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® GREY ADVERTISING INC. February i, 1979 M~. p,J. TighQ B~OWN & WILL~A~ON TOBACCO CORPO~TION 16~0 ~est Hi~I ~treet P.O. Box 35090 Louisville, ~ent ~cky 40232 II~ ax" Pat~ The pu~os~ of this lettsr ill to present Gcey's point- of-visw on the implic~ions to Project. G of th~ new fi~ldings • roleased in ~:he Surgeon General's Repo~ on January 11, 1979. Ill,pORT H~GItL'~GHTS The 1979 report appea~s to be far ~e definitive than the one issued in 1964. ~In addition to ~e-~:ating the i~l~- vi[ous fir~dir*~s, the new report Coflcl~dl~s~ J.• 54 ~i~.lic~n ~eric,ms ~m~k~, and 75% sta~d b~lfo~e a~e 21. Smoking has risen dr~a~atically from 8.4% to 1~.3% ~'x~n~ young ,~omen ~md g±~'l~ in the last l0 y~ars. The rate ~n~J older wog'en h~s ro~ained cn~st~t~ while ~ollg m~n it h~s fallen. In total, 6 million people I~nd~r age 211 s~ke (100,~100 12 or yQung~r). 2. A hi,~her percent~g~ of blacks smoke than dQ whi~s. 3. Blue collar worker~ sll~oke more thar~ do ~;~ 1~o~ al~fl~ent occupati~al s~qments. 4. Asbestos, uz~mi~, ~bb~z" and ch~nical ~d~s~:~y w~rk~rs who smoke run up to ~ t~es the ~sk of developing l~lg ce~r them w~rkers who do1%1~, smok~.

rt Mr. p.J. Tiqhe -2- F~bruary i~ 1979 5. Women who are ~regn~nt and Smoke s~d a greats~ chance of retarding fet~l growth. 6. Children of women who smoke are ~e likely to hav~ m~asurable deficiencies in physical growth and devel- opment. 7. There have bee~ slight de~llnes in 1978 in both the percentage of A~ricons smokingl and in the total ~- s~m~tion of cigarettes. I~LICATION S/DI SCUS SION To dat~ ~ns~mer r~action and, for tha~ matter, public reaction in general to the new SG RspOrt ha~ been minimal if not almost non-sxist~nt. ~ether this i~ because of rel~ti~ly light m~dia ~verag~ beyond the I/ll an~ounce- • entsp effective Tobacco Institut~ co~teri~ 0f ~erQly apathy on the part of the public because o~ an increasing distrust of the growing number of government ~pQrts "d~ing" ~veryth~g from hamburgers to th~ air you breathe as being bad for you is hard to say, In all probability i£ was a combination of th~ three. One thing is clear hOWever, Secretary califano a~d the anti-smoking forces will do th@i= bes~ to ke~p the report a~d the issue mllve. Xt is our feeling that ths information centered in the report will "drlbble~' out over ti~e, i.s. the expected re- lease of the gas issue in June or there aborts. As the information is released it will tend to hav~ a cll~ulatlve building effest, increasing puSli~ awareness of th~ issues and forcing ~ore california Proposition 5 type ~nfrontatlons. Additionally, it can be expected that awareness of whichever issues surface as the most pro~inent~ bo they gas or sc~e others, will ultimately build in the cons%t~ers' mi~d and therefore ~ventually be t~a~sl~ted into new positi~nings/ prod~cts by the cigarette indnstry ~o eapit~llze upon ths opportlLnities. What %his all ~e~s to us is that we fully ~xp~ct the low delivery segment of the market to r~main "th~ ~ain ~rena" as smokers react to new i~o~,ation. The implication for Projech G aro clear...~reat potential with one major ~isk; that being mis~in~ the Opportunity bscauso Of faulty product positioning. We m~st attempt to clearly define where we are going early on enough s~ that w~ o~n capitalize on each and ~very eppsrtt*~%ity. The parallel develop~o~t of the "low tar/~ood taste" ~d ~low gas" positienings is a good ~irst step, What we need to do is ~et a handle on what is the best positioning within these two areas as soon as possible. \

Mr. P.J. Tigh~ -3- February i, 1979 In the I~eantime, We have socured a Copy Of the full S~rgeo~ General's Report and plan to review it in the hop@8 that we might be able to identlfy potential areas which will be surfacing in the upcoming month~. Please give me a cal~ i~ y~u want to dis~sm this letter in any greater detail. B~Bt regard5 r stephen D~ SchWartz SDS~dls No attachments ccz P. Emst