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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