Tobacco Documents Online

BRITISH AMERICAN TOBACCO Copy Request Form Request Number: Organization: Physicians for a smoke free Canada 13 Request Details 2 Request Date: ......................................................... File Number: ....~... ......~..!.6..~...Box Number: ...~..Q....~...~..~..~.... Page Range: First Page ~ ~ 1 ~ ~ ~ "~ (~ 2. Last Page ,3 ~)] i ~ ~ ~Z ~ ~ Requested By: (Print Name) Details below will be filled in by Depository Staff Only II Copy Details Copied By: .... !~p~.7~~.. ............................ Date: ..... ~././~J..~...~.. .......... Time: ..~.: ~..~ ............ Copy Checked By: ................................................ .... . . .. .. Date: .......................... Time: ............... • mms sso • Qs ass ssl • • • • ososse III Delivery Details Checked By: ........................... ......... Date:.. .............. ... . Sent By: .......................................... Date: ..................... BATCo document for PFSFC 1 March 1999

( B.A.T (U.K. and Export) Limited Woking t To) RF, F SEE DISTRIBUTION R.D,JVC I ~o.,..~ ,,,/ I R. BRENTNALL I ( i $ April, 1992 t FS DOMESTIC - CANADIAN BORDER ~ ~'~ product costing USS20.00 on the US side. The differential is due entirely to the high Canadian Federal and Province taxes. It is estimated th~ this trade, primarily for Canadi,'m cigarettes, is worth 3 billion per mmum. Three main sources of purchases - Border shops - US side: Retail domestic outlets inclusive of!ndian reservations and smuggling. Due to political, ecoa,.,mic and domestic retail pressure, the Cans "'dish Government ann,,,nced ,m February 12lh mt iuanediate imposition of C$8.00 per carton on all ',Tanz,lian exports of ci._o'arerres regardless of destination. The a.,~lmprion bein~ tha, the # "~2 majority of Canadian exports are. in fact. imported back across the border. ~ ~. estimated to be _-3 months stock in trade, rn addition, the situation is extremeiy fluitl ~ .%t~d with turnouts of yet fttrflaer chaases in dub" stnlctttre. Provincial goverm~ents ,",.re not hefpin~ the Federal ,,ovemmem as they can and are applying different strategies to their k local duties. For example, it .has just been learned that Ontario may apply additional \t~" <~.~ Luxltry. Tax and Manitoba a 6% Tax on all products. If proven to be true. these actions will oifly r~se demand over the border. A probably move will be for all C~madian manttthcturers to .-'witch expot~ production off-shure. Ma~D,,nalds are nmloured to have already commenced Pne'.r,; Rico. prodaaioa in ~ E g BATCo document for PFSFC 1 March 1999

Impljeorions for BATU'K.E BIT, our US domestic distributor, has "alwa)~ been developing brininess along the border as a natural extension to their growth. Due to other priorities, this border Wade had not formed part of our key strategies except where business could be developed to Viem,'unese living in Canada, but close to the border. An average monthly volume of 2 million State Express (out of an average 16 million nationally) is being achieved through distribution to key border distributors who in Run supply Indian reservations. If these new duties remain in p 'lace, then there would appear to be an oppommity tbr BATUKE with a Virginia proposition at a rea.sonable price. Border sales, this month, have risen to 7 million due to speculative purchases from the trade. 1. Distn'bution Consider distribution is the Fast priority. BIT have been asked to expand their distribution base. Brov, la and W~on - Hoyt Higgins, Vice President Domestic Sales has been asked by thC_.W_I:it~ to tmdertak¢ a ~ di.~ribution survey along the border for the 555s brand. He has readily agreed and results should be provided within t'w__oo BWIT - have been asked to recheck their dism'oution to the key duty-free bord~ shops. Apparently the largest Company - Ammex i,~ ovemrieing all of its cim'trerte/" product compared to aggressive domestic retail chains. BWIT ,'u'e Lmkia~ proposals for a change in policy_>._ / 2. With 5fiSs currently underpriced, in trade terms, in the US domestic, it is --m attractive proposition at USS 19.00 per carton.... 5. \ ~£~mmmati~u After consultation with CME, no local press of any importanc~ is available bur they are investisatiug outdoor opportunities. At this stage, BIT had immediately sent out a trade flyer and a more professional, universal teaflet could be beneficiaL , The key points ,are - Made in England 0 0 BATCo document for PFSFC 1 March 1999

Use of POS has been considered but, at this stage, requires more thought due to the re "'Ikmce on the material being passed from distributor to wholesaler to retailer. +. v_almm.miegtm Due to the high number of variable factors it is difficult to make any reasonable assessment. Another strong rumoux is that following strong representations from the Canadian tobacco manufactme~, ftmher changes to duty structures or possibly a repeal could be made in the next few days. It is clear the Canada consumer is only 8oingo m switch products if he considers his own brand is too expensive. US generics are possible attractions. , Market Visits Whatever the ongoing situation, we need a closer appreciation of the business at the border. Kelvin Ling will be visiting this month, Buffalo, New York State with the co-operation of the local Brown and Williamson domestic team and Sear'de, Washiagton Stare. 6. A further report will be issued at the end of April unless circtanstances change so necessitating an earlier summary. .__. pP Distribution: Mr N. G. Brooke~ M.r A.D.G.Pereira Mrs S. Osborne .Mr S.Facey .,'vft- C. Figuereido M.r I. Pothecm3" Mrs L. Previati CZ) O~ ~4 "-,4 ~4 C) BATCo document for PFSFC 1 March 1999