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PHILIP MORRIS U'. S. A. INTER-OFFICE CORRESPONDENCE RI CHHOND, ¥1RGIHIA To: . Dr. Robert B. Seligman Date: Fro~: . Myron Johnston $-bject: o Young Smokers -- Prevalence~ 'rrends~ Implications, and. Related Demographic Trend,s March 31, 1981 For over fifteen years certain demographic and social trends have been moving in directions favorable to industry growth. N~w, one by one, these powerful social and demographic factors are turning against us, and by 1985 all will be operating against us. The trends are: L | I I. After increasing for over a decade, the prevalence of teenage smoking is now declining sharply. 2. A~ter increasing for over a decade, the average Haily consumption of teenage ~mokers is declining. 3. After increasln.g 18. percen.t from 1967 to 1976., the absolute number of 15-I,9 year-olds will decl~ne 19 percent during t~e 1980'~s, with ~he period of sha:r~es~ decline beginning in 1981. 4. Beginning in 1981 the absolu=e number of 20-24 year-olds (the ages during which average da£1y cigarette consumption increases most rapidly). will begin, to decline, after increasing for the past 20 yeats. 5. For the ~irst t~me ~n a decade of polling, average daily cigarette consumption as reported on the National Panel has declined. 6. In 1985, after declln~ng for nearly a decade, the number of people in th.e age group, most d~sposed to quit smoking (ages 45-54) will ~egin to. increa:se dramatically.

[ [ I- I, I I I l l l L t L L I I I It is inevitable therefore, that industry sales Will begin to decline within the next few yea:rs. Thus, Philip Morris USA can sustain its past rate of grow.th ~ only by an a:cceleration of the rate of increase in~ market share. While this news is not good for the industry, I believe we car use these data and other ~ data I plan to report on. to good advantage in order to minimize the adverse '~!.effeet on Philip Morris. . ~. This report deals with only one of these trends--teenage smoking and attitudes towa=rd smoking, together with related demographics. Subsequent reports will cover the social, economic and psychogra~phlc characteristics of teenage smokers and the demographics of other significant age groups. Because the major d~ta~ sources have just become available, and because of the importance of these d~ta to the company, I have elected to report the data in a series of memoranda rather than wait andi issue all of the ma~terial at once. MEJ:yl Attachments CC:: Mr. R. Thomson Mr. H. Daniel Dr. C. Levy Mr. L. Meyer Mr. J. Zoler (NYO) Mr. T. Goodale (NY0)