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Intermediate Management Trainin~ Course No. I0 9th June - 8th JulyT 1960. Production Problem llI Group 'A' Our primary consideration in all three territories was the obvious need to manufacture a filter cigarette as quickly as possible. For the purpose of this exercise it was assumed that we have no previous tec,hnical knowledge of filter cigarette manufacture. Our lack of knowledge prompted us to proceed in the following manner for each territory. I. Factors for consideration in designing the cigarette were discussed. 2. Matters which had to be decided within the territory were determined. 3. Information best furnished by Research and Development Departmont was determined. 4. Information b~st furnished by Millbank was determined. TERRITORY 'A' I Factors for Consideration a. How best c~:n we expedite tile launching of a filter cig:rette? What will be its specifications? b. What zechnical ir~o2~ation on ~nchinery and materials will be recuired~ c. How do we cbtain a furthar analysis of our competitor's brand? d. Is health u real issue in consumers' minds? e. Has the local publication received much Attention, and has there been any follow up in other media? f. Do smokers want psychologicol satisfaction of complying with health issue but still dezire their old smoke? g. What is the goner~tl attitude of non-filter smokers toward filter cigarettes? h. How does the smoker of a filter cigarette differ from a plain cigarette smoker in his smoking habits? i. What are consumer comments on the draw resistance of the filter. J. %',%at are comments on taste, and how does tho filter affect taste. k. mr: thore any g~noral eo:~plnints or favourable comments on the competitor's cigarette? i. How do filters fit into th~ oxelso structuru? m. Arc there patent rights on filters or filtur processes? n. Hc~v will filter manufacturu nffuet production costs? FiL~er cost v~rsus Eob..cc~ cost? 0 0 rxD <ZD

- 2 - - • II Local Decisions a. The conp~titor's brand is zn 85 mR x 25 um cig:.rctt,- with a 15 rm Estron type filter and a 19 mm. cork tip with Ver6o paper nnd zn American type blend. b. The health issue is n vital factor in that the medical survey findings hzvc had ~" considerable impact on the local populace. Oth.r media h3vo commented on the survey but have not expressed any views. c. There are Indic.ntlons of arual he-:lib scsre as evidenced by the sczrlng s.-.les of our compo~itor -_nd the marked switch from. pl.-.in to filter. d. Consumer research shows that filter smokers have conuented that the n~w brand is too mild end too dry. Others have com.uen%ud that the cigrrette lacks taste _nnd is hard to drzw. The most fnvourable comr.unte .-.re on length and appe-'.rznc e. e. The competitor is inforrinE, throu,,zh clever .~dvor~ising, that his cig'.rett2 h~s certain health advnntages, but is m'.kin~ no direct he~-ith claim. f. There ~r~ n9 patents uxistin@ on filters or filter processes, ~_nd duty is IO~ ~_d v~.lorum. g. Smokers ch niin6 from pl~in to filturs smoke E~oro ci~-.rettes. However, butt lengths nre icnger th~n on plain cigzrottes. h. We will pr::duce ~n B5 m~u x 25 mm cork tip cig-rctte with -.n • . Amjricn type blend which hzs a nicotine ~,nd t?,r c~ntont slightly bel?w com.~c%ition and, if possible, below ~.u.,ric'n br n']z which h':d high r-tir4s. Our cignrett~: should not bu ns mild nor ~s dry us our conp~tit:,r's. For psychc!ozicrl re-sons the fil~cr will be no shorter th:.n our ecmpetito.r's, lor~er if possible. Ill ~;:?.tters for Rose-.rob ,:nd Development n. W~ trc fcr.';-rdir~%, by air, s-.mpl~s uf our eomputit~r's brmnd for d~tniled znnlysis. b. We -.re ":isc sending s.mpl~s of our own clgzrettes, r::g and l~r.f for similnr .-.n:~lysls. c. After -.n"lysing our cumpetitor's br-nd -rid ours, cnn you supply us i.~uedi~tely with n filter which will permit us to produc~ n cigarette _'s outllnud in the attsched copy of ou~r local decisions? Also included is ,: copy of the locsl publio-.tion, please verify the results on the Americnn blends. d. From e;ch rng s.-.r:ple £or~'~rdcd you, pleeso supply us with cigarettes, complute with :ppropri~.t~ filters ~nd ralevsn% infor~]::ticn, so that we m-'y c~:rry out smokir~ tests ".nd " decide which we should m-.rkut. e. Plcts¢ _~ivc ". c~mpl~tu c n.-lysls of all le.".f s~mples shipped. f. Pl~?.sc s=nd 1,000 cf u :oh proposed filter in order that" they m~.y b~ :v-ilnblu for future experimentation. At :ha sam, ti'~, ",'~ would .'ppreci-te your s_ndi,%g us the followinc infor~.- t ion: I. Should .'.'o b3 requir_'d et :: l:.%or d-to to fur%hor reduce O O

-3- t~rs and nicotines, ~:h~t type, or typos, of filters will give us the hijhc::t possible filtr::tion? 2. Forward detailed information on all moons of lowerin~ tar and nicotine by one, or a combin.?.tion, of moons. 3. Recommended cnsi~s ~nd flzvours to achiev~ taste of present blends if excess filtration produces inouffici~,nt or un- pleasant taste. 4. Once we have decided on the best ciz~rette from the group forwarded us for smoke tests, ~nd should we doci~e that it is too mild and/or dry, what can b~ done to overcome these undesirable qunlitius and maintain the same filtration? 5. We note that one American brand utillzcs a recessed filter. Whnt function does this'recess' perform ~nd wh~t are its advantas~s? Can an ~iI tobacco filter with a recesced end be ~.nufac~ured? 6. During ~smokir~ t!1~r~ is a considcr:ble build up of discolour- ation on %h~ filt=r end o£ the cig:rctte which produoez a bnd t~nte when touched by the tongue, c:.n we compensate or d,crecse the cmount by stopping the st'~in further inside the filter? 7. Should we consider cultivuting locally any typ~s of l~af p~rticu!~rly suited to filters? 8. C~n you ndd a gr=de or -~rndcs of lo~f to gi ~ strength ~nd charzct~r to ~h~ smoke, to compensate for usu of high percentages of low tar =nd nicotine leaf, end not increase ~ar ~nd nicotine con~ent of ovcr~ll blend? 9. Tl&-ase forv,::rd g.n~.r*.-i in:orm.'~tion on cignrotto p~.p~,r znd tip~in.~ m."teria!s .hich might be n factor in affecting smokin," -%u-.liti~s of ciczr~tte. i0. Whzt filt#r tosting equipment do you consider wc will require? Please forward dot'~il~d inform~tion on equipment, testing proceduro and cost/:veil::bility. ii. Wo are presently destroying our Burlcy stems because they give zn ~acocptuble smok~. How c~n wc neutrnlizc those and use them in m filter cigarette? 12. Upon rcccip~ of thu analysis of our local ic~f gn~des, how do ~c m~tch them for imported ~rndes which wc wish to sub- situte in a blund? IV Infor~.tion Roquircd from Millbank a. What Rddltion~l m=~chincry will we require to produce the cigarette outlined in the zttach~d copy of our local decisions. P!eas~ supply the following details. I. Cost nnd earliest dclivury dztc. 2. :,:.,inlcn:nce .~:nd opera.tin'.'. Instructions. 3. Jutllne drnwin6s listing floor spncc required and appropriRto inst llntion time. 4. ~_r~cnn=l ~v=ilbiu for inst. llation and trtining of !oc:l personn~l. Cost? 5. !'orm .! ~ffici.nc.'," . rd ",;': sta-~es ~ftor 3 ~,~onths - 6 months - I y...r. 0 0 r~D t.#n, fxD !

-4- 6. Recommended training programme to achieve effic ency and wastaie goals. 7. Advisability of U.K. training for a member of the local staff. 8. Convertability for different filter lengths. 9. Modifications necessary to maker and cost of modification. I0. Modlficntlons n~c~ssary to packing and wrapping machinery, and cost of modifications. ii. Recommended procedures for hnndlin~ rejects. 12. Cost and availability for 12 months supply of spare parts for r~comm~nded machinery. Normal delivery time for any spare p':rts re-ordered. 13. Compl~ta speciflcations required for ordering each machine. 14. Operational "hints" which will minimize the initial difficulties w~ will experience with thu machinery. b. Materials: Paper, Filters, Cork Tippln~ and Adh~siv~ Samples. i. Full ordcrin~ specifications for ouch. 2. Cos~, :.vailzbility Rnd how ship,pod. 3. Main supgliers and :tltern:~tive sources with comparative prices. 4. Zp~cia! s torcg~ conditions r~com~njnded for uny of these materials. 5. Primary difficulties that have been experienced with each material. 6. Formul- usin#s for c::ch m-:torial when the m" chine is opcr':ting r.t"90% efficiency? This is r~quired ~.s a guide for costing. 7. SubsZitutes for the~o ~torinls. Who supplies them? Whet are costs? Please forward sanplbs for testing. 8. Cnlcul'~ted formul~ woicht per 1,000 M cigarettes for individual filters, paper, cork tipping :md adhesives. c. List of filter processes and novel features which we should try to p~tent. d. Information on history of filter movement in areas simila~ cr ~ost sinil r;'to ou9 ov'n t rrit~ry, Includins 66~p ~y nd'c.f.tition -.ction nnd results. e. Would it b~ advlsabl~ to send n member of our staff to study filter manufacturing processes? f. At what stage of filtur vcl~me should we consider the possibility of manufacturing filters locally? g. We will require a suggezted list of m-nuf:-cturing records and qurlity control informr.tion considered n~cessary for filter tip mnnufacture. h. Assuming we c~n influence our compotitor's actions or policy, wh~% ~rG points to ~void in filtrntlon and filter manufacture? m O CZD m ok.)

-5 - TERRITORY *B* I Factors to Discuss a. How best czn wc expedite the launching of a filter cigarette? What will b~ its spocific:tlons? b. What t~c|mic~l information on mc.chin~ry nnd supplies will we require? c. Why are filters becoming fashionable. How ~trong is this trend? d. ~hzt --re consumer commcnts on dr.~.w rozist:.ncc c~.used by filter? e. What ~ro comments on taste nnd how does the filter affect taste? f. Are there ~ny ganorcl compl~ints or fmvournblc comments? g. How do filters fit into tho oxcis~ structure? h. Are ~h~ro patent rights on filters or filter processes? i. How will fil~or munufacturo affect production costs? Filter cost vs. tobzcco cost? j. How dc~s Th~ smoker of z filter cignrctt~ differ from n plzin ci~°:z~ttc smoker in his smoking h~bits? k. Wh:~t is ~h~ gcn.r::l fortitude of non-filter smokers tow':rd filter cig, rcttes? iI Local D~cisions a. Th~ comp~titcr's brund is nn 85 nm~x 25 mm. cignre~tc with a 15 l.mm. Estron type filter, a 19 mm. cork tip, V~rgc paper, and zn Amcric n typ~ blend. b. Consumers stnt~ thnt they nro unable to distinF.,ish n marked its:to diffurcnc~ b~tw~en filter nnd non-filter br::nds. Most filter smo!-ors co.mm.nt fnvourzbly on not getting tobacco particles in their mouth, but some complzin of the s~ain and bad tns~ when ~hc tongue touch.s the filter. All smokers comment favournbly on the length and the zppearnnco. Some few smokers who tried the competltor'e cixnrettes during their introduction hove r turned to th.ir plain brnnd bcczuso of the differences in the draw. Filter smokers smok~ more than formerly znd the lengths of disc rd~d butts are greater. c. Our competitor is pl~ying up Zh. fnshiennble zspect of filter smoking ~nd has hnd phcnomunnl success. d. There- are nc pztcnts oxistir~ in filters or filter processes. No duty is l~vi~d on filters. o. W~ will produce -.n 85 m~:. x 25 mm. r~cess~d filtar cig-.rctte with -on Am~ric n typ~ blcnd. Filtrntion should b~ -t a minimum. The ci6:~rutt~ should bu full fl:'.vourud, e,zsy draw- ing nnd h-v~ smoking qu:liti~s ~qu'tl to, or b~tt~r th:,.n, our pro:sent Zop pl:.in cig rctt,-. If possible, th~ tipping should b~ whit~ v~iV.h two g~old lin,~s ::round the lo':;~r udg:_,. The cigmr_tto p".pcr should h vA ccmc nov~l aopoct to t-k. ,?.dvtntng~ of the currunt "F':shion F-.ncy". ~,';~ fu.l th-.t "Reps" p~.p~r might npp_:! in this type of m::rk~t nnd give addition.%l uniqueness to our now v~nturc. 0 CD t3~

- ~) - III Matters for Rosonrch and Development Th~ following -.re thu s::mc as Territory 'A': c, b, d, o. c. After cn~lysing our computitor's brand ~nd our blends, cnn you supply us i.mm~di~tely with _~ filter which will p~rmit us to produce ~ cigarette as outlined in the attached copy of our local ducisions. THE following nr~ also the snme ~s territory 'A': i, 2, 3, 7, 8, 9, i0, ii, 12. Questions 4, 5, 6 do not npply in this situation. IV Required from Millbank Same as Territory 'A'. TERRITORY 'C0 I Factors to Discuss a. How best cnn we oxp~ditc the luunching of a filter cigarette? What will bc its spccific:.tions? b. What tuchnical informttion on m~:chincry nnd supplies will we require? c. How c~n we t~ke ~dvtntngu of the filt.r to usa grontor quantities of our harsher local loaf? d. ~hnt are consum.r comm.nts on d~aw rcsist~nc~ c~uscd by filters? e. Wh-t ire comments cn t~st~ nnd how do filters affect the taste? f. Are thor. ~ny ~cner:l compl.lnts or fzvournble coz~nts? g. How dc filters fit into the excise structura? h. Ara there p-~tont rights on filters or filter processes? i. How will filter m~nufncture ~ff~ct production costs. Filter costs vs. tohncco costs? j. Whet is th~ gonurcl ~ttitudc of non-filter smokers toward filter cigarettes? II Local Decisions ~. The comp.titor's brand is in the hiLhost price c,~tcgory and is :n 85 DAn. X 2~ mm. cig:r~ttc with c 15 mm. Estron type filtcr, a 19 mm. cork tip, Vclin paper, ~nd cn imported Vir~ ini~ blend. Govarnm.cntnl conc~ssions to now industrios in rcstrictud fiolds h vc enabled him to import tobccco, filters ~nd other m-teri.ls duty froc for the next two years. Thcr~ h~:vc burn no ccnsum,~r complaints ~bout ~ny feature of his br.nd. b. l:~ith~r health nor filtr=tion =r~ major f'~ctors in our market. c. Through clcvar competition ~dvortising, -. certain "snob 0 "'pp~!" for filter smcking is dev~loping. 0 d. Th~ m rk~t is presently 60% Virgini~ ~nd 40~ Vir~ini~/~ir cured. Local ir cured tob.ccos are w~ry strong ~nd harsh, r~o Our goverr_m~ntal ccnc~ssicns h~v. expired nnd we rmst pay

duty ".~ the r.-tc of 20~ .d vo:le_~'cm on "ii m':t~ri Is utilized in our m:nuf :ctur~ ,:nd 50~ on tob-.cco. '"o must ~ct thu mnximum % of loc".l air cured tob~..cco ~nto the highur priced c".tcgory which is prusuntly 1OO% Virginie if we ".re to con- pete. Colour Is of no p".rticul-r conseq:lonc~ wlth ". filter. Smokrs ch-.nging from plnin to filters tend to smoke mor&. Howuver, filter butt lun~ths ~ru hnbitu-:lly longer. e. There are no p tents existing on filters or filter processi,~. f..~e must produce -.n ".cc&pt-.blc 85 mr.i. x 25 mm. cork tip filter cig-.1"ettc with - blund of 55% "iF cured ".nd 4~ i~ported Virgi':in. The filtcr must bc 15 ::~m. ":nd its prlnnry function must be to rcmov2 the hrsh teztu of the loc:.l le.:f, with efficiency n s~cond-:ry considcrntion. %¥o do not wnnt a 'fruity' or czs~d flnvour and must h-.vo the b~ttor natural ".ttribut~s of %h rob cco to pormc-.te through -~ur filter since th~ pure Virginia t::sto is ste dily losinZ ground to the blended t::st~.. III M".ttors for Resu':rcll ".nd Dov~lopmcnt The following ".~.'o th~ same ::.s T~rritory 'A': n, b, d, e. c. After nn~iysin~ our ccmp&titor's br:nd znd our bl&nds, cnn you suFply us im-modi'tely with z filter which will pjrmiZ us to produce "~ cig r~tto ns ~utlin&d in th~ ":tt".chcd copy of our loc-.l d.cisicns. The followin -re ~Iso the sznc ~s Territory 'A': I, 2, 3, 7, 8, 9, lO, I!, 12. ,~u_stions 4, 5, 6 do not zpp!y to this situetion. IV Ruquircd from Millbnnk S~me "~s ~erritory 'A'. Chairm-n N. Moore Sucrot~ry J. W. A. Sv_nson Chslwood, July, 1960. (481) O cxo Cu-.

10th May, 1960 INTERPtF.DIATE MANAGE~=~ TRAINING. ~O ~TION PROSLE~ t~ Filters are mostly used in countries having a high standard of living. They are an expensive and late development of the cigarette manufacturer's art, and as such have therefore appeared to the greatest extent in countries where the cost of cigarettes is high. This refers to the cost of blend and manufacture and not so much to the cost of duty and taxes, Since, however, duty and tsxes may be levied sometimes on the weight of the tobacco in the cigarette and sometimes on the whole weight of the tipped cigarette, not only the ¢elative costs beb~een filter and tobacco may be important but also the relative weight. Filters are seldom added to cigarettes, since that would increase their length. They usually replace tobacco, which is tself good filter material. Consequently, the first effect is to substitute one filtering material for another, which may be as good, better, or worse, and the second is to change the pressure drop, or draw resistance from the value of the original cigarette. Attaching the filter requires special machines or attachments, and the extra expense of operating these may become an important factor in deciding on the l:ngth and diameter of cigarette to be used, since this extra expense will remain the. same regardless of length and almost independently of circumference, The length of the filter plug itself is dependent on mcny things, but mnlnly on the difference in cost between tobacco and filter, and, in the case of high filtration, on the pressure drop required. Countries ~tth a high standard of living are also highly developed countries in v~tch it is natural for inventions and discoveries to be protected by patents, so it is probable that many novel features of filters and their methods of m~nufacture will be affected by patent cover, and this will have to be taken Into consideration when one is thinking of adding or changing filters. The following three cases cover the majority of filter enquiriess casEx The health angle predominates, and it is natuzal for a zace to begin to achieve a cigarette with very low tar. A filter Is an obvious way of doing this, and the object is to use a filter with the highest possible efficiency. CASEH There is no health angle, and, in fact, no reason for using o filter other than that it is beco=ing fashionable end you¢ competitor is getting good sales by using one. ~hethor the filter is efficient is of absolutely no concern. r~'j

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- 2 - CASE III Filters do emphasise points of distinction in the smoke, but in general prnbably do so by masking C he more obvious flavours. It is not long therefore before it is discovered that heevierp cheaper tobaccos can be used with a filter. The emphasis then is on the use of such tobaccos to effect economy. I now went you to imagine thet you are menufacturers in three 1~rrltories which hitherto have not used filters, but are about ready to accept them. A competitor has launched, with clever advertisement, a brand with a filter and his sales are soaring to the del~£ment of your own, plain brands. l~at are you going to do? And what help will you need in arrivlng at the best solution, and where are you going to find it? [n t~rrttory A, a local medical survey has attempted to connect increases in human ailments with the national increese in smoking, and a local publication (like Readeres Digest) has concerned itself with this, publishing tar and nicotine figures fc¢ the local brands and comparing them with the figures for U.S. cigarettes, which are lower. In territory B, the standard of living is advancing reptdly, people are becoming more conscious of filters being used in similar territories ~bro0d, but there is no health implication so for. Territory C is like B, but has a surplus of home c¢ovm leaf which Jt would be economically desirable to use, but which is normally acceptable only up to ~O~mixture with imported good quality Virginian tobacco. This is your problem. In each cese, to set down in order of priority all the information you would l!ke to have. To discuss the factors you would take into account in designing the cigarette and the filter. To indicate those Batters you would decide within the territory. To set dew1 the queries you would wish answered by a Research Department. To set down the queries you would wish answered by Millbank. These three cases form the bulk of the filter queries reaching Mlllbenk, and so it is right you should give your attention to them. I am aware, as I am sure you ere, that we lmow far too little of the answers to the questions you will raise. Nevertheless, I am very hopeful that your consideration of them will be useful, not only to you, but also to the research effort of the B-A.T. Group cs o whole, by indlcattno whet are the most important filter problems needing solution, and by bringing to light difficulties of whose very existence we may now be unaware. C t~r- Y

INTERqEDI~TE HAN/~Drf T 'RIINING CO~R3E NO: 10 9th June to 8th July. 1960 P~ODUCT~ON P~OBLm X~ G~UP 'C! TERRITO~ "A" "Recently a local Digest magazine has published the relieving statistics in an article on the tobacco industry in Territory "£", referring particularly to the health aspect of smoking. "The statistics show that the opposition brand filter-tip cigarette has a tar delivery rate per cigarette of 12 rags. It also shows our own Plain Size brands A, B and C as having a tar delivery rate per cigarette of 2/+, 25 and27 m~s. respective~v. ~ The size of the opposition filter-tip cigarette is 72 runs. ~1~), 25 sins. (circumference), with a 15 ~ paper Dllter plug. (The Report mentioned that the statistics shown were based upon the Foster D° Snell analytical method, with the cigarettes smoked to a 23 rams. butt). Our own brm~ds are .also of overnll length 72 rams. and 25 rams. circu~/erence. "We therefore propose to launch a filter-tip br~.nd to co~pete with that of the opposition - so adjusting it th:t our brand will h~ve a lower tar a~ nicotine deliver)" rate than that of the opposition. Our object is to get our brand on the market as soon ~s possible. "We require to manufacture n cigarette of 72 anna. overall length, keeping to a 25 mas° circumference, with a 15 m~s. tip, or if necessaFj a 17 nuns° tip, but no longer. 'Trom the above in[orm~tlon we have m~de the following calculations! G~Lven ~nforn~tiov, Br ~nd Mgs, Filter -tip brand 72 x 25 ~s. (15 ,as. plug) Own Plain sise A 72 x 25 ms. B C T~ Ldel'~ ~E$. Tar in per cig ...... T_ob. Section 12 n~s. 2/+ rags. ~gs. rags, ~0.0 rage. Tip O.~loulat ed Efficienc~ (Required for 11 rags. ) 60.0~ 63.5g ~nfor~tion F~l~er' Press. Drop (Required 15 m. plug) 5,8 ores, 6.4 eros, "From these calculations it appears that we h~ve to use a paper filter of the Myria, Schweitzer type. It was on this assumption that the above filter pressure drops were ealc~lnted. ~e are therefore fo~arding samples oF the opposition brand for testing and an21ysis. The information that we require is: 1, Be. of rags. of t.~r .~nd nicotine delivered per cigzrctte. 2. Bc. of mgs. of t~r -~nd nicotine in the tobacco section. 3. Ti= efficiency. 4. Cig-~rette pressure drop. contlntted.,.. C C L.; C i i , _| w

--2-- 5. Filter pressure drop. 6. Length ~ type of filter. e Description or the cigarette, to include details of the paper and the tip, 8. !~y other relevant informetion. ewe are also forwarding samples of three of our own plain brands, for which we should like the same tnformation~ less that relating to the filter-tip. eWe should be grateful for your advice concerning the choosing of a suitable paper filter plug and the length of filter, and the smoking results obtained from fitting these filters to our three brands. eWe appreciate that by having to attain these efficiencies, we are compelled to increase the pressure drop of the cigarette more than we would wish. We understand, however, that there are cert~tn techniques for reducing the prusure drop while maintaining a given tar delivery, end we would like further details of these techniques to enable us to make up our own cigarettes for testing. We weald aiso like to have your comments on the number of cuts to the inch of our rag. "For the long term it is suggested that a small laboratory is set up here, with simple minimum apparatus for testing opposition brands and our own production. What eq.Aipment and pfr,onnel would be required and what would the cost be likely to be? How long would it take to abram.in equipment and train personnel? "Our last request concerns adhesives suitable to our problem, and we should be gr.--.teful for your comments on t his matter too, "When a decision has been made on the question of filter-tips, we should be grateful if you wo,Ald order 1,000 of each type of filter recommended, through Millb.~k on our behalf, to be sent out to us at the earliest opportunity." Letter to Hillbank. ewe give below details of a filtcr-tip br~J~d that we intend marketing in this Territor7 "h" in the near future: Straight Virginia 72 mas. 25 .me. 15 mine. (pc Isibl~ cigarette: (long) (circum.) (filter plug) 17 as.) '~e require to know what filter rods are available in Myria $chwaitzer range of paper tips, with lengths of 90 or 102 ms. amd a pressure drop of 33 - 38 ores., and the plug cost per thous,~d. eWh~t tipping materi.~is axe available, and the cost, for use with the above filters? :"~h-t is the most suitable machincry ~Llable for attaching a 15 ram. or 17 mm. plug to cigarettes? Cost and delivery dates, are essential? "What crews "re required for running the plug assembly machine recommended, -nd what is the running speed of the m~chine? "Wh~.t patents are there reg?Jrding the making ~d/or use of the p~er filters in question?" cent inued... O m

-3- Inform-tion/Act~on reou/red ~u Territory "A" 1. It must be decided in what category and price range our cigarette is to be, ~nd the measurement must be stated. 2. ;. decision must be made on blends to be used, (using domestic F.C.Y. as well as imported) end their castings worked out. The cost of blend ~.nd m-_nufacturing costs must be calculated. 3. A co,,~lete picture of the local Excise regulations must be obtained. Euqtiries must be mad~ to find out if filters, or materials for making filters, =re aviil~ble with~n~.e Territory, and if so, their cost. 5. The S~les )lsnager must be asked for his comments on the type of tipping paper needed. (To, avoid duplicating data which is common to ~ll throe Territories, it should bc noted that in Territories "B" ~nd "C"j queries retarding blend costs, testing~ m~_chin,ry, filter plug availability, etc., would be put forw~d to R. & D.E. ~nd Millb~.nk in much the s~me way where applicable.) TIR~O, ITORY ~. We -.re ~ssumlng t~-.t in Territory "B", we and our competitors are marketing King Size cigarettes, with our competitors h_~ving just l~unched a new filter-tip King Size br,u~d. Our new brnsd will therefor~ h.~v¢ to conform with the opposition brand, ~s follows~ K~E Size Filter-Tlo 85 rams. 25 rams. (long) (circum.) These details are being sent to R. & V.E. ~r~ our letter to them continues: Letter to R. & D,E, '~e require a filter-tip with a filter plug sise of 15 / 17 mms. and efficiency of 25~ - 35~. We would like a pressure drop of around ~ cms. We should be grateful if you wo~ld recommend what filters you consider would suit oar requirements. "We have tod,~y forwarded to you samples of our c~,~ King Size existing blends, and the opposition King Size F.T. brand, for testing and analysis. (The same inform.-tion will be required as for Territory eA"~ "We would usk you to bear in mind that at some later d.~tc it may prove necessary to incre-.se the efficiency of the filter without very noticeably varying its texture end size." Once R. & D.E. h~ve given the req,ired information, ~ suitable blends achieved, s.~le cigarettes would be manufact,red ~d the required filters fitted by means of selot~_pe. The filters recommended by R. & D.E. would give t~r ~nd nicotine fi!tr-tion figures higher than the opposition br~d. These cigarettes wo~!d be tested on a s.~J~.le of not less th~n 200 respondents tc determine their preference. From this ~nd other considerations a decision co:ld be Finally made. continued.a.. ...__,~ r.._~ '...jl I'-._~

-4- :'-s soon =s the t~e of plug has been de~%ded upon, the necessary orders for suitable machinery would be placed immedistoly. Should our requirements be a F.A. 5 Type Filter Plug "ssembly attachment, we wou/d require one machine to begLn with .~/~ possih)y another at a later date, depending on salsa forecasting. T~ZX)~ "C" Letter to R. & D.E, "In this Territory we wish to introduce o filter-tip cigarette to compete with one recently introduced by the competition. Here we are also faced with having to use more .~d more of our domestic F.C.V., much of which is low grade composed with imported leo/ mad is inclined to be strong. We therefore feel th-_t when introducing a F.T. brand it is ~ 8ood opportunity to use ~pthe low~ leaf grades. At present, as you know, blends using a maximum of domestic leaf only ere acceptable to our smoking public. "We wish to introduce a cigarette with a F.T. of 15 - 17 rams., 72 rams. long and 25 ram. circumference. "we ~re forwarding to you s..~mples of the competition brnnd s~d three of our own blonds, including one existing blend, details of which ~re given below: Code 14 Blend L 50~ domestic V.F.C. and 50% imported " 15 " S 65~ " " " 35~ " " 16 " C 75% " " " 25~ " "S.~ples of =~r own blends are pocked in 2O's packets and code numbered, (8C0 ci~.~mettes h~ve been sent of each blend). "By hnving these three blends we are allowing for onnual fluctuations in the production of low grade domestic leaf. "In each case ws especially require to k.now the tar delivery for each of the s~mples as well as the other test results nornaily required (set under Territory "/.". ) "We sh~/1 be grateful if you would fit u type ~n.d size of filter which is: (I) sult~ble to produce m~cir..um filtration with nor..~ acceptable draw resistance ~nd (2) a filter having 50~ of this retention - to each of the three s~mples. When replying to the above queries would you kindly arrange for Millb.~nk to send us 1,000 o~ the filter plugs you recommend for e,~ch sample., Information/Action reouired An Territor~ le Exactly the same information is required as was asked for in Territory ",i". 2. In this Territory there will certainly be the problem of trying to use up fairly large quantities of low grade domestic growth, which is likely to be strong and rather peppery. Idenlly, the most suitable blond would use levi gr.:ded according to plrmt position i.e. luss ~j~d primln~s, nnd cutters. (Could take some fillers but preferably no le-I or tips). I'~ ~:m c~so of i~o~rted le~ this would substonti~lly possible, hut unlikely with domestic leaf Rs .-r~.ding is done on - different b~sis nnd it wo.~id be mlmost impossible to ch~J~8~ for teahnic~l r~asons. (~h~s is presuming that leaf production in t he Territory is in its early stages). It w~s -~Iso considered in wh~t proportions Amsric~n, Rhodesien, Indian ~r.d d~me~tie F.C.V. could be used, bearing in mind the cost o£ lea~ and that ~ericcn leaf h-~ a h/~hur tar and nicotine co,trent th~n other typos of F.C.V. continued.... O Pk2

-5- @ It was noted that C.R.S. could be added to blends and it was borne in mind that C.zl.$. usually ~ives a smoke contoining 60% less tar and 70% less nicotina than comes from the corresponding lamina. As soon as filter plugs arrive smoking staples must be manufactured. Smoking tests will be carried out using 200 respondents to dotex~tne which blend and filter is the most acceptable, or whether we need to find an intermedi~.te filter or t~ke otb~-r steps to make the smoke acceptable. Letter to Millb~nk The same questions would have to be asked as were for Territory "A". Cha~an: C. Bell Socretary: G.A.F. l~s Chelw0nd, July 1960 No: ~82 0 0

INTERMEDIATE MANAGF~ENT TRAINING COURSE NO. 10. ~th June - 8th July, 1960. pRODUCTION PROBLEM III GROUP 'B' TERRITORY 'A' In Territory 'A', our competitor has successfully launched a filter tipped cigarette which has received a boost in sales by the recent publication of a medical survey report concerning the effect of smoking on health. This impartial survey stated that the nicotine and tar content of domestic cigarettes is higher than comparable American brands. Also revealed in the Report was the factthat while smoking one domestic cigarette the following milligrams of tar remain in the mainstream smokez Competltor~ Filter Tipped Brand - 20 mg. Plain Brands - 30 - 36 mr. ASSUMPTIONS: i. The dimensions of our competitor's filter tipped clgarette are 85 mm x 25 mm. 2. The competitor's filter is of cellulose acetate fibre (Estron) with a length of 13 mm. Our competitor imports all of his filter rods from the U.S. 3. Cigarette paper used by our competitor is the same as we are using for our plain brands - Highly combustible. All cigarettes produced in Territory 'A' are of the American blended cigarette type and 100% domestic leaf is employed in their manufacture. The laboratory which conducted the tests for the medical survey agreed to conduct a series of tests on our Companies behalf. The Foster D. Snell method of tar analysis was employed to obtain the data for the survey report and for the tests requested by our Company. The average "butt length" in TerritorylA' was determined to be 32 mm. Pressure drop apparatus is available at the Laboratory. 6. Excise in Territory 'A' is paid on weight per i000 cigarettes. 7. Import duty on manufactured filter rods is 20% ad valorem. R~SULT OF INVESTIGATIONS: 1. The 13 nun Estron filter plug used by our competitor has an average pressure drop of 8.0 cm W.O. 2. The total pressure drop of the cigarette of our competitor is 13.O cm W.O. Continued... G

s From the information published in the survey report that the amount of tar in the mainstream smoke of our competitorts filter tipped cigarette is 20 mg. we were able to de£ermine the amount of tar in the tobacco section. By applying the pressure drop of the filter plug (8.0 cm. W.O.) to charts recently supplied us by R. & D.E. we found that the efficiency of the Estron plug is ~0~I this means that the 20 mg. of tar in the mainstream smoke represents 60~ of the tar contained in the tobacco rod. The amount of tar in the tobacco section is 33.3 mgs. ~e The nicotine content of our competitor's filter tipped cigarette was found to be 2.2 mg. ~e After tests of our own plain brands of cigarettes, the one which we selected to be the most acceptable for the application of a filter was found to have a tar content of 30 mg. This cigarette has dimensions of 85 mm. x 25 mm. and a pressure drop of 5.0 cm. W°G. OUR OBJECTIVE : To produce a filter tipped cigarette with the following characteristics: l° A hi~her filtration efficiency than that of our competitor. J A lower draw resistance than our competitor's (about io~ cm. w.o.) e To market" our filter tipped brands as soon and as economically as possible. To select a type of filter material which will allow us more flexibility as regards filtration efficiency than our competitor has. In case of a grcwing cancer scare amongst the smoking public we will be able to increase the filtration efficiency of our filter plug (without changing our filter material) to a point higher than that which our competitor can reach using Estron. COVRSE OF ACTIQP: i° As we are aware that the tar content of the brand to which a filter is to be attached is 30 mg. and we were able to determine the pressure drop of the tobacco section to be 5.0 cm. W.G. we were able to determine the following: a) The pressure dro~ per milllmetre of tobacco section is 518.5 : 0.59 cm. W.G. b) The pressure drop of the 72 mm. tobacco section is 72 X 0.59 cm. W.G. = ~.25 era. W,G, c) d) We want a filter plug with a pressure drop of ± 6 cm. W.G. Also, we want a filter plug of the same lensth (13 mm.) as our competltor's but with the idea of lengthening our plug at a later date for economical reasons. That a filter made of Viscose fibre with a pressure drop cf 6.1 cm. W.G. will give us Continued.. rkD

e) -- D -- a filtration efficiency of %3.3~ - this is 3-3~ more efficient than that of the competition. The use of a Viscose filter with an efficiency of ~3.3~ will reduce the tar content o£ the mainstream smoke from 30 mg. to 17 mg. CONCLUSIOn: By using the Viscose fibre filter as discussed above we will obtain the following advantages over our competitor. a) b) c) Our cigarette will draw easier because the pressure drop is lower. If a further medical survey report is published it will reveal that our filter tipped cigarette has a low~r nicotine and tar content than that of our competitor. We will have the flexibility to increase the filtration efficiency of our plug from its present ~3.3% up to 55.0~ and still maintain a pressure drop lower than that of the competitor's present filter which has an efficiency o£ only ~0~. B~OUEST~D OF tR, & D. ~. I. To check our calculations and inform us as soon as posslbl~ if they a2ree or disagree with our conclusions. o To ship to us, by air, the following: a) Pressure drop apparatus with instructions for us~. b) As the cost o£ having tar and nicotine analyses done in the local laboratory is very hilh we would like advice on whether or not to conslder setting up Foster D. Snell apparatus in our factory and to have one of our laboratory technicians trained to perform the analysis. e By air, trial samples o£ 78 mm. Viscose £11ter rods of various deniers in order that we can be,ln experiments to determine the one which will give us the pressure drop and filtration efficiency that we desire. ~e To send us any new information which they may have as regards the latest developments in filter materials and filter rod manufacture. RBQUESTED OF HILL~NK." Ii Advice on the various types and the costs of filter tipped cigarette making machines or attachments w~ich we should use. We desire a type o£ filter tipped cigarette making machine or attachment which is simple to convert when we decide to change our speclficaticns. 2e How soon we can expect dc!ivery of the machinery, which the:: su~o.est, upon placement of our order. Continued... O r~D L J7

. 4. 5. 6. . m Manufacturing and shipping costs of filter rods of different materials, from whom we should order them, and expected delivery time from the supplier. Approximate costs of setting-up a filter rod manufacturing department in our territory. Also type of machines we will need. The type of tipping and adhesives we should use. If we should use the extra combustible cigarette paper which we also use for our plain cigarettes or if We should consider a porous type paper. Please attach names of suppliers and cost figures of the various types of combustible paper. As we believe that it is Company policy to lean away from the health ankle in itg advertising we would like to receive specimen advertising material from Territories which are operating, or have operated, under similar circumstances as ours. To approve or disapprove the name, labe].~ stamp, and outer wrapper design which we have worked up and have attached to our list of requests. oooOooe TERRITORY 'B' In Territory 'B' the c=mpetltion hms successfully lau,~hed a filter tipped cigarette, the sales of which are soarin= due to the fact that it is the first filter tipped cigarette in the Territory and the smoking population is only following a world trend. In this Territory the smoking of filter tipped cigarettes is considered fashionable and there is no health angle involved. ASSUMPTIONS: i. This is a mixed market of 60% Virginia cigarette smokers and WO% Blended type cigarette smokers. . Our competitor introduced a Virginia type filter tipped cigarette of 85 mm. x 25 mm. with a 15 mm. Estron plug. e The competitor is using a f~irly expensive blend of all domestic tobacco in his filter tipped cigarette. As the standard of living in this Territory is advancing rapidly we assume that the price of domestic tobacco is higher than the delivered cost of filter rods. . 6. Excise is paid on each package of cigarettes by the application of a Government excise stamp. Our competitor is usin~ a cup pack and bundling ten packages in printed white paper. OUR OBJSCTIVE: l. To produce a filter tipped cigarette of high quality and except|onal appearance and launch this cigarette Continued... I CD 0 ~0 O0

onto the market as soon as possible. Q Tc attach a filter to one of our existing 70 mm. VlrEinia cigarettes. Being influenced on which of our brands to use by the prefe-rod smoke of the local populace and the cost factor. o We wish to attach a filter plug to our 70 mm. Virginia cigarette which will give u, as low draw resistance as possible but yet ap~,tr to tile public that they are receiving a benefit from its filtering action. ~e .e wish to establish a feature of uniqueness to attach to our filter tipped brand which will enable us to recover some of the Market which our competitor gained by launchin~ th~ first filter tipped cigarette in the Territory. Unique features from which we may select are white tippingp shell and slidej flip top boxs alum- Inium foill outer wrapper and perhaDs a tobacco tip and recessed filters. COU,~SE O! ACTION: i. As there are no facilities for conducting pressure drop tests in the Territory we w%ll rush by air 500 of our competitor's filter tipped cigarettes and TOO of our own plain Virginia cigarettes to R. ~ D.£. for pressure drop tests. ~e will request that B. & D.~. design for us a filter plug of lower pressure drop than the one of our competitor and to m~ke from the material which they select 5Of each of rods of 90 mm~ 102 mm~ & 120 mm. Ne will advise R. d D.E. to please ship the s~mple filter rods by air. 2~ Unon receipt of these filter rods from R, & D.C. we will attach plu~s to th~ Virginia type brands under consideration and conduct s.~oking tests. e Sales department will be~in work and submit as soon as possible a ILst of suggested nam,~s for the brand plus label and outer wrap designs. ~e ~e We will begtn tc organise our advertising campaign for the launching of new brand. We will pay much attention to how our comq~etitor's filter tipped cigarette is received~ and we will advise our salesmen to list any com~laLnts and/or compliments which they overhear about our competitorls brand. :~JESTED OF R.&D.E, i. TO conduct pressure drop tests on the filter plugs and total cigarettes whicl] we are shIDDing by air. 2. To conduct pressure drop tests on the brands of 70 mm Vlr~lnia ci-arettes that we are shipping and design us filters ;or these brands which have a lower pressuredrop than has the cigarette of our ccmpetltor. Sample rods to be sent to us for ma!:inP, up of ciRarettes to be of 90 mm, 102 mmD and 120 am. Pl:ase :-Ish. 3. To ship to us by ~ir Freight pressure drop measuring a~paratus with instructions for use. Continued... O O tjn

REQUESTED OF ~IILL~AN~. Same as for Territory 'A' with the additlonsof: io A request for their views on the type of tipping, packing, outer wrap, type of filter tip to ebt~in desired uniqueness. . A request for the additional costs of manufacturing filter tipped cigarettes over the costs of manufacturing plain cigarettes. ooo0ooo T;.RP[TORY ' C__.~' Same as in Territory 'B' with the added fact that there is a surplus of ~omestic leaf which we must use. Normally, in order to prepare an acceptable blend using the domestic Virglna tobacco it has beun necessary to bl~nd it with up to 50~ of good quality imported V%rglnin. ASSU:-iPT~[ OIlS. - i. . ~o Territory 'C' is almost - iOO~ Virginia cigarette market. 6. Cur competitor introduced a 75 m m x 26 mm filter tipped cigarette with a 13 mm ~ria p~per filter. Th~ filter tipped cigarette of the competitor is made of a blend of 100% domestic Virginia tobacco. Our smoking pan~.l is of the opinion th--.t the smoke of our competitor~ FTC is ~ bit too strong, has a "bit.=", and a slightly "e>rtby" taste. We feel that our competitor's FTC would hlve few buyers if there were a quality FTC on the m,rket. Excise Tax is p~id on each package of 20 cigarettes by the application of a Government excise stamp. Import duty on manufactured filter rods is ~0~ ad valorem. Import duty on imported Virginia tobacco is g3.00 per pound. There is no ad valorem on tobacco. 7. Permits for importing machinery are easily obtainable. OUR OBJeCTiVE: 1. To market a filter tipped cigarette of good quality and appearance which will give the consumer a pleasing and satLsfying smoke. We wish to begin • manufacture as soon as possible. 2. To reduce our surplus of domestic Virginia tobacco ~nd to prevent a surplus from building up in the future. 3. To develop a cut tobacco filter tipped cigarette. COURSE OF ACT~O!!: IQ To avoid t~.e high costs of importing fi!tcr rods and to i'.-prove on the s~oking qu~llties of the domestic l';af we are going to begin at once to try to develop -. cut tobacco filt.r rod. In our factory we have Continued.,. C rk_

-7- change gears for our TCM which enable us to cut tobacco at 160, 180 and 200 CPI, and we have Mollns MK. VI. making machines which we under- stand are being used for the m~uufactur~ of CTF rods in other countrtes. . e ~e Te . While developing our manufacturing procedures for the CTF red we will use the better grades of local leaf with the plan in mind to switch to a filter plug made of imported VlrEinla when the man~facturlng procedures are perfected. When we are able to manufacture CTF rods we will begin exp~rim~ntln~ to determine if a blend c~n be developed of 108% domestic tobacco which will satisfy the smoking taste of the people in this territory. To design a cigarette of 85 mm x 25 mm to help overcome the advantage that our competitor gained b~ launching the flrst filter tipped cigarette in the territory. Due to the heavier weight of the tobacco filter and the high cost of imported Virginia tobacco which we plan to use for the filter we have decided to use a filter length of ii mm. To begin experimenting wlth different typos of cigarette paper (high poroclty, perforated, etc.) when wc start putting our cigarette together in ord~r to dec case the draw resistance. We realise that the draw resistance of our cut tobacco tip will be higher than that of the compctitor's paper filter but we feel thxt the uniqueness of the tobacco tip plus the better flavcur which it will impart will offset this d!sadvant~ge. ?~C/J~STED OF R.&D.E, le To analyse the samples of tobacco which we are air freighting to them and give theLr opinion on what may be the cause of its unpleasant characteri- stics and what are some possible remedies. me To rush to us, by air, pressure drop apparatus with operating instructions. REGU&STED OF MILL~ANK: . Rush to us all information concerning the manufacture of cut tobacco filter rods - to include technical information concerning types of leaf used to give varying effects, cuts per inch, weights, moisture contents, draw resistance~ hardness, type of wrapper, adhesives and comparative costs. 2. Information about d~fferent types of porous and perforated cigarette papers including names of suppliers, sample bobbins and costs. 3. Types a!!d c~zts of filter tipped :,uking m~chine or attachment which they consider the best for our use. 4. Smmple udvertising material from Territories where ci~zrcttez with a cut tob:,cco filter h~w: been introduced. Chairman: J.D.Bland. Secr~t~ry: J.P. Sikkol. Chelwood, July, i~60. t~. 4~0. 0 P,o C',