Growing our leading position in theCaucasus
Paul Holloway

General Manager, Caucasus

Caution on Forward-Looking Statements
Today’s presentations contain forward-looking statements. These statements appear in a number of places in these presentations and include statements regarding the intent, belief, orcurrent and future expectations of our management with respect to our business, financial condition and results of operations. In some cases, you can identify forward-looking statements
by terms such as “may”, “will”, “should”, “would”, “expect”, “intend”, “project”, “plan”, “aim”, “seek”, “target”, “anticipate”, “believe”, “estimate”, “predict”, “potential” or the negative of theseterms or other similar terminology. These statements are not guarantees of future performance and are subject to various risks and uncertainties. Actual results, performance orachievements, or those of the industries in which we operate, may differ materially from any future results, performance or achievements expressed or implied by these forward-lookingstatements. In addition, these forward-looking statements are necessarily dependent upon assumptions, estimates and data that may be incorrect or imprecise and involve known andunknown risks and uncertainties. Forward-looking statements regarding operating results are particularly subject to a variety of assumptions, some or all of which may not be realized.

Risks, uncertainties or other factors that could cause actual results to differ materially from those expressed in any forward-looking statement include, without limitation:(1) decrease in demand for tobacco products in key markets;(2) restrictions on promoting, marketing, packaging, labeling and usage of tobacco products in markets in which we operate;(3) increases in excise, consumption or other taxes on tobacco products in markets in which we operate;(4) litigation around the world alleging adverse health and financial effects resulting from, or relating to, tobacco products ;(5) our ability to realize anticipated results of our acquisition or other similar investments;(6) competition in markets in which we operate or into which we seek to expand;(7) deterioration in economic conditions in areas that matter to us;(8) economic, regulatory and political changes, such as nationalization, terrorism, wars and civil unrest, in countries in which we operate;(9) fluctuations in foreign exchange rates and the costs of raw materials; and(10) catastrophes, including natural disasters.

© Copyright JT 2015

London – September 18, 2015

JT Investor Meeting2This presentation contains images or packages of our brands
in some slides. Those slides have been included exclusively
to illustrate JT Group’s strategy or performance to ourinvestors. They are not to be used for any other purpose.

© Copyright JT 2015

London – September 18, 2015

JT Investor Meeting

3The Caucasus: A dynamic and developing area
• 3 diverse markets: Armenia, Azerbaijan and Georgia• Stable operating environment• Cigarette industry volume of 28.8 BnU in 2014
• Cigarette industry value of 1.6 $Bn in 2014
• JTI significantly outperforming industry
Cigarette market by configuration

Volume, 2014 vs. 2010+108%

KSKS Slims

KS SS

Other Slims
67%
49%

38%

33%
17%

+8%
Industry© Copyright JT 2015

Source: JTI estimates

22%
12%

Azerbaijan

JTILondon – September 18, 2015

15% 12%

Armenia

15%

6%

12%

Georgia
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JTI, the tobacco industry leader•JTI Share of market
29.9%

JTI Caucasus• Established in 2011
• Based in Tbilisi

14.2%
2010

• Objective: further broaden JTI’sbusiness base
2014
•JTI Total volume(BnU)

4.2

8.8

8.3

Volume and share of market doubled
since 2010 driven by GFBs

• Leading tobacco company since 2012
GFB

4.1
2010
© Copyright JT 2015

Source: JTI estimates

2014
London – September 18, 2015

JT Investor Meeting5Investing to drive profit growth
Investment(Index, 2010=100)•Increasing focused investments to:• Enhance GFB equity• Develop infrastructure and people

x3.2
2010

• Expand distribution coverage• Increase visibility at point of sales

2014

EBITA(Index, 2010=100)•Profit more than quadrupled over the last
5 years driven by volume and price/mix
improvements

x4.4
2010
© Copyright JT 2015

2014
London – September 18, 2015

Note: Investment includes trade marketing, brand marketing, sales and operating expenses. Investment and EBITA on a reported basis

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GFBs fueling our growth momentum

London – September 18, 2015

JT Investor Meeting7Winston: The #1 brand in the Caucasus
Winston total volume(BnU)

4.6•Leading brand in the Caucasus with
15.1% market share in 2014, an increaseof 2.1ppt vs. 2010•#1 brand in Georgia and Armenia•

In Azerbaijan, Winston improved its mix
delivering over 65% of total volume
through XS range at higher price points

3.6

2010
© Copyright JT 2015

Source: JTI estimates

2014
London – September 18, 2015

JT Investor Meeting8LD: Doubling volume driven by Azerbaijan
LD total volume(BnU)•

Launched in Azerbaijan in early 2011
• Strong growth driven by LD Club
• Representing 55% of JTI volume•

Launched in Armenia in 2013
• Compelling product mix

2.5• Rapid share gains in the growing Valuesegment

1.0

2010
© Copyright JT 2015

Source: JTI estimates

2014
London – September 18, 2015

JT Investor Meeting9Sobranie: Broadening presence in the Premium segment
Sobranie total volume(MMU)

801•

Sobranie has an outstanding performancein the highly profitable Premium segment•

In 2014, Sobranie’s share of Premium inCaucasus reached 11%•Growth driven by Azerbaijan and Georgia,
where Sobranie is significantly out
performing Premium segment growth

24

2010
© Copyright JT 2015

Source: JTI estimates

2014
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JT Investor Meeting10Solid growth across all markets

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Azerbaijan: Expanding the portfolio and tripling market share
JTI Share of market
2010

10.3%

2014

•

Entered the Azeri market in 2007 withWinston•Strong market share increase (+20ppt vs.
2010) driven by portfolio expansion• LD leading volume and largest sharecontributor due to LD Club30.8%

• Sobranie delivering strong growth in thePremium+ segment

JTI Share of segment
2014

vs. 2010 (ppt)

Premium+

22%+22

Mid-Price

51%

Value2%© Copyright JT 2015

Source: JTI estimates+29•

Key success factors: innovative
propositions, enhanced retail coverageand strong team capabilities+2
London – September 18, 2015

JT Investor Meeting12Georgia: Strengthening our leading position by expanding GFBs
JTI Share of market
2010

2014

23.5%

35.7%

•Strong market leading position withsignificant share advantage vs. #2•Winston is the #1 brand in Mid-Price, thelargest volume segment•Increasing presence above and below
Winston to fuel market share growth

JTI Share of segment
2014

vs. 2010 (ppt)

Premium+

5%+5Mid-Price

60%

Value

13%

© Copyright JT 2015

Source: JTI estimates• In Premium and Value, growth driven by
Sobranie and Magna, respectively•+9

Key success factors: improved route tomarket and coverage as well as
development of local team

+13
London – September 18, 2015

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Armenia: Investing and seeding to grow market share
JTI Share of market
2010

10.1%

2014

16.5%

604365© Copyright JT 2015

Source: JTI estimates

Presence since 2000. #1 international
tobacco manufacturer since Q4 2014

•Winston is the leading brand as of 2013,with strong presence in Mid-Price•Investing toward future growth
opportunities by:• Building LD through line extensions toincrease focus in Value

Winston volume(MMU)

2010•• Establishing a JTI local entity inDecember 2014 to improve further ourcommercial capabilities

2014
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Great achievements setting the base for future growth•The Caucasus delivered significant growth in volume, share of market and profit•

This was achieved by increasing investments, consistent focus on GFB, talent development
and effective business relations with local partners•

Future growth opportunities driven by a stable operating environment and our strong brandportfolio across all price segments© Copyright JT 2015

London – September 18, 2015

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