lq@
A WORLD-WIDE CONCERN
OF MAMMOTH PROPORTIONS
BAT Industries document for Province of British Columbia 23 April 1999

BAT industries document for Province of British Columbia 23 April 1999

@IB
AWORLD-WIDECONCERN
OF MAMMOTH PROPORTIONS
4 c, -ptionis
here are feNsk. places in he usErialie mrs.Theexc.
Tworld %where B.A.T lndusLrie@,' B'\TL:S Inc.. based in Lcluis,,ille.
produces are not available.' K- ' .-.. %%,,hill manwites the corn-
In rhe words of s;ompark% chair- pan%'i L.$. inE,-reSES in tobacco.
man Macadam, B.A.T In- re-ailing. and paper.
dus:rieb s "a truly international. The iubsicfiar@ and affiliated
compan@. proud of its %%orldR,%ide zompanies of the group employ
ipread and diversity. :-40.000 people. of %hom
In fac-, B.A.T Industries Ltd. @cme 100.000 are emploNed in
1;@ Br;tain's third Iareet,-, ts.-wbaz,:o operations. Its produces
eme-pris!. az@ listed in "The Times at,- manufactured in '@S countries
on ii% continents. Over 80,ro of
The group's principal aCtMEV. aSses are o%,erseas. B.A.T Indus-
of zoursc. is the worldNIside manu- tries is ne%ertheless a British corn-
fac-ure c ftobacco products. but it pany, quoted on the London Stock
aiso has substantial international EwhansEe and v6ith some 150.000
interests in retailing. paper. print- shareholders. Nearly all the shares
ing and -.)ackaeing, hoist impro%e- are held in the United Kingdom.
merits, and cosmetics.
Since 076, the parent :ompan\ Decisions at headquarters
of . the group has been B.A.T
eo-1- Industries. formerl% kno"n as The board of B.A.T Industries
Tobac:c- Securities Trust. In that delegates conbiderabie authority
year, Ehv company acquired all the to the boards of' the operatinvi
out;zandine sha re@. in Brinsh- groups. A small headquarters
Americin Tobacco Co, Lid, @taff at %\ indsor House, Victoria
(BAT), which had been the parent 'Street. London, absists the main
compariv since the troops, e!,cab- boardin t% foliou ing functions:
lishm-eni in 1902. -establishment of corporate ob-
B.A." lndustneb' :rading acci, - jecti, esand trate-zies:
ktie@. ar.-, organized (hrouLh ;.I\ -definition of corporate policies
optratirg groups which. nith cine a-, guidelinci for the conduct of
ex,:_-piicn. look a.`tc- parti,:uI.-r grotic
-eroup orgarizacional structure
and k;.,\. arpointmtnu,:
1-\rWtI. ft I I' 41.14 RIC J-C-d L, A _01SUnrig the development ol
1 %.,IC iNg, -, .10 I:!,"
the main board iuch as the al-
location of resourz;!s abos-e a zt-r-
tain le,. el.
The chairman's policy :,)m-
mittee. which consists of the
chairman. Peter Nlacadarn. and
the r,%o depury chaimerk. Patrick
Sheehv and Edward John S%.
mons, is responsible to the B.A.T
Industries board for rhe overall
dem,clopment and well-being of
the group and for the day-to-day
iuper%isionofiCzs acEitafei.
British-American Tobaczo Co.
(BAT), the holding company for
(he group's tobacco interests
outside the United States, has its
headquarters in Westminster
House. Millbank. London.
Tlirouizh BAT and BATUS's
Brown and Williamson Tobacco
subsidiary, the group is the
wor!cl's largest private enterprise
tobacco concern. One or other of
(he group's cigarette brands is
the market leader in 3beclunrries.
while Henri Wintermans is the
Moil %--idely e\ported zigar in
the kiorld.
Total cigarette sales exceed 5 50
billion a vear and. with 120
tobacco f@ctories in Over 50
countries. BAT subsidiaries and
JL@s%)c:ates Represent the group in
every continent,
%losi international brands are
manauement information either British or Amer;
hL, -Al 4 cc,. "ni, wo Jw I A "@n in
-R& two d6tinci
R. hc :11031 I- oriein and these
a I,- . 'h ski hc -I-Z.! ... '%pes 46i-prette no\% acL:ounr for
BAT Industries document for Province of British COIUMbia 23 April 1999
C@

about 400-o of cigarettes sold in
the non-communist world. In
recent years. international brands
have expanded three times as fast
as brands developed for manu-
facture and sales in individual
national markets.
The ownership of trademarks
and concessionary rights in the
tobacco industry is very complex.
What the company refers to as
-the brand maze" has its origins
in the formation of BAT in 1902
but has become more intricate
through subsequent mergers.
acquisitions, and changes in
relationships between the com-
panies concerned. For example,
many of the brands associated
with Imperial Tobacco and Galla-
her in the United Kingdom are
owned by BAT or its associated
companies in most overseas
marke,s.
BAT's B-itish-type cigarettes in
export and most overseas markets
include Benson & Hedges Special
Filter. Benson & Hedges Special
Mild and Luxurv Mild. Player's
Gold Leaf and John Piaver
Special, Wills Embassy, and Du
Peter Macadam
Chairman, 8-&T industries
Maurier. Three Fives, from the
House of State Express, is a
brand which is owned by the BAT
group worldwide. As regards
American cigarettes, BAT's asso-
ciate, Brown & Williamson, has
long owned Kool, the leading
international menthol brand, and
Viceroy, both in the United States
and overseas. Other brands which
BAT owns in most countries out-
side the United States include Pall
Mall and Lucky Strike. These
80 years of BAT
. . a
were strongly reinforced by the
acquisition in 1977 of Lorillard
brands for sale outside the U.S.
BAT's international brands are
manufactured bv many of the
group's associated companies
around the world and, in some
countries, bv licensees. Substan-
tial quantities are exported.
mainly from factories in the
United Kingdom, the United
States, and West Germany, when
tariffs and trade regulations
permit. Of particular significance
in export terms are the Middle
East. airport shops (including
those in the United Kingdom).
ship and air stores, and embassies
in all parts of the world.
The marketing of BAT's inter-,
national brands around the works,
is based on the quality and
reputation of the products. Thev
are supported by a consistent
Publicity and adve mising strategy
and bv substantial investment.
in total, the group markets
nearly 700 brands-that is. over
300 'cigarette brands. over 200
brands of smoking tobacco. and
130 brands of cigars and
ish-American has a lone and fascinating history. in the American market. a truce %as called. Under the
September. 1901. the founder of the American To- terms of the settlement. Imperial and American Tobacco
bacco Company, the legendary James Buchanan (Buck) agreed not to trade in each other's domestic territory and I
Duke, who had' alreadv achieved a vinual monopok in to assign brand rights each to the other for use in their;.)-
the United States. came to England to make an all-out respective home markets.
bid for the British tobacco market. in response to this The second part of the agreement concerned the two
challenee, a number of British famil, -owned tobacco companies' businesses in all other parts of the world. A
businesses closed ranks. forming the Imperial Tobacco new company, British American Tobacco Company Ltd.
Company (of Great Britain and Ireland) Ltd.-now (BAT) was formed and registered in London on
known as Imperial Group Ltd. September 29. 1902 to acquire the two founding
An intense and cost1v trade war ended in less than a companies' recipes. trademarks. and export businesses.
year with J.B. Duke's 3 rit enterprise the main loser. and to own and operate their overseas subsidiaries
When Imperial countermacked. taking steps to invade outside the United Kingdom and the United States.
Duke. head of giant American Tobacco. then became
the first chairman of BAT. Thus the company. though
British-based. was controlled bv Americans. who held
two-thirds of the equity.
In 191 1. however. t6c United States Suprcme Court
ruled that the American Tobacco Company was a
v"
James Buchanan oults, monopoly and therefore illegal. Unablc to find a solution
itself. the ourt finalk asked J.B. Duke to devise a plan
to break up his own very complex griup and adopted his
solution in its entirety.
American Tobacco was also required to cancel its
orieinnI cnvcnants with BAT ind Inincrial and to divest
itself of its BAT shares. BAT then became a quoted
companv tin the London Stock Exch3nee and Most Of the
2
BAT Industries document for Province of British Columbia 23 April 1999
C:)

)ne c;-,,aret:,: In
i i countnc,% ouisit.:.:
C-)me-.:t)n ..nd 0inj @-, a
Geogril-nically N4irth Nnivr-c.
.he aroun', rrioI@ important
2ion. In the United Scato. Bro-k-1
,x NViiiiam.-on Toba@:,:o. a Nubiwi-
arv of B.ATUS. is he :oun:r-.
:hard large-It tobaci:o, compan, It.,
rnain brands are Kool. Micron',.
Raleieh, Belair. and law!v. Ba r-
,:lay. Kool is the leading menthoi
brand in :he world. Other prod-
u,:,s incluzie Sir `IValEer Ralenzh
pipe tobac--os, plugs. and snuffs.
In Canada. BAT has a lar,_,t
7
minoru@ holdine in IMASCO L U..
a multi-di isional :omt)an%, %%ho,!e
tobaczoi,i.b,,idiar,. is the big-atiat n
thezount:-%.
Laun Amenca s another region
of major mporiance. The la,--.etj
subsidiary. ii, SOLza Cruz. ;n ira-
z,I, @ates %tiiurne it@ raw.
hi@t"cr ft)n that of ar% other B -\T
company. The zompan%'s
inc!ude HoIM%ood. Miniiz.--.
Continental, anti Arizona.
There ire also subsidiaHei; in
Argentina and Venezuela. in Cen-
'dWreN tlt-,)osc@i ot 11, Saatchi T
b% British tmestor,.
1w
Patrick Sheetiy
Deputy Chairman. 9-A.7 imouStries
Chairman. Britisn -Americ3n7oaacco Ca.
tral America (where De;ta is :he
ZoD seller in three ountriesi. and
he Caribbean, as @tte!l as SUbS=-
Eial holdinas in the lea-`ing :Om-
panics in Chile and Mexi,:o.
There are manufa@:-_-ring @-.Jc-
Sidiaries in Wes, Germany. Be%
urium, Finland, the Nt,'"e7:ands.
S%, itzerland. and the Unuted K;ne-
dom. Nkcst German, B-k L i
largest European mnarkt@ and :@-.
local company's H.B. K.-oneri-
filter is one of Euroc,-';
\%eiv JCLIL.11-@,i in
i, rnarkci !e:iJ1-.r in
-Zaire BAT ha.-, a
ilhjrnuidin2 in Dentn.A. @%'I
Z
BAT brands are-also ioid
in France. Nor@%a%,
ana other European :ounirneI. in-
cludinu sonne in Easteri Eu.-ope,
.%here certain BAT brnnd@ are
manufactured under
In 4frica. there are sub,;idiarv
and affiliated comparie!, in I@
COLintrieis. BAT market leaders
include Sportsman in Ken%a.
embassy in Ghana. Plla@er's Gold
Leaf in' Nigeria. Western In Sier-
ra Leone, and Life;n \Iala%%i.
BAT's interests in Asia and
Australia comprise eight subsid-
tary comparlie' s and tar-ie niinoritv
hoidines in ITC Lzd in Ind-a and
Amaid I W. in Australia. Amon_,,
brand leaders in As-la are Vicero-
in Hong Kone. Benson & Htdzes
Special Filter in Nlaia\sia. COM_
modore in Indonesia. Br;stci in Sri
Lanka, Scissors in India. arid Star
in Bangladesh. Benson & Hedges
is also the top selling brand-of
BkT'-, associate in Auscraiia and
restlitin.-, :11 [he
'.7411 NfC@ Of Ski II I. III Lmigenicni . an-' (,II trol
Titus. H.kT Lict-2.niv frt!-. to ..,n,'tiv: I% husinc-,s tr, I-, it, [,,evil national-, in the %.Irish-, host
indcpende-ILIN In .1.1 parSof:he -% 'rid exiclior the Briii,@t) CI1Wi-:eS 11
Ish:N. wh_-re the lerrllor'M 31_11WIIICM@s NWIl A: ai,-,w :", sarne title. it aas bccornintz :!ear thi,
Imperial lohacco rLilinined in tor@x affiliate%, Inweria, tor ftir-,her evnarision ill 910 otla -I
rmilied it one-ftri interest in 8-\T retire,,% e-t: lievoinnne more lintircti. III" i je6sion
lit @is varfv %car,; m indcvvn,!v-.-t olicrattiIn. akr '%.t- :11,1@ 4 V '.,t Ai-. er'.6 Into other it IC% ;,, Issue the
evpanded in (he UMICIA Kint_,-',iii b,, (,failing tie,% bet-@ u.:,1 01 ;he group's business expertise and cash
factoric, it LiNertitte,l and &,uth.imliroit to I% 8 AT liteizzan toacL;Liirt: -.le-.% mainly
-Nport It it-, in,ned it% LoWhIll paper anti cosrne!ics. B.A.T Industrie-,
kejdqLI.ItWr% frOill dic Stram. --- %VcNtnun%tcr House. ;:w parent -onipan% 4 the BAT Grour !it :Q-tw.
Millhank. T,.-..: 8@tr -i-_,rk:v-ncnt @%ith imperial either lit 14-2 tie
lit Bro%\n in(! Willi.triwii. thwn a swall iolm@:o, European Coniniumi% tradinu, rvattintion,,.
cornparl% bascd ill \,Trial Caroitn.:. %%.I% luirkha,,@J. foil-med in inicrchariv Of brWILN 110--%cen the
Elwixiier,% o%cr@ea% sAt!% dep--ts tcn: AeNelopcd file,% a% I re%uh ot \%Nch cach conip.triv ha%
V01111mme-, \%er tu@: ,ticr,nip o0s initial brand in the United
e
rotation iii inati\ other nuntric, local otarce@, -it ra%\ ..-iti W%,,virn Etiropv. SAT. hime%er. retained
material %UI)I'6C%. C%JIC%:1Jfl% IeUt \% e !'C @11 act!,., of t1rands and irjdem.trl,% in rnwq
de%C!"re'l _,:,eN%herc. autt for the rrX,!C Hittite
I'lle 1.1 C IIJ-10, and 1,1411, 1.0, .191 Eitr-pe In this latter irca. tor re.t,tins of
CA": ;)Icahn'. I'll-, '-v, Imperwl ha, hctn%e-.I B%T -tit a
obimmict! ;tic :-w, .411.1 PI-0, 13 if !,.I Ni, .'Per3le :IS hy-:1nd% 1.1
Xld WT amsoti i-- ,role Frank.-:-. MIA -lit, -raise
I irr%. ftir uin rinic
L'.,@ 11 Vl@
II)MI .1110 Follo\%@n- iut,,taratai disposaIN in 19-5 and 1979 ithe
9 ",J-. .
one %uig among the tarses-, Cit% of London Erans-
11.10 real, 'tire I'1111M .1 %eAr L;'..! '011.1cot lin finite vr, a,@::,,n., -,r I. linrertal group's remaining interest of just
rating! ind III 01.01 I 20 B.A.T lndu%tries' equity was wu. in i9so
fa. 40 .:It _-,mt
'he cii-erance of :he equa@ I= betIt-'ern
III tit: %fair,. ther, @%.th alw a marke.1 -;hariLe
3
BAT Industries document for Province of British Columbia 23 April 1999
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. . a
rleiJ -,ub- 'ItoE. it -%ill Nza@lnatc. dveline. and
in Nc-.% Zealand. Aiv. The reten(1011 of
E -qp m t is t 1 v from the -.italii,. is it) rimth and
I:n,.ivd K;nudorn. the Unircd viralit i v can '7e prc-,er-,cd on[% if
SE-,[%:% .111.t: West German%-g-) zo gro,6%Th ;s maintained and :hjn%z-!
-etN @%h
I Mirihur .)I mark .@re B.NT is welc
@as lo MJPt1fJCTL17i11'1 fUCIfiliCN. We a r L, not interc@rcd in
For -_,.aripie importt:d Ben-,%)n pursuing growth for :is t)%% n sake.
Ht.,d@z@@s is the market leader :n Gro%%th in our terms is not just
the @L;dan and Three Fi%es is JrO%kLh in the %olume of' sales or
popular n many parts of the Mid- even-the ultimate criteria-
d1le Ea-.E. in man@ zase%. local pro- growth in earnir@is per share and
duction @s also supplemented b% distributed dividendi. Growth
:mporttc brands. Must include a qualiciti%e ele-
As -he bulk of BAT's income-, :s ment %%hich will hake a longer
earned )utside the U.K.. its term impact. Among the criteria I
auvarent financial position has C.H. Stewart Lockhart would choose %vltild be an
b@e'r @it recenrIv by the condiu- Direcior. sntishArrterican Tobacco extension of our technical krowl-
Ing strcri@jth of the pound, %,.hich In particular. the last couple of edue and skills. increased stabii.
has zhe effect of making, Financial years hake seen the production ItN-and qL1aiiTV of earnings. and
7e-@U!ti Xok less good. in sterlin2 zapacitics the compan%". [felt improved 1D s
portunit% in marKer
:erms. ch a n the results i n plants i n Macon. Ga. and with a E:Uure
0%e'se.1s _,ompanies really kxere in Uberlandia. Bra7fl. succeisfuilk "We art: lom. %ell established
zheir 1-. zurrenc:es. expanded. and major programs of in several industries and we
The general picure has b.=ri re-equipment %--ith ne%@ high- 'intend [1) XnfirLle zo build -in
one ol"atzhe- turno%er and profiti spec@ rn'ac@:nerv ha%e taken place
thern. Ho%xever. @%e are not
in local :,urrency terms, but %%ith in several companies in Latin inhibited from exploring new
zhii improvement not reflected Amertea. as k%eH zi-, in Malaysia. venturcs. %,L here there is a
ki,hen the figures are conk erted '.n:o Indonesia. and the United King- genuine opporrunirv for real
sTeriin2. dom. crowth. on :he terms that I hake
The ' re(ative performance of the On a broader Cront. the group just ourlineul and ,.-here we hake
group i tobacco interests con- looks forvard %iiih confideno e in the mana2ement means to de-
nm'e -o be S12nificant. deSpiEe T@C continued 2ro%%tjj. @%nli no @elop such Possibilities.
mo%erierr :nto non-mbacco into-. sicin to :Lian.:e. .I have 6equentlx stressed the
ests in recent %cars. In roUnd Savs B..A.T Indu,,tries chair. critical im:)tirtance ot . people and
@11ZUT`ei. 3b0ill half of the Groun's man, Pete- Macadam: -1 see a their moti,-ation. -ahich includes
total assets are still in tobuc@:o- company as a living organism that job iatisfacrion and securitv. as
and these! produce around m(- has to 2ro%% and aclapt. If it does %%ell a.; monerarv rc%%ard'. In-
o croup turnover and cluded in growth' must be the
profit. de%elopment of the human po(en- .
Investment in modernization The British BAT articles. tial in business. This will come
and exparsion of the B.AT 10baLCO three morz of %%hich folio%%, from a more participative srVIe of
fac,or-cs ias continued at a high and he BAT Directory (p. 10) management. We have entered a
level in many parts of the world kiere zompiled bv Donald Hill. new e-ra where relationships. both
and. acccrdi . rig to C.H. Src%%art regular TOBACCO JNTERNA- within businesses and in societv
Lockharz. managing, director of TIC\ XL correspondent in Eng- at large. are changing funda-
British-Arnerican Tobacco Co.. land. with the assistance ot mentallv.
these investment provrams "arc B.A.T IndustrieN dXCCULives. "It is by lookin g into the future
an ininvrrant factor in the whose help is acknci%%ledged and antictpating these develop-
incricasirty, prodUCtivii, of BAT ith thank,. ments that ve-k%ill continue to
plant., as-1 \%]late.,, i7row SLIC-@es,;!`Uih
BAT Industries document for Province of British Columbia 23 April 1999

Afflk
B _ALT
Internationally, more than 1,100
research and development workers
7'As a matter of group policy,
BAT devotes substantial re-
sources Ec a continuous program
ot . researcn and development. For
over leg vears. the company has
7
been investing. in extensive re-
search into the issues invoked in
the smokng and health contro-
l ersv
BAT takes the view that as a
responsible manufacturer of to-
bacco products it is its duty to
provide consumers with a %%ide
range of products kdomn to low
le4s of moke components). so
that people can choose the prod-
ucts thev like. in Elie light of in-
formation a%ailabld EO them in
@aricius forms of literature and
'-trough Elie media.
The indusErv itself has seen
startling chanses-part1v in re-
sponse to the smoking and health
issues, but also as a result of in-
creasing Production speeds and
efficiency and the general ptog-
ress from a craft-based process to
a technoloe -based one.
y
The group'.i main -esearch and
development activities are located
in Southampton. in the south of
England and iome -! miles awa@
from London.
At dic laboratorics therc are
,,onie 4W tat: in a nunl@Lr ol di.!-
Ophries: LriL0\,t,.
chemical enetneering. chemi-,try.
elecEroni,.,@. mathematici, Me-
chan:cal en-annecr:ny. plv@ii,s,
and also
A further '00 research and
development staff work for BAT's
various international operating
companies. which ac, as autonc-
mous business units but Co-
ordinate Ehe.7 main ze-chnical re-
sources and ob,ec:i%es throu2-
central committees and confl!r-
ences.
Incoming and outgoing
Besides the main researcl, es-
tablishment at Southampton,
England, BAT also has major re-
search companies in Australia.
Brazil, Canada. Germany. and the
United States. 'NIanv BAT com-
panies, parTcularly those in the
developing countries. have quality
control laboratories equipped for
routine analysis and testing to
monitor Incoming materials and
Outgoing cigarette products.
The main laboratories at South-
ampton occupy a two-hectare site
next to the factorv run there bv
BAT (U.K. and Export) Ltd. The
technical areas covered include:
* biological and toxicologicai
studies:
*the development of filterz:
a automated. high-ipetd ciga.
r;.-tte manufacture:
kinetics of combustion and to-
bacco pyrolysis:
leaf biochemistry,
leaf preparation and processing,:
sensor\ and preference ci@,iess-
mem
* smoke %,.enerat:on. trniis;cn. ffl-
traEion, and arak @i-,:
smoke taste arl' -@a% Q%
smoker bchaviO7
Supporting ana-
lytical de-.- elopTtn". :oMcii-Ing
serNic-cs. librarv anJl r.ormation
services. mathernatics and statis-
tics. a patent Ser\:Z:! "or all parts
of the BAT groun. ard Facilities
for sample manufacture,
Much of the zen-ai research
and engineering carried
out at Southamp:on 's z oncerned
with the de@,elopmen: if modif:ed
or novel products. in arder to es-
tablish new princ:ples of cigarette
design for exploitation 'ov opemt-
ingcompanies, in :he grou'p.
Direct support is also given to
those companies in the group who
do not have their omn develop-
ment facilities. an,4 zannot on
their own take immediate advan-
tage of the most up-to-date tech-
nology in filtration. flavors. pa-
pers, and ventilation.
So, in summarv. the role of the
central research and development
function covers both long and
short-term functions. In addition
to providing a sourz., ot . Technical
information, its -ask- is to under-
take basic research and engineer-
me developmem, to iecure the
loneer-term tc6noloe@cal base of
the group. as %,-eil as pro,6iding
technical support to,- :he shorter-
term business operations of those
companies which do -,L)t have their
leliou IC 1".
BAT Industries document for Province of British Columbia 23 April 1999
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I F.-M-h
B A. T
Neither landowner nor grower-but
still a leading tobacco developer
i -,%e!l a@ :i laree buver
Aand proc_-5or at . tobac.:o from
tradit;,.)nal Irlarke-.s such as the
Unittc Slates. Canada. and the
\ear East. BAT has pioneered or
de,-eioped the grc\%ing and proc-
essint! of tobacco in mar%% areas
of the .% or 1-4.
The group', purchases amount
to around 1.300 million pounds of
tobacc:) in a vear-somethin-, like
I Ilro o-total %%orld production.
Despite tht size oi'iis pur,-.hase@.
ho,%e% !r. the croup does nat o%kn
land a- -_,ro%x icaf tobacco, except
I . or d\rcrirnenlal purposes.
It h3b been an clLerrWim!
;)rtnci-.,Ic that B-\T hould not be-
xtne i landowner or firmer in
its o\%:i The group has ai-
%%a%,, r_-'C-:LJ the estate conccrt.
ltislea- it ha@ adjoriad (he poli,:%
Ellat it , "tar hetuer that ,he land.
an,i :is fruntz. Should belone to he
peopie of me :ountrv rather thur.
IL, far;.- c-icr,".
BAT t';r-i -nitrate zautiou.,!%
on @ro,@uc:ion in Brazil.
India. and China around 19-'U.
Four objectives were set dov, n:
-to ensure that tobacco aro,%tng
in no wav disturbed the roduc-
p
:ion of food crops:
-to guarantee -he farmers agood
re, u rn:
-to produce tobacco co a iatis-
factory standard:
-to promote the gro%%-,h of onl,.
.
the quantity of tobacco for \%hich
there .%a.., a readv market.
Native leaf
O%er the vears, BAT has gi\en
con:,iderabW linuncial and @echni-
cal &,si,;tan,;%.- to a larue numbe-
at . f . armer; in some 40 countries.
thu) dev-doping, the induiiry and
pro-, iding % aluao.e additional za.,h
:.-ups for national economie@.
\Ijn%- cif the countries in ,%hich
BAT ha.,, taken this inifiative art
no%% laraeb. or critire'v. indL-tendent
of impor,,d tobacco and %%orth-
k\ line ;!\r-ort '-1L1%1:1eSNeS lla\,C
oped in @ome of them. The most
notable are India. a substantial
exporter for many years. and Bra-
zil. which has recentiv become a
major supplier of tobacco to the
world industry.
Three things come before th
establishment of a ne-.% tobacz3
prowing area; exploration. experi-
7
mentation, an d education.
First, meteorological, and soii
data must be collected. land ten-
ure systems sEudied, and the sup-
port of the local or central author-
itv enlisted. If the sur%ey looks
promising, small trial plantings
are made to determine the relative
suzcess of various strains of seed.
the buitabiliEv of %arious times of
planting. and the optimum quan-
iiv- and I % pe of fertilizers.
Cultural prac-,ices %at% from
place to place and there are. Of
course, many other variables to be
studied. The compan@ accepts full
"'inancial responsibiliV. at thli-@
itag;!, surplernenting local scien-
d, . lic resourcti %%ith tht skill., o@'
BAT Industries document for Province of British Columbia 23 April 1999

Phom 7oGJCCZ 3UC'10M @n
Thrcugtlout -.h# mcrid@ SAT has helped
dowelacmeni a] toza=0 gr0wing activil,*S,
ronOeting -ezrinic.V 30vice and 11M.1ricial
5"Coort.
its vttn iL:ron@:rni,z, an,' @eaf c\-
PC!
Li
@'Ui ind -h-1 -ni"i;:-, v: :ne .oba%:zo
ar"; is @MA:r.L _nara@izn@ti" ar;,
7r
le!d per
iat,.@;aczov . an-, he
:men, -o
ac:e :s iu. make a \,Iable 4
crop. .he rcal _,.--.,-ioprent be-gins.
Lrmer: art, ie!e@zed and sup-
plied @%irh setd!;ngs. and
.:rcD chemicaii frtL or' charce.
Compaw. t.%pe7-s -.h,--l move in -.o
offer all @`nz@ of zti,,ice to [be 14
farmer. a-, --%eJ as Prac'.,cal help
hand The- farmer is and arading the 'taf. As the tarm- ail% still some expansion and,
1,4,ho@%n ine be@,z Lrac:ict in plant- er progresses, no,%v-er. he ;s en- %\"-..-n the needs of the local mar-
@ng. 'ne _iie _). :t,1:Iiz;-ri. and zhe zcuraged to curt :he tobaczo him- ke, ar.- iaE;sfie-. there mav be
noi@., IN. @70[` .;'Idmi.:a1s. At. fir-.1. @e!f. Loans art arranv,:d Lo enable ex-port, opportunities. In htse
=2 it is se.
the @ornpun@- -.ran :na-, itav ai- cunng starns o be @uift bv indi ar, Idom that a month
rno-ti permanenz.% %\,it, :he farmer: \Idu@l 2ro%%tr; or some za@,es pa@@.-s %%ithouE most subsianfial
.n an% Zaze. lt '171121111 %i@a him b% groups of trial farmers band- farmers' recti\ine a visit tram a
not @e%%er har ::mes a ed tosteEher. -\i -,he lessons are cornpanN man. and there is. of
tor fi%c murW-s or more. It ;s, or' !earned and the ;kiiIs are spread. cour'zi:. alv-ay; zontac, bt-etri
cour@e. zxtrernel@ important Lo en- more and more 'armers come t .or- the -armers are ?he buvers %%hen
gage :he -armer'i full zonfidence. \%ard to join zhe @ompany whemcb,. th,! ured and szrade@@ lear' is
Farmer, art inc;ined to be -on- until 7inaltv a I;Iourishiniz and \,-ell- brouvht into central depots w be
sertari--e and -asow,.ous or . ne%@ based agricuitur-ai industr\ ki es- soi,4-
Wah the profits 1, om his obac-
crops anc ne%% met-ods. On the rablished. r
other hand 11,-. art probabl% :he Compariv reiazioni -%iih the to- co zrop the farmer repa\s the
mo@E :oniis;tntl@ indu.,trious bacco-growing .:ir,. ;@rom place to loan he has rezeived and is able
peopis: :n :hL Ha. and cinct the-. place. In the -.er% mature areas to invest in more sophisticared
can be cori%i%ed that the advice such as the United States and equ;pment.
chip. art send, wen :@, found and Canada. the zornnarv is mainiv And io the process of improve-
.to their ad\antaee. thev often concerned %%ith buvina, thottah men, Zoe% on. adding up !o an
li,.hom great enthusiasm anciikill. r-!prtbtnEaci%cs art ahl%@\% travel- imprzz,`sive itory of increased pros-
In (he tart% itagts of a develop- ing around in zhe gro%%ing season peny for many thousands of indi-
ment. BAT buk i ,he :obacco att;.-r co offer an% ad-,ict %%hich might %id-.;ai farmers. for -.%hole reewns.
the farmer has been ho@% n ho%\ io be sought. and to appraise the and-in some instances-e-,en for
har%ebt it. an-' :he company j@,_ gro%@ing crops;n the ficId. cou-.11ries. It is a de@-elopment. role
iurnei re.)ren@itiliEy for curing In zhe ne%%er areas there i@, usu- of --%hich BAT isjuitifiabl\ proud.
7
BAT Industries document for Province of British Columbia 23 April 1999

Three Fives. SAT's State Express brand.
Mr- comes off the line 3t Southampton plant.
V
Adr-Ift
B@.A.T
Bringing it all back home
Ithol,i2h BAT's tas;c itrenet" z@,osen as BAT'i U.K. entr% point Nlean%%hile. oth.-r BAT launches
Ais the-ipread of iz5 %%orld-t%ide %%as alreadv kno%-.n. too. an'd had in the U.K. ha%e been made under
wi%ifiei. (her,- %%as izeial qsznif:- an established reputation oi,ersens the du Maurier and Kent names.
cance for the group -Ahen. fo@lo" - -@%herc :t had been a favorite Dtt.\faurierk:n-eSizeNvasintro-*
:ng the earlier endine of aizreementi BAT brand since the 1910s. duced at the erid of May, 19860
Imoerial T Three Fives Filter Kings quickly as BAT's second major house
be!ween BAT and 0
bacco. i, %as able to start :radin-z tstablished a firm base, and was name in the U.K. Aeain it \%as a
in the I ,'nited Kingdorri-its .),,.n later joined by Three Fives Select. familiar name, since the group
011@ d(Mestic market. it-, -%hich it had ed Virainia (a plain cigarette, and had owned the mark in non-U.K.
been denied access "or io lone. more recenEiv. Three Fives Medi- areas since 1955. In the U.K. it
It -,%a. in Nlav. 19-S. aiter care- um \Iiid. and then Three Fives @%as gmen a hea\%%%eie_ht launch
ful preparation and a thtiroul-1h Special.\ lild. campaign, %ith publicity empha-
test nia@ketinv exercise. that the Special Mild. launched at the sizing its high-qualitv appeal.
group entered the U.K. tracle beLinning of this vear. is a-i 34 Then. in October last year. Kent
throijut, the kina-iz, ie-arnen:. nim Ung @iize cigare.,ee wit?. Vir- Xing Size was launched, follow-
enjo%iny, a grti\%ing V;ni,-i tobaczo blend izi--ine alow ing a compiete reappraisal of Kent
popular-tv %%i(h Brit@,h smoker, tar Target tar le\el is 8 brands after BAT took over mar-
The peirheid was anJ millisn-ams and :arec! nicotine level keting and distribution in the U.K.
ititernai:onal Icni-nN zicare-,- v; 0.i me per citzarcu:. The new Kent Kiniz Size is an 84 milli-
tr-)m rh - How;e of qiate E\pr;.,,, iatinc ed wit the help mcter length cigarette With esEi-
,rand \xa.,
a name %%hich %%-i-, al- ot -p2neroti; trade bonuies. eve- mated deliveries of 9m2 of tar and
mokcr@ c.11 @ing point-ot'-,ale Material. I.Orng of nicotine. Manufacture
(8rand, under 0.a, naine had be%,-n and a @:trnne press and poster was undertaken at the Liverpool,
-tising carnpaig
,Ad in :'%! L K. h% L A. @'j t h T - w % e. P. Therc %cre England. factor-. of B.A.T (U.K.
Nac@:41 C , until the!x, 1941".) -,;,o next pack" coupori.@, and Export). The new brand took
nie - vn7ee P, @:,- -,ratio nar% trials,,: each :Ticket. its placc aloneside Kent de luxe.
BAT Industries document for Province of British Columbia 23 April 1999

tne 100mn international length
brand marketed by BAT. Nar-
keting and distribution of Kent
brands in the UA. had been aken
over by BAT in July, 1979. ending
the agreement whereby ITIL had
previously marketed them. BAT
had purchased all the overseas
interests of Lorillard, including
Kent, in 1977).
Kent King Size represented the
first major U.S. type cigaretEe
launched in the U.K. in the low tar
sector of the market.
So, in [as than 3 years' iii-ne, the
BAT Group has built up an im-
Port-am, presence in the hi-hi,. -com-
PetiMe United Kingdom market.
U.K. market director Gordon
atson sums up, by saying: "We
have, in the hre-. years since our
@aunch. set up a full U.K. mar-
keting and sales operation, estab.
fished a nationwide distribution
network, and launched a range of
successful brands under the Three
Fives, du Maurier and Kent names.
BAT has already established a
firm business base and we intend
to build on :his both by concen-
crating on existing brands and by
Introducing new brands. Our
strengths-apart, of course, from
the backing and commitment of
the BAT group-are an excellent
range of brands. a fully profes-
sional approach to sales and mar-
keting, and above all a determina-
cion to iucceed.
BAT's U.K. activities form part
@ a
Of the operations of B.A.T (L.K.
and Export) Ltd., which became a
separate company in its own -istht
in 1976, as part of the lead-Up to
the U.K. market assault.
It operates out of an imposing
I! -story headquarters in Woking.
Surrey, England. and is well staffed
with all the expertise necessary to
manage the sales, marketing, and
support services for both export
and U.K. business.
Using major man
facilities at Southampton an@
Liverpool. England, BAT ac-
counts for well over one-third ot .
direct U.K. tobacco exports, with
its range of products reaching
over 150 countries around the
world.
IN;
BAT Industries document for Province of British Columbia 23 April 1999

SATt;S Inc.. Tobacco Division.
:V.G .-:is Z. a:3.
.-t. Az,:,ucr-y -%C202.
'J1 S A
British American Tobacco Co. Ltd. Brown & Williamson Tobacco U.S.A,
Wes:Ttnver 1-louse. - 'Aiflzanx 16COV.1esi - '! Slree'.
_:ncvi 5711PI-E. . _Z1,151-4 4C' .01
u S.A
Export Lost Tob&CC* Co-
B.A.T W.K. and Exporif Ltd.. 1,60"Alest Le,;It Street.
E.xcc.: -cuse ?.'oo-. P 0 ECA Z72' ',
Sur,.iy 3LI21. 1Y6 Sicnrrcrc. vir;ima 22261-
Eng-ar: Directories U S.A
PRINCIPAL Latin America British-Arrierican Tobacco Co.
& Caribbean Barbados Lid..
SUBSIDIARIES PC 3CA '07
Cia Noolliza Piccardo SvC;e'.-..-jr
S.A I.C.I.F.. Samac:s
Europe :asi;:a Zorec -:S;
'COO Aires Demerara Tobacco Co. Ltd..
A.TR*n*Iux S.A.. Argel: =0 SCx 'a 262.
1q1:e ze -(:ninch :8 GaCfqe"'.Vn.
13.',^EC Brussels. Cia Souza Cruz Industria 9 GU-Jana
Comercio.
-Zaixa@:S:al '6C-::-:0 The West Indian Tobacco Co. Ltd-
Jersey Tobacco Distributors Lid.. P. c 2e . ar at ro, DC Box 177
Rue cis =,es 7,ac;r.; Esate. adz Pof-V Scairl.
St Sa-ocr Trinicao
@erse@ Reputl IC Co..
ACarazz- :96. Asia
Sari @Cse
B.A.T @Cyprus) Ltd.. Bangladesh Tobacco Co. Ltd-
PC SC4 '563. PO EC% 392.
NiCcls;a. Cigarrena Morazan S.A.de C.V.. Dacca Z.
Cyrrii -Xcaraz: DcstalM-3. Bangtacasn
Suomen Tutpakka 01Y. Sa.11 Sa..acor.
E, Sar,aczr British-American Tobacco Co.
PO SC% , 19 (Hong Kong) Ltd..
C0211' -eisinki 2.I. Tabacaisra Mordurena S.A.. GPO Box 5.
Finiar.@. Acafla':2 DOSal 6.: HongKong.
San Zec-_- --ula.
B.A.T,' .1gareltan Fabriken G.m.b.H.. Hanc,ras P.T. SAT Indonesia.
P125:12,C!, 1-00660. Post Sag 7S.
2COO @-amzurg 36. Tabacalara Nicaraguense S.A.. Jakarta.
Germ; rv Apartac: '049. Pusal.
Manag-.a Irconesia.
arifish-Amorican Tobacco Co. Nicara-;-_a.
(Ne,tefland) S.V.. Malaysian Tobacco Co. Berhad.
P: St E c X jCO 1, Tabacalers IsImena S.A.. Po eox Is--
Acar'az: .4-3 Kuaia LurCur 07-01,
a3rar i A. hlaiavs-a
:;e-:@:,a Parara
Pakistan Tobacco Co. Ltd..
Henn Nintermans Sigarentabriken B.'J.. Britisn-American Tobacco Co. Ltd.. PC 2C. .160C.
N.e-j.-. S,'36, 75. PC 3. -,aracn- N;
E-trse- 03r3r-al ZZ-ZUILI. Pax-van
ho,ar S'r-r-a-e
Singapore Tobacco Co. (Privatep
S.A.7 Suisse) S.A.. Cia Anonerna Cigatrera Sigott Sucs.. Ltd..
Case -,,.3ie Ar.", Acar:3c: 'a& Max...je ;;3cac.
-e-1va -15 PO at: X M'-; CN
S.-, -Ili
BAT Industries document for Province of British Columbia 23 April 1999

Ceylon Tobacco Ca Export Leat -roacco Ca. Canada
PO _2CA of Africa Wvt.i Ltc..
:: 3 JA J-92 IMASCO Ltd..
Sri La@-,a Sa . .:@r@l Z Zi@, BCA d8c:
'Aontreai PC
Atrica -@;ar aca
New Zealand 3C 3L-
B.A.T Kenya L:d..
PC SC., :Iroc WD & HO Will s (Novii Zoaianc,
Ltd.. Chile
PC BOA 'A
Au-_.-ianc 1j--jZc_,.arc. Cia. Chileria it TaVacos.
The Monrovia Tobacco Cor;i.. Castile 267-'.'
PO Scx 1.922. Czrreo 21
mcn(C"li.. Sanuaqc.
Literia Chile
B.A.T (Malawi) Ltd.. Principal Trade Denmark
PC Box -Zs.
Slanty,e Investments Skandinevisk Tobakskompagnt AIS
Maia-si. rocartsvele- 4.
Ontish-American Tobacco Co. United Kingdom KD-2360 Socarg.
(Mauritiusi Ltd.. Denmary,
owl', PC 90A '01 Molins Lid..
;1cr--ot. s. 2 E',eiyn Sireet Germany
MaLM:J 1 4:7coll.
S E C: H Horton A.G..
Nigerian Tobacco Co. Lr.. 4 D'Ussef-::_-
PO BOA 37 Australia Am Seeste-
L.j (; - s Gerrany
Nigeria. AMATIL Lid..
Aureol Tobacco Co. Ltd.. GPC Box 1-:5. Ghana
Sycney,
PO Box , 09 Nev. Scutt, %Na-es V.'01 Pioneer Tobacco Co Ltd..
F,eetown. Australia
Sierra Lecre PO 13C x 5__
Accra.
Untied Tobacco Co. Ltd.. Brazil Ghana.
.1.4ain Pev RcaC.
Inct.sTria PO Box r_C85- Aracruz Colulose SA., India
Incus'na 204' Z. Avenida August: Siierc
PeCU131W at Sout'i 4111C3 NC J. 5th Floor. I.T.C. Ltd.,
Flic -,e Janeiro.
PO Box $9.
B.A.T Zaire S.A.R.L.. Vervejana Reunidas Skil-Caracu SA.. Calcutta !5
Boste Pc stale 62' India
Kinsnasa. RtaMena Sarretc No -Z.
qeoublique -ze Zaire Pic ce Janeiro.
Bra:-' Mexico
For SAT Zambia Ltd
conta:1 BAT Zimbabwe Lid. Polo Inclustria o Commorclo Ltda. Empresias La Moderna SA de CV.
call Praia co F:amenS:- t54. Ave. Franc:SCD!.
BAT Zimbabwe Ltd.. 5th Fi0or Mac aro, Pie. No. :750
PO Box i87 Rio ce Janeiro. Monterrey.
Sa1.stU--j._"1r-iCaC-.ve. Braze N.L. Mexica
C:)
BAT Industries document for Province of British Columbia 23 April 1999

13-AT
Germany 1: Production facilities
00_@,
adirsE tn%estmenr prioriv, for
AsM Germany is zhe moderni.
zation of facilities for tobacco
process.ne andcigearette manufac-
:ur,-. because only the most
-nt. idern machinery a\ailable is
,d cnou-zh to ensure a high.
quality product manufactured tin-
der cind-tions of economic effi-
,:;encv.
Another of the company's
investment targets is to effec- a
marked improvement in the
quality of the working environ-
Ment. Sp,:cific targets include the
rationalization of planning and
lav-our at the overall plant level:
better siting of the individual
machines: and improved location
of contrcl functions and super-
vision facilities to aid operation
and wrvi:ing.
The !a%nut of the new machin.
er% for manufacturing and pack.
aging ciprettes was therefrare
,tesis gried To allow for a lot of open
-ipace. greatly facilitating super-
@ision. oreration. and servicim.,,
The stiff @%.ts encourilzed to
zake an part in the detailee
desi,mim- -if work areas and their
mc-lifies. Valuable ;nout from the
,.%(Irk for.-_- al-,o went into the
rn.triv ni.,asure,; for impro%ing
4ttaiiltv, -,.ise of operation-i ant_`
machiiie praice%%eN.
and safer%
BA T Ahrensbur,.r. One of the
r-os- important projects corn-
pleted at Ahrensburg in recent
years (it was finished in IQ-qi was
the construction of the enlarged
buildings designed to house new
tobacco-processinQ facilities.
Another impro\.emeni :fired at
opurnizing the flom.- of materials
within the plant %%as the installa-
tion of a new bulk transport
system in the cigarette manufac-
turin-e and packaging section.
Following the compieion of
work to extend the boiler house. a
new boiler plant designed to burn
solid fuels came into service. This
type of boiler permits greater
flexibility in the use of alternative
energy sources. including refuse.
which can be burned and "re-
cvcled" to generate steam.
And in 1980. on schedule. a
hi2h-densitv -archouse facility
was completed at AhrcnsbL1-.-Z. for
soec4allv developed for -he in-
dividual processes involved. and
these soon pro%ed their \%orth in
operation.
The reconstruction of the filter
production unit was completed in
ON. The machinery has been set
out on an entiTCh . new ?rinciple
evolved by BAT itself.
After a construction time of
only three months, BAT Bayreuth
was able to hold the "topping-
out" ceremony for its ne-,%
hi2h-densitv storage fae;litv. Bv 1,
the end of the vcar the shelving
had been installed. along with the
relevant machinery and conveyor
system. This made it possible to
start using the ne%% storage
facility much sooner than had
been planned.
Each of the new high-density
Warehouses at Ahrensburg an@
Bavrcuth has a maximum storage
capacity of some SOO million
cigarettes. A section of the
the iroraae of -inislied products. Ahrcnsburg facility is also used zo
BAT Bavrezith. lhe tobacco- store advertisin2 material. This
proces,;ing facilitte-; at th., Bav- means that the operating range of
reuih plant al-,o underWenr -MOd. the %varehouse-the area it is
ernizarion in rec;!nt vears. As a capable of ser%icing-can be NJ
-tended b% approximatc!v CD
resith it is no%% ptaNs -te it) ex
produce Cut tob,-.cco of a much 330-40":). All the normal ware-
more cons;srcm qualit-- [hap. housing functioni. -iuch as iorrin- I_J
befor-c. A -,crie@, of the %hipping, nations as thing: L-1
unrest s,. ; t e ri,, had b c arrive. air flicking the pallets and C1%
Uri
BAT Industries document for Province of British Columbia 23 April 1999

U
r ::ho Is 3;,7 .4hr,?nfinurg. ;rcw i, i-
UCIjQn ana Manufac!unnj !ac:' -t$ w,
7 lh; 7" 1@: OaCKgrounC ana rntaClogrour- Ina
n the lortqrounC. lhe Storage '@c O,es
..7 J.': a! CoMptex maS COM;Iletp@d n !@7- '-@do
7 :77
I: y. j I,,,. !12-11. - 0n-:,:,_-,.,:L,. m '..:%:_7 @N
10',O. OnL'-' t,%: J.: -!@v 'itin'.bt:r oT
@-Il! -%a-, abic 7 z-,.iu,, rn e au
norn-al Action,,. Al
7 -
-knar! fror- rhC 7Q-_%)n-,:7 ..':OIL .:L aiso %n,,L! t in
nr ;:ict;;tv a-, the Bc:-;:n %%ork OUE LLE the -i :,:V
tull% @iperationa, in newcantetm -,he te cor.
:7 C Of the year. and tht-ru firie. the canteen Z; n.:: n j! A,.'t'-, j h,-- iafe: .
n, p r.) % L, n t
7. . 7'@7 t h are beim! 71,'dC-Si2nCd ZO Pr ex,)ert".
Of the @,.,nre-zes more eff!e:cni Ter@e.:::7 -,a t _- y e j u : -j -
2- %7._;@-. inc. zn the mwr@@n-2 As in nre@-iuu-. ,:ears. rz-!,. are a@-:--, nor, em.-ni
% de to reL1',.__ Ill..: -, te -wr:i L%,a, an,i
ior @.zurf. Rc\.'w!it effor-s . e-e ma
:mprol, ei@. le%et of noise -,U C
.,en,,ion Ot !II:! "--1[7':f z'- c,, ir-. :t,ni:)an% drl.@-k r 11, Nhloul,; ako
n g ;n,,z:i!1a- nld,;
mn. :%ton,)t%e e@.Demence I r n -.-(I -
Sl%jr, Ill.- Firm
area. --%'1hi;t: at Elie iaw.;:
L'7=11%M2 !he r r%i,:nine7,-
@o7 ous andl
;r,,7iiui-.,-ns. In io
V
CN
close
BAT Industries document for Province of British Columbia 23 April 1999

A El k-
Germany II: Postwar growth
of foreign business
cold, C,
n 1949, hen the Federal Repub-
ilic of Germany came into being,
BAT's export sales totaled 14 mil-
lion cigarettes. By 1979. this figure
had grown to something like 8.4
billions remarkable achieve-
ment by any standards and reason
enough to briefly review the story
of the last 30 years.
In 1949, the company's foreign
business basically consisted of
duty-free sales: and since there
was verv little civil 2viation traffic
at this time it was largely a
question of supplying the ship-
ping lines. The popular brands of
the dav are almost forgotten now.
How many people stili remember
Old Joe. for example. or Stapps
Blue and Stapps Red? Names like
North State and Gold Dollar did
not appear on the scene until a
few years later. while -,he leading
BAT brands of today were still a
Ion wav in the futu-e.
9
Up unt:l 195 7 or so, the year in
which HB first went an sale in the
export riarket) BAT's annual
export sales did not exceed
25-30 bill!on cigarettes.
Trade follows tounsm
The big change carne with H13.
The gro%% rh in domes-fic sales of
the brand created excellent op-
porrunitics for export, since it was
to be expected that German
smokers who traveled abroad-
which in those days usually meant
Austria or Switzerland would
welcome the chance to buy their
favorite brand away from home.
For many years the satisfaction of
this new demand was the central
objective of BAT's export strate-
gy. The spread of the tourist
industrv into more and more
countries and the growing success
of HB led in time to the creation of
a genuine export trade alongside
the existing duty-free business.
Expansion was rapid. and by 1965
foreign business had attained an
overall volume of 540 million
cigarettes-300 million in exports.
and 240 million in duty-free sales.
The growth in exports to Italy
was particularly gratifying. From
a total of 240 million cigarettes in
1966, they had increased to
1.35 billion bv 1969.
Meanwhile. the company's for.
eign business interests @ad ex.
panded to take in a third area. the
manufacture and sale of cig-
arettes under license. The first
licensing agreements were con-
cluded in 1961 for the manufac-
ture of HB in Switzerland and
Holland. and in 11304 a similar
agreement was reached with
Austria.
Other countries subseouentiv
added to the list were Yugoslavia.
East Germany. Bulgaria. and
Greece. and b-, I%9 sales in the
license business sector had grown
to 840 million cigarettes. This
brought the company's foreign
business for the ve' ar-i.e. the
sum total of exports. dutv-free
sales and license business-to
more than 3 billion cigareqes.
As a result of this expansion in A%
foreign business. coupled withw.
the company's growing involve.
Tnent in other markets. certain
changes in organizational struc-
lure became necessary. This led
in 1971 to the formation of a
separate company. BAT (Get-
many) Export GmbH. which took
over responsibility for BAT's
foreign business.
Foreign sales received a further
boost with the launch of two new
brands. Krone and Kim. In 1970
alone. Krone sold a total of
100 million cigarettes in the
export sector. T@e success of Kim
was even more dramatic. and it rl@j
soon became clear that the CD
brand's capacity for growth in the -
international Market -as nothing '-4
short of remarkable. V1
Kim sold ex-.reme!v well in C7%
BAT Industries document for Province of British Columbia 23 April i999

[t2lv. it first becarre-
a'labie
av 1 .n 19-5 after a great deal
of preparatory work on the
market. Sales of Kim increased
far more rapidly than those of
Krone. which had come on the
market much earlier. An effective
and well-planned marketing stra-
tegy accelerated this growth still
furcher. and in 19-16, only one
vear after its Italian launch@. Kim
sold 8-40 million cigarettes on the
Italian market -
Thanks to this outstanding
market performance by Kim.
BAT's coral volume of foreign
cigarette sales exceeded the
-4 bfilion mark for the first rime.
The vears that followed saw a
rapid expansion in foreign sales of
HB. Krone and Kim. the three
brands marketed abroad by BAT
(Germany) Export GmbH. Vurther
licensing agreements for the
manufacture and sale of HB were
concluded during this period.
Arrangements were also made to
begin licensed production of
Krone in Switzerland. because of
the name and general brand
image. sales of Krone are largely
limited to German-speaking coun-
tries.
In the three consecutive vears
t9--. 19'7:3. and 1979 foreign sales
as a whole increased annual1v bv.
one thousand million cigarettes.
which brought the final total for
19-9. after 30 years of foreign
business. to 8.4 billion.
This success was made possible
oniy through the rational step-b, -
step expansion of the company 's
foreign business. Having begun
with the dutv-free business and
sales co German tourists abroad.
BAT took the next step at the start
of the 19-Os by setting up a
separate expo" marketing or-
ganization. 3imed specifically at
the forei,,n consumer. Althoueh
German smokers traveling abroad
continued to represent a signifi-
cant salei potential. it was soon
recognized that this was not in
itself a sufficiently broad base on
which to build up a dynamics
expanding business.
The logical conclusion %%as to
appr-ac?i new- markets and new
tarvet groups-which is %%hat
. U
BAT now did. progressively more difficult in niany countries
extending its marketing operation bv the existence of gavernment
until it reached beyond Europe legislation regulating product and
into other continents. package design and the content of
In the face of increasingly fierce cigarette advertising.
competition on the world's inter- Despite these difficulties, the
national cigarette markets. manu- future of BAT's foreign business
facturers need to remain highly looks encouraging. and a sales
flexible in their approach to botii target of 100K_s ciparettes seems
product and communication stra- well within reach in the near
tegy. The situation is made even future.
BAT Germany, 1980
BAT Cigaretten-Fabriken GmbH, Hamburg, second largest
manufacturer of cigarettes in the Federal Republic of Germany,
sold over 500 million cigarettes more at home in 1980, thus
increasing domestic sales to 35,300 million (34,800 million in
1979), a market share of 1-1.8076 (28.'Fo).
Consistently applied marketing for the main brands and the
international brands has been decisive in achie@,ing this. The
particular strength of the enterprise lies in its extensive range of
brands, containing numerous types of taste and price classes.
There is no doubt that this has decisiNelv contributed to BAT's
stable marke, position.
The value of sales (including excise duty but excluding @,alue-
added tax) rose by 100 million 3eutschmarks to 4. 100 million WA.
Total sales of all factory-made cigarettes in the Federal Republic
of Germany rose in 1980 Lo 1:7, billion cigarettes (I'33,600
million).
The most popular German cigarette for the past 20 years. HB,
clearly maintained its leading role, with sales of '3.600 million
cigarettes. The result for 1980 showed a slight falling-off from
14@Vs 13.700 million. HB's market share was 18-V'o (19.11ro).
The second most important BAT consumer brand was the
regionally distributed Kurmark Filter. With a growth of 100 mil-
lion, it increased its annual sales to :.200 million cigarettes. with
arnarket share of 1.7307c.
K-M has continued to improve its leading position in the
market of cigarettes for women (market shar-e 1.20%) by an in-
crease of more than 9074 to 1,500 million cigarCtEeS (1.37 0 million).
Krone maintained its market position with a market share of
3.1076 and almost unchanged sales of 3,960 million compared to
those Of laSE year.
BAT offers the smoker some interesting alternative. Benson &
Hedges and products from the Kent and Pall Mall families sold
more than 2 billion. Pall Mall Plain and Benson & Hedges both
showed a particularly favorable development; almost 500 million
cigarettes each of these brands were sold. Growth rates for these
brands last year were between 100'a and 2501a.
The French cigarettes, Gauloises and Gitanes. enjoy great popu-
larity. With sales of 940 million cigarettes, this special range of
French products has found a secure position on the German
market.
For a number of years. BAT has been noticeably expanding
its market activities in the fine cut and smoking tobacco areas.
Eight different brands are being offered currently. In the fine cut r11J
class, Gold Dollar is the company's most successful brand. C)
Sales of rine cut rose by lSr'o to -83.600 kiloi (665,000 kilos).
The same rate of growth was achic%ed for pipe :obaccos.
C11
-4
co
BAT Industries doCUrnent for Province of BritiSh ColUrnbia 23 April 1999

AM 1k
I&VYA&A
-BAT.
Germany III: Research and
Development Department
ith the foundation of BAT's
ith the fc and Development
Department in 1954, one of the
very first research facilities of its
kind was !,et up within the Ger-
man cigarette industry. Through
its pioneering researca work in
many areas. and above all @
its remarkable capac . cy r . or Lnno-
vation. the department has played
a leading role in the de%e!opmenE
of tobacco science and :echroloev.
In the field of -product, develop- thereby opening up a %hole new
ment BAT's Research and Devel- market. Another example is the
opment Department has been re- brand Auslese, which came on the
sponsible for many major contri- market in 197-1. IL Was the first
buLions during this quarter- nationally marketed cigarette to
century period. The development be labeled nic it
of the "mild" EYPC of cigarette The department has also done a
is one example, as it was thanks lot of behind-ihe-scenes work in
co the hard work Of its Research areas such as production and the
Department that BAT Was able to marketing of new products. in the
bring out the first low-nicotine 1960s, for example. a research
filter cigarette as early as 1959, team achieved some remarkably
successful results in the breeding
THE B.A.T TRADE INSTITUTE of new, pest-resistant tobacco
plant varieties. Other research
he work of the B.A.T Trade Institute, which provides further projects have yielded important
Training for manapment and staff in the trade, is being carried new knowledge about tobacco
on with great success. There is now a growing tendency to involve smoke constituents and about
members of B.A.T's sales force in the work of the Institute. where ways of reducing them effectively
their knowledge and advice arc of great value. without impairing taste qualities.
Demand from the trade has increased so sharply, both at home
Habit monitor
and abroad, that the Institute is nearlv alwavs booked out a vear in
advance. Since its foundation in 19671, approximately 2.000 days In recent years, the Research
have been de% oted to seminars, which have been attended bv about Department has not only furnish-
20,000 people in all. ed the industry with valuabie new
Figures such as these demonstrate the wisdom underlying the findings on smoker behavior but
basic concept of the B.A.T Trade Institute and its practical also developed modern methods
operation. IL is a remarkable institution, not only in West Ger- for the study of habitual smoking
many, but in the world at large. The object Of its various -methods which have since gain-
seminars, courses. and other teaching programs is not simply to ed world-wide recognition and
impart knowledge or instruct people in specific techniques; its acceptance.
concern rather is to contribute to human fulfillment by showing New policy guidelines were laid
people how to develop their potential and use their resources of down when the department was
creativity and in [Cl I to full ad%anEage. reorganized in the autumn of
197 7.
Aided by %%ell-kno%%n scientists and "practical" people, the
Institute offers a wide variety of instruction programs. many of The updated research program
them aimed at developing and improving Organizational structures. included various projects de-
Various approaches to the problem oT ta@or economy are con- signed to optimize the market
sidcred at management seminars. and %% ork is also done on the performance of certain brands.
improvement of communication techniques. Other courses are together With a number of new
given on the subject of work methods, with the objective of ex- priorities determined bV the de-
Lending managemen,. theory through contact with practical mands of today's market.
examples. Because the various research _N1
programs within the BAT group
cl-
BAT Industries document for Province of British Columbia 23 April 1999

are intertinked and coordinated on
an international basis, it is pcs-
sible to incorporate the most re-
cent findings in all the relevant
scientific disciplines at the project
development stage and to translate
the results into new products and
processes. A rationalized system
of planning and supervision en-
sures that all of the Research
Department's activities are co-
ordinated with the needs of
production.
In order to optimize the flow of
information within the company
and to ensure that the manufac-
turing division is kept supplied
with the data it needs relating to
tobacco research. product devel-
opment and production methods,
a modern system for the proc-
essing and storage of information
was set up in 1979. The world-
wide scope of BAT's operations
is an enormous advantage in this
respect, as it, gives the compan%
direct access to a wide range of
information resources.
In order to protect the fruits of
its research, development work,
and production kno-A -how. and to
maintain its competitiveness in
the market, the company took
steps to revise and tighten up its
policy on industrial patents.
The major advantages of these
measures are:
-improved flow of information
at all levels of operations;
-more effective monitoring of
projects in progress and optimum
utUizaaon of all available resources.
The Research and Development
Department is thus supplying the
company with the know-how and
resources necessary in order to
safeguard the market position of
its products, through a continuing
process of adaptaEion and im-
provement.
The responsibility for imple-
menEing new developments in
products and man u factoring p roc-
esscs, and applying them ro pro-
duction on the factory floor,
belongs to BAT's production
technology deparment. Here,
work is carried Out EO perfect
existing manufacturing methods,
while new MCEhods are developed
1.
and tested before they are incorpo.
rated in the actual production
process.
Each project is Systematically
broken down into the different
areas of work so that key data
relating to each project-goals,
schedule, costs-are always read-
ily available, thereby simplifying
the task of project coordination
and control.
The staff that works on these
projects remains in close touch
with the Research and Develop-
ment Department on the one hand,
and N47ith the production side of
the company's operations on the
other. This makes for a valuable
blend of theory and practice.
BAT's various manufacturing
plants assist directly in the execu-
tion of these projects by supply
in& resources and manpower, and
their cooperation makes it POS-
sible to plan operations well in
advance. It also means that any
improvements can be incorpo-
rated withoUL delay in the produc-
tion process, all to the immediate
benefit of the company's products.
17
C:)
BAT Industries document for Province of British Columbia 23 April 1999

Souza Cruz means
cigarettes in Brazil
By Jonathan Bell
ouza Cruz has been in Brazil
List of Principals ouza 1915. In 1979 it was the
nation's second largest company
Alan Charles Long, director and president, Kenneth Murray in terms of turnover. Souza Cruz
Sumner, director, vice president and superintendent; Bruce alone accounts for 29476 of all sales
Randolph Strachan Donald, director of finance and marketing; LaX income from Brazilian indus-0
Directors: Kenneth Henry Lionel Light. Trevor John Green, try. Although it controls an awe-
Michael Edward Crawshaw. Nelson Ben Alfred some 83ro of the domestic ciga-
rettc market and roughly 2507o of
Mic.nael Heath, Robinson Da Silveira Gil.
the unmanufactured tobacco ex-
Major Brands ports, the company is also rapidly
I .Category K: Charm. Hilton. Pall Mail. Advance. diversifying into non-tobacco
2. Category J: Carlton, Hilton, Minister. Carlton Lights. areas.
3. Category 1: Minister, Advance, Luiz XV, Albany, Consul. Souza Cruz success, however,
4. Category H: Hollywood. has been built on cigarette sales.
5. Category G: Continental. In 1980, total unit sales reached
6. Category F: Wembley. 117.7 billion. The top scilin$ ciga-
7. Category E: Arizona, Continental. Lancaster. rette in the country is the com-
pany's Hollywood brand, with
Major Brands Sales 1980 1980 sales of 41.9 billion. Hollv-
1. Hollywood - 41,0.64.000,000 wood is bought by more than a
2. Arizona - 23.418.000,000 quarter of Brazil's smokers. Souza
3. Continental - 20,881.000,000 Cruz offers 19 major brands, in
4. Minister - 12.5-93.000.000 a full range of styles. The low ta@
segment accounted for only 31% or
Total Sales 11980 the market in 1979, however, the
1 1 7,720,000,000 company has placed three brands
in it with heavy advertising support.
Clearly, the company is corn-
Loaf Sales Outside of Brazil
mitced to product variety and mar-
keE sophistication. It is also sensi-
Year USS tive to the fact that 751mo of its
1970 215,735 stock is controlled by the mother
1971 1,526.565 company in London-something
1972 7,994.827 Estimated that might not be acceptable to
1973 14,051,686 1980 72.000,000 Brazilian nationalists or to foreign
1974 11,179,039 1981 99,000,000 observers critical of large multi-
1975 20,980.331 1982 109,000,000 national cigarette companies oper-
1976 29.074,863 1983 120,000,000 ating in developing nations.
1917 43.810.083 1984 130,000,000 Hence che company's efforts at pQ
1978 54,436.000 maintaining a low profile and Pro- C-.)
1979 66,772.626 ducine such things as low-tar ciga- -
rettes in a nation that has little -,j
use for Ehem-anEi-smoking ef- L,1
I forts in Brazil at the present time Cy,.
BAT Industries document for Province of British Columbia 23 April 1999

Leal Production For Souza Cruz depends on the -government's atti-
Year MoGrandedoSul SantaCalanna Parana Total Procluced Value in tude toward raising prices. Until
Billion Cr$ 1976, prices were allowed to tail
1979 ",475 98.660 38.131 3 486
1M. costs, reflecting the inflation spi-
50.200 88,330 31,630 170.660 5.415 ral. The practice was disrupted.
however, when a 14-month price
Farmers By Producing State Under Contract freeze was enacted. Responding to
Year RiaGrandedoSul S&nt&Catadna Parana Total a crisis situation in the industry,
1979 14124 26.110 15.273 56.207 the government again changed
1980, 12,984 22.370 13,376 49 2:0 policy and permitted three in-
creases in 1979. totalling 10407a.
Land Area of Farms Assisted By Company In 1980 a further 20011i increase
Total Land Are@ Aces Plariled in Tobacco was granted, although the -manu-
Y*ar Ric Grande do Sul Santa Catanne Parana Total facturers had asked for 7017o. This,
1979 1.216,884 (ha)
28.052 150,487 19.71@4 98.273 plus the 40076 granted to date for
1911301 1,143,974(ha) 26.371 47,462 le.-= 92.385
.2 1981, may further cool consumer
interest.
Productivity (kilos per hectare) Despite its concern for concin-
Year Arnarelinho Virginia sudsy cornurn mean ued strong sales, Souza Cruz clearly
978 1,711 1,570 1,452 1 !:I W6
has no choice but to continue
1979 1.972 1.671 1.77' 2=1 1.845
C, suring for additional, and reg-
19w, 1,90 1,777 1,809 1. 1,847 pres
'w,mated care ular increases. The company has
made statements to the effect that
could be described as mereiv northeast, to 551ro in the south.
the future of the Brazilian ciga-
nascent SaJcs have been bouyed consider- ette industry hangs in the balance
Keeping a IoLw profile has not ably by a surge in Brazilian smok- '
if the price-cosl: squeeze is not
been easy for a giant such as Souza ing population and consumer eased.
Cruz. Until 197", the manufac- power during the 1970s. Up to
turer is said to have made a con- 1979, Brazil had, in fact, one of Domestic lost
scious effort to hold its market the world's fastest growing rates
share down to 700%. This was of consumption-toEal sales dou- The profit pinch concerns the
deemed wise as there remained bled in the decade. More ciga- company for a number of reatsons,
little if any foreign competition rettes arc now sold in Brazil than one particularly is its responsibil-
after Rothmans pulled out of Bra- in the U.K. and. according to one ity for and dependence on domes-
zil in the 1960s. report, the average Brazilian is tic leaf producers. As already
In the early 70s. however, both smoking as many cigarettes a day noted, the company is able to ex-
R.J. Revnolds and Philip Morris as a Frenchman. port some '15ro of Brazilian leaf
took up positions in Brazil. At But 1979 was a troubled year for production, besides what is con-
,?that, Souza Cruz lifted its scif Souza Cruz-cigarete sales ac- sumes for its own needs. This
-Nmposed restraints and swiftly tually fell for the first time in means that the company support -
took more market share. many years. This is attributed to ed 49,230 farmers in 1980, work-
It is reported that both Ameri- consumer resistance to a more ing a total of 92,385 hectares, and
can manufacturers are currently than 10001o price increase. The producing a crop of 170,660 kilos,
00-1 unhapp) with their Brazilian re- company has been caught in a seri- valued at 5.4 billion Cruzeiros.
sults, and one concern for Souza ous price-cost inflation pinch in a This large system of support
Cruz is that the company could nation where cigarette prices are for farmers is a reflection of the
conceivably be left champion of set by the government and have incredible increase in tobacco pro-
the field once again, but this time therefore become politically sen- duction in Brazil during the 1970s.
holding -nore than 800,'o of it-an sitive. One indication of this is seen in
even larger targeE than before for Despite its problems in 1979, the mushrooming value of Souza
nationalists and/or bleeding-heart Souza Cruz results show that, gross Cruz leaf CXPOrES-which stood at
critics. turnover rose by more than 50079. ci n ly SZ 1 5,73 5 in 197, 0.
Brazilian-owned cigarette man- Net profits exceeded S-3, 1.7 million. Export leaf value alone for 1980
ufacturers are barely holding on However, the company remains has been estimated at S72 million NJ
with a Ole mark@t share and cautious about cigarette sales and (it was S66,772.626 in 1979). The CD
their ofNring of brands is deemed profits in these early years of the leaf is shipped To 24 nations.
no challenge at all to Souza Cruz 80s. Sales predictions for 1980 The worry for Souza Cruz is -@l
supremacy. called for a modest ',.;r-o gain. that as the costs of farm produc- VI
Souza Cruz cigarette power Consumption growth is expected tion skyrocket. it is caught in a 01%
varies by region in Brazil from a to rernain'ow. bind to maintain farmers' earnings -4
98% share of the market in the The protil: situation of course -the company participates in the CIN
19
BAT Industries document for Province of British Columbia 23 April 1999

contract system, signing up the
farmers each year, supplying them
with everything from fertilizer on
up.
To administrate the system. the
company employs an administra-
Live staff of 35, has 30 agron-
omists, 70 coordinators and 700
agricultural instructors. The bulk
of the leaf operations are in the
states of Rio Grande do Sul, Santa
Catarina and Parana. Souza Cruz
maintains processing centers in
Rio Negro, Blumenau, Brusque,
Tubarao, Lajeado and Santa Cruz.
If the company cannot continue
to afford to support all its contracts
with the farmers, it of course loses
them-either to rival leaf buyers
or to rival crops. This could lead
to restricted expansion in 1--af pro-
duction. Currently, growers are
asking for a 20001o raise in leaf
0": red a
prices-they are being :e
100% increase. The company is
keeping a watchful eye or.'iEs leaf
operations, caught as it iS'D.'Lween
government price policies and the
evcr-climbing cost-o Niving index.
As with its contemporaries in
other western nations, Souza Cruz
has evolved a program of diversi-
fication to cue its dependence on
tobacco and cigarette consump-
tion. According to a report in the
Financial Times of London, the
company is directing 200) of its
current investment into non-
tobacco areas. The report adds
that eventually this percentage of
investment will rise to 50% of the
company's spending capital.
These invesunent projects have
included a grape juice concern, a
polypropylene film plant. and a
27076 share in a S617 minion cellu-
lose pulp project, Aracruz Celu-
lose.
This operation is said to be
the world's largest integrated pulp
and forestry project with its own
sea terminal. Reportedly, 18016 of
Aracruz's pulp exports-about
72,000 tons a year-are taken by
two B.A.T subsidiaries, Wiggins
Teape and Pirahy.
Jonathan MI is I editor of TOBAC-
CO INTERNATIONAL.
NJ
C@
@J
Qn
20
BAT Industries document for Province of British Columbia 23 April 1999

Wv4a
\\BAT -
And in America:
Brown & Williamson
n 1927, Brown & WiUiamson To-
bacco Company changed its title
to Brown & Williamson Tobacco
J"orporation and became affiliated
with British-American Tobacco.
BAT acquired B&W as that
North Carolina company's busi-
ness was steadily expanding. In
1925 , MA' ha@ acquired Flynt
Tobacco C,). and its Sir Walter
Raleigh pipe tobacco brand: and
in 1926 had purchased R. P.
Richardson Co., a manufaurer of
granulated smoking tobacco. Be-
coming afflated With BAT may
have been -.he last necessary step
preparaton to a major marketing
venture. In 1928, B&W made its
initial entry into the booming ciga-
rette market, with its new brand,
Raleigh.
The BAT takeover came when
i C:&W's oritins wereahalf-century
old. T. F. Williamson, of Caswell
County, N.C., had formed a small
company ire 1876. to manufacture
0@1 plug. chewing and granulated
smoking tooacco
its two brands of plug, Red
Juice and Red Crow, and its Gold-
en Grain brand of granulated
gradually became well known
throughout the Atlantic Coast
area. Wagonloads Of them were
sold by salesmen in the mountains
of western Virginia, North Caro-
lina. eastern Tennessee, and Ken-
tuck-Y.
A@out the same time. William-
son's son, Robert, was employed
by a plug tobacco manufacturer
in Winston-Salem. Through his
business attivilles. he became ac-
quainted A - Eh George Brov. n. who
A *to
Willis the Penguin
was engaged in the purchase and
sale of leaf tobacco in the same
city.
Ge6rge Brown's leaf business
prospered until the panic of 1893,
when he found himself with
100,000 pounds of tobacco he
couldn't sell. At this point Robert
Williamson, experienced in the
manufacture of tobacco, joined
George Brown, whose experience
was in tobacco marketing. to form
a partnership for the manufacture
of plug and smoking tobacco,
They found a tobacco factory that
had fallen into desuetude. bought
it and its machinery, and set up a
business. Some three decades later,
its success was e\ ident: BAT pur-
chased a company on the upswing.
The following are some high-
lights of the subsequent half
century.
1923-Raicigh " I brand
was introduced. It was B&W's
first cigarette and was marketed as
a specialty item, in a waUeE-like
pack, at a higher price than was
asked for most competing brands.
In the economically depressed
1930s, the price of Raleigh was
lowered and gift coupons were at-
tached to each pack (with loose
extra ones in each carton). Spot-
ting a trend in the early 1950s,
B&W converted Raleigh to king-
size only, and hen introduced a
filtered version. An "extra-long"
model was marketed in 1969, and
Raleighs with louer tar content
were developed by the middle
19705. Today, Raleigh offers king
size (85mm) in Filter and plain
end. at 16 and 9 mg of car; and
long (100mm) at 16 and 9mg.
1929-B&W moved from Win-
ston-Salem to Louisville. Having
previously constructed a plant in
the Kentucky burley country, the
company then decided to establish
headquarters there.
1932-A second manufacturing
plant was opened in Petersburg,
Va.
1933-Kool was introduced.
With Raleigh converted to popu-
lar prices, iE uas time for another
"specialty" brand. and that was a
mentholated cigarette. Kool re-
mained higher-priced until 1940.
In the years that followed, it was
competitive, though still relatively
special and associated with its car-
toon mascot. Wiffie the Penguin.
But in the 1950S. a king-size and
then a filtered version were intro-
duced, and Kool began its move
2!
Uri
CIIN
BAT Industries document for Province of British Columbia 23 April 1999

into the ranks of the best-seflers. zational restructuring of 1974. mentholated. but a mentholated
For a dc,=de and a half, from the when Brown & Williamson Indus- blend -.was added;n 197 1.
mid-1960s until now, Kool has tries, Inc. was formed. to provide
maintained its position as third- management services to the oper- R&D at S&W
largest selling cigarette. It has, of ating companies Within the corpo-
course, gone through the long and ration. BATUS is now the top- Brown & Williamson's growth
low-tar ;tages. At present. Kool is leve! managerial en11EV for those throughout its history has been
available as an unfiltered 70mm companies, comprising tobacco, based. in fare part, on a philos-
cigarette: as king-size, filtered, retailing, and the paper trade. ophy of research and dociopment
mild, and "supertight"; and as While cigarettes are the dorn- -a constant seeking for new and
100mm. filtered, mild, and super inam items at B&NV (two others, better products, packages and ma-
Ught. premium priced du )-laurier and terials, new and better processes
1936-Viceroy was introduced new, ulEra-low Barclay, should be and techniques.
as a filtered cigarette exclusively. mentioned), other items, one of The research and development
Again, this was a "specialty" thern going bac@ to the original department at B&W is assigned
move by B&W: at best, one ciga- Williamson company, are still responsibility for developing
rette in a hundred sold was filtered. produced. There is, of course. standards of quality for materials
Within 20 years, the filter market Sir Walter Raleigh pipe tobacco, and for conducting product and
was considerable and B&W intro- bought along with Flynt Tobacco basic research. Procedures are de-
duced the cellulose acetate filter Co. in 1926. There are three veloped to make certain that all-
so-, as Viceroy was revamped. The brands of plug cheving tobacco: B&W products are manufacturer
extra-long Viceroy came along in Bloodhound ("A l5og-Gone according to he highest standards
the late 1960s, and in the low-car Good Chew"), B&W Sun-Cured, of quality and consistence. for fla-
stress af the late 1970s, Viceroy's and chat brand from 1876, Red vor. ar orra, burning efficiency,
entry was Rich Lights, in 8-4 and Juice. There is Tube Rose Scotch and all othercharacteristics.
100mm lengths. snuff-dry, mild, and sweet. with Among the many significant re-
1946-One of the largest leaf coupons like chose of Raleigh and sults of produce res'earch in recent
processing plants in the industry BeWr. There are ihree brands of times was the introduction in the
was opened in Lexington. Ky. rolling tobacco, introduced in the early 1950s. in cooperacion with
1960-Belair was introduced as 1930s: Target and Bugler, formerly suppliers, of the now widely used
8&-W's first low-car mentholated. plug tobacco brand names and cellulose acetate filter.
filtered cigarette. In 1962, it was brought out in 1931 and 1932; The research department con-
paired with Raleigh as a couponed and Kite, introduced in 1934 as the ducts extensive studies into every
item. In its two decades Of exist- only mentholated rolling tobacco, phase of tobacco. "from seed to
ence, Selair has been among the finally. there is Laredo, which smoke." The staff of scientists
ZO best-selling brands often. is a whole rolling kit. Laredo, and technicians working in the
19-7-Another cigarette plant, introduced in 1969, includes to- company's modern research
this one in Macon, Ga.. was bacco, papers, filters, and a spe- laboratories in Louisville is one of
opened. Its production target was cial machine for constructing each the major reasons why B&W feels
3.350 million cigarettes per day. cigarette; and cardboard packs assertive enough to describe it_1
1980-AATUS, Inc. was that hold 20 such cigarettes. The name as "the mark of quality in
formed. It grew Out of the organi- first Laredos, were filtered and not tobacco products.
BAT lnftStrift document for Province of Brifth COIUMbia 23 April i999