Given today's rapidly evolving society, we have reexamined the role we believe we should play and how we intend to contribute. In doing so, we arrived at the hypothesis that a backlash in value sets could occur–specifically, that people could find meaning within inconvenience and inefficiency as advances in science and technology increasingly optimize their lives. In fact, momentary scenes of everyday life that appear irrational at first are precisely the conduit through which to experience "fulfilling moments." We believe that "fulfilling moments" for society as a whole and, ultimately, for future generations, take shape as these momentary scenes accrue. Taking into consideration these future changes, we rearticulated the values we have cherished over the years and seek to consistently provide, which are embodied in the JT Group Purpose: "Fulfilling Moments, Enriching Life."

Meanwhile, we must flexibly evolve the ways in which we deliver this value amid the fluid value sets held by society and individuals. The reason the Group continues to evolve is not simply to expand its business or secure a competitive advantage. Rather, it is about earning trust and remaining a reliable presence in society within the "fulfilling moments" field.

A healthy sense of urgency and aspiration toward growth

During the period of Japan Tobacco and Salt Public Corporation, which would later become Japan Tobacco Inc., the domestic tobacco market had already showed signs of sluggish overall demand. This was largely due to the declining adult population and growing social concern over the relationship between smoking and health. Conscious of the potential for a prolonged decline in overall demand, we (Japan Tobacco and Salt Public Corporation at the time) maintained a healthy sense of urgency, questioning whether sustainable growth could be attained given the prevailing conditions and outlook. At the same time, we felt that the tobacco business was unique in that it could enrich people's lives, a value that we wanted to maintain into the future and develop further while addressing the demands of the times. Ensuring that this sense of urgency would not simply translate to anxiety, we continued to sincerely confront the question of what challenges we needed to confront in order to realize our aspirations. This led to our vision of becoming a global tobacco company. To realize this vision, we recognized the need to evolve into an enterprise that aggressively expanded into overseas markets and that could responsibly make management decisions and investments to compete on the world stage. In making a fresh start through the incorporation as Japan Tobacco Inc. in 1985, we established the framework necessary for taking on the immense challenge of globalization.

Taking up the challenge of globalization

During the latter half of the 1980s, we advanced overseas through an export model that shipped the products we manufactured in Japan to international markets and gradually expanded sales channels, while also working to accumulate knowledge and build a robust sales infrastructure across the globe. Meanwhile, we faced numerous challenges in international markets stemming from differences in regulatory environments, business practices, and competitive structures across countries and regions, as well as a shortage of human resources to expand into diverse global markets. Despite recognizing that the approach adopted in Japan may not fully support the development of our brand overseas, we continued our journey of evolving into a global enterprise and strengthened our efforts to tailor communication and product development to the preferences of consumers and their cultural backgrounds, build a sales foundation, and establish local operations.

Large-scale acquisitions completed in 1999 and 2007 were pivotal in the dramatic expansion of our global growth foundation. By strengthening our brand equity through ongoing investments, the acquisitions made have grown significantly into GFB (Global Flagship Brands), which continue to drive the Group's growth today. Winston and Camel, in particular, have solidified their positions as the No. 2 and No. 3 global combustibles brands. Moreover, the number of Group employees has also increased roughly 2.5 times compared with pre-acquisition numbers. Hailing from more than 100 different countries, this diverse pool of human resources constitutes a key source of the Group's competitiveness.

These acquisitions also marked the start of efforts to build a global management structure and our track record of addressing challenges in a bid to secure growth. The post-acquisition integration process and operating approach required ongoing refinement, as we navigated various challenges along the way. However, this experience helped create a global management framework that enables autonomous business operations under the appropriate delegation of authority.

Strengthening the Japanese domestic business foundation toward sustainable growth

Although we had acquired a major growth platform for our overseas business, we continued to face declining overall demand on the domestic front due to a shrinking population and stricter regulations. In order to continue generating value and remain a company that grew into the future, we recognized the need to fundamentally review our domestic business foundation.

Under the medium-term management plan JT PLAN-V, covering fiscal 2003 to fiscal 2005, we took several proactive steps. These included consolidating tobacco manufacturing factories (from 25 to 10), reorganizing sales offices, and calling on tobacco leaf growers to terminate cultivation all while securing record-high profits for three consecutive years from 2000 to 2002. In similar fashion, we undertook additional measures to strengthen the domestic business foundation in 2015 and 2022. These reform measures were not simply about cutting costs. They also served to establish a more robust business foundation, strengthen competitiveness and future profitability, and ensure the Group's medium- to long-term growth. Even as the industrial landscape undergoes dramatic change, we are taking on the challenge of embracing the spirit of "One Team" with an eye to the future.

Striving for further evolution as One Team

The tobacco industry is currently undergoing intermittent change in a manner where previous approaches no longer suffice. This is illustrated by the rise of RRP (Reduced-Risk Products). Under these circumstances, we recognized the need to build a structure that maximizes the use of global resources and more effectively and efficiently delivers products and services that exceed consumers' needs in order to remain globally competitive and ensure sustained growth. With this in mind, in 2022 we decided to move to a One Team structure, consolidating our previously separate domestic and overseas tobacco businesses into a unified organization.

We assigned the headquarters function to JT International (JTI), which did far more than simply unify reporting lines globally. This initiative helps put in place a system that maximizes the use of human and business resources worldwide by fundamentally transforming existing business assumptions. This includes integrating the formulation of strategies, decision-making process functions and mechanisms, and other systems, previously separated between the domestic and overseas businesses.

As one example, we undertook a massive project of unprecedented proportions to unify the core systems used globally in more than 130 countries and regions with our domestic operations. Given the unique business processes and practices of each region, this project required more than five years from planning to execution as well as the coordination of more than 100 departments and sites. More than 2,000 employees were involved in the project, working to disseminate information internally and stabilize the system after implementation. Completed in January 2024, system integration has enabled more efficient operations under a globally unified system.

One Team is an initiative designed to maximize the value we deliver to consumers on a global basis through the integration of organizations, functions, processes, and systems. We are strengthening the mindset of building a future together as One Team by overcoming organizational differences as well as physical and cultural disparities in our charge toward a common goal.

By taking on a series of challenges including large-scale acquisitions on a global basis, the transformation of our domestic business structure, and the implementation of One Team, the JT Group has steadily reinforced its foundation for growth. With our sights firmly set on the future, we believe that tirelessly transforming ourselves will serve as the engine for our medium- to long-term growth.

RRP growth in the tobacco business

Advancements in technology and varied consumer* values in the tobacco industry are driving the need for more diverse products, including RRP. The RRP market remains in an early stage, and we believe consumers are highly receptive to new value brought about by innovation. However, innovation cannot be realized through technology alone. Instead, it relies heavily on capturing the potential needs of consumers and effectively conveying its value.

Conscious from an early stage of the need to reduce the risk of smoking-related diseases, the JT Group was one of the first companies to recognize the need for RRP. As such, we released smokeless tobacco products like AIRS and ZERO STYLE to the market in Japan. However, we did not fully grasp consumers' latent needs, and we were unable to deliver the value of these products to its fullest extent. Upon reflection, we continued to refine our uncompromising consumer-centric approach and established a product development and marketing system based on the true needs of consumers.

As Heated Products we believe hold the greatest potential for growth, the category was popular when first released in Japan owing mainly to concerns over their peripheral effects and the importance placed on sound health. As the market expanded, however, consumer insights revealed increasing demand for flavor as a luxury item. We meticulously analyzed the experiences of consumers, from usage behavior to taste preferences, and barriers to the replacement of devices. This led us to comprehensively reflect consumer insights into every aspect of this product category, from device and refill design to packaging, in-store experience, and pricing strategy.

* Adult consumers. The minimum legal age for smoking varies in accordance with the legislation in each country.

RRP evolution

*1 For Japan *2 Outside Japan *3 Global

Released at the end of May 2025 in Japan, the largest market for Heated Products, Ploom AURA embodies this stance. Through flavor enhancements, device redesign, and innovative heating methods, Ploom AURA earned high consumer praise for its flavor, design, and functionality. This favorable assessment helped boost product sales, allowing us to capture a 15.7% share of the domestic Heated Products market during the fourth quarter of 2025. By sharing consumer insights and improvement cycles garnered in Japan with other markets through One Team, successful steps are being taken to roll out Heated Products in each market and accelerate Ploom's market share growth.

Similarly, higher profitability for combustibles has generated investment capital, allowing us to concentrate business resources on Heated Products as our utmost priority. In fact, we now plan to strategically invest roughly 800 billion yen in RRP during the period covered by Business Plan 2026 (fiscal 2026 to fiscal 2028). In particular, we will lay the groundwork for establishing Heated Products as our second pillar of profit growth by strengthening our marketing efforts. Moreover, we will also work to uncover business opportunities and drive innovation in the area of Next Generation Propositions that transcend the scope of existing segment definitions with a view to identifying and creating future growth drivers for RRP.

We anticipate growth in the tobacco business, centered on combustibles, will remain firm going forward. Having said this, we acknowledge various uncertainties from a long-term perspective. Recognizing the need to factor in such uncertainties as regulatory changes, taxation, demographic trends, shifting values, and technological developments, we are expanding our RRP initiatives while also advancing our processed food business̶which aligns closely with the concept of "fulfilling moments" by providing products and services that support everyday life̶as well as the D-LAB initiative, which is dedicated to researching, exploring, and creating unique "fulfilling moments" from a long-term perspective. Through these initiatives, the JT Group will work diligently to grow as an entity that continues to earn the trust of society and to satisfy its responsibility to provide "fulfilling moments" in the future.

Processed food business–Creating everyday value and expanding value

Corporate R&D D-LAB–Exploring "fulfilling moments" from a medium-to long-term perspective

Realizing the JT Group Purpose

No matter how much society and the business environment continue to evolve, the core values held by the JT Group will remain unchanged. We will always stay closely tied to the moments people feel fulfilled through our products and services, and create those moments together. This desire represents the greatest value we pursue and serves as the axis that guides our future growth. Having said this, the manner in which we deliver this value will evolve with the times. As people's values and lifestyles change, we will continue to refine how we provide "fulfilling moments."

The JT Group Purpose, "Fulfilling Moments, Enriching Life" does not seek short-term results. Instead, it is the guiding principle that we will consistently pursue over the ultra-long-term. In order to realize the Purpose and to contribute to an enriched society and future, we will continue to embrace change as an opportunity and tirelessly pursue evolution.