a lower price therefore lower margins. 2) Duty Paid on the positive side we can phase the new stock-in and communicate/reassure the trade and consumers. our lower priced brands will, however, give an advantage to our non-compliant competitors. 3) Other This is a major problem as no communication, high risk and constant suspicion of counterfeit. L_J C) L4 BATCo document for Legal Services : Health Canada 19 October 1999 - - !E;~ 44 4M TEL Ne. 44 483 7S964~ g R.~mL bl k l' G 15:16 p~09 ~GF 4airma SEI;x tAtitwe 84-= -PEI INT MWOYW& U= 20-010 40W 'r.4,rjc EHLM INT Mid"# &400 &Mo &,,. , 0.8Q IE INT ud4wa LMO -Le-~ lm lm lm PL= asio c4-,1z~ MUY-% 1.= WFK W L34T es 7.C "wr IliMil ce j~s 80 Illhg es "00 0.080 0 ONOMbOFe cet ips KS BUTL 2374.0oe amLid W aot 0190D 9.24t; ips wr et IN7 OUTL &M jpq 8* mM 0n~ 0.400 SE ICIC WrL am Int ico am SUTL Ilm'W Tgcr =800 ~ ~. c,-cj~z . lmb MI (CI UJTL 7.7110 am 02M Aow xn~ Ka q 81UTL A4r,~,_ OE lm ONU 41NI= se wr e= P.M &= Loic am [nt joc chbuo 4%= Uie CHNA DDMEUrC WK Chha &va" 98:K HKCO#A BNW HKDDM 21ILM &Mo SONQ NONO 0041EIMO JL70 aao fflO 9EFK SE icc WK rccpn HKEUped sa".cM Xir NKMqlt lauce 14M.010 &4 kx iog 38,7W NKe45t mom tONG IDNG C,4 O=CCQ 1317,M CD se IDU amw Chi" Dg Im.UM =7W > IkIN7 ChiMrF 1LOM &7W L-4 414 bt 100 Chine> S.Coe 1.2w chirte cg ICL= P-4W %Z MINA cLrry nu &CCO 0.730 -Ij lem= 4=0W BATCo document for Legal Services : Health Canada 19 October 1999 IL L No 44 483 759645 01-04-92 15:15 p.ns ,41VI l bila ;..ik qj'e DHU J&PM CYF 1.4m 0.380 ,Y e t-FK j4pn off 47.SM 11.uo %M Nt J&PM D/F 31100 0.780 j 5 MPAN DIF mom jps M chu %lmown 130.MO JM Ka (M jipn Dom n.= W.240 je HLC JIYM nom 8.0W MPAN DOM 4~37CC0 OEPX T&WW au.= am lrdiwm 89.0m SE 100 T*IVM lu= SE U09 Tlwm TIJW&n talc MMO 141VM rAIWAN DOM 118=0 M-770 IMM MKW 14J= Wo cil.4 'l; -e SHIRM HKW li5m a= WK MKMF 9946ce 73.= , sim INT HKCVF 0.3m 0.000 'Yo JM&Vl HKW 1.140 in 39 NK CVF Q.M agice mW 4.800 OE NT (MO MKDF am Int lm 4400 1.140 ~ ~4-- we~E I gir, . HKD/F LOW agio W. dD& ~Mc Imm lac Mx EVF 1.OM Hffl =NCI CF gKow SFM FE 0M 89-rK Fi (Xh "400 21.= F EUT OTHERS IMOM IMU &-e, une Sm U200 icam 4w- vue, 13rigum si.= 0.740 34W ?Mr enos7c 3.7M in NT encem 3.200 3ENrM ahowc 4.7m 1.170 Ai se Oc. JK j'su une am 1 L4W C.&O SE loe cin= 10.600 21840 .16 la% 98 et= 1.5m CI= -~#w ~0tIIc . IN Int lm am lm lino Sm C350 aHM 0.2ic ang grc 160.000 42270 jw PEAbou 9= ulo (1-4 ivx FEAoo 11L= 3.Mo CD 1: q4m Asa= 29200 7-M -t> 74.480 --4 il! 100 Iliogingt &= Ulo Lri Thwwci 34.= &480 28.000 em BATCo document for Legal Services : Health Canada 19 October 1999