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, Mr. J. T. W*ttebrenner Page-Two - May 5, 198(t John, the attached analysis reflects all available learning that we have on Asian-Americans. If there is interest in exploring specific markets further, we would suggest custom research such as focus groups to better understand this group. • Jack Bellis JVB:kde cc: Mr. L. W. Hall, Jr. Mr. A. R. Cox Mr. D. N. Iauco Mr. S. R. Strawsburg Mr. R. C. Nordine

~6- iayoa . . . 7F i,la,,(~ MDb i* May 5, 1986 TO: Mr. J. T. Winebrenner FROM: Jack Bellis SUBJECT: ASIAN-AMERICAN BUSINESS POTENTIAL Attached is the analysis you requested showing the potential size and growth of the cigarette business among Asian-Americans. In our view, SALEM's business potential among Asian-Americans would have to be described as low to very low. Reasons are as follows: • Although they are the fastest growing minority in the country, they are growing from a small base. The Asian-American adult population is currently one-third the size of adult Hispanics and one-fifth the size of adult Blacks. • Asian-Americans have a very low smoking incidence (9%) which may in part trace to the fact that they are the best educated group in the country (including white Americans). • Their population size in combination with smoking incidence suggests a very small volume and share opportunity--it is estimated that there are currently only 325,000 adult Asian-Americans who smoke which is less than 1% of total adult smokers. • Asian-Americans are geographically concentrated with half residing in California or Hawaii. Further, they are likely concentrated within certain sections of the major cities in these states (i.e. Chinatowns). As such, there may be potential to reach these smokers in a very targeted manner. However, the small size of the Asian-American population in any given market should be considered. For example, Los Angeles has the largest Asian population of any city in California, but`is still estimated to have only about 30-35,000 adult Asian smokers--about 5% as many smokers as the average RJR sales division. • The menthol category is underdeveloped among Asian-Americans (and this is also the case in Asian countries relative to the U.S.). • Philip Morris (particularly Marlboro and B&H) is already strongly developed among Asian-Americans, such that SALEM (or RJR in general) would not be building from a position of strength. I ~