Tobacco Documents Online

-2- MAIN POINTS FROM DELEGATE PRESENTATIONS Amatil Despite the already severe pressures on direct smoking and health, the increasing social attack is seen to be the greatest problem facing the industry. Industry agreement with Government is that no cigarette is to be sold above IBmg. The SWAT is now approximately 11 mg - but this is not a feature of discussion with Government. Publication of CO yields wil~ take place this year, but they will not be included in the Voluntary Code for packet labelling at this stage. The main motivation of Wills R&D is in connection with Excise Tax. The continued drive towards lower weights is now giving problems with ends stability, taste/smoking quality and puff number. There is a wish to increase the interaction with GR&DC, beyond density reduction. The main interest relates.to processing rather than basic studies, but consumer research methodology is important - especially for social pressures. Blended products are increasing in importance in Australia. BAT Industries document for Province of British Columbia 9 November 2000 BAT INDUSTRIES 00290318

-3- BATCF The German market is recovering since the down-turn in 1982. The BATCF response of eliminating longer-term work and concentrating on cost reductions and quality improvement still continues - but the plan is to revert to longer-term work in 1985/6, albeit more strongly related to product and process application than to basic studies, A high level of interaction with GR&DC programmes and projects extends virtually across all work areas. There is also good interaction with B&W in the areas of project SHIP and flavour research. BATCF see a continuing reliance on GR&DC for basic research. BAT Industries document for Province of British Columbia 9 November 2000 BAT INDUSTRIES 00290319

-4- USA The main thrust in this area is to gain market share through the introduction of new products supported by technology and innovation. A principle priority for existing products is to improve and maintain smoking quality. In order to compete in the emerging economy segments, the achievement of cost reduction, and improvements to economics through manufacturing integration, are of strategic importance. lhe joint project efforts in support of SHIP are crucial to the fundamental understanding of harshness reduction and smoke chemistry control. GR&DC support for new product projects over the last year, including ARIES, GEMINI and $|im cigarettes, has improved the quality and timing of key efforts. The attempt to produce good tasting products through blend modification and processing has resulted in improved blends which will be incorporated into products - some of which are currently under test market. BeYond this, exciting new posslbilltles exist for nicotine control, pH control and re-constltutlon opportunities. Longer-term objectives (which are not that long!) include reduced sidestream and self-extinguishing products. Input from GR&DC wi|| continue to be sought on future technology trends, directions and opportunities. BAT Industries document for Province of British Columbia 9 November 2000 BAT INDUSTRIES 00290320

-5- ITL Main areas where continued close interaction with GR&DC is sought are: (t) (ii) Biological: Factors that influence specific activity and the development of short-term tests for mutagenicity. Smoker Behaviour: There is a need to develop a working relationship between sensory a~sessment, smoker behavlour and product design. Also there is a need to develop a better understanding of swi tchi ng. The ITL puff duplicator is thought to have wider potential throughout the Group, but further development is required. The DELTA methodology is being applied, but needs more effort. The reason for the apparent failure of Rothman's Passport low-sidestream brand is being studied by ITL Marketing Department. Process: Areas of particular interest are improved tobacco utilisation,, reduced degradation, reduced loose ends and Imp.roved fill value. The work of GR&DC and other Research Centres on expanded stem and lamlna is being closely monitored. BAT Industries document for Province of British Columbia 9 November 2000 BAT INDUSTRIES 00290321

-6- SOUZA CRUZ With the exception of the Group Programme on Process Research, and the work for the Leaf Steering Committee, all effort is concentrated on short-term priorities - particularly cost reduction (greater use of local materials) and support to tobacco production and diversification. The longer-term work of GR&DC is closely monitored - with particular interest in Project RIO, reduced sidestream and smoker behaviour. The series of fruit extracts developed by the Flavour Project has led to the possibility of modifying cigarettes to give (a) a 'new' taste, and (b) reduced butt and sidestream aroma. There has been .close collaboration with GR&DC, in the evaluation of butt and. sidestream aroma (Project STALEMATE). In view of the high cost of filters in Brazil, there is continuing interest in polypropylene. A joint venture with Hercules is under discussion. BAT Industries document for Province of British Columbia 9 November 2000 BAT INDUSTRIES 00290322

GUIDELINES FROM MARKETING CONFERENCE Any successful brand, existing or new, must fulfill three fundamental consumer needs: - Physical eg taste, nicotine - Emotional eg brand image - Rational eg the total proposition must be meaningful. Marketing ident|fied six specific areas that demand attention. The R&D response to these areas is summarlsed below: Brand Reassurance (Image, design, presentation, smoking quality) and Smokin9 Pleasure and Satisfaction (Relative full flavour) - Higher free-base nicotine - Higher nicotine/tar ratio - Project SHIP - "Consumer-Demand Responsive" (CDR) and other novel filters. - Thermoformable paper/embossed filters - Front-end lift - Sallvation/dry mouth/after-taste. BAT Industries document for Province of British Columbia 9 November 2000 BAT INDUSTRIES 00290323

-8- Perceived Personal Reassurance (Smoke Deliveries re S&H) - Low carbon monoxide - Project RIO - LoH smoke retention. Social Concern (Nuisance - sidestream/room/butt odour) - Ecusta vs de Mauduit papers - Low-weight tobacco rods - Aroma masking/modifying flavours - CRA studies of social pressures. Val ue-for-Mone~, . (Price related motivation) - Project RUGBY (high expanded tobacco content) - Low-weight products (other means) - Cheaper/better filters. Female Smokers (Growing importance) - CRA studies - Ultra-sllm c|garettes? BAT Industries document for Province of British Columbia 9 November 2000 BAT INDUSTRIES 00290324

-9- SPECIAL DISCUSSION TOPICS Smoker Behaviour There is a need to improve the link between, and the mutual understanding of, market research and scientific research on smoker behavlour. Marketing research knowledge should be used to give direction to fundamental research. Areas of major significance are: - switching - starting - consumer response to new products - influence of design on smoking behaviour - research methodology Experience of BATCF should be used with respect to consumer response to new products, and to their approach to research met hodol ogy. Nicotine The agreed background was: I. The toxicity of nicotine will continue to be questioned. 2. There will continue to be claims that nicotine is "addictive". o o ,~ BAT Industries document for Province of British Columbia 9 November 2000 BAT INDUSTRIES 00290325

-10- The view that smokers seek or acquire a specific dose of nicotine is not universally accepted. There is a likely tolerence window for nicotine which does not figure in isolation but in the context of percelvd strength, taste, flavour irritation, impact etc. An attempt should be made to establish whether smokers smoke for (a) transient peak effects threshold base-line levels throughout the day. A study of the effects obtained through chewing "nicotine-.gum" might be relevant. Despite considerable research over many years, the role of nicotine in smoking is not understood or universally accepted (cf 1984 book edited by D J K Balfour). Some insight might come from animal studies in which nicotine is compared with other stimulants of nerve response. A direct method of enhancing nicotine in tobacco smoke is through additions of nicotine oxide or nicotine salts. There are, however, other less overt means of influencing nicotine transfer from the product to the smoker - and the commercial viability of such means should be pursued, using the extensive knowledge already existing in Germany, o 0 BAT Industries document for Province of British Columbia 9 November 2000 BAT INDUSTRIES 00290326

-11- Sidestream/Amhient Smoke Despite any unresolved issues of marketing, it must be encumbent upon the tobacco industry to find ways of reducing sidestream and ambient room smoke. The modified (Ecusta and de Mauduit) papers lead to reduced visible sidestream smoke and reduced ambient particulate smoke, but gas-phase components such as CO and NO are, if anything, slightly increased. Serious efforts must be made to counter this trend. Sidestream R&D should be extended in the broader context of the total "social" problem, ie to room aroma and butts. It was confirmed that this is a high-priority area - with the end-objective of developing products that give the smoker a fully satisfactory product while at the same time giving t~e non-smoker less cause for perceived concern. Work at GR&DC should be extended to include US-blend and German-blend tobaccos. There is need for greater understanding of social pressures on smokers. The Canadian experience with 'Passport' is relevant. The need for a self-extinguishing cigarette continues to be primarily of interest in the USA. Low Retention Products Despite the severe technical issues, and the lack of an immediate Marketing proposition, products that give rise to a low retention of smoke in the lung must be an important goal - given the allegations of the medical/scientific opinion. Current GR&DC work must be pursued as a priority. The performance of Maryland tobacco must be elucidated. BAT Industries document for Province of British Columbia 9 November 2000 BAT INDUSTRIES 00290327