The JT Group has reinforced its business base through M&As such as RJR Nabisco's non-US tobacco operations in 1999 and Gallaher in 2007, and has also expanded its product variety by acquiring two e-cigarette companies, Zandera in 2014 and Logic in 2015. In 2016, we acquired the Natural American Spirit business outside the US, which allowed the JT Group to enlarge its brand portfolio to meet various needs of consumers. In addition to M&A, we have invested heavily in our brands from a mid- to long-term perspective and expanded our geographical coverage. We will continue our investments for further growth.

We develop new products based on the dynamics of individual markets, with a view to meeting the diverse demands of consumers around the world. Our Global Flagship Brands* (GFBs), such as ‘Winston’, ‘Camel’ and ‘Mevius’, have a strong presence in major markets across the globe. We will continue to enhance the product power of our GFBs by updating our product and package designs.

To meet the diverse and changing preferences of consumers, the JT Group has been working not only to improve product quality in the taste and flavor of our conventional cigarettes but also to develop new types of tobacco products. The emerging products category has been growing in recent years, and we now offer various products in European and US markets. In Japan, we have launched ''Ploom TECH*'', a new type of tobacco vaporizer** for enjoying smooth and clear tobacco taste with no combustion and no direct heating. We will continue to take on innovation challenges beyond conventional thinking as we constantly strive to achieve high consumer satisfaction.

Our business thrives on the diversity of our employees, and we grow our business by developing our talent. We promote training for personal development, provide opportunities for international assignments within the Group, and strive to make continuous improvements to the workplace environment. JT International (JTI), leading the JT Group's international tobacco business, employs people of more than 100 nationalities. We create value by encouraging collaboration among people with different cultural backgrounds and views. The diversity of our human resources is a key source of sustainable growth.

The Japanese domestic tobacco business is an important market in which the JT Group earns around 40% of its operating profits and has secured around 60% market share. We have achieved this on the strength of our brands - our most valuable assets.
Among our key brands, 'Mevius,' which is Japan's No.1 brand,* has a strong presence in Japan and many other countries in Asia and remains popular following the name change from 'Mild Seven' in 2013. We have also achieved robust sales of 'Winston,' another key brand that integrated 'Cabin' and 'Caster' in 2015. We will continue to maintain our market superiority and further generate profit through our competitive brands.

We are helping to maximize the potential of stores to enhance customer satisfaction, by offering a wide selection of products according to customer demands as well as the market dynamics of individual sales areas and retail channels. Our trade marketers work with retail stores across Japan, providing marketing support according to the characteristics of each store. This includes providing advice on range and store layout to help consumers easily find and buy the brands they want. Our support for our trade partners demonstrates our commitment to achieving a high level of consumer satisfaction.

We are constantly improving the quality of our products. In order to ensure a stable supply of quality tobacco leaf, the principle raw material for our products, we provide support to tobacco farmers to help them improve their productivity. We also focus on building an optimal manufacturing system to ensure an efficient and timely supply of quality products to the market. We will continue to strive for quality improvement throughout the process from procurement to manufacturing and marketing, so as to deliver quality and reliable products that meet consumer demand.

Through our global R&D network, we develop products for consumers worldwide through research and technological development carried out in Japan. Our R&D activity is focused on speed and flexible collaboration with other teams in the business, making use of the diverse expertise and individuality of each one of our employees. We are constantly challenging ourselves to create new value to meet the varied and evolving demands of our consumers.