CAQ 1981
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PRODUCT DEVELOPHcrit
R e C& 2 7 MAY 1981
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PRocucr DEVEr-OPM2NT:
FUTURE TRENDS AND NEECS, AND THE ROLE OF '11ILLBANK
Produc: Development is at the very heart of our business. It
is enormous in scope, and is being actively pursued by all
Associates and by GR&DC.
To ini:iate discussion, I plan to comment cn three aspects:
A. BATCo strategy on Product Innovation
B. Technical possibilities for the longer term
C. Better understanding of the Consumer
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BATCo document for Province of British Columbia 23 April 1999

A. BATCO STRATEGY ON PRODUCT INflOVATION
We all know that there has been a general progressive trend to
low deliveries.
FIGURE 1 [Sales weighted average tar)
FIGURE 2 [Sales weighted average nicotine)
The basic assUMDtlon is that there will be a continuous trend
towards lower deliveries in all markets. Despite the fact that
the Group competitive position within the lower delivery seqments
var: es widely, the BAT policy Ls to lead the industry in this
trend.
In ,:onsiderina the Key Area of Product Innovation in January
thif; year, the Br-IB accepted three main strategies:
(1) Cigarettes Designed to offer Low Deliveries
Identified oroduct segments/opportunities are:
deliveries in the lower part of League Tables
deliveries in the lowest position
smoke constituents below stated critical levels
Let me summarise the position for the six countries represented
at this conference - as estimated by Millbank Market Research,
Dec 1980.
FIGURE 3 [size of market segments: cumulative]
FIGURE 4 [Histogram of segment sizes/BAT shares]
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Despite all the efforts that hire been made by Associates and
by Millbank, there is clearly still a long way to go.
Much of the GR&DC effort is relevent, either directly or
indirectly, to the design and characterisation of low delivery
products:
computer aided design
combustion
filters/tipping/paper
ventilation
expanded tobacco
reduction of carbon monoxide
flavour orecursors/enhancers
biological activity
I shall comment on some of these activities in Section (B) below.
The I rd segment, which concerns 'critical levels' was, of
course, initiated by Dr Gio Gor of the US National Cancer
Inst:.tute. While his hypothesis has not been taken up by any
au thori ty - and indeed there could be problems for companies if
it wf,re to receive overt publicity - we believe that the under-lying
conCE-Ot Of threshold levels for tar, nicotine, CO, NO, acrolein
and i.--N can be used to guide us in the development of products.
The b?DC has asked Marketing Department and GR& DC to work together
to draw up a recommendation.
(2) Cigarettes Designed to offer Social Reassurance
Identified product segments/opportunities are:
- cigarettes giving less smell, eye
irritation and visual smoke
- cigarettes with very low (or non-
existant) levels of allegedly
harmf il sidestream components r..)
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BATCo document for Province of British Columbia 23 April 1999

Aga n, a significant part of th,2 GR&DC effort is directed to
this area, which clearly is of growing importance:
reduced (at least 50%) sidestream emissions
panel method for subjective assessment of
sidestream
assessment of minimum percentage reduction
perceived by consumers
analysis and reduction of nitrosamines
(3) New High Quality/Low Cost Product
The basic assumption here is that in countries with rising
Pr ices/lower disposable incomes, there will be a demand for a
total product (including wrapping materials) which offers high
quality at minimum cost.
If "his assumption is true, we have the opportunity of developing
such a product segment and of retaining a profitable share of
the reduced costs.
The MPDC has initiated a project, and this will be discussed
in detail at the Research Conference in August. The key targets
have been set as:
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BATCo document for Province of British Columbia 23 April 1999

King size
low delivery (5-10 mg tar)
standard paper cylinder and circumference
standard filter material
ultra-low density (down to c 150 mg/cc)
simple pack/over wrapped in transparent
material/bulk quantities shrink-wrapped.
This project may be a suitable vehicle for developing "structured"
designs that incorporate ultra-low weights of tobacco.
(B) TECHVICAL PCSSIBILITIES FOR THE LONGER TERM
L,oo@ Ing back even as little as 10 years. ago, the changes in
ciaerette design and 5moking characteristics have been enormous.
And there is no doubt that many medical authorities associate
"he lower deliveries with lower health risks.
In terms of product performance, however, there is potential
for further considerable changes in the product and relevant
reSEarch and development is underway at GR& DC
FIGURE 5 [product Research and Development]
A schematic of the main technical objectives of the cigarette
of t.he future is shown in:
FIGURE 6 [schematic of future cigarette]
III significant advances were to be made in each (or most) of
the component areas the cigarette of the 1990 , could be
very different again from that of today. CM)
BATCo document for Province of British Columbia 23 April 1999

In pErallel with the experimental research and developments
indicated in Figure 5, a "Technological Forecast of the Future
Cigarette" is planned to be started later this year (to be
undertaken by Dr K D Kilburn).
I do not have time to dwell on the various technical objectives
that are being worked on, but you might be interested to hear about
three! items that I believe are of particular importance:
(i) Carbon Monoxide
A project is underway with the objective of substantially
reducing the level of carbon monoxide relative to that or tar.
Figure 7 sumnarises the position.
FIGURE 7' [CO/Tar for commercial and experimental cigarettes)
(ii) Physical properties of tobacco
A Project has been established with the broad
comniercial goal of reducing cigarette cost
through density reduction - but with maximal
retention of other desirable cigarette physical
features, eg firmness, pressure drop, ends
stability, hot collapse, taste and flavour.
The project will investigate the
relationship between the bulk properties
of cut tobacco and individual particle
characteristics, and will focus on the
influence of primary process conditions and
tobacco expansion on these basic parameters.
I propose to comment specifically on expanded
tobacco at the end of this talk. CD
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BATCo document for Province of British Columbia 23 April 1999

I am pleased to be able to report that this
heavy old chestnut at last looks as though
it is going to become a commercial reality.
Briefly, we are about to cease work on the
Bridon fibrillation process and to concentrate
on working with Hercules to develop superior
products based on spun fibre.
DEMONSTRATION (Tow samples CA vc PPI
(C) BETTER UNDERSTA14DING OF THE CONSUMER
In the past three years important advances have been made in
the general area of consumer awareness. The behavioural research
Gr:)up at GR& DC, which includes behavicural psychologists, is
working on a broad front using as an overall guideline a
scne,natic model of sma behaviour.
FI3URE 8 [Model of smoking behaviour]
FI3URE 9 [Consumer Awareness Studies]
Th? way these various programme objectives inter-relate with
'Tie Smoker' and 'The Product' is indicated in Figure 10.
FI13URE 10 [some aspects of GR&DC Behavioural Research]
I believe that an important reason for the good progress is the
ve-:y close working relationshio that has been established
be :wee the GR&DC team and (a) Millbank Marketing Department
(bi a number of Associates.
An item not Specifically referred to in Figure 9, which continues
BATCo document for Province of British Columbia 23 April 1999

to rf,ceive attention, is the central issue of tle role of
nicotine in smoking - and in particular, whether low nicotine can
lead to quitting. Figure 11 summarises present views:
FIGURE 11 [Nicotine and Smoking Behaviour)
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f
This reference to nicotine leads on to the wider issue of what
are the characteristics of importance to the smoker and which
he de sires as deliveries are reduced.
FIGUF 12 [Change from high to low delivery]
I believe that all characteristics are important and also that
they interact in a complex way. Certainly I believe that we
are presently overly concerned with Taste and Flavour - at the
exclusion of developing a real understanding of the way that
impact, irritation and mouth feel influence smoker acceptability
and cf the precise origin of these various factors. We are giving
thought, as to how best we can broaden our research to cover
more than just taste and flavour.
EXPANDED TOBACCO
[Seca-aLe notes]
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BATCo document for Province of British Columbia 23 April 1999