B-AT INDUSTPIES
Inter-Office Nfemo
To: M-r U G V Herter
From: Nfiss H C Banon
Date: 29th November 1993
Subject: Britfing Note for TSG on Sth December 1993
Mr Davis will artend for items I to 4, Dr Thomon and Nir Pmctor for item 2(i), Mr Read for
item 2PQ. and Mr Snowden and the Leaf Directors will artend for item.X. I have also heard Thu
'Mr Tomr. W Zapf and Dr Kausch will be artending from BATCF.
l. hiidutes of the meeting an sth September
Some amendments to the minutes have been proposed and then are set out on the atrached
note. AU matters arising from the Cost Reduction meeting on 12th Aupst, the TSG
meeting on Sth September and the Project Stem meeting on 27th October, are covered on
the.Uenda.
2. Research & Development
(i) Dr Ray Thornton and Nft Chris Pro=r will. present the annual review of the work of the
Scie=ific Research Group.
(ii) W Gr-aharn Read will present a report on rec= patents fbr each of our n*or competitors,
con==zing on the number, quality and type of px=L in order to assess the direction of
their research, and to judge whether our efforts behind innovation are sufficiem (9/9/93
minute 49).
(iii) Dr Schweitzer was asked to arrange for a short presentation on coaxial cigarettes (9/9193
minute 49).
3. Leaf
(i) Mr Snowden was L*ed to review the bream for fee demand for Led in order to
be= central guidance (11W3 minute 49). He and the other Leaf Directors were Iso
asked to report on which Group companies are not buying all thew non43AT Leaf thmugh
Standard Commercial, and the reasons for their other purchases (&9/93 minute 19).
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nu Several options with respect to Standard Commercial were to be evaluated: -N& Snowden
andNIr Davis were to consider either financial engine@ering to prevent a take-over or an
enhanced JV, Mr Sandefur was to investigate whether there could be an opportunity with
ELT, W was asked to analyst the implications of a BATISouza Cruz rdwriry
participation. -s;t-
4. Production
(i) W Davis will report on the finher work that you requested on the European
.Mxmz&cmrmg Location Strategy fb1lowing the TS 0 meetizig; in May- a more demiled =idy
of the need to maintaon Bmssels and Bo-fin, based on market forecasts rather than
guidelines, taking into account EC sourcing requirements, particu.1arty if Finland and
Switzerland join the EC, with planning for a UK greenfield plant being conti=ed in partner
(195193 mim" 19).
(T) Ai :@ie Cost Reduction meeting in August you asked Mr Kohahom to update the Group
view of capacity as quickly as possible and at the latest for the TSO meeting in December,
CT as it is needed to review the individual Operating Group plans. This was already bemg:
prepared as pan of the disaswr recovery exercise, and wiH be reported in fiX by W
Kohnhom at the TSO meeting in March 1994. However he %rill submit a abort paper
summarising the current position to be presented by Mr Sandefur (17J&93 mizarm 42).
.U the same meeting, Mr Davis was asked to update, in parallel, the work on the
staadardisation. of production particularly of IBs, as a joint %A-4-11M a
initiative I believe that it is intended that this work will also be reoorted in March (12tW3
mimite 43).
Progress Reports
Oi Corrtpetitors: AD members to report as usual.
(ii) 'Ar Bnuniey will report on UKIBs as usual. I have requested that Mr Sandefur should
incruse his USIB report to include information by brand as was previottsly reported. (I
believe that this was dropped as it was not used by B&W internally. However following the
succession plan meeting, B&W committed to developing brand groups who wfll themselves
need this information in the fimwe).
Until we have agreed on brand classification, the major brand report for other Opowting
Groups is premature, but I think the TSG coWd bear reports on BB and Hollywood, and
any brand that Imperial Tobacco is considering using outside Canada at this meeting.
(iii) I proposed this agaula item on end markets so that progresk on the implementation of end
market control could be reported and any issues resolved. r1oX
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Ob
New Marleets: Mr Brookes to report as unial.
*SOON"M" UW
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6. Marketing
(i) The pricing strategy for Lucky Strike was discussed at the list TSG meeting but not agreed
(9/9t93 minute 30).
You asked W Sandefur to present the advertising developments fbr Lucky Strike. Km
Pall Mall and Vicerov to the nott TSG (9/9/93 minute 32).
(iii) At the cost reduction meeting I was asked to wofx with -W Binghazn to produce a paper for
this TSO, setting out case histories and lessons to be learned from than and analysing
potential arm of risk. I have received case studies from Germany (1982) and Brazil
(our=) and =pect to receive in update of the US situation. You have seen W Bisghatds
paper which does not set out case studies but draws general conclusions from all BATCo's
ceperience. In view of this paper, I do not think that it is necessary for me to produce
another summary of the lessons (1218192 minute 2).
7. Legal/Regulatoqv Issues
(i) I& Chalfen presented a policy statement on coumedch in December 1992 and committed
to reporting back to the TSG on progress in a years time (2112192 minute 48).
(ii) At the TSG meeting in May it was reported that the Leaf color ... r was with W Snowden
for comments, and the Distributors' contract was waiting for W Walzar to come free from
T2];=-- Progress was not reported in September (19/5/93 minute 23).
S. Project Stem
(F) I have not yet received any comments on the minutes of the meeting on 27th October.
(ii) and nm : I sent you a Memo on Thursday about brand classification and Trade Mark policy
and processes (V9/93 minate 47).
bvz) sr-
Cm) r2u% Yugoslavia we= outstanding at the end of the Project Sten: meeting
on -77th October.
(v) I sent down to you this morning a copy- of Mick Fends paper showing IDF volumes by
Operating Group and market. WI
(vi) W AUvey will report progress on the work being done by W Potter to develop
management information by end muket and by brand.
(%ii) BATCo were asked at their Plan Review meeting to produce a sh"t paper on their
productjLurciz
Ljgwbich is relevant to Project StwL
6t rksc.:s %
(viii) NO Bramley proposed that we should agree what to communicate as a result of Stem.
NJ
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9. Trading Review
All Members to report as uswLL with particular emphasis an any decisions which need to be
taLen before the year end.
10. 1994-1"S Plan Previews
I wondered if YOU might wisn to summarm the in= points that arose ftm the plan
preview meetings and the subsequent board discussion
11. Any other b i en
CI) -Mr Ettedgui vwrill present the work he prepared for the Group Board analysing vVnv Philip
Mar.-W =en& for inve=u= in new markets appear to be differeat *Om our =enL
(8;9M mim= 42).
CH) W Bramley asked for civification of the frequency and timing of the Maricering meetings
,d= have been Eicussed. We previously discussed an armal presetttation to the TSG to
approve the swategy for the International BtandL If this discussion is senui@ strzlegic@ it
should be in May as part of the Toba= Strategy Review. If it is a &=Lssion of detailed
plans it should probab@y be in December to coincide with the detailed put of the planning
proccaL You had also mentioned at one point the possibiUty thu you might have quarterly
mectizigs with the Marketing DirectorL
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BAT IndustrieS document for Province Of Brlt!Sh COIUMbla 23 April 1999