14
Tobacco
1. Let us now turn to Tobacco. Although the prospects for increasing sales
must be limited, it is essential to the success of the Group that our
Tobacco interests continue to provide increasing profits and a strong
cash flow for investment in other growth activities.
2. The key issues for Tobacco are that, (SLIDE XI):-
(a) We should play our part in opposing the anti-smoking lobby and in
defending the industry position in relation to product liability
legislation and litigation.
(b) We should continue to work towards establishing ourselves as the
lowest cost producer of quality cigarettes.
(c) We should seek to improve our market shares, especially in the
full price sector.
(d) We should put a high priority on developing and marketing
innovative now products which will enable us to strengthen our
position in the high value added segment of the market.
3. Although there bas been progress on each of these issues. much remains
to be done and I believe that the discussion of Thursday morning should
concentrate on considering bow we can be more effective in relation to
these four issues.
4. One aspect that may be worth further emphasis is the question of growth.
There is little doubt that the Tobacco market as a whole will be low
growth and this makes it particularly important that we should seek to -
at least hold and preferably increase out market share in the top end of
the market.
S. 'We must also soak to take full advantage of the opportunities presented
by the liberalisatiou of monopoly markets and from this point of view
Japan and China will be particularly Important.
6. Another aspect to In considered is the extant to which we can become
more effective in transferring skills and expertise from one part of the
Group to another, especially in respect of new product developments-
7. A key factor in transferring expertise will be the movement Of People
between businesses end hors again it may be worth considering whether
there is room f or planning to do more of this than we do at present -
S. There are already a range of projects which are being progressed through
the Tobacco Strategy Review Team including Expanded Tobacco, European
Manufacturing Rationalization, Coographical Expansion, European Tax
H-armonisation, Barclay and additional action that might be taken to
combat the anti-smoking lobby.
9. What we will be looking for this week are further ideas for new
initiatives that might be taken to Improve the profitability and cash
flow for Tobacco and to extend this Improvement into the longer term
future.
2
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all,
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NJ
BAT Industries document for Province of British Columbia 21 April 1999