10 COPUS MAY BE MADE SECRET
Tobacco Stratery Roview Team
@0001
A meeting of the Tobacco Strategy Review Team was hold on Wednesday, 26 th
F*bruary 1992.
Present Sir Patrick Sheehy, Mr. M.?. Droughts, Mr. B.D. bramley,
Mr. &.J. Pritchard, Mr. A. montairo do Castro,
Dr. R. Salter (Secretary).
In Attendance Dr. A. Schweitzer, Mr. I.E. Kohaborst (whole meeting) and
Mr. D.S. Watterton (items 24-48 only).
Mr. U. C. V. letter and Mr. J-L. Mercier mare unable to attend.
Dr. B. Schweitzer attended in place of Mr. Harter.
The Chairman noted that Mr. Rerter's absence was due to
exceptional circumstances and stressed the importance of
ensuring a full attendance at meetings of the Tom for which
alternates would not normally be accepted.
Minutes of the Previous Yaeting/mAtters Arising
1. The minutes of the meeting hold on 2nd December were agreed.
2. China la-organination : It was noted that the new Organisation to
serve the China market and long Tonj had been iaplesmnt*d:-
(a) BkT China is reopcmsibl* for the development of the China marker.. It
is operating but a now CEO for the company is still to be recruited.
(b) RAT long Kong is responsible for the long long and Macao domestic
markets and for duty-free sales. Mr. Barry will take over as
Managing Director of this company when Mr. Aitken retires in March.
(c) The Par East Sales Unit (FISU) is responsible within UTMM for
product invoicing and supply to BAT China and BAT long long.
Mr. Duncan heads the unit with Mr. Cunningham reporting to him.
3. An objective in setting up PESU was to improve the forecasting of sales
requireamts month by month to assist in planning and budgeting in the
production units. lowever, experience to date in 1992 bas been that the
call-off from Macon has been considerably lose than had been forecast.
Mr. Brauley will investigate the reasons for this and will report back
to the next meting on action taken to overcome these initial problems.
Varkettax lame@
4. November warketiag Seminar - it was noted that although there were
papers from Sousa Cruz and Tawsco, reviewing significant issues to have
emerged frm the seminar and recovown4ing action to pursue those, there
were no papers from the other operations. Mr. Irmaley, Mr. Pritab"d
and Mr. Zorter were asked to produce papers for the next meting at
which the Sao" Cruz and Imasco papers would &Lso be considered.
5. I.T. ia Sales Seminar : Mr. Pritchard reported that the seminar hold
in Louisville during February bad been very valuable as a mono for
exchanging information an the use of 1. T. in selling. Re bad been PQ
surprised by the extent to which I.T. systems were in use throughout the =0
Group and by the depth of experience which could be shared.
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6. Kay points to *art* from the conference had been the importance of
focussing an the users rather than the providers of the systems (i.e. on
sales/markating rather than MSD) and the need to establish both best
practice and the potential for extending the use of the data produced
(e.g. by the capture of data from vending machine sales, as practised by
Coca-Cola).
7. Hr. Pritchard will arTange for a summary of the main conclusions from
the seminar to be prepared and these will be circulated t3 the zembers of
the Team during March.
S. Marketing 'Information System : Mr. Bromley reported that an external
consultant 'mad been employed to assist in the impl tation of the now
marketing information system. The program* and allocation of costs had
been agreed with the other Operations and implementation was on schedule
for completion by the and of the year. The Chairman welcomed the progress
which had been made and empbasisod the importance of ensuring that the
system was functioning fully by the and of 1992.
Commetitor Analysis
9. Philip Morris : It was noted that a significant proportion of the
volume increase of 8.3% in cigarette sales achieved by Philip Morris in
1991 was accounted for by special business to Russia and the acquisitions
in Brazil and last Germany.
10. Profit margins still continued to improve both in the US domestic market
and overseas and there appeared to be continuing pressure an reducing
costs and 'improving cash flow. It was understood that all now machinery
purchases for 1992 had been cancelled. lowever, there were plans to
expand the Berlin factory to a capacity of 50 billion p.s. at a cost of
DR115 million. It was also understood that DM40 zillion was being spent
on upgrading the 12 billion Dresden factory.
11. Product development appeared to be comtred om low tar (including a now
dual concentric filter) and the campaign to establish de-uicotined
Cigarettes is &180 Continuing. At the @am time, Marlboro remains the
central focus of Philip Morris' strategy. especially in International
markets.
12. The Chairman noted that Philip Morris still had a policy of lobbying for
the highest possible proportion of specific exciss, suggesting that
expanding sales of full-rovenue cigarettes was still their preferred
strategy. At the memo time, they were also prowting lower priced
cigarettes, especially in Central and Ustern Zurope. What was not clear
was whether these were opportunistic sales or part of a sustained strategy
to develop the VFM segment of the market.
13. Mr. Pritchard said that the strategic direction of Philip Morris would
be researched further by Brown A Williamson. la will report back cm this
at the next mating.
14. It vas wttd that UTCY, in c=j=ctjan witb BATCo. would be carr7ing out
research into consumer attitudes to Marlboro in Germany. Switzerland,
Spain, Italy, Prance, Greece. SmSar7, Poland and Moscow. The results of N.)
these studies will be reported by Mr. Better at the September meting C)
of the Tom.
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15. UJ- Reynolds had experienced a downturn in profitability in the uS
doomstic wrke in 1991 where a key strategy is to concentrate an the nev
wrap. The main weaknesses have bow in failing to secure shelf space in
retail outlets and in the adverse reaction to the plethora of new
launches, including Canal Widas which require band stamping.
16. Despite continuing losses of market share in Germany and to clear thrust
in Japan, Thailand and other Asian markets. profits in the international
business have improved. Rowever, sow of this nay be due to loading. LT1-
have been active in Turkey, Poland, Russia and elsewhere in the CIS but
announcements of investment intentions are still largely tentative.
17. It was noted that Nabisco were active in Latin America and in addition to
purchasing Maguary, they were also potential purchasers of EverCrisp in
Chile. LIZ had offered to licence their brands to Souza Cruz and were
also thought to wish to obtain licensees in Venezuela, Chile and elsewhere
in Latin America. It was noted that BAT already licanced 2JR brands in
Argentina. However, no advantage was seen in licanciug brands in
Venezuela. Chile or Brazil.
18. it was noted that although WR Nabisco was having continuing success in
refinancing the Company, it was still possible that certain elements of
the International business might become available for sale. Mr. Pritchard
will arrange for an evaluation of the current status and potential
interest to BAT of the various elements of RJR'a International business.
Mr. Broutbtan will then arrange for an update of the report. originally
produced in December 1998, assessing the value of these activities in
financial terms.
19. Rotbawm r It was noted that the main reasons behind the observed
improvement in Hotbeds margins in 1990/1991 and the first half of
1991/1992 had been improvements in Australia, Malaysia and Europe. where
there had been substantial rationalisati= . It was believed that they had
been relatively unsuccessful in the full-priced segments of the market and
were now concentrating on lower-priced products.
20. Rothmans were also developing their business in line Cut and Sticks.
Although an increase in excise in Canada bad taken away such of the
competitive advantage of Sticks, they could have a potential in Germany
where lobbying to have them classified as cigarettes has been less
successful than elsewhere in Europe. However, the main threat in Germany
remains the possibility that Rothmans will try to promote a low-prico
cigarette in the market.
21. Mr. Irmalay will arrange for Mr. Bingham to =&lye* 10thmans' strategic
thrust over the past 5 years. Be will report to the next meeting an how
effective they have been and how their strategy is likely to develop in
the future, especially with respect to low-priced brands.
22. JTZ/AntL-Dmpias : It was noted that there were no markets where it was
thought to be either feasible or desirable to initiate anci-dmping
actions against JTT.
Camwa
23. it was noted that following the imposition of an export tax in Canada,
off-shore siasufacture had become more attractive. LZ were known to be
planning to manufacture in Puerto Itico and Isseco had enquired whether
Brava A Wil could undertake the manufacture of certain Imperial (D
brands. The Chainum asked that every effort should be made to assist
Tmasco in overcoming their current difficulties. 00
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UT Markets
24. gastem Europe : Or. Schweitzer reported that following a 63% rise in
ales -to Eastern Europe in 1991, January 1992 shaved sales down by 222
sales to to January 1991. However, this was largely due to the timing of
SATCY sales to Russia which had been nil in 1992 compared with 486 zillion
in 1991. Excluding this, sales had increased by 1882.
25. Prospects for the remainder of 1992 appeared to be reasonably good.
However, they were subject to political and economic uncertainties and
would also depend on a successful outcome to contract negotiations vicb
the Russian authorities. The Chairman ampbasised the importance of
maintaining profitability in sales to Russia. pursuing the brand and
pricing strategy which had been agreed. Be also asked Hr. Dranley to
check on the ownership of the trademark 'Pros', which might be useful for
a lav-car offering.
26. Smagary : It was noted that because of a back-log of work in the
Hungarian Courts, the purchase of the shareholding in Pecs would not be
ratified until the beginning of March. The ceremony to formation the
purchase had now been postponed to 9th Xwcb. 3owever, BAT was already in
effective control of the company. A budget and plan will be presented to
the Chairman when be visits the company.
27. Bulgaria : It was noted that discussions are continuing with bullartsbak.
However, it is not expected that these will make significant progress
until the position regarding pr iv at has been clarified.
28. Poland : It was noted that the tobacco industry study which the Polish
authorities had commissioned frou Morgan Cron fell is due to be presented
at the end of February. Although it is not know vbat recommendations will
be made, it is thought that the Government will be advised to privatize
the industry ea-bloc. Because of the difficult political and economic
situation, it is unlikely that there will be opportunities to promote
alternative, more radical solutions. It was agreed that the Group should
continue co give support to the Augustow management while monitoring
developments in the overall situation.
29. Cafthoslow4kia : It was noted that the Slovskida authorities have
invited tenders for 31Z of the equity of CM. the principal cigarette
company in Slovakia. Since this would not pcovide control and since the
mininum price being quoted appears unrealistically high, it Ls intended to
submit an alternative proposition for 512 control.
30. It is understood that there is also an intention to privatise the tobacco
industry in the Czech part of the country. Bowever, there is a ruiscur
that this may be implematuced. by striking a private deal with Philip
Morris, who already have licence agreements for their brands. The
Chairman has written to the Czech minister of Pr ivati a at ion to ask that
the business should be offered an open tender rather than through a
private deal. SIXTA have made similar representations.
31a Anothar pc#sibiliry for bamin; established in the market would be to
invest in a 'graimfield secondary. This would be sited about 200 km from
Bayreuth. which would be used as a source of cut rag. IATCIP will continue
to develop plans for this alternative approach.
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32. Tagoslavia , It was noted that a visit had been arranged to Makedonis
Tabak (MT) who have expressed on interest in some form of association with
SAT. MT have a 28Z share of the cigarette market for TuZoslavia as a
whole and corn $60 million a year from Leaf exports. Despite uncertainties
about the political status of Macedonia and au absence of privatisatioa
law, it is still considered worthwhile to establish and develop contacts
now in order to be able to profit from future developments which could
offer opportunities for investment.
33. Mr. Pritchard reported that in Serbia, NIS were putting up a now factory
and were said to have a contract to supply the Russians with 7 billion
cigarettes in exchange for oil. Be is intending to visit NIS as mm as
this is possible.
34. Moldova : It was noted that Moldova has good quality Leaf and one of the
best cigarette factories in the CIS. A letter of intent covering
co-operation in Leaf development is being prepared by Ift. Wattarton and
arrangements will also be made for the supply of seed for Leaf growing. A
major sensitivity is the future of Moldova, which sight ultimately be
absorbed into lomnia.
35. Romania : Mr. Pritchard reported that he was due to visit Romania within
the next week. This was still a good export market for Brown & WillLamson
and sight ultimately have a potential for investment. However, local
manufacturing was of a poor standard.
36. Russia : Mr. de Castro reported that a proposal was being prepared to
build a new factory on the site of one of the former military industrial
complexes. This proposal would be for a SAT equity investment in a 3 stage
programme, expanding production capacity progressively from 12 to 24 to 40
billion. Souza Cruz would have an agreement to supply Leaf to the factory,
probably in exchange for oil. it was not clear at present to whom the
proposal should go. but it was thought advisable for it to be directed to
famous close to Mr. Teltsin.
37. An alternative approach being pursued by BATCIP was the preparation of a
proposal to purchase an existing factory. However, this was thought to be
Jess promising than the 'Broomfield@' appraack. It would also be necessary
to visit more factories to select the beat prospect for iswovement.
38. Mwaine : The Chairman reported that he had signed a letter of intent
in the Mcraine which would give the Group 3 months' exclusivity to develop
proposal and business plan for the purchase of selected factories at
;rilutky and Charkassy and a tobacco processing plant at Vimastirriska.
If acquired. these would give B.A.T Industries 25-30 billion capacity in a
market of 80 billion. There would also be the potential to expand to 50Z
of the market.
39. Lithuania war* thought to be looking for a partner and it was believed
that Philip Morris had entered with a letter of intent.
40. Istania/Latvia : it was noted that the approach to Zaturnia and Latvia
bad been complicated by approaches by M, clainins to be representing the
SAT Group. Mr. Brumley will wake it clear to STR that they cannot
speak on behalf of SAT and that B.A.T Industries reserved the -right to
asks independent approaches either directly or through a Group company
such an STOT. 00
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41. Scandinavia : It was noted that 'fr. Dramley had informed STZ that the
proposal which they bad developed with Mr. Cyllenhmmr for the
consolidation of the Scandinavian tobacco sector was totally unacceptable
to B.A.T Industries since this would involve B.A.T Industries holding a
relatively small equity share in a business over which it had no control.
42. It had been suggested that a refusal to go ahead with the proposed merger
might leave the way open for a bid by Philip Morris for the Swedish
Tobacco monopoly in the proposed privacisation of the
Governmenc-controlled holding company Procordia. Rowever, the Chairman
did not feel that this was sufficient reason for SAT to outer into an
arrangement whose main purpose appeared to be to protect the monopoly
positions of the Scandinavian tobacco companies and to secure far Mr.
Cyllenhammar's other interests, the benefits of the cash flov from
Tobacco. If Philip Morris did bid in a break-up of Procardis. BAT would
have the option of mounting a bid of its own.
43. Mexico : It has been agreed previously that BAT was tin I ike I to wish to
re-enter the Mexican market unless the Run was extended to Mazico.
Mr. Pritchard reported that the negotiations an this were proceeding
slowly and it was unlikely that an agreement would be reached until after
the US elections at the end of 1992. In the meantime, Brown & Williamson
would continue to lobby for cigarettes to be included in any agreement
which was reached.
44. Thailand : Mr. Pritchard reported that although progress was being made
in Thailand, there were continuing problems with the authorities who had
recently adjusted the duty benchmarks for US brands, Ut brands and
Japanese brands in a way which made it sort difficult to compete.
protests had been lodged through the agents in Thailand and help was also
being sought from the American Trade representative.
45. Colombia : Mr. Pritchard reported that Brown & Williamson had opened an
office in Bogota with additional space available to Sousa Crux. The
budgets for 1992 called for sales to Colombia to be more than doubled but
both he and Mr. de Castro were confident that this moo achievable.
46. Harcoser : It was noted that Mr. de Castro was continuing to lead the
project to determine what action should be taken to- meet the opportunities
and challenges resulting from Marcasur. Be reported that he was
investigating with Mr. Stanley, the recovery of the Group's trademarks in
so-, Paraguay preparatory to mounting an export drive. Following discussions
with M. Mailhos in Uruguay, be would also prepare a proposal for entering
this market. 3W. Braulay and Mr. de Castro will also investigate the
potential for selling Souza Cruz brands in Argentina.
47. 3 - sins, the Chairman "id that the work to develop into new markets
was a long-term programme with as* or two major inves- to in each ye=
likely to be the most that could be achieved. Be believed that the
current arrangements were effective with a small tome. at Windsor louse
able to draw an support from the Operating Groups for specific projects.
It had been impressed with the level of co-ordination which bad been
achieved and hoped that this could continue to be developed*
48. It was intended to have a roviev mating specifically on now markets on re
20th May in Budapest, ahead of the conference planned for the rest of that C)
week. Progress on all potential now markets including Vietum, Cambodia
Mysumar and Cuba would be reviewed at the meeting.
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Budapest Coaferance
49. The purpose and arrangments for the conference do@ to be bald in Budapest
fron 20th May to 22nd May were noted. The list of attendees was also
agreed. The next stage will be for 'sponsoring' companies to write to
each of the delegates regarding the conference, enclosing a formal
invitation from the Chairman and a questionnaire regarding hotel
arrangements and requirements for translation facilities. Dr. Salter will
provide the letters of invitation and questionnaires and will also be in
contact to discuss the form and content of the presentatione to be made
during the conference.
Us International Brands
50. Mr. Pritchard reported that there bad been good progress in "pending
!also of US Thternatianal Brands in 1991 except for TAnt for which sales
a China and the Middle East had been disappointing. The overall budget
for 1992 required volume growth of aver 14%. This was demanding but
chievable. Menthol brands were expected to continue as so important
:1evient of growth, especially in the Tar East.
51. Zoat : It was noted that growth in China continued to be a key factor in
determining the overall success of Kent. 11ovever, following a relatively
unsuccessful launch in Munich, it we agreed that it might be necessary to
r*-think the positioning of Lint in Europe. One possibility would be to
use it as a lower-priced International brand, perhaps sold as 25m. This
would leave Lucky Strike as the leading full-flavour premium brand with
Barclay as the key low-tsr brand.
52. Lucky Strike : It was noted that Lucky Strike continued to make progress
worldwide but that that* were still some problems in ensuring that quality
'as uniform in all markets. 'If the problem in Belgium cannot be overcome
directly. supply from Germany will be considered as an alternative.
53. It was noted that the average ago of Lucky Strike wokers was generally
thought to be lower than for Narlboro. However, Brazil was an exception
and the Chairman suggested that action should be taken to rectify this
with promotion at places where young adults congregated. Be also
!uggested that there should be more concentration generally on promotion&
in hotels, restaurants and caf&s.
54. Barclay : 'It was noted that the re-launch with changed numbers had been
successful in Belgium. However, the Chairman was disappointed with the
overall budget for 1992 and suggested that this should be reviewed market
by market to ensure that there was sufficient thrust behind the brand.
Mr. Pritchard was asked to report bock on this at the next meeting.
55. It was noted that the possibility of launching Barclay in Trance would be
kept under review but no decision would be made an this until the position
on Lucky Strike had been resolved.
56. Other Drands : It was noted that Capri, Tics"y and Zool continued
progressive and that Pall Mall was continuing to make progress in the
Geruat New Leads. It was also being bald ready as a possible lower priced
brand in West Germany. The Chairman believed that both the price and
volume potential for Kiltom had been underestimated aud Mr. Pritchard
was asked to review this for the next meting.
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57. Nr- Bromley reported that Although Progress overall had beam good, Benson
S 11adges had been disappointing. Work was in band to develop a new
*nviromagmtally friendly pack aid to prepare a now campaign which will be
launched in the second quarter.
58. 31555 continued to be successful and line extensions were being developed.
Sponsorship was being rationalized and pricing reviewed to ensure that
S2555 was positioned consistently so a premium brand.
59. Players Cold Leaf was being upgraded to bring its packaging and product
quality up to the standards expected of an International Brand. The
Chairman welcomed this development and suggested that there should be
increased emphasis an encouraging specific farmers to supply higher
quality leaf for use in the brand.
60. Jobst Player Special - It was noted that JPS was now used less as a general
International Brand and store as a tactical brand for use in particular
situations where additional impetus was required (e.g. in Malaysia).
61. Smanwising, the Chairman. "id that there were encouraging signs of a fresh
thrust in DX International Brands. 1k asked W. Bramley to arrange for
Mr. Imbisswoki to make a brief presentation to the next meting,
enlarging an the overall strategy and plans for Season & Hedges , SE355 and
Players Gold Leaf.
TAILMMM
62. Mr.3roughtou reported that he had continued his discussions with American
brands regarding than possible sale to B.A.T Industries of the rights to
Lucky Strike in selected markets. A further meting was to take place on
24th March at which American brands wore due to react to SAT's estimate of
the value of the rights to the brand. Mr. armshtm will report progress
at the next meting.
Smakint QmalitT
63. Mr. Ubaborst reported an the project to upgrade the testing of moking
quality and to use the improved tests in the devolopment and quality
control of products which consumers would recoguist as being "Mal or
superior to Nmlbara.
64. It was intended to prepare a review report documencing beat practice in
testing and product development. Mr. Rebaberst will circulate this to toom
a I a in April. The Chairman stressed that this would be a highly
confidential report and should be treated " a high security document.
65. it was noted that. in product development. an isportaut intermediate stage
between the tam developing the product and the consumer tests was the use
of internal panels of trained o"loyses (eta" panels). Nowwar. the
Chairman questioned the value of the** and suggested that there should be
a one rapid progression to outside consumer tests.
66. It was noted that a key factor in improving the overall standard of
testing and product development was good intra-Croup communication nd it NJ
was noted that the project had boom particularly valuable from this point
of view. Rowever, it was suggested that W. Bromley night wish to review
BATCo's rsprosesst&tion an the team to ensure that the results of the work co
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67. It was noted that following the distribution of the ' best practice' report
in April, the key objective for the tam was the development of a product
to match at better Marlboro by the end of 1992.
68. Methods used in quality control on-line would also be reviewed during the
year and Mr. Kahaborst hiSbligbtsd developments at YAcon aimed at reducing
problem associated with inclusions of foreign matter in cigarettes.
69. The Chairman congratulated the project team on the progress achieved to
date and asked Mr. lobaborst to provide a further review report am the
work of the toam in September.
product Development
70. FIC : Mr. Brumley reported that Mr. Graham Read had been appointed to
head the n*vly-=rSsd Usearch and Development department in BATCO. Uork
due to be transferred from the 74odamental Research Contra to the
development team in the Operations was being handed over an schedule and
no problems had been experienced.
71. losewch Co-ordinstor : It was agreed that the post of research
Co-ardimator should be allowed to lapse but Yr. Brunlay would review the
position at the beginning of 1993 to confirm that this function was not
required.
72. T-1 Tobacco : It was noted that there was limited demand for Y-1 Tobacco
in 2"3 and that the productivity was relatively low. Mr. Pritchard
agreed that further Senatic development was required.
73. Reconstituted Tobacco : It was noted that all companies were continuing
developments with reconstituted tobacco, aimed at producing cigarettes
with improved making quality. It was speed that, in future, these
developers should be reported " part of the project to improve making
quality (see iteme 63-69 above).
Leaf
74. laaf Procausing Soniaer : Mr. Pritchard reported on the sominar on Loaf
processing hold in 1991. This had boom valuable in drawing attention to
the broad range of development activity in the group and the participants
bad found the interchange of ideas to be very stimulating. Mr. Brumley
agreed and said that the rating had been particularly useful in
highlighting the potential for further developments in Gram Leaf
Threshing (c LT) . Action programsmas more currently being developed to
improve GLT in BAM. and Souza Cruz. These would be significant in
iWroving quality, especially in Leaf for export.
75. Answering a question from the Chairman, it was noted that the switch to
broader band equipment, which use virtually complete in Vilsom and which
would be iapl ted progressively alsetobere, not only improved quality
'out me@ also sore environmentally acceptable in reducing noise and dust.
76. Leaf Costing Guidelines : Mr. Broughton reported that the Guidelines had
ban produced for setting prices for Leaf purchase#. UTC*. companies and
Souza Cruz would be encouraged to use the Guidelines in determining the
terms to be written into contracts with farmers. W. Broughton will
report on this at the next meeting.
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77. Leaf Supply Contracts : It was noted that following the review by B.A.T
Industries' Legal deparcwnt of tht turns of the contracts for supplying
leaf to distributors, these will be changed to sliainate clauses restricting
the froodom of companies to sell TA&f on the open marks t. Progress on
this will be reported by the Socretwy at the next mating.
Filter Tow
78. It vat noted that Mr. Pritchard bad studied the supply position for Filter
Tow and had found that the worldwide capacity to produce this critical raw
material was sufficient to satisfy the expected demand, at least for the
next 2-3 years. It was agreed that it was not necessary to take further
action to secure supplies.
smant Develojoent and Training
79. Mr. Broughton presented a paper by Mr. David Stevens proposing a now
structure for the training of functional Managers in the tobacco
businesses.
$0. The Chairman noted that considerable progress had already been made in
designing the fmctional course@ and asked that proposals for thee*
courses should be brought to the next mating (All I 3).
$1. la qua a the inclusion of separate business courses in the overall
mcbnm and suggested that this olement of training should either be
arranged separately outside the Group at should be integrated with the
functional courses, using business experiemce available within the
operating company mounting the course concerned. Yr. Brought= was asked
to report back at the next mating, at which tim the overall plan would
have been developed further and would form the basis for discussing
vhether the proposals being put forward would be a sure cost-effective way
for providing training than the c=rent system.
82. Tatar-Camspany Tronsfer* : Mr. Brumley reported progress in arranging and
implementing inur-company transfer* of personnel. A current &ia was to
extend the @yet= to younger managers for whom a spell in a suallor company
could be invaluable in providing a tooting experience early in their career.
Tradint Results
/00-1 $3. Mr. Broughton reviewed the latest estimates for 1991 and the budget for
1992 for the tobacco business " a whole. Numbers than reported an the
results for January and an current trends in their operations.
Insulate" Isms@
$4. Ravirommimmutal Policy : Mc. Broughton reported that the arrangement to
ensure compliance with the Group's environmental policies appeared to be
working satisfactorily.
85. Advertising restrictions : W. Irmley reported that the debate within the
IC as to who tbor there should be a ban an cigarette advertising was still
unresolved. The Chairman reminded members that Goverment@ opposed to the
ban were under continuing pressure from anti-making groups within their
countries. Re mphasisod the J"ortance of ensuring that the case against r1k.)
a ban was also put forward as strongly in each country within Europe.
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86. Raviroamiental Tobacco Socks (ETS) : Mr. Pritchard reported that
although there is continuing pressure to tighten the rules an ZTS in the
workplace and to pursue legal action against the industry, there bad been
no adverse developments since the last seating. The industry is
maintaining its position that employers should us& better ventilation
rather than autocratic no-rooking rules to reduce ETS.
87. Firesafe Cigarettes : Mr. Pritchard reported that little progress had
been made in the authorities' work to develop a test for a fire-safe
cigarette. Rowever, a more dangerous development was the publication of
data purporting to link the Wtiatica of firv@ with certain specific
brands. There was a fear that because most fir*@ occur among the low
income, younger, black population, who also tend to amokis sethol brands, a
false correlation sight be deduced.
Tranadermal Nicotine
$8. The Chairman draw attention to the reported development of a product which
could be applied as a patch and which would transfer nicotine into the
body. A description of the product was circulated to all numbers who
wars asked to discuss with their marketing a" technical peopla:-
(a) Whether this is a significant technical advance which could be
developed into a saleable product for mass markets.
(b) If so, does it represent a significant threat to the tobacco
industry.
(c) What should be the reaction, if any, by 3.A.T Industries.
This will be an agenda itsmi for the next seating. Rowever. the Chairman.
asked that answers to the queries raised should also be passed to bin
directly. ahead of the meeting.
Dates of Future meetings
$9. A meeting specifically to discuss Now Markets will be held in Budapest an
Wednesday, 10th May. Me nazt full meeting of the Tom will be held an
Friday, 29th May and subsequent mating# have been arranged for Thursday,
3rd September and Wednesday, Ind December.
RS/DjS
12th March 1992
C)
01
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BAT Industries document for Province of British Columbia 21 April 1999