sample="quota" bates="93455341" isource="ll" decade="1980" class="ui" date="19860731" Lorillard Memorandum July 31, 1986 TO: Those Listed FROM: S. F. Smith RE: ANNUAL INDUSTRY AND CATEGORY FORECASTS For your reference, MRD's current industry volume estimates for 1986 through 1988 are shown below. In addition, the attached tables summarize: 1) 1986 and 1987 volume and share of market forecasts for key market segments 2) breakdowns of projected filtration category shares by length (king vs. 100mm), type of packing (soft vs. box), and non-menthol vs. menthol. Estimates of industry shipments versus consumption for the next three years relative to actual recent annual trends are as follows: COPIED - 2 As outlined in the following table, forecasted shipment trends for 1986 assume that: 1) consumption will continue to fall at a rate 1.2% (i.e., the rate indicated by actual 1985 and early-1986 data); and 2) the industry's year-end load will be approximately 5 billion units higher than in 1985. This increase in load volume would most likely result from further efforts by Philip Morris to maintain volume growth (the company has not had an annual volume decline in over 30 years, but its total shipments for the first 5 months of 1986 were 3.8 billion units below a year ago), as well as the tendency seen for other companies to offer heavier and/or earlier terms associated with price increases, historically announced in mid-December. During 1987 and 1988, shipments are expected to adjust to consumption trends which are estimated to remain at about -1% per year due to the reduction in the number of smokers, higher prices, and increase publicity and legislation against smoking. Additionally, forecasts for these years presume that the magnitude of year-end loads will stabilize in the declining market. S. F. S. /be AICF/26 attach. cc: M. R. Abene K. P. Curren J. E. Daghlian S. L. Evans E. P. Farrell C. G. Garbin J. A. Guardino R. D. Hammer S. T. Jones M. A. Kayiatos E. M Kiernan V. D. Lindsley R. H. Orcutt J. P. Mastandrea T. H. Mau P. P. McFadden A. P. Pasheluk M. A. Peterson W. Sands G. R. Telford H. H. Westphalen COPIED - 2 COPIED - 2 COPIED - 2