sample="quota" bates="511025094" isource="rjr" decade="1980" class="ni" date="19881222" from the desk of JENNIFER BAILEY VTG 100 REG 1.88 LBS/1000 CIGTS (KAREN SANDERS) TEST MARKET .00188 LBS/CIGT | 65,500,000 CIGTS | = 123,140 LBS NATIONAL ROLLOUT .00188 LBS/CIGT | 2,138.2 MM CIGTS | = 4,018,816 LBS December 22, 1988 TO: Mr. H. T. Parks RE: LN Volume Projections The following reviews the volume projections provided to R&D for the potential LN product '89 test market and 1990 national expansion. The information provided by MRD was requested by R&D in order to provide the Leaf Department some guidelines as to how much LN tobacco would have to be purchased. Volume Projections/Assumptions Test Market Assumptions: - 5% industry volume - 6 month test 4th Qtr., '89 - 1st Qtr. '90 Share Projections Volume Projections Pessimistic .3 39.3MM units Most Likely .4 52.4MM units Optimistic .5 65.5MM units 1990 National Rollout Assumptions: - 100% industry volume - 2nd Qtr., '90 - 4th Qtr. '90 Share Projections Volume Projections Pessimistic .3 1,282.9MM units Most Likely .4 1,710.6MM units Optimistic .5 2,138.2MM units Note, that for both the test market and national rollout the optimistic share/volume scenario estimates were communicated to R&D. Lastly, per our discussion of yesterday, given the lead times required to procure LN tobaccos, a commitment decision for test market quantities will have to be made January 15, 1989 with national quantities having to be committed to by February 1, 1989. Given the potential ramifications of these decisions, I suggest we schedule follow-up meetings with R&D to further discuss the quantity commitment issue. If you have any questions, please contact me. D. A. Alcazar DAA1:11 cc: Mr. D. Potter Ms. J. Bailey Ms. C. Mitchell