:aaacto Strateq7 leviev T"m I Q - .- - @- - -
a ninth mosting of the two sot up to review the s trz t0ti"- !of the 'Groupa
Tobacco activities was held an St$% November 1967.
J.-asont: Ir. P. Sheehy, 'it. C.L. Zennis, 'it. E.A.A. 3ruell,
Mr. D.L. SLoboa, Dr. 1. Salter (Secrecarv%
Mr. I.P. G4rrzw&y was unable to attend the Meeting.
'Mr. A.L. Board and Dr. 1.1. Thornton attended !or izams 1-7.
1. The minutes of the meeting held on 7th April- were agreed.
Z. IC was noted that:-
(a) The DIET plane La Berlin was co be mothballed and would U sold of ter
the patents expired in September L988.
It had been hoped that it might be sold to Souza Cruz but owing to
Brazil's import restrictions this was impracticable. Z., was now hoped
ft that it might be possible to arrange a sale to China.
(b) The APEX development was proceeding but progress was delayed pending
completion of Lahalation toxicology Costs. These were expected to be
successful but had been hold up by problems at the test-mg laboratory.
(c) A= cf!er had been made to the ocher shareholders in SkandinaTisk but
this had been rejected and no further progress is possible at present.
However, the of!ar has beam Left open and ic may be possible to re-open
negotiations at some time in the future i.11 there is a ch-ange of attitude
by any of the ocher shareholders.
(d) Good progress was being made 'In increasing sales in the Japanese,
market. Details of this were given in a brief report whic.1% had been
circulated.
(a) It was still hoped that it might be possible to invest in Turkey buc
this project would not be progressed until after the elections. In the
meantime, exports to the country war* being promoted and a trial order
for 500 cases of Barclay had been received.
(f) ?ro$rass an sa=facturing rationalisation, was continuing and
negotiations warv in WA with the Unions regarding the closure of
Ahrousburg. Outs these agreements were in place, further changes would
be considered. The review by Mr. Slaboa, of the options for
manufacturing rationalisation in Zurope would be complete by the end of
the year. A special meeting would than be arranged at which these
options could be evaluated.
(Z) Progress in promoting a more rational view of the effects of passive
sswkLmg had been limi:ad but it was hoped to otganise a conference an
low risk epidemiology La March 1969. In the maisatIms, efforts to
influence public opinion towards a mar& objective view would continue,
concentrating on providing reasoned criticism of the work purporting- to
link passive smoking with health problems. Mr.. Iru*ll also intended to
organise. an internal Group seminar an the subject.
ILD/LM Smokeless Cigarette
3. The $Jg12JfJC&oC* of the us- 'emokalass' cisa"tts developed by R.J. laynolds
was discussed. It v" noted that this was being takas extre=ely *ortously b?
1J& who, 1A addition to investing in new preAuation QquipftUt, hAd 41SO
approached the Surgeon General to obtain his reaction to the proposed
marketing of the product. This had apparently led to advice tar It should
be evaluated by the Amerizaa, Health Youndation.
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4. hr- Heard believed thar. :he design of the product w a such char. t mica r
a he :La*
was derived from the tobacco and hence the product was likely to be
c:Assifi4d as a cigarette rather than as a drug. Re believed that the
product could have a major impact on CM marker. and char W. should build up
research effort specifically aimed at competing with this iniziarive.
5. Ift. Heard presented a paper proposing a prograxon of basic research for the
UT Group. similar 'ia cost and content to the programs presented last year.
However, he also suggested that, in addition to this basic pragraiama costing
EZz in 1988, char& should also be a supplamucary programme to provide a
competitive response co the R.1% smokeless cigarette. Initial estimates were
that this would cost a further f1m in 1958, Z1.8a in 1989. L2.7m in 1990 and
Z2.5m La 19 9 I.
6. 1: -das suggested that the 'funding of the Ou programme La 1988 should be
shared between the Fact companies with the USA, providing LO.9m, the UK
LO .7 So, Germany and Canada FO-57m each and Australia 10.21m.
7. 3oth the research programme and the proposals for its funding were accepted
as a reasonable basis an which to proceed. It was also noted that the next
review of R&D would be La the autumn of 1988, at which time a progress report
would be presented on the work related to the RJA smokeless cigarette.
Barels?
S. Mr. Bruall reported continuing good progress with Barclay La rest European
countries - Rovever, G4rmauy continued to be an exception.
:-. was intended thac the Spanish monopoly would be offered both this product
and Capri under licence, during Mr. Pritchard's visit in December.
9. Mr. Bruall would &Is a discuss with Mr. Pritchard whether an approach should
be made to Gal lahe rs , offering to licence the product to then. Assuming
Mr
. - Pritchard agrees, Mr. Bru&ll would then sound our Mr. Cameron to see
whether an approach would be welcomed by Gallahats.
10. The Chai-.zan reported the current view in the USA vhich was that although
there was considerable goodwill in the Barclay name, the cred-lbilit7 of the
a4z .rot filter offer would be difficult and OX;* CLS ive to revive. Brown, 4
;;il-l1azson were now likely to prowtv an ultra-slim version of Barclay but
thus would not be pursued until Capri bad been exploited to the full.
Cauri
11. Regarding Capri, the Chairman had already reported to the Board am progress
in the USA, which continued to be encouraging.
12. Mr. 3rual-I reported that progress an launching the brand in Zaroyean, varksts
was up to schedule and, following trial sbipseau in December, Capri would be
launched nationally in Belgium and Rolland in January 1988, using supplies
free Germany. In Germany itself. the brand had been launched in Munich under
the name Caprice and early sales were up to expectations. Elsewhere, the
on17 set back had been in Italy where the Mayor of Capri van objecting to the
use of the name. The Germans believed that thin problem could be overcome by
using the same Caprice but Kr. Bruall believed that trill j&blsm should be
faced directly and the arguments against the use of the name should be opposed.
13. Mr. Dennis reported that Capri was to be launched in Australia and the
Chairman again emphasised that he believed the product should be sold at a
full or premium price.
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14. The Chairman asked Demu:Ls to check on the posi-t-lon in Canada and -.,2
report back to him on this.
15. Mr. Bruall reported that the testing of the spacial properties of Capri was
still in hand. Attempts were being made to obt a,-.% a re emenc to a standard
tasz for sidestroaz smoke. In addition, the development of a chromosome test
by an external laboratory was also being monitored as being potentially
useful.
16. The Chairman again itaphasised the importance of taking full advantage of the
ideas that have been developed in the USk for the promotion of the brand.
Raticualised Leaf Buying
17. The paper by Mr. Bruall an the ratiomalisacion a! leaf buying for Europe was
noted. Commenting on the ciae. period proposed for integrating the buying
requirements of SA-.C.T, the Chairman suggested that the &La should be !or
SC,C-: to be is ful:.7 integrated by the and of the 1969 buying period, rather
thart allowing Z-3 years !or this to be completed.
Euroosan Tax Rarmouisation
IS. The progress report by ',it. Bruall was ao Commenting an the paper, the
Chairman thought that it was unrealistic to expects immediate agreement an Tax
Rarzouisa:lou from those countries which would suffer major changes I= the
market price and/or :ax revenues from cigarettes.
While it was abylously necessary to co at I nut to push for the optimum system.
BAT would need to plan on the basis that only the major countries were
likely to be amenable to either the Commission's schema or the modified
theme proposed by UT.
scheme pro, in Italy -
19. It was noted that Bcovm & Williamson, BATCY. UT (Ut & Export) and Reutt
WLatermans had all expressed satisfaction with the quality of service AM
coverage of the Italian market provided by Italtabacc.bi.
20. Ravavev, the Chairman was not convinced that the company provided the depth
of distribution that might be provided by an alternative distributor. In
particular, he questioned whether the assessment had been sufficiently wide
ranging. considarim; non-Tobacco as wall as Tobacco based companies as
a I options.
21. Mr. Sruall agreed -.* rsas*ess the options for Italy during Mr. Pritchard's
visit at the end of the year, prior to visiting Italy to assess the situation
at first hand. early In 1988,
To= Couaceition
22. The Chairman informed the meeting that he was considering changes to the
composition of the team to increase its effectiveness through note direct
representation of grown & Williamson. BATCT, and possibly of the other major
Tobacco subsidiaries.
A paper would be prepared for the CPC asLd the ca&a would be informed in dua
course 3f any changes that had been agreed.
RS/DJA
20th November 1987
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BAT Industries document for Province of British Columbia 22 April I egg