Philip Morris Incorporated 840000 Corporate Affairs World Conference Rye Brook, New York 840913 Directly: in the Legislatures & Government Bureaus

Philip Morris

Philip Morris Incorporated 840000 Corporate Affairs World Conference Rye Brook, New York 840913 Directly: in the Legislatures & Government Bureaus

Date: 13 Sep 1984 (est.)
Length: 53 pages
2025422001-2025422053
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Author: Breedlove, J.; Bull, S.; Covington, M.; Hunt, R.; Irish, M.; Klemp, R.; Nelson, J.; Vonmaerestetter, C.
Type: TRAN, TRANSCRIPT; LIST, LIST
Area: CORPORATE AFFAIRS/CARLSTADT
Site: N100
Named Organization: 5th World Conference on Smoking + Health; Alcohol + Drug Problem Assn; American Council on Alcoholism; Batf, Bureau of Alcohol,Tobacco and Firearms; Board Officers of Field Pac; Cannon Mills; Coca Cola; European Commission; European Economic Community; European Parliament; Evelyn Wood Speed Speaking School; FDA, Food and Drug Administration; Federal Express; Foreign Investment Review Action Agency; French Parliament; Ftc, Federal Trade Commission; Health Education Foundation; Ma State Legislature; Mcclain; Miller Brewing; Nas, Natl Academy of Sciences; Natl Assn of Sports Assn; Natl Assn of State Boards of Education; Natl Conference of State Legislatures; Nla; Ny State Lobbying Commission; Pepsi; Poison Squad; TI, Tobacco Inst; Uk Parliament; US Brewers Assn; US Congress; US Senate; Usda, U.S. Dept of Agriculture; Washington Post; Wolfgang Arnold; 1984 Corporate Affairs World Conference
Request: Stmn/R1-006; Stmn/R1-020
Named Person: B, A.; Boland, J.; Breedlove, J.; Brown, W.; Buccellato, V.; Bulger, W.; Bull, S.; Covington, M.; Cullman, H.; Cuomo; Delaney, J.; Flanagan, G.; Grannis; Haley, M.; Hunt, R.; Irish, M.; Johnson, H.; Klemp, R.; Marisfeld, T.; Mazingo, R.; Milman, A.; Nelson, J.; Pittman; Sargent, E.; Scott, S.; Vonmaerestetter, C.; Weismann, G.; Wiley; Xxandrew; Xxbernie; Xxemily
Master ID: 2025421657/2239
Author (Organization): 7 Up
Litigation: Stmn/Produced
Date Loaded: 05 Jun 1998
Brand: Virginia Slims
UCSF Legacy ID: xgd34e00

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H1 I Li D $ X 1 PXIZ3P NORRIS IDCORPMTaD 1984 CORpOBIATE Ag!?1IRS WORLD COWUMH 2 R?II SR0W NNi1 YOAIC SEFTMBBR 13, 19®4 3 DIRICTLYs IN iU LEOISLA?" a ©OVERDM:BT 'UMUS 4 TI'1'ti$, SBraEER.. , ?Ji~R 5 CE3nD'?3RIXED R*S.OLtRCaS , Jim sBLSOg............... 2 ~ ~ co I COIWUSIOH OVER SWBB'PXaR8 to N ROBER'P StJ1111' ............... 10 7 MAJOR LE®ISLATIVS I ~ PRO82.8NS KhY COVIII>WOllr............ 17 8 0 ~ PILOT PROf3RAM. XICHAEL IRISB ............. 25 9 ~ O ~ ADVBRTISI]ftG BADi ON 10 ~ BRNNINi COMPAMBS RICHARD XiENP ............. 30 11 ~1 Ct1MPliRIlliA CAL+UIDAS 5~ LBt3xsIATIVS ISSUES 12 COMPARED TO U. S.& mROPR z CYWfHIA vOx MAZRZSTaTT$R.. 3s 13 ~ LRdISIATIVE AND H RFS3ULATORY VALUES ~ JAMES BREEDLOVB........... 44 14 I CLOSING REb1ARKS STEPSSS.BULL .............. 52 15 ~ 16 0 z ~ 17 ~ 8 w 18 a 19 z 0 .~ F. 20 a N 21 22 23 24 25

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1 lKMdPAT'!d 8?8VNBB DMLs =! I can have your 2 attention here I think we' ll qat started. We're only about 3 2~ miadtes behiad so .r.'re goin9 to ls;ve to make up so.a 4 time. This workshop is entitled, Dealing witb the 206044 5 Directly, In th. Legislatares and dasrn..at ftteaas, and OD Cl) 6SO? it has been des igned for ur to Snarrwase oqr mWarstanding ~ CO 7 ~ of the legislative and regulatory issaes eAsl2saqing tb. IV 8 o cospany and its iAftstries Iato the strategies ewplay.d to 9 o meet these chaiiessges. We bope that it vrii`l be instructive ~ 10 ~ a Ad entertaining for all of qs In as onch as it should be w z 11 ~ reflective of tbe various issues on which the representatives 12 En from virtually all the op.rating aoaPanies are and have been z 13 ~, working and should give us an indisation perhaps of bow we H C* 14 ~i stiobt deal with similar or disparit issues as we discussed 15 ~ in the previous session. ~ 16 z There will be a total of seven presentations h~1 17 p ali, each of which wiil be limited to ten minutes. 8.ily U w 18 a just gave me strict instructions that we will indeed adhere ~ 19 O to the schedule in one way or another we'll be out of bere F- 20 ~ ~ by 12:45. In addition to the light Rroheler digita2 eYock ~ 21 ~ which I'm supposed to focus upon during each presentation 22 23 24 25 I've been told it says, times up. So we will begin, I will introduce individuals as we go along. I thought originally I migbt introduce each presenter at the beginning bowever, doing it as we go along provides the opportunity not only to

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B3 1 3 4 ~ O w x law. WbI1ip Morris. V.8.AO .fio will describe the ooepytrtsis+rd 00 Cr) 6 ~ ~ CO 11 12 . ring the b.11l but to isterrapt by just introdoviuq the xast person. ftr - fiT#ft presentarlcion is es. J&dh Nexso®. 140 is saoaqer of Public Altt.ir. #ft research and analysis resoatzeese available Isbxo"% aNi, M, tihe track iegisiation. DR. 0 OW pAi,dalts 'lhank you Bteve. I want to talk a little bit before I talk about what wr've done at PM-EtBA, about wbhat ressaxelk is supposed to do in Public Affairs. I think it has four elesents, one is collection of inlorsstion about political acctivilty, legislation. I think that research had four eleen.ats, the colleation of information about political activity, legislation and regulations rela.--< I tive to the ceeepany's business. The analysis for senior 15 ~ ~ 16 0 z 17 18 19 20 aaanagemnt of this information in light of the interest of the company. Tbe preservation of such information aall the medium fresaahicb it is quickly and easily retrievabie and the creation of persuasive arguments to articulate out peoti- ~ . 0 tion once established by management in the political process. E- d ~ D1ow all these elements relate to the activities 21 z 22 23 24 25 ;; of P->ri's political operatives, what our po2itical, operatives seek in their ekhanstinq taave'is and recepti.ons, dinners,ana luncheons, is aspeQific occasion, an occasion on wfiicb to speak to a decision mNker, to teli hi.s or her saAetblbg about Philip morris, and when appropriate to tell thea somethinQ

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84 1 4 6 .Sl a) Co 02 ~ ~ ~ about Philip Morris, and w'Aea appr-opriate to teli tb.m something about our issues. - I think research can assist the operatives in mrking this occasion aore productive to the ctorapany. We : can discern the emerging iaaue in a given stat. or 1ocality we can identify the key decision makers on that, issue, we 7 ~ can Qlarily the company's position, give the operative argu-. 8 0 >swnts for our decision. fte operative can then use. these 9 p arguments to, intiwnce that deeisiou saking, toucbing the 10 decision msker with tbe right information at the right tisw z lt ~ 12 can z 13 ~ E- ~ 14 I 15 ~ ~ 16 0 17 ~ 0 w a 18 ~ 19 p F 20 ~ 21 ~, 22 23 24 25 is critical. Merely to identity key decision xakers may allow tbe operative to establish the contact for use rrliea our a issue later arises or to plant some seeds which may there- fore bear fruits later. I think finally tbe ~research function can store a record of the operatives contact with the decision maker so when an issue does arise and we search for belp our computer can teil us vlAor, we know and where. Now, (SLID88) The probleaas° that we face in USA, nationwide we work closely with the Tobacco Institute, and we do have our own field oilioes. This is a rougA idea of how we're arrayed out in the field.. 3,::8ow what we're working to do is connect all these offices together with a oommanicratioos and data system. It's wbat's called electronic mail. At present TI has an electronic mail system ahich we're linked in so we

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1 bave all IOair o1liea0s on board row and the other oliicas iu . 4l40iA °:; and .tbe.plant stat«s will bft, on boaIcd by the .asd of thfss yearr what wr deal with h.ers is Ms :11 be able to send virtua ily instautaaao<us mMVS: leqis Uti©o. lists, oostacts, anything lsoa ow data base. a1e can take out anything 1hst's been put in a word protssssor, wa can takf out and W* can ship elaotremicaliy, nery ei!'icient and w th.y can can send it to somebody and edit it, they can send it badk to you and all this can occur in a matter of an hour or so. ' re pntting into 2n lact the syst~ that wa 12 z. 13 ~. F. ~ 14 I 15 piace is really a generation abtad of the p.d.ral Upress a taczsinile ZAP Mail wbich is jnst about similar to this this is more sophisticated than that. we bave tAe data base, our data bases include at present some 20,000 nasrsslo- tbeY're legislators and public officials and other key contacts that w#ind it necessary to deal with and have access to on a regular basis. Zt large2.y contains names and addresses at this point we're N t ~ 20 ~ expanding it to contain other key information, it's very ~ 21 z ~ useful in the big hits that we ake with our products, with ~ 22 ~ our products meaning thiaqs like the black, the hispanic guy, 0 23 pirqinia alims csa2en!lars, things that we reaeb out and show N 24 tben what* liie do, wake contact, make oltr names known to then. 25 111 sae this is ont ai:ea0nt of it, developing an information system.

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R8 1 2 3 4 22 23 24 25 '1".he seessfri4 leas>s<t of researctb. the seCOOd elesnat of research lasation I gbink has to pay alcteetion to is tAe NLA gmation. 'i'bat Is developing data bas.s and inforaatioa that'a useful not only to senior sYaaagssrnt bat to tbe aperatiws of understanding the issnes and being abls to go out into the field aod deal with those isroai and baeg able to go out into the field and deal with those issues. now bere is sss>te qrapbic illustrations of what we do bave in our data base. This is a bar graph that il.ltutrates what was 1983 status report, on the sa jor cate- gortes of legislation in statea at tbe local lev.l. As ycm can see the rrd Is past, the blue is pending, green is de- feated and it go.s to each one of our issues, we can look at this and see werY quickly that the problem we have at the ioca 1 lev.1 is a problem of saoking wit©hing. OkaY, this 3s a graph that a 1l.ne graph that arrays price changes in cigarette industry over the past 10 or 11 ye:rs, it nses index numbers which is just a way of creating all, making all things equal in and you have differ- .nt values. What this shows politically is you can say, well if you look at our price <hanges which Is manvtfaoturers list price the line that goes to the very top e.alates very cios.ly to tobacco prices tUoulboat the first part of the decade, the yellow line, and then when they diverge you can see the surge

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87 4 ~ 0 z 13 ~ ~ 14 ~ 15 ~ 16 t~ z 17 8 18 ~ ~ 19 z 20 21 22 23 24 25 r, d tbat occurs Ia the exettaa aal*a tax which is tbe botter 1ima. It's a useful ilinstratlft = think gi,rren cnsr current relations with the farr aoa.amity. Xege's sss..tbiAg you can use with a ppablio olfioiat, a3xi.ght, it's a high bar grapb. It illnstrates wbo gets Vlott from the sale of cigarett.e packs tn xew York. I lfelieerr vs put something like this in our Corporate Affairs Report for the loard last year. And again, its clear the 1 govsrtsreot gets the biggest s lie3., break out the govern.ent .: shares with the bar graph and illustrate I think what aom of the probists we face are in Diew York to the public offi- cials. 47% of a dollar, that's a lot of cash flow makes us very close to being tax collectors only in New York State, and New York City. Alright, this and the graph following it were used in tbe battle over changes in the Federal Bxcise Tax payaeAt period. This was prepared in order to illustrate differential treatsient afforded cigarettes and other products that are subject to excise tax. You can see the presentlaw which is 13 days, the proposal I should say senate not state proposal. Tbe senate proposal I believe was 1.5 days com- pared to 75 days for tires, auto parts, telephones and air tjW&. This ia something I think an operative woa].d use to aaidb an equity largnment to government of f ittia 1. D1ow this is somthing I think would beuselui

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1 3 4 5 6 7 8 9 10 ~ 11 12 En .. 14 17 18 19 20 P 21 z 22 23 24 25 to an ©p+ristiws to aw3esstand iawpact of every propwai, e leotrobia funds tranr fer avd payment dates can be pretty: esc>trria staff. »!at this dois is it takes all proposals and reft+ees then current law, M is eleekronio funds trans- f.rs 25 days which is the current length of time, eftbetive isnqth of tisre for that. So 8tT in 20 days, no Ms 14 days ,~eezttoaabie. I and the& final ly the Senate proposal which was the asMt ob- _ ~ a) o, M know what wed like to see, what's store favorable alad what qs ie less favorable to then, and I believe Stew w+e'w got the o Nc+r you don't hive to be a finance expert to sTP and you got the same period. Actually we're a little more efficient tha7h the average manufacturer so that 1.5 day actually we still get a half a day play . BTaw this plots and projects using ~ ~ a treoEd line regression which is a very si.ple analytic z R Average retail prices and &Vera9e st+rte taxdf°' in the U.S. until 1999. Now what this is saying is this t4~~i.q~ce. is a way of looking at an issue, projecting it out and ~ ~ z 0 Q what's not going to b e such a big issue. And what this indicates is that we've done a pretty effective job of keep- ing state taxes down and if the trend continues in this vein they will continue to drop as percent of retail price, and vrhich ie of course a favorable trend. Now her.b an ad, as ~ saying, Wteat's going to be a big issue in the future and

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lt9 2 3 00 03 6 OUD) 7 _:. ~ ~ ~ 8 Q ~ 9 02 10 ~ z 11 22 23 24 25 sOM Of Y" lllay IfGM/, yNterdaY lftl" bOQa1e the second st.atr to attacb an e{0 imrease in 0. stat* tax to t1W smaet of the lederal tax, the tederal tat #,s Uhat we would call aa eytogenons sboft ahia'h possibly aasDtld throw this line all askew. ctassT,inoluding sales tax and add the more excise !.t any, This is th. last MInsi . xow wbft I took this from 0 chart that's prepared by $ve Sargest. M'i0 1s iR Mary Cuviagton's group, whictD I was rea liy fapress+sd by and in the EBC +» used it to compare things that you can see. Their charts look much different fresa ovucs in this first category. 1lasic- ali,y it takes the State, the value added tax which in onr the only one we have here is a line. The total proportional does tax, the specific excise for 20 that doesn't include the Federal Excise tax, the average trade margin on retail price, 20 pack price for the popular category, I also put in Bnro- peaa currency units because Ian did that and I thought that was . Tax incidence which is percent of the retaii priaee and tax. Our multiplier alhicb in this case is just the sea- sitivity of retail prices to change and manufacturers prices and then finally the total tax yield for 20 pack. Now I think with this kind of model does for you is you look at Aayaii, you see the very high multiplier rh what.tkat tells you, and wben you translate that into dol2ars and cents is that a one dollar increase in manufacturers

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Hx0 1 2 3 4 11 22 23 24 25 price .ight inarease retail pri+ose asn average dollars eigbtees thro00eat tur aatioa aud whili !lawaii it would imreasa then 03. 0.0 yb3dk tn one of the r.asoe! .by we agpose added on tocatl,". I tbinhr that #3ey cannot, res.ar+ak and astiol3i` man't aeplac» qcod pOlihioal issttaCts and good Contafts but tt can bap us be sox* elfacEiva a" give us an edge in in- etreasingly hostile poiitical world. NW»PAZOR 8. Bt1tL= Tltaek you very such Jaetk. Rabert 8ant, is with as from 7 Up, Manager of pnblic Affairs from 7 Up vhd will dese>vibo eertaia Federal reguiatory eftfusi,oa over wetners. ROBSRT i3tJ1~Ts Thank you Stevo. I wanted to title my topic today, Bow Safeet It Is, but that's just not the case when your talking about artificial swoztners, as a matter of fact it's a very bitter lesson in the .rhdle regulatory structure and leqis lature stsua3ture of the nations safety laws. A lot of diverse grougs are working on swdify- food ing tbe/safety laws and the use of alternative sweetrters conewaer groups, iadustry 4;roups, scieatists, the academic coaomunity and of course Iftderal regulators. Before getting into really any overri.v of aspartame, cyclamates and sacrdhaYiLn, the three major swet- ners that We're looking at and that rve're using to sa®0 ex- tent in our products I'd like to just give you an overview

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Philip Morris