CEO Message
Transforming ourselves and turning change into strength to deliver "fulfilling moments"
We recognize that as changes in the operating environment become more dynamic, both business risks and business opportunities are simultaneously expanding. We have proactively transformed ourselves and continued to move forward in order to steadily capture these opportunities. This has become the source of organizational strength for the JT Group. Toward the long-term realization of the JT Group Purpose, we will further deepen our understanding of consumers and continue to evolve the ways we deliver the value of "fulfilling moments," as we remain committed to the sustainable growth of corporate value over the long term.
Aspiring to be a driving force that accelerates the growth of the JT Group
I am Takehiko Tsutsui, and I assumed the role of Representative Director and President, Chief Executive Officer in March 2026. Fiscal year 2026 marks exactly 30 years since I joined JT. Comparing the time I joined the Company to today, the JT Group's business has evolved dramatically beyond anything I could have imagined. Personally, the sense that the Group continues to move forward while undergoing change has been a major source of motivation in my work, and I approach each day believing that "tomorrow, we can always take another step forward." In the past, I often used "challenging the status quo" as a phrase to express my opinion, and at the core of my values is the constant belief that "we can always do better." When I was involved in the acquisition of the U.K. company Gallaher Group Plc in 2007, I had no prior M&A experience, and since then, I have repeatedly found myself in roles I had never experienced before and taken on new challenges to deliver results. Through these experiences, I have come to believe that there is always more we can achieve and that new possibilities lie ahead, which has shaped my value of constantly striving for greater heights.
Based on these personal values and experiences, I am confident that the Group has significant potential for further growth. Changing things requires tremendous energy, but by engaging many colleagues, facing difficulties together, and sharing the sense of accomplishment when we overcome them, we can inspire individual development and a challenging mindset. And by bringing together each person's growth, we can transform it into great organizational strength. I am determined to serve as a driving force behind these initiatives.
Looking back, after the Group was incorporated from the Japan Tobacco and Salt Public Corporation in 1985, we have pursued the globalization of the tobacco business as a key strategic priority. As a result, today the Group is among the world's leading companies in the tobacco industry. We have also aimed at business diversification, and while we have achieved certain results, we have not yet reached the state we originally envisioned. Taking this history into account, we established the JT Group Purpose, "Fulfilling Moments, Enriching Life," in 2023, based on the values we have cherished since before incorporation, in order for the Group to continue delivering new "fulfilling moments" to consumers on a sustainable basis. As we pursue the realization of our Purpose over the long term, the key challenge in moving to the next phase is how we deliver value to consumers.
For many years, the Group has operated its tobacco business centered on combustibles*1.
Meanwhile, as health consciousness rises and the business environment changes in various ways, the value that consumers and society seek from tobacco is also evolving, and in response to these changes, we have strengthened our efforts in RRP (Reduced-Risk Products)*2. RRP is also an area where I led the business globally until 2025.
RRP is one example of how we seek to create new businesses based on our Purpose, evolve them to exceed consumer expectations, and deliver the value of "fulfilling moments" to consumers. I believe that as CEO, one of my most important missions is to drive such business transformation with unwavering leadership.
An organization that embraces self-transformation and pursues long-term growth
Looking back, the JT Group has gone through numerous transformations. For example, the process of transforming from the Japan Tobacco and Salt Public Corporation into a global tobacco company was by no means a straightforward journey. However, by setting a strategic direction with a view to the future and persistently pursuing our goal over the long term, I take pride in the Group's organizational foundation that enables us to accomplish long-term objectives. In fact, there are very few tobacco companies in the world today that originated from a monopoly corporation.
Specifically, if Japanese practices are useful for the globalization we seek, we adopt them; if they become obstacles, we view them as challenges to overcome. When we acquired the non-U.S. tobacco business from RJR Nabisco Inc. in 1999, we chose a global management approach rather than the familiar Japanese style of management. We do not cling to past practices; instead, we are willing to transform ourselves to realize our long-term aspirations, and with this resolve, we have fundamentally transformed the Company and arrived at our current form. I am convinced that this organizational foundation is one of our sources of competitive advantage and will make a significant contribution to realizing the JT Group Purpose.
Engaging directly with consumers and providing diverse choices
In recent years, many tobacco companies have been shifting from combustibles to RRP. For the JT Group, while we recognize these changes, we believe it is important to engage sincerely with consumers*3 and provide choices that meet their diverse needs. When consumers desire combustibles, we want consumers to enjoy the very best products we can provide; for those who wish to take a step into a new category beyond combustibles, we provide Ploom, our global Heated Products*4 brand. By offering multiple options, we enable consumers to make their own choices, which is the essence of the value we provide, and our tobacco business strategy is built on this philosophy.
In addition, in our processed food business centered on TableMark Co., Ltd. and Fuji Foods Corporation, we hold the No. 1 domestic market share*5 for frozen categories such as udon, okonomiyaki, and takoyaki. In other words, by undertaking what other food manufacturers do not or cannot do, we are able to provide products that are indispensable to consumers. In this sense, we believe that engaging sincerely and directly with consumers and consistently delivering products that satisfy them is also one of the Group's unique competitive strengths.
Embracing and navigating change
The business environment surrounding the JT Group is becoming increasingly uncertain, with the expansion of geopolitical risks, regulatory challenges in the tobacco industry, and changes in consumer behavior, and we expect uncertainty to continue to rise going forward. Generally, people tend to have a negative connotation of the word "uncertainty," but we do not share this view. We believe that a high degree of uncertainty can also mean that the business environment is dynamically changing, in which both risks and opportunities are more likely to emerge. Therefore, it is important that we accurately recognize risks and consider and implement countermeasures, while also proactively mobilizing ourselves with agility in response to change and steadily capturing opportunities.
Our tobacco business operates on a business model in which annual sales are determined by "approximately one purchase per day per consumer X number of consumers X number of days" across the globe, and this very structure forms the foundation of our stable earnings base and high resilience. From a medium- to long-term perspective, we expect combustibles industry volume to decline by approximately 2.5%*6 per year on average. Because combustibles account for a large portion of the Group's revenue, we recognize this change as a significant risk that could affect our business model and earnings.
Meanwhile, looking at RRP, we expect total demand to continue increasing over the long term, and in particular, we project that Heated Products will grow by approximately 8% per year on average through 2035*6. We currently view this change as a significant growth opportunity and are actively investing in RRP with a focus on Heated Products, steadily increasing our market share. Specifically, we plan to invest approximately 800 billion yen over the three years starting in 2026, with a focus on marketing investment. We will continue to examine the progress of our investments and consumer responses, flexibly adjust our plans as needed, and use the 2028 RRP medium-term ambition*7 as a milestone to drive further results.
Since the integration of our Japanese and International tobacco business operations in 2022, the Group's combustibles business has continued to increase market share, which is highly significant for the Group as a whole. Although the total demand for combustibles is expected to decline over the long term, by concentrating the profits we can reliably generate through market share gains and pricing into new areas such as RRP, we can accelerate the development of these new areas and expand their scale. That said, this does not mean we will compromise on our combustibles business. In the medium- to long-term, we aim to grow Heated Products within RRP into our second growth engine alongside combustibles and to further expand the range of options that meet consumer expectations, thereby contributing to sustainable growth for the Group as a whole.
Moreover, with respect to Heated Products, we consider it a significant change for the Group that we have launched and are nurturing the Ploom brand from the ground up. Our core combustibles brands, such as Camel, Winston, and MEVIUS, each have a history of 50 to 100 years including their predecessor eras, and the results of long-term investment have formed their foundation. We believe that being able to constantly launch new propositions and nurture them into core products, this ability to "create and nurture," is one of the future visions we aspire to for the Group.
Looking further into the future, we believe that the values people seek will continue to change. While it is difficult to predict the future with precision, we are confident that as technology rapidly advances and society increasingly demands convenience and rationality, the day will come when people place even greater importance on the meaning and significance of emotional value. As in the past, the Group remains committed to delivering "fulfilling moments," and such changes in social needs present opportunities to broaden the scope of the value we provide.
Delivering value to consumers through innovation
As social values and individual perspectives continue to evolve, we intend to flexibly adapt how we deliver the value of "fulfilling moments" so that we remain a trusted and relied-upon presence in this domain. To achieve this, we must accurately capture changes in social and individual values and appropriately evolve our business portfolio.
The tobacco business will continue to serve as the JT Group's core business and drive profit growth going forward. We expect the shift from combustibles to RRP to accelerate further across product categories.
Among RRP, Heated Products, our current area of focus, represent a relatively new category, having emerged only about ten years ago. Many consumers are still new to this category or have limited experience with it, and a significant proportion are eager to try various options. While enhancing product performance through innovation is essential, we also recognize there is still considerable room to improve how we deliver value to consumers, which in turn means significant growth potential remains.
In product development, we are advancing technological innovation across various categories, focusing on Heated Products as well as Modern Oral*8 and E-Vapor*9. In addition, we are working to develop Next Generation Propositions that do not fit within existing category definitions, aiming to create new propositions that could expand future business opportunities.
Furthermore, we believe that the wider adoption of RRP is also significant from the perspective of potential health risk reduction. We will continue to develop products that can potentially reduce risk, while also focusing on accumulating scientific knowledge and investing in research and innovation for product development, so that consumers can make informed choices.
Driving innovation is extremely important, but unless consumers themselves are motivated to embrace it, innovation will not succeed if it is imposed unilaterally by the Company. Some consumers are already enjoying Heated Products, but we do not believe that all consumers are fully satisfied at this stage.
At such a juncture, innovation is highly effective. By delivering products that meet and even exceed consumer expectations, we can promote broader support for RRP and believe there are significant opportunities for consumers to switch from competing products to ours. In any case, as it takes time for innovation to materialize in visible ways, it is essential to proactively prepare multiple initiatives at this stage.
From the perspective of how we deliver value to consumers, RRP is still in the process of establishing its foundation. We must explore how to actively gain consumer support by ensuring they fully understand the differences from combustibles. To gain further support, product performance alone is not sufficient; building ambassadors for our RRP will be a major challenge going forward.
The processed food business has significant global growth potential and will continue to play a complementary role in the Group's profit. As we work to expand the scale of this business, we also aim to further enhance its presence within the Group.
We position D-LAB, our corporate R&D organization, as a unit responsible for researching and exploring new forms of "fulfilling moments" that go beyond the extension of our existing businesses. We are currently in an investment phase for the future, but from a long-term perspective, we will create and nurture new businesses from these initiatives that will support the Group's future.
Diverse talent delivering "fulfilling moments" to consumers
Looking ahead, as we continue to pursue the JT Group Purpose as our unwavering guiding star and create and nurture new businesses, it will become even more important for us to deepen our understanding of consumers.
What are the Group's consumers thinking, where are they, and in what ways do they feel satisfied or dissatisfied? Although consumers rarely express these needs directly, it is important for us to accurately capture such unspoken needs, reflect them in our products and services, and exceed their expectations. By doing so, we can help consumers more clearly recognize the value of "fulfilling moments," even if they themselves have not yet fully realized it.
The key to these efforts lies in the strength of our talent. By providing a foundation and growth opportunities that enable diverse talent to thrive, and by continually deepening our understanding of consumers from multiple perspectives, the JT Group can continuously update and enhance its ability to capture consumer needs. We will heighten our sensitivity to consumers on a daily basis, embody this in our products and services, and deliver them to consumers in effective ways. We believe that further refining these cycles and making that a core strength will become a growth engine for the Group's future.
Enhancing corporate value through business growth and shareholder returns
We believe it is important to achieve sustainable growth through these initiatives and appropriately return the results to all stakeholders. With regard to shareholder returns, based on our management principle, the 4S model, we will continue to exceed the expectations of our shareholders by achieving a balance between profit growth through business investment and dividends. In fact, the results of our business investments to date have led to record-high profits in fiscal 2025. We intend to continue generating profit growth through business investment as a starting point, and to create a virtuous cycle of further growth and returns not only in the short term but also over the medium- to long-term. In addition, the feedback we receive through dialogue with investors provides important insights into the JT Group's leadership. We will continue to actively create such opportunities, place importance on constructive dialogue with the capital markets, and work to enhance corporate value over the long term.
Toward the long-term goal of realizing the JT Group Purpose, I will lead the transformation to achieve sustainable growth, ensure disciplined resource allocation, and consistently translate these results into steady shareholder returns, thereby continuously enhancing the Group's corporate value over the medium- to long-term.
Representative Director and President,
Chief Executive OfficerTakehiko Tsutsui
Profile
Joined Japan Tobacco Inc. in 1997. After working at the Odawara Factory and the Manufacturing Department at headquarters, participated in acquisition projects in the Business Development & Corporate Strategy Division. Handled numerous M&A deals, including the acquisition and integration of the U.K. company Gallaher Group Plc.
Appointed Vice President of the Business Development & Corporate Strategy Division in 2012, leading various transformation projects. Appointed as Executive Officer in 2014, promoted M&A deals and new business creation (including D-LAB and others).
In 2020, seconded again to JT International S.A., served as Senior Vice President, and appointed Executive Vice President of the company in 2024. Oversaw the RRP domain, led the innovation of core products, and drove the expansion of global rollout including from Japan.
Appointed President and Executive Officer in January 2026 and Representative Director and President, Chief Executive Officer in March 2026.
Integrated Report
2026