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/ REPORT ON THE THIRD GROUP SMOKING AND HEALTH CONFERENCE [%"" HELD AT CHEWTON GLEN, ENGLAND IST - 5TH JUNE, 1975 DISTRIBUTION: Mr. P. Macadam Mr. J. Edens Mr. P. Pare Dr. H. Stutzer Mr. H. Widdup Mr. E. Ricard Mr. G. Bartels Mr. D. Bryant Dr. D.G. Felton Dr. S.D..:Green U,Ko U.S.A. Canada Germany Australia Canada Australia U.S.A. U.K. U°K. Mr. G. Hargrove Dr. I.W. Hughes Mr. C.I. McCarty Mr. P. Sheehy Mr. H. Sottorf Mr. C.H. Stewart Lockhart U,K. U.S.A. U.S.A. U.K. Germany U.K. O O ~4 ~D ~D BATCo document for PFSFC 2 March 1999

REPORT ON THE THIRD GROUP SMOKING AND HEALTH CONFERENCE HELD AT CHE~'FfON GLEN, ENGLAND, FROM IST - 5TH JUNE, 1975 Io AIMS OF THE CONFERENCE Mr. P. Macadam welcomed the delegates and then reviewed some of the main developments since the last Group Conference at Tegernsee. He then tabled the following Conference aims, which were agreed:- (I) To keep fully informed those responsible for the major companies in Tobacco Division where this area presents a continuing problem and to this end to exchange ideas and current thinking of the managements concerned. (2) To evolve on a continuing basis guidelines with respect to response to differing and developing external constraints. (3) To develop suitable strategies aimed at the protection of tobacco companies and their consumers. (4) (5) TO ensure, as far as possible, that actions by companies in the Tobacco Division which have a bearing on smoking and health shall not adversely affect other companies in the Division. To this end to ensure that the managements of all companies in the Tobacco Division are aware of the effects that their actions may have on other con~anies in the Division. To enhance the standing of the B.A.T. Group as a responsible organisation which contributes with advantage to the countries in which it operates. O O J~ ~O O BATCo document for PFSFC 2 March 1999

2. REVIEW OF THE STRATEGIC AND POLITICAL SITUATION IN THEIR OWN COUNTRIES BY THE DELEGATE COt:~ANIES (1) U.S.A. It was reported that, although there had been no new developments in the literal sense since the last Conference, there had been significant new emphasis and alterations in momentum in certain areas on the smoking and health front. These were:- (a) Increasing momentum in the trend towards smoking becoming a socially unacceptable habit combined wit~ increasing restrictions (in terms of locality) on the freedom of consumers to smoke. [b) Increasing activity aimed at producing further limitations on the tar yield of cigarettes. (c) Attempts to impose certain measures in the field of advertising. As regards (a), it was reported that there are now 23L Bills in 45 States (of which 82 were active in 22 States) and most of these Bills represented a change in emphasis from concentrating on dangers to the smoker to concentrating on the danger or nuisance that the smoker represents to those around him. In the matter of (b), Senator Moss had made a formal approach to the Consumer Product Safety Commissior the object of which was to pressurise it into imposing maximum tar levels for all cigarettes. The Commission had, however, voted 4 to 1 against Moss's proposal on the grounds that it was not so empowered. As a result there was now a Bill before Congress the effect of which would be to remove tobacco from the purview of the Consumer Product Safety Commission. This Bill had passed the House of Representatives and was shortly to come before the Senate Committee, where the industry is optimistic for passage. Last week Moss had written a letter to the industry asking that tar yield informatic should be made available at all points of sale and the industry was currently considering what its reply should be. In general the industry was not finding it difficul~ to deal with these pressures in the short-term, although it recognised that there could be long-term dangers in this trend towards tar level limitation. The main move in (c) had been the Federal Trade Commission's recon~nendations for health warnings on advertisements and also the printing of tar and nicotine figures on advertisements. The industry had"-~ taken voluntary action in this area and the Federal O O Trade Commission was extremely active in monitoring ~, all cigarette advertisements. ~O ~-4 The Ad Hoc Committee of the National Cancer --~ Advisory Board had recommended a ceiling on tar/ nicotine level. This recommendation has not been --" BATCo document for PFSFC 2 March 1999

-2- (2) acted on yet by the President since no new evidence was submitted by the Committee in support on any ceiling. On the general political front, one particular development had been the fact that some of the senior Congress members from the southern (tobacco) states had been voted out at the last election - for example, Mr. Cook who was a member of the Senate Commerce Committee. This had had some effect on the tobacco lobby but on the whole the industry felt that it was still fairly well placed in Congress. As a generalisation, it could be said there was now emerging rather a different type of Congressman, particularly in the House of Representatives. The new men seemed less business orientated than their predecessors and much more consumer orientated. Some southern Congressmen had actually associated themselves with anti-smoking measures. Previously the anti-smoking moves had almost always been initiated by Federal State Governments, but latterly there had been pressures on State Governments from "grass-roots" sources - usually from vocal minority groups who saw anti-smoking activities as an easy means of increasing their power. CANADA It was reported that there had been no really radical change in the situation since the last Conference. The industry had established a relation- ship whereby Government accepted that the industry would keep them abreast of developments in other key countries and the indus'try, while realising that the Government would be influenced by such developments, had achieved a position where it would not be asked to make concessions in advnnce of these developments. Industry relations with the current Health Minister and with his Deputy Minister were good and the industry did not anticipate any serious problems in the near future. Meetings with the Minister took place about every six months and the industry had been able to date to give way slowly when asked to make concessions - for example, it had been enabled to delay the printing of tar and nicotine figures on packs over a period of three years. IMASCO was convinced that the only hope for the future was to retain the unity of the industry. If the industry split the Department of Health would undoubtedly intervene and legislation could be affected by it in about three weeks if it so decided. The main problem in the industry was the attitude of Reynolds, which had recently acquired MacDonalds, whose largest brand was declining, and of course the O attitude of B. & H. (Philip Morris). These two O companies which each had a small share of the market~ were indulging in brinkmanship in fighting against concessions and only abandoning the fight at the "~4 last moment before there was total collapse of BATCo document for PFSFC 2 March 1999

-3- (3) industry unity. It seemed likely that the two main issues for the industry in the future were the matter of the declining social acceptability of smoking and the whole question of "safer" cigarettes. The industry recognised that it could not afford to be complacent but it thought that it had a satisfactory policy of gradual retreat which would last it for three or four years. Its main concern was not to reach a point where a Price Commission for tobacco was set up, because the Minister decided that this would be a useful form of control. The beer industry in Canada had been extremely severely d.amaged by such a Commission. The industry had agreed to a new code of behaviour in the smoking and health field as from the ist January. This had been accepted by Reynolds and B. & H. with great reluctance and because of their ultimate fear of legislation the code had been cleared with little trouble with the Ministry of Health, but the Ministry of Consumer Affairs had proved a stumbling block in its desire for the Combines Group to initiate investigations. However, the industry had modified certain points in the code and the code would be printed and published in the near future. Copies will be sent to Millbank for circulation as soon as it was printed. As regards advertising expenditure, the allocation of funds for above the line advertising was already in in existence and the M/nister of Health was pressing for below the line advertising expenditure to be included in this allocation (e.g. give-aways, promotional activities at points of sale, etc.). This would mean, of course, and additional limitation on the industry because the Min/stry wanted the total allocation figures to be frozen with no allowance for the effects of inflation. The industry has introduced tar and nicotine figures on packs. Average figures are shown as agreed by the industry after each company carried out its own tests. The Waterloo Universities would be monitoring the figures. If their figures differed from a Company's by 1 mg they would inform the company immediately, but they would only insist on a change of figures on the pack if the variation amounted to 2 mg or more. AUSTRALIA --~ O O It was reported that over the 12 months since x~ the last Conference the attack on smoking had shifted ~o from one based on causation to an offensive based on --~ passive smoking and the decline in the socialaccept- -~u ability of smoking. The industry's chief public opponents continued to be Dr. Nigel Gray of the Victorian ~ti-Smoking Council and Dr. N.D. Everingham, BATCo document for PFSFC 2 March 1999

the Federal Health Minister. At the XI International Cancer Conference of Florence, in 1974, the former had reported that lung cancer rates in the 55-59 and 60-64 age groups had declined and claimed the credit for the fall for his Organisation. He based this claim on the fact that his Council had campaigned with success for the reduction of tar yields in cigarettes. In this connection the fact is that the industry has now no brands over 20 mg, although to date there has been no demand for the establishment of maximum tar levels. ! In general, the media coverage of smoking and health has been somewhat scrappy. In the political arena, Aldermen and Local Councillors have begun to use smoking and health matters as means to achieve public attention. This area has previously been the preserve of Federal and State Legislators. Their activities have not stemmed from grass-roots agitation. On the contrary they have generally been inspired by public health officers with their own axes grind. On the industry side, the Managing Directors of three manufacturing companies had redefined the responsibilities of the industry group previously known as the Public Relations Committee. As a result a more formalised group called the Co-Ordinating Committee on Smoking and Health was set up in January, with representatives of all three companies under the Chairmanship of Mr. B.E. White, AMATIL's Manager for Victoria. Under its terms of reference this new Committee is responsible for alerting the Companies to development or trends affecting the industry and where statements are made by the Anti-Smoking Lobby which ~annot be supported by evidence, to write letters to the authors of these statements asking for substantiation of them. Over the 12 months there had been a number of instances of the opponents of smoking taking action in various areas - mos~ often operating by stealth. In May, for instance, the State and Federal Health Ministers had issued a press release at the beginning of their annual conference in which they announced the extension of health warnings, worded as, for the packet warning, on various forms of advertising, including billboards, point of sale, and even clothing. This action was taken after the industry had been assured that smoking and health was not on the agenda. Faced by this situation, the industry had taken steps directed at ensuring that action would not be taken to implement the measures recommended unless there was agreement at Cabinet level. To this end, individual manufacturers were lobbying State Governments basing their arguments on economic rather than health grounds, particularly in the tobacco States. Approaches were being made at State Premier level and to Party 100427754 BATCo document for PFSFC 2 March 1999

-5- officials. Additionally, if this was not successful, the point would be made that, as in Hobart, Tasmania, advertisements already carried sufficient health warning because a warning appeared on the front of packs featured in advertisements. To date Queensland had made it clear that it would not follow the recommendations and the industry was hopeful that New South Wales would take the same attitude. The industry was hopeful that if there was a change of Governemnt between now and September next year it would be allowed to carry on with the use of electronic media with the existing limitations. Surprisingly enough, however, certain Liberal pclitician~ were in a way more of a menance to the industry than their Labor counterparts despite the fact that the Labor Party had a plank in its platform against smoking. In the area of "safer" cigarettes the industry had made a proposal for co-operation with his Ministry to the Minister of Science, Mr. W.L. Morrison. However, industry was not now pursuing this with any enthusiasm because Mr. Morrison was in charge of Consumer Standards which could be a potentially dangerous area for the industry. Furthermore, his department was responsible for tar and nicotine testing in each area. The department's analyst, Dr. F.E. Peters, was working already in liaison with Waterloo University in Canada. As regards the Australian Tobacco Research Foundation, the five year period of financial sponsorship by the industry had now expired and it had been agreed that it should be renewable on an annual basis for not more than three years in the first instance. In any case, however, long-term commitments (maximum 3 years) would be completed. As regards the problem of maintaining industry unity, this was not proving too difficult because none of the three manufacturers was struggling for existence. The other two manufacturers were both in favour of a Tobacco Institute on the U.S. lines, but AMATIL was opposed to this as it provided an easy focus for all attacks on the industry. AMATIL still take the lead for the industry in all matters concerning smoking and health and prepared the policy papers. In reply to a question it was reported that the unattributed health warning now used in Australia had not been agreed voluntarily by the industry but was covered by State and Federal legislation. It was also pointed out that the warning used in electronic media carries an attribution. m C In Australia there was a Price Justification C Tribunal for all industries with a turnover of over 20million dollars per annum. Over the last two ~c years the industry had had, after an initial set- back, some success in its dealings with this Tribunal ~F BATCo document for PFSFC 2 March 1999

• --6-- (4) GERMANY It was reported that over the last 12 mont~hs there had been three major developments in the smoking and health situation in Germany:- (1) An enormous increase in the Anti-Smoking campaign. (ii) Intensification of the competitive situation in low tar and nicotine cigarettes, together with the introduction of N.T.M. cigarettes. (iii) The reaction of the medical authorities and the Government to (ii) above, i.e. intensive competition. As regards (i) above, the most serious issue was the declining social acceptability of smoking. The situation had been worsened by the advice given by Government to all concerns and establis.hments. In addition, the market had been seriously hit by an Anti-Smoking campaign, specially effective was a television report in March. This campaign had been run for a half or three-quarters of an hour at the peak viewing time of the day and the results it achieved had been about as great as the impact of the Surgeon General's Report. As regards the low tar and nicotine brand competitive situation, 18 months ago the industry had agreed to have lOO brands tested in three neutral research institutes. The resulting tar and nicotine yields would then be agreed by the brand manufacturing companies and published every six months, preceded by a press conference. Some days before the initial press conference the results were published in tar yield precedence in the press. This pre-emption was undoubtedly inspired by Reemstma, who must have extensively planned over the preceding 18 months to achieve this. The move was successful in that R.6 was top of the league and rose from 1OO million a month to 4OOmillion a month in three months. The seriousness of the situation for the industry was, however, with the press coverage for these figures emphasised the risks of smoking so the overall market volume suffered as a result. J In addition to this, a Consumer Association in Berlin, Government sponsored, published the tar and nicotine yields of 37 brands in March, including B-A.T.'s brand, AUSLESE. The list included Reemstma's brand, California, which came out top of the league in spite of the fact that it was not yet on the marketl ~ghen challenged about its inclusion, the Institute replied that it had been assured by Reemstma that California's tar and nicotine yields were the same as Delta, which did not sell. c C t~ BATCo document for PFSFC 2 March 1999

-7- (5) The list also included Carbon Monoxide and Nitrogen Oxide yields and AUSLESE had the highest Carbon "Monoxide figures. Details of the N.T.M. cigarette situation in Germany would be dealt with under a later item. It should, however, be mentioned that B-A.T., Germany, have never wanted to market N.T.M. brands with a declaration on the pack. The reason for this was that; without a declaration, N.T.M. could be included in the blend of any brand and also a no declaration situation avoided any unfavourable reactionby the consumer against artificial substances. This could have been achieved if the industry had been unanimous on the subject but Reemstma had refused and obtained a licence involving declaration on the pack. Reemstma's attitude in all these matters had destroyed the unity of the industry and, in the matter -/ of publication of tar and nicotine results, B-A.T., Germany, was considering whether it would be better to priht tar and nicotine figures on the packs rather than to have figures.published every six months. It might be advanteous in that figures that were constantly before the consumer gradually became meaningless. The reaction of the medical authorities and the Government to intensive competition in the low tar and nicotine sector of the market had been a strong one. Their fear was that the public could easily get the idea that such cigarettes were safe. Only last Tuesday the Government had put out a statement that cigarettes of this type might be safer but they were certainly no~ safe. It might come to a situation where the law would be changed but the industry was in close touch with the Government on this subject. In fact, a study carried out by B-A.T., Germany, show._/ that there was no evidence that the smoker of low tar/ nicotine cigarettes smoked more than the smoker of normal cigarettes and, indeed, he appeared to smoke about i to 1½ cigarettes a day less than the smoker of normal cigarettes. Nevertheless, the Government was somewhat concerned about the possibility of increased consumption per capita in this sector. U~K° It was reported that, as mentioned at the last Conference, Mrs. Barbara Castle had taken over from Sir Keith Josepth as Secretary of State for Health when the Socialist Government was elected in February 1975. Since then she had confined her activities -- largely to the Social Services and had handed O responsibility for smoking and health to Dr. David O Owen, the Minister of State for Health and Social Services. In July last year Dr. Owen had summoned --4 the T.A.C. to a meeting in the House of Commons and BATCo document for PFSFC 2 March 1999