TOBACCO STRATEGY GROUP: 19th MAY 1993
BRIEFING NM
For Agenda items I to 4, Norman Davis, Ian Snowden, Earl Kohnhorst and Werner Zapf will
be attending the meeting. For lunch and agenda items 8 to 12, Jimmi Rembiszewski and
Paul Adams will be attending.
1. AGENDA [JEW I Oviviess- food Ma"Pre A g,
1.1 Minutes of the Meeting held on 24th February 1993: We have no corrections to
suggest to these Minutes. You may recall, however, that you got Hibuy Barton to send
out a correction for paragraph 13, deleting any reference to Ray Pritchard
recommending that a Leaf Director should be appointed for BATCc.
1.2 Tr2oning- David Stevens was required to:-
- present the training calendar for 1994 and a final draft of the Groupwide
brochure including instructions on nominations (Pam 9).
- determine, with the Human Resource directors (including you), those
elements of the MDP that are useful and should be covered in another way
(Pam I 1).
- Define, with the help of the HR directors, the needs of a new Board
member, and make detailed proposals (para I 1).
There are no BATCo briefing papers on these issues.
There are, however, briefing papers on the following:-
a) Leaf Training: Various notes by Ian Snowden and Geoff Brooks relating to
Leaf training and Career Development for Blenders (para 8 of the February
TSG Minute).
b) Finance Training: A note by Richard Pilbeam is attached relating to the
resource required for running the Finance Programme (Pam 9 of the February
TSG Minute).
c) Marketing Tr2lujU: A note by Bob Taylor is attached commenting on the
BATCF Level I Marketing Programme.
1.3 World-Wide Best Ultraloghts Exercise Feasiblidy: Earl Kohnhorst is scheduled to
lead on this issue (a background note by Taj HiqCRobin Crellin is attached). A
briefing note by Graham Read is also attached relating to the Virginia proje ct.
1.4 Scientific Research Group: You are scheduled to lead on this issue (i.e. do we have
the right SRG advisers, para 23 refers). Attached is a briefing note by Rdy Thornton on
this.
You have asked that Ray Thornton stand by to attend the meeting, and he will be at
Windsor House (at another meeting, also starting at 9.00 am., from which he can be
extracted).
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1.5 Group-Wide Purchasing: You are scheduled to lead on this issue, reporting back on
the recommendations on the meeting of Group purchasing managers orgaWsed by Ed
Watt (paras 24 and 25). A paper by Ed Watt is attached, which has been circulated to
TSG members.
1.6 Manufacturing Disaster Recovery: Earl Kohnhomt is scheduled to lead on this issue.
Attached is a copy of the paper we believe EK will be submitting to the TSG. The key
point for BATCo is contained In the sidelined paragraph at the bottom of page
one I.e. approval is needed for Southampton factory to approach other UK
prod for reciprocal emergency production agreements.
2. AGENDA ITEM 2 m EUROPEAN MANUFAMIRING LOCATION
STRATEGY
ne proposal is that Booz Allen Hamilton will be asked to make a presentation of
about 20 minutes on this.
A paper has been prepared by BATCo (and agreed with BATCF), and this has been
circulated to TSG members (copy attached). Norman Davis will be in attendance.
3. AGENDA ITEM 3 a LEAF TRADING STRATE G-1
Ian Snowden will be leading on this topic. The original proposal was for IS to brief
members on the implications of the Standard Commercial/Dibbrell merger for BATS
Leaf Trading Strategy. Now that this merger is no longer going ahead, the report will
be more of an update on where we are with our strategy.
A briefing note on this from Ian is attached.
Also attached, as background information. are copies of.-
BATCo's December 1992 Leaf Exports Review paper;
An update of the key figures from the BATCo paper, using final Company
Plan exchange rates;
A 23rd February 1993 note from Ian Snowden, indicating that the
projected 1993 Leaf profits are not attainable.
4. AGENDA ITEM 4: LEGAURRGULATORY T-S-19UPS
4.1 T21ism2n: Stuart Chalfen will be leading on this issue. As a meeting on this is
scheduled for Friday 14th May in Brussels, Stuart Watterton will provide you with
either a written or verbal briefing early next week.
4.2 Other Progress Reports:
4.2.1 FM: Nothing of interest appears to have happened on this issue since the last
meeting, other than the ban on smoking in public places in France (a copy of the
provisions is attached).
4.2.2 Fire-Safe Cigarettes: An update note on this from Graham Read is attached, along
with the fuller briefing note provided to you for the last TSO meeting.
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4.2.3 Advertising Restrictions: You are scheduled to lead on this, briefing TSG members
on advertising restrictions in the UK. An update note on this from David Bacon is
attached.
4.2.4 Leaf Contracts: A note on this from Peter Clarke is attached.
4.2.5 Distributors' Contracts: A note on this from Peter Clarke is attached.
5. AGENDA ITEM 5 s TRADING REVIEW
A copy of the latest draft BATCo Monthly Report (14th May) for April 1993 is
attached.
6. AGENDA ITEM 6!!; YEAR PLAN/BlIff)ORT
David Allvey will be leading on this issue. Attached as background briefing is your
copy of the BATCo 1993 - 1997 Plan, plus a copy of the detailed BATCo P&L
account.
7. AGENDA ITEM - TOBACrO STRATEGY
Ulrich Herter and Hilary Barton will be leading on this (a paper has been circulated to
you).
Attached. as background, is an extract of the Tobacco swion (plus relevant tables)
from the April 1993 BAT Industries Future Business Environment paper, plus the
Tobacco section from the 1992 BAT Industries Strategy paper.
S. AGENDA ITEM 8 m CONFERENCE ON SALES AND DISTRIBUTION
Flavio de Andrade will lead on this item. Attached are various communications
between Hans Niedermann, yourself and Flavio de Andrade.
You may wish Jimmi to take the opportunity to outline BATCo's approach to Trade
Marketing and to emphasise the need for a coordinated Group-wide approach across
BAT Industries.
9. AGENDA ITEM 9 * MARKETING
9. I Item 9(h. Andean Pgict/Colombia: You are down to lead on this. A BATCo paper
(attached) has been circulated to TSG members (along with the booklet detailing
BATCo's original proposal, also attached). A key point is that, although the original
BATCo paper was in line with the TSG objective, the compromise proposal coming
out of the 'co-ordination team' is not, inasmuch as there would not be one company
responsible for driving forward BAT's overall business. Clearly, this is a sensitive area
for B&W and it is they, rather than Souza Cruz, who are opposed to the BATCo plan.
Also attached, as background, are various letters/faxes between Keith Dunt and
Antonio de Castro primarily concerning the launch of FREE in Peru.
9.2 Item WM, Mexll;2: This item is to be led by Tommy Sandefur. There are no briefing
papers on this.
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9.3 Item Will), LHckX Strike Sollst Nights Campaign: You are down to lead on this.
The subject relates to para 36 of the February TSG Minute, where Ulrich Herter
requested an evaluation of the Lucky Strike Sonst Nichts campaign outside Germany.
Attached is:-
j. An'analysis'by B&W of the two campaigns.
ii. AnotefromiainHackingtoTomWhitehaircommentingontheB&W
analysis.
W. A BATCo briefing note on this issue by Sean Ashe.
9.4 ItErn MY). BAT's Brands in Egypt: You are down to lead on this. The item relates
to para 43 of the February TSG Minute, which indicated that you would investigate
what happened to BATs brands in Egypt. Attached is a note from Legal Department
on the trade mark position, plus a sheet showing BAT sales by brand and Operating
Company for the years 1977 to 1993.
10. AGENDA ITEM 10: MANAGEDIENT QF EXPORT MARKETS (Str2t= for
Russ*al.
There are no specific briefing papers on this subject, but I have included an extract
from the BATUKE 1993 - 1997 Plan relating to sales to Eastem Europe and the
Minutes of the Group Co-ordination Team (which Tony Pereira attends on behalf of
BATCo).
Also attached is a note by Brendan Brady relating to BAT Corporate Affairs
representation for BAT Russia.
11. AGENDA ITEM 11 @ PROGRESS REPORTS
11.1 Item IM). USTBA: Tommy Sandefur will lead on this. Briefing papers on Barclay,
Kent. Lucky Strike and Pall Mall are attached, plus a schedule relating to Hilton.
Also attached (after the relevant brand reports, where appropriate) are:-
. A note by fain Hacking summansing agreement reached between Herter,
Rembiszewski and Hacking on the use of Pall Mall and Kent as the Group's
low-price brands in Europe.
- A note on the Pall Mall trademark (ref. pam 36 of the February TSG Minute).
- A note on the positioning of Kent.
. A note on Kent duty-free in Europe.
11.2 Item MM, UKIBs: You are down to lead on this. Papers on this item, which have
been circulated to TSG members, are:-
- a one-page summary sheet
- SE555
. Benson & Hedges
- Players Go Id Leaf
There is no paper this time on JPS, but there will be for the next meeting.
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11.3 Item WM)- Competitors (including PM stratw@: This item relates to all members.
The following papers are relevant:-
. BATCo's report on Rothmans, Seita and Tabacalera (which has been circulated
to TSG members). Lindsay Mair has also prepared an additional background
information for you on Rothmans' pricing and brand launch activity over the
last three months.
. A Quarterly Competitor Activity report prepared by Marketing Department;
which is only a briefing for you.
- The letter sent to OpCos by Jimmi Rembis---wski relating to the PM price cuts
for Marlboro in the USA.
- A note from lain Hacking referring to a March 1992 speech by PM's Michael
Miles.
- Two BATCo booklets (March 1993 and April 1993) analysing the PM
Marlboro pricing strategy and its implications for BATCo.
Paul Bingham believes that there is no need for a note on the Group-wide'Competitor
Activity Study Report, as the process is 'grinding on re I mc I es to the production of
the various reports by the appropriate Operating Groups.
11.4 Item II( eV ). CentraVEasteM Europe/CIS: BATCF are scheduled to lead on this.
Attached as background is a note by Mick Fenn updating the BATCo situation in this
region.
I 1.5 Item I 1 M. New Markets: Nick Brookes is down to lead on this. Attached is a copy
of the latest NBD briefing note.,
11.6 Item I I NO), Other KcX Markets . Uruguay, Cuba, Mercosul Task Forces: Souza
Cruz are to lead on this subject. Attached is a very brief note from Alastair Young
indicating BATC3s limited involvement in the Uruguay and Cuba work.
Also attached is a brief note from Alastair Young relating to the Mercosur work.
11.7 Item 1 i(vin- Pholippines and Iran: B&W and BATCF are to lead on these items.
There are no briefing papers.
12. AGENDA ITEM 12: ANY OTHER BUSINESS
12.1 Ttem 12.1- Excise Taxation Manual (Para 12 of February TSG Minute): A briefing
note by Paul Bingham is attached.
12.2 Item 12.2. ISO 2M (para 15 of February TSG Minute): A note by Norman Davis
is attached.
12.3 Item 12.3. Group Use of ATC's Tobacco Technologies: (pam 20 of February TSC-
Minute): A note by Graham Read is attached.
12.4 Item 12.4. Cirmar (Para 52 of February TSG Minute): A note by Paul Bingham is
attached outlining progress at implementing this system. However the note does not
address the point made at the last TSG meeting abut access to sensitive information
(see last part of Paul Bingham's briefing note to you for the February TSG, attached).
Paul says that he is unable to progress this issue further, and that it really needs you
and Tommy Sandefur to get together.
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17 5 Item 12.5. Brand Evaluation NAel (Para 53 of February TSG Minute): A
briefing note by Paul Bingham is attached.
12.6 Ttem 12.6. Stratcgic M2chinea Reserve (para. 54 of February TSG Minute): A
note by Roger Beck is attached.
12.7 Item 12.7. Panorama I Oth May-=: David Bacon's II th May note to BATCo
senior managers is attached for information.
12.8 Item 12-9. Tradernarks: Attached are two notes which you requested be brought
forward for this TSO meeting.
12.9 Ttem 12.9. ITL CapacilX (para 38 of February TSG Minute): A note by me is
attached.
12. 10 Item 12,10, Counterfeit: A note by Peter Clarke is attached.
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