Z.,
TOLL= STRAT= ItZVUV TZAH
The purpose of this note La to provide background on the terms of reference
and issues for the Tobacco Strategy Review team meeting arranged for
31sr October 1988.
Tema of Reference
1. When the team vat got up in December 1984 it was agrood that its
principal aims should be to ensure that the Group mount* a coherent
strategic thrust in Tobacco. that there is effective technical and
marketing to-operatiou between the Group's Tobacco businesses and that
there in a unified approach on Smoking Issues.
2. It was noted that the team would be concerned with ma,:or nev
initiatives and with removing structural and other obstacles to
effective marketing or technical co-operation.
It was not intended that the team should be concerned with monitoring
progress in areas where co-operation is already proceeding
satisfactorily or with issues which are specific to only one Operating
Group. However it may be used as a =&no for sharing information in
cases where this appears to be appropriate (a.&. where a particular
development in one company could be of wider interest).
Issues
Issues which have previously been covered by the team or which have been
suggested for consideration are outlined below. In each case, the current
status of the issue is reviewed and reports due to be presented to the
meeting an 31st October are noted.
1. Policy/Action on Smoking Issues: BATCo. are responsible for the
production and dissemination of the Smoking Issues Compendium and for
orgauising seminars to discuss the issues. Following an internal
seminar on Passive Smoking, a public seminar on low risk epidemiology
has been arranged for March 1999. Mr. Bromley is due to report
progress.
2. R 4 D% In the past, the team has reviewed the centrally
controlled element of tht Group R & D programme and has commented
on:-
(a) Priorities. 10
(b) Levels of expenditures
Cc) The allocation to individual operations of the work and of the
charges for this activity.
Mr. Heard, who is responsible for co ordInating the R & D programme
will be invited to present his proposed program- for 198 9 . kt the
same tine, he will also report progress an projects Airbus and
Grecadot. Hr. Pritchard will be asked to provide information an the
reception in the market to the launch of the W1 smokeless cigarette.
Nj
C:.,
kill
Ln
CC:
BAT Industries document for Province of British Columbia 22 April 1999

2
3. Process Develoymant
(a) The team has monitored the development of the APEX expanded
tobacco process and Mr. Bramley wiU provide a caport on the
current situation.
(b) It was noted that the DMT plant located in Berlin would be sold
after the patent expires in September 1988. Mr. Bruall will
report an the current situation.
4. Loaf Buying
The team has noted the benefits of cautralised leaf buying and the
currant aim is to have BATCF fully Integrated in this system by end
1989. Mr. Bruall will report progress.
5. The DeveloEMest and Marketing of Now Products
The team has initiated action to accelerate the dissamiaation of
Barclay and Capri into a wide range of markets. Mr. Bruall Is due to
report on this and will also report, with Mr. Pritchard. on the
possibility of licancing these products to the Spanish monopoly and to
Gallabers.
6. Implications of Europe 1992
The tsam has noted action being taken by UTCo. and BA:CF la relation
to the EEC initiative to create a Single European Market by 1992:-
(a) Preparing proposals to the Co=Llssioa on Tax Ha=aaisation and
trying to preserve, for as long as possible, the Duty-free
trade.
(b) Preparing proposals for marketing and manufacturing
rationalization.
Mr. Bruall and Mr. Bramiley are due to report on this.
7. Experts
It has been suggested that the team should review the current
situation with regard to exports and should consider whether some
general guidelines should be established for deciding where and to
what extent export opportunities should be pursued.
A background paper on this subject will be circulated before the
meeting and there will also be a separate paper from Souza Cruz
regarding the potential for exports from Brazil.
8. Other Strategic Optious/Isnues
Other issues which have been considered previously by the team but
which are not due to be discussed at the meeting are as follows:-
(a) The potential. priorities and responsibility for now initiatives
to become established or to improve market shares in markets
where there is an identified opportunity to do so (e.g. Japan,
China, Turkey. Thailand).
C"
C'
BAT Industries document for Province of British Columbia 22 April 1999

3
(b) The possibility of acquiring the outside shareholding in
Skandanavisk. This is being kept undo review but it does not
appear practicable to pursue it at present.
(c) The possibility of improving the representation in Italy
(considered by Mr. Sruall and Mr. Pritchard).
9. Manasesent Development
Although not specifically covered by the terms of reference, it has
been suggested that the two W wish to consider the potential for
improvements in the arrangements for Manager Development, reviewing
the contribution made by the courses at Chelvoo-d and considering
whether it would be advantageous to organise more transfer* between
Tobacco companies in different Operating Groups in order to accelerate
the development of the managers concerned and to benefit from the
greater exchange of kno-iledge and experience which should result.
10. Conclusion
-loot of the items detailed above can be dealt with relatively
briefly.
However, it is anticipated that there will be more substantive
discussion on the following issues.-
(a) R & 0 (Introduced by Mr. Heard).
(b) Europe 1992 (Introduced by Mr. Bramley and Mr. Small).
(c) Exports (Introduced by the Chairman and including consideration
of the paper from Souza Cruz on Brazilian Exports).
The team may also wish to consider which issues should be dealt with
at the next meeting of the team, whether Management Development is an
issue which should be considered by the team and whether there are
other issues, not covered in the outline above but which the team
should also consider.
RS/DJA
3rd October 1988
01
BAT Industries document for Province of British Columbia 22 April 1999