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Liggett & Meyers Report: Visit to South Africa from March 1st through to March
11, 1977
FROM: J.H. Keller. Brussels
TO: Mr. J.A. Hemingway, Brussels
Date: March 15, 1977
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Summary of Image
Page One
Lists objectives
"Comments: Significant progress was made in 1976 over the 1975 period by our
licensee... Chesterfield Fi. 30's [1975 - 5,491; 1976 - 50,893; Change +1,555.3%]"
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Page Two
"In contradiction to other markets, it is however the young 'roughies'
(16-22 years) that generally smoke non filter brands such as Texan-Plain,
and it is that consumer group which proves difficult to convert." "...In
terms of market share an average of .5% was gained comparing quarter... in
typical Virginia areas and 'Afrikaans' regions, substantial progress can be
noted:"
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Page Three
"In a very intelligent way, Mr. E. Sigge, the Chesterfield Team Leader
directs his promotional efforts to 'problem' areas well in time to assure that
the Chesterfield growth pattern is nation-wide." "...I am a strong believer in a
regular healthy growth pattern. 1977 ojectives are a) a sales increase of 25% b)
an increase of .4% market share c) natinal prosition Nr. 12 (beating 'Life' by
end June)."
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Page Four
Discussion of pricing options and excise tax increase
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Page Five
"I have found all promoters to be highly qualified and devoted people. They
are being well directed by Mr. Sigge and are being trained during an annual
sales seminar, held at 'Fleur du Cape.'"
"Brand Positioning a) Toasted Market: Whites, 32.33; Blacks, 56.7%; Coloured,
10.3%, Asiatics, 0.7%. b)Chesterfield of toasted market: Whites, 55%; Blacks, 39%;
Coloured, 6%; Asiatics, -."
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Page Six
"Age Groups: The toasted market consists of 31% 16-24 years old and 65% 25 years
and more. The Chesterfields sales profile is 47% 16-24 years old and 53% 25 years
and more."
"Comments: The actual Chesterfield sales profile coincides with TEM marketing
objectives and the brands ideal positioning which is described as follows: --
Toasted market, -- higher image brand, -- full flavour, -- younger male,
-- White European."
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Page Seven
"L&M: L&M with a white filter tip is out of the question, yet personally I do
not see why our company should reject a cork-tip version, due to South Africa's
geographically and politically isolated situation."
"Advertising: Formula 1: I have expressed TEM's view and have submitted my personal
recommendation to continue using Brett Lunger during the 1977 Grand Prix."
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Page Eight
"Quoting TEM Management, already the 1976 Grand Prix was successful although
the organizational set-up behind the racing team was inadequate."
"Without proper planning this event which could have turned into a very
strong promotion was compared with the well planned efforts by the McLarens -
Marlboro; Lotus - John Players; March - Lexington (Overseas Rothmans International);
Ligier Matra - Gitanes"
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Page Nine
Comments about race: "Final result 14th of 15 cars that ended the race. Hence on
T.V. the car was not sen once!!." "70 T-shirs (not 100 as quoted) were inadequate
(more than 100,000 spectators). 'Gitanes' have sold over 500 shirts." "The racing
jackets ...arrived ...with no Chesterfield advertising on them. Hence they could
not be used." "Some of the uniforms worn by Lunger's mechanical team had a Chesterfield
tag, other had not. It's size was approx. 5X5 inches, whilst Marlboro and John
Players carry chest and shoulder full-size advertising."
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Page Ten
From p.9 -- "Some positive results. b - pictures of car and interviews with Lunger
(with Chesterfield tag on uniform) appeared before the race in newspapers."
"c - the car was presented and interviews taken with Lunger on T.V. several
days before the race. d - two lectures by Lunger on road safety were given
to two universities (CH. Target Group) free of charge. e - participation of
Lunger in a cinema film sponsored by the South African Road Safety Councel (Lunger
wearing CH. blazer).
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Page Eleven
Advertising budget -- "All media has been increased, the biggest portion however
going to cinema"
Totals: 1975/76 - 828,154; 1976/77 - 922,600; 1977/78 - 1,243,500 (+34/8%). Figures
expressed in Rands (1 rand = $1.158).
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Page Twelve
Do we find price fixing here? See point 11: "Duty Free - TEM has increased prices for
its products as follows: ... They are proposing a price of Rands 10.30 for our brands
in conjuction with an agreement apparently reached with BAT."
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Page Thrirteen
"The Marlboro and Winston agents have announced a price
increase to Rands 10.-. I have rejected the price of Rands 10.30 as unacceptable
since not competitive and have proposed as highest price Rands 10.- (Marlboro)
and as lowest: level Rands 9.25. It is unusual for Rothmans and Dunhill International
to sell at substantially lower prices than U.S. brands in any Western European
port as example. I understand however that TEM operates with London on a transfer
price basis enabling them to be competitive with prices quoted, i.e. in Western
European ports. Regarding the pricing for our brands TEM will take up negotiations
with BAT and advice us." [click on image to enlarge to full size -- 13K]
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Title: VISIT TO SOUTH AFRICA FROM 770301 THROUGH 770311
Type of Document: LM, Liggett & Myers Memo
Date: 19770315
Author: KELLER,JH
Recipient: HEMINGWAY,JA
Site: Philip Morris document site http://www.pmdocs.com/
Page Count: 13
Bates No.
2501263952/3964
URL:
http://www.pmdocs.com/getimg.asp?pgno=0&start=0&bool=texas&docid=2501263952/3964
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