a.

Exhibit # ~O 0
Date : y -S - TRIAL EXHIBIT
A1fred A . Betz, RMR 10,299
TINY 0003248
 ,
DR . H . WAKEHAM
R&D PRESENTATION TO THE BOARD OF DIRECTORS
7
(November 26, 1969)

Gentlemen of the Board and Guests :

Once again It is my pleasure to appear before you and to make this traditional
annual presentation of Philip Morris Research Center activities . Before
talking about that particuler aspect of the program that I have selected for
this year's presentation, let me make a few remarks about the Research
Center in general . y

We have now been in the present Research Center facility ten years . We have
greatly Increased the depth of our scientific knowledge In the cigarec product
so that we are able to cope with the demands for new and Improved products
and the needs to defend ourselves from attacks In the areas of smoking and
health . We have extended our skills Into areas pertinent to our extended
product lines . We have greatly improved our communication with and services
to other operating groups and have overcome many of the probtems encountered
In the early days of the Research Department . We are highly and effectively
instrumented with the most modern research tools, and the qualicy of our staff
is second to none in the business .

You have on the table before you copies of a new brochure on Research at
Philip Morris . In it are details about our people and the facility, but here `' ^4
. . . ;~
are some figures I think you will find of interest . Our present staff numbers
about 330 persons . We occupy 125, 000 feet of floor space . Our operating 0
budget for this year was $6 million, of which about 25 percent goes Into C
research, 50 percent into product development, and 25 percent Into technical ~
services to other departments .

.N
So that you will, be reminded that we are still very active in developing new
.3 cigarets, I will now show you one product prototype which is perfectly practical
in terms of present technology but still fairly far out in terms of the present
.
. . .. : ~ • . .'* ~. . .

TINY 0003249
 2.

market . This product mighc be called a multifunctional filter in which the

different elements function in different manners . The front plug is a chemically
treated paper specific for phenol and hydrogen cyanide removal . The space
contains three solids identified by color . The black one is a general purpose`'M1
activated charcoal for gas phase removal ; the blue one is specific for hydrogen
. .i':_ . . . ..•
cyanide ; and the white one for certain water soluble gases . ' f4

'= These solids can be mixed, Inserted into a plug-space-plug filter system, and
; :r±;~,each wiZ1 perform its specific function in gas phase component absorption ..r• ..~

dndependent of the others . A year ago this kind of a product was only a gleam ~'
~ .,In
: : the chemist's eye . Today it is a laboratory reality . We have several ocher
. .~ ... . . , .
~,-cigaret prototypes in the works and are now scheduled to present the latest
{~ ;: ones for 1970 consideration to our Marketing Department on January 15 .

This year I have chosen to talk to you about some of our work in smoker psychology
. This work only represents about three percent of our total effort
but it is an important program, so I bring it to your attention today .

Ever since research began at Philip Morris, our emphasis has been on the
cigaret -- its chemistry, physics, biological effects, engineering, raw material
, :1
~ f requirements, and production problems . We have been . largely concerned with
the technology of the cigaret and cigaret making . In all this we have until
,
; recently almost t+otally ignored the smoker and the why of smoking .

' Why do 70 rnillion Americans and countless millions outside of ahe United States
smoke despite parental admonition, doctors' warnings, governmental taxes,
and health agency propaganda?

What benefits do smokers wittingly or unwittingly find . in smoking that outweigi

the real or Imaginary risks that the same smokers feel? Q

Why do some people not smoke, others smoke relatively few cigarees, still Q
others many, some merely puff supertiicially, while others Inhale deeply? CJ

TINY 0003250
 3.

Why do some people start very young, while others wait until middle life to '
begin smoking?

In answer to these and similar questions you will find many opinions, many
hypotheses, and very few facts . Some will throw up their hands and say that
the problem is hopelessly complex . We do not delude ourselves into thtnking` "
, . , ~ . . . . :,
we are dealing here with a simple question searching for a simple answer . On
- the other hand we do believe tha : the subject is important to our business and
K . .. ,. , ., .
that it Is amenable to systematic investigation and research which will lead to
~ some useful generalizations .

. . • <.
It Is for this reason that I have chosen this year to talk about the psychology
of smoking and the part which psychologists play in our research and developmen
program .

Our aims in this direction are twofold :

1 . To determine early in research and development the consumer acceptability

of a product idea before we expend hundreds of thousands of dollars developin
It, and

2 . To learn more about the psychology of smoking, hopefully to discover ways

to exploit the benefits of smoking to the advantage and profitability of our .
major company business .

Focus of our first aim is the work of a consumer research facility having the
"front" name of Product Opinion Laboratory . This organization consists of
about fourteen people who have as their chief task the collecting of opinions and

Slide judgements aboun our developing products . The judgements are made by differen
2 types of people, depending on the stage of product development and the degree of
expertise required . Thus, preliminary taste and flavor profiles are supplied O
our chemists and development engineers by three small descripttve panels of 0
highly trained experts . Products slightly further along the development trail ~
are evaluated by larger groups of less expert Research Center employees, W
supplemented by a group of abouc eighty Rtchmond housewives who smoke

TINY 0003251
 'cigarets in the Product Opinion Laboratory office near a shopping center .
Further screening is available from about 1500 members of civic clubs and
community organizations who are called on when we want a quick test from a
more representative group of non-experts . And finally, products approaching
'the test market stage of development are evaluated by a national cross-sectton
of American consumers, chosen from some 35, 000 people who represent
15, 000 families .

So, funneled through our group of POLL people, there is a continuous flow of
.~_ Y, ., .consumer responses to guide the Research Center and Marketing people in . .
. . .
. making product decisions . .r

One observation from this product testing work has been confirmed to us over
and over again, and that is that the expert smoker panelist ts much more acute
in detecting differences in cigaret smoke taste than the consuraing public .
~ ~

• For example, tn studies aimed at determintng the desirable amount of menthol

in a cigaret it was established thae over half the menthol smokers cannot dtstingui
cigarets with 5070 more or 50% tess menthol than chat in Marlboro menthol . The
presence or absence of menthol can be detected at very low levels, lower than
one-tenth that In most menthol brands . But differences In levels at higher amount
are very hard to distinguish .

Incidentally, another study on this subject demonstrated rather dramatically

that the menthol . coolness ascribable to our competitor's Kool cigaret Es
attributable to its name and brand image rather than to the taste of the smoke,

er se . When ehe KooL cigaret was compared to our Marlboro Menthol with I
Slide
3 the brand identtty concealed, menthol smokers, including regular Kool smokers,
could not tell the difference . When these same smokers smoked these same ~
cigarets in their regular packages, most of the menthol smokers chose the C
Slide Kool cigaret to be the "cooler" smoking and the Marlboro to be less menthol ~
4
tasting and more tobacco tasting . ~
~
. ~A
.Vt

TINY 0003252
 5.

In another example, it is well known to the experts that smoke from a regular
leaf blend tastes different from the smoke of a 10070 reconstituted tobacco
product (BL) containing a large percentage of stem material . The expert taste
panelist can also detect small changes of the order of 5% in BL content of the
~ blend . This taste accu[ry is not present in the consuming public according to~
another one of our studies . In this test we used the vending machine procedure,
. . .,,... f . . .
in which the panelists use issued slugs to "buy" one of several test cigarets '
`' from a modified vending machine placed in a factory or office lunch room . ' ;.
.,~r : .•.~.,..•
:' . ,.~. . • . .._ . , . . ... .
The test cigarets are all in plain white packages identified by a simple geometric
symbol . At the start of the test the panelists try the various cigarets available
and then repeat purchases of the one they prefer . By following the sates
:
frequencies we discover the consumer acceptabiaities of the test products . :

In this study we started the panel on two [dentical standard cigarets, and then
Slide gradually changed one stepwise to a high (75) level of BL . The results Indicate
5 that we could put Into the blend well over 30F7,, of BL without significantly altering
. the taste and subjective properties of the smoke . These findings have implicatio
In cigaret blends that can be translated into cost considerations .

In a third study, a thousand smokers were asked to compare cigarets made of

aged tobacco with cigarers made of unaged tobaccos . They had no preference,
Slide
6 suggesting that the aging process does not significantly alter the taste of the
cigaret from the consumer's point of view . This observation means we may
have more latitude in, maintaining a tobacco inventory than was heretofore
appreciated .

These examples illustrate how by studying consumer responses we can arrive

at valuable Information about our products and our business . But we have only
scratched the surface . I now want to indicate how much more tnformation we N
have about the smoker by looking at some information about the smoking 8
population .
~
A

TINY 0003253
 6.

We know a Iot about the typical smoker . . He's . 3 inches taller than average,
weighs 1 . 4 lbs . less than average, smokes 20 .5 cigarets per day, leaves a
-3
34 mm butt, Inserts 10 mm of the filter between his lips, takes 9 .5 puffs per
cigaret, takes a 38 cc puff into his mouth, and takes 290 mg of TPM into his
mouth per day . But smokers vary tremendously.

I have already referred to differences in the daily consumption of cigarets by

Slide smokers . Here in this distribution you will see that the range ts from one
7 cigarer to more than• sixty per person per day . But numbers of cigarers do not
tell the whole story . We know that smokers also vary in •

numbers of puffs per cigaret,

volume of smoke per puff,
length of cigaret smoked, and so on~ and on .

Because of these variations we have sought a more meaningful index of smoker

Intake and have come up with a mean daily intake of smoke . This measure is
obtained by analyzing the nicotine in the filter when the smoker has finished .
From this measure we can calculate precisely how much smoke passes through
the filter and into the smoker's mouth . Here's how we do It . Nicotine in /
smoke is directly proportional to the particulate smoke or tar . We know the
total amount generated in smoke for each cigaret brand and also the filter
efficiency . From these by difference we can tell from the amount of nicotine
how much smoke was drawn through the filter -- how much went Into the mouth
of the smoker .

in this test we had filter smokers save their butts for us for one week, and
from the residual nicotine measurements, obtained an average daily particulate
Slide matter intake value for each smoker . This slide shows you the magnitude of
8
variation among smokers In terms of this new and more precise index . Now ~6
one might ask "how good ; is the smoker's estimate of how many cigarets he

~ Slide smokes per day i-n measuring actual intake?" This next slide shows that It Is IVS
9 a poor measure indeed . ~ W

You can see from this that the index of smoking level, in health surveys as ~

TINY 0003254
 7.

determined by the number of cigarecs people say they smoke Is a very unreliabl~
measure of actual smoke incake .

. z . .
This great variability among smokers results from the fact that a smoker h,, .
tends to seek his own level of intake . Even while smoking a single cigaret, '
Slide he adjusts the volume of his puff as he goes down the rod, compensating for
10 the change in the densfty of the available smoke . , ;:c, , i.

4`~?'his adjustment is also observable as the available TPM of the total ctgaret
•~"ehifts . We undertook a study in which sixty smokers volunteered to srrloke-Ua•
s oniy the cigaret which we provLded for a period of five weeks . The first two, ..
weeks the cigaret delivered 20 mg of TPM . The next three weeks the cigaret •
*delivered 25 mg of TPM . The changeover was unannounced . Immediately
after the changeover, a number of participants complained that the clgarets
were too strong and defected, foregoing the $10 gift certificate promised to
those who completed the study . We found that adaptation occurred the first
day and remained stable for the remaining three weeks . Those who were
changed to stronger cigarets smoked less of each one and those who were
changed to weaker cigarers smoked more of each one and/or more cigarets .

The smoker's determination of his own Intake level is also seen in some
Slide figures provided by our associate, Dr . Max Hausern•mann ; of FTR . His data
12
strongly suggest that brand choice is a function of desired intake level . C

The above examples illustrate the kind of work we do in studying the smoker's
taste preferences artd his smoking behavior . The examples were selected to
emphasize three important conclusions : R

1 . Smokers are remarkably insensitive to the taste nuances in smoke .

2 . Differences In smoke intake arnong smokers are much greater than
is suggested by tar numbers and estimates of how many cigarets are
smoked each day, and It
3 . A smoker's intake level is determined by the smoker himself, not
by the manufacturer of the cigarets .

TINY 0003255
 Recently our psychology program has added a new emphasis . We are now
beginning to concentrate on the motivation of the smoker . We are asking the `
simple question, "Why do people smoke?" ., ; .

: . . . .~ .~
~ I must admit to some embarrassment when I say I don't know the answer tov+`=
this question . Tt is even more embarrassing to the psychologists on my staff .
:,•(. ; ,
", '
But I can tell you this -- despite the voluminous research and pseudo-sophisttcat
. .j : .
- theories, no one seems to be able to give an explanation backed up by substancia
s o lid fact . '^~ ~t'~"

Slide First, we "have to break the question into fts two parts : 1) Why does one begin
to smoke? and 2) Why does one continue to smoke?

There is general agre6nent on the answer to the first part . The 16 to 20-year
old begins smoking for psychosocial reasons . The act of smoking is symboIic ;
It signifies adulthood, he smokes to enhance his image in the eyes of his peers .
But the psychosocial motive is not enough to explain continued smoking . Some
other motive force takes over to make smoking rewarding In its own right .
Long after adolescent preoccupation with self-image has subsided, the cigaret
wi1I even preempt food in times of scarcity on the smoker's priority list .
Witness the experiences many people had at end of World War II when one could
buy wine, women, and song with a cigaret . The question is "Why?"

One of the obvious ways to approach the problem is to ask the smoker himself
why he smokes? When . you do this (and Leo Burnett did this about ten years ~
ago for P . M . ) the smoker will either parrot an advertising slogan or give O
you one of these responses : ~ R

1 . It relaxes me .
2 . It stimulates me . ~
~

One way to interpret this is to conclude that different people are affected in r
different ways by the inhalation of smoke . We are Inclined, however, to
ascribe this apparent duality of effect to an inability on the part of the smoker
to describe smoke-produced sensations .

TINY 0003256
 9.

Another obvious way to approach the problem is to search for differences

between smokers and non-smokers . This strategy has been more fruitful .
The research effort in England and the U . S . over the past 15 years has yielded
the following facts about smokers :

A . Behavioral Differences -- Smokers are :

.l . More extroverted, gregarious
2 . More business oriented - Generally more
-
,I . , .• -, . aggressive and
3 . More competitive risk oriented
4 . More mobile (fobs, residences, even marriages)
l ..

5 . Higher accident and injury rate

B . Physiological Differences : . 'Y .

. . , .. .,
1 . Have faster heart rate
Generally more
2 . Eat more
active, faster
3 . Drink more - beer, whiskey, coffee
living ~
4 . Have higher oxygen metabolism .
5 . Weigh less

C . Psychological Differences -- Smokers exhibit :

1 . More anxiety
Slide
16 2 . More emooional turbulence . . . , Generally
,.
more
. . .. P
3 . Greater sense cf time urgency tense and

4 . More suicide emotiona] '

A third way to approach the question is to search for the immediaoe effects of
smoke iahalation, upon the smoker . This approach also has been fruitful . Here
are the changes in human body function which follow smoke inhalation . All of
these changes have been reported by at Ieasn two independena researchers : ~
Slide
Cigares Smoke Effects
, 17
Increased pulse rate
Increased cardiac output and coronary flow
Lowered skin, temperature in hands and feet
Reduction tn knee jerk

TINY 0003257
 10 .

Arousal center in brain stem excited

Blood sugar level increases

Now what can be said about all of these findingsl

i
,

TINY 0003258
 11 .

A for t`ne differen-es between smokers and none-smokers one might

. surnmarize with these three general observations :
• : ; ~ . ., .., .
1 . Cigaret smoking is more often a habit among more responsive,
more arousable, more anxious people than among the less
responsive or more tranquil people . , ~..,:r
,_.; :~ :..
2 . More cigaret smoking is to be found among people whose
life careers expose them to pressures and crises .
3 . A smoker smokes more during the more stressful moments
of his day or during stressful periods of his life .

. .. -
. ~ I .
. _ .'~_~ .J . , .. • . . ' . .~

One might expect from these differences to find that people are attracted to
• : .- . :
smoking because it acts as a tranqutlizer En a stressful situation, as some
told Leo Burnett . Indeed this reason for smoking has been hypothesized by ~
a number of other investigators . But in our experimentation whenever we ',
have attempted to confirm this hypothesis, we have found, exactly the opposite
effect . For example, in studies using excessive muscle tension as a measure
of psychological arousal we have observed that smoking inereases rather than
decreases muscle tension .

We are of the conviction, ln . view of the foregoing, thet the ultimate explanation
for the perperuared ctgaret habit resides tn the pharmacological effect of smoke
upon the body of the smoker, the effect being most rewarding to the individual
under stress . [

We cannot view smoke as a tranquilizer ; most of Its effects on body function

suggest arousal . We can see all the benefits of smoking when bored, not yet
fully awake, etc . -- It arouses you when you need to be aroused . ` However, we r
do not yet understand how an additional source of stimulation, could be rewarding
to an aroused person in a stress situation . We are beginning eo work on this
problem .

Currently we are making exploratory measures of bodUy indices ot emotion and

arousal . We are measurtng heart rate, respiratory race, the efectrtcal resistan
of the skin, and muscle tension . At the moment our subjec are wired to a
1000273752

TINY 0003259
 12 .

polygraph recorder ; we plan to develop the techniques and instrumentation

to measure these indices remotely by radio signal .

Our ultimate intent is to monitor the smoker under real life conditions,
,under conditions of experimentally induced stress, and under conditions
of tobacco deprivation .

"l 1rC..'~
This is bas ic exploratory research, but we expect fallout in the way of informaci
, :, 1

. . applicable to the design of our smoking products and also information that m ight
: . . . ,
,.~. .,
^!~ ~a' . be used in a p ubllc relatio ns program . - '•`,

The subject of human response to stress Is receiving increasing attention these

days . You will probably recall the recent remarks by/lvia'rgaret Mead on the
subject of marihuana and drugs as a means of relieving stress . If cigaret
smoking is one of these responses, then we need to study it in this light with
the view to emphasizing the benefits of smoking . And-this may be an appropriate
time since the public is becoming increasingly aware with sodium cyclamates,
monosodi'.:m glutamates, DDT, etc ., that risks are relative and are often out-
weighed by the beneftts . Cyclarnates make life more bearable to diabetics and
people who tend to be obese . DDT is vital to the control of malaria and other
insect-borne diseases . It is interesting to speculate what stress responses
seventy million American smokers might make to the discouragement or
outright prohibition of smoking cigarets -- alcohoI. drinking, marihuana smoking

over-eating, muscle spasms, ulcers, fingernail biting, hair plucking, wife

beating, more aggressive driving demonstrations - - you name lt . Our
psychologists are work .ing on a program to determine what some of these
alternate stress responses might be . After we have identified them, we expect
to make some kind of relative risk analysis in order to place smoking in its
proper light in terms of modern living .

I have pointed out that cigaret smokers as a group seem to differ considerably
from non-smokers in personality, physiological, and psychological characteristi

10002'73'753

TINY 0003260
 13 .

Slide
18 ..These observations may give us clues as to why smokers may be a high risk ,,
group in terms of certain diseases and longevity . In other words, the health
. .•a
statistics regarding smokers versus non-smokers might also be explainable
in terms of inherited and environmental influences on the body . This hypothesis
Slide an a .ternate to the cigaret causation hypothesis , is brushed aside by the anti- '
~
19 cigaret advocates , possibly because it cannot easily be disproved . And yet .'
•,
evidence in favor of the susceptible person or high risk hypothesis is still ;
coming in . The most telling support comes from the recent work of Cederlof
- in Sweden an Ident i ca l tw i ns I n w hic h h e fi nd s that the no n -smoking twin has .~
heart and cancer disease rates similar to those of the smoking twin .
k This observation certainly seems to deny cigaret causation of these diseases . '

All of these studies indicate that Philip Morris as a company and the industry
as a whole might very well benefit greatly from much more research on the
smoker than we have done in the past . Certainly he is an important link ln the
chain of our success .

TINY 0003261
 U/

Slide 2

_ - La b I

II4
Descriptive
,
{ I
Personnel {p` Housewives o MetroPOL 101 P OL ;

I
TYPICAL
,~
I

EXPERIENCED ,
CONSUMER

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 Sllde 5 v aI

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 Slide 7

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 Slide 12

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TINY 0003272
 Slide 14v

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 %wo Q/
Slide 18

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Slide 19

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SiMOC ~ER
A-l"FRIBUaES _ .
C I G fli.R E ~ E
3 o"dO C~9 IN, G
In support of healthier communities,
this document was provided by
Blue Cross and Blue Shield
of Minnesota .

Tobacco web site address :

www .mnbluecrosstobacco .com

TINY 0003279