ercian is continuing a wine-making tradition that dates back to 1877---marking the production of Japan's first wines. Over the past 120 years, we have contributed to the qualitative improvement of domestic wines and the expansion of the wine market. As Japan's leading wine label, Mercian has helped to enhance the reputation of Japanese wines by winning numerous awards in international competition. In 1997, Chateau Mercian Jyonohira Cabernet Sauvignon 1990 became the first Japanese wine to earn a gold medal in an international wine competition, in Bordeaux, France. Mercian was also the first Japanese winemaker to have its products included on Japan Airlines' first-class passenger wine list. Since then, superior Mercian wines have helped to create a relaxed atmosphere for passengers traveling the world's skies. For many years, we have striven to educate Japanese consumers about wine as part of our market development efforts. Keenly aware of the need to establish a wine culture in Japan, in 1994 we conducted an in-depth consumer survey. Its results led to the development of the Bon March series of \500-a-bottle domestic wines designed to suit food typically served in the Japanese home and break down the cost barrier that initially discouraged consumers from purchasing wine. More recently, we introduced Mercian Bon Rouge, which, developed as a "health wine," contains enhanced levels of polyphenol and has proved to be a great success. Using technologies and traditions accumulated in Japan, Mercian has forged strong links with leading wineries in other countries. We acquired Markham Vineyards of California's Napa Valley in 1987 and Chateau Reysson of the Haut-Medoc area of Bordeaux in 1988. We immediately expanded the facilities of Markham Vineyards and initiated a quality improvement program that has enabled the winery to gain a reputation as one of the best domestic producers in the United States. Quality improvement efforts at Chateau Reysson contributed to the winery's outstanding success at the 1998 Concours de Grand Vins in Macon, France, where it was awarded the gold medal. We have also formed business partnerships with various noted European wineries, beginning in 1971 with the introduction of Tio Pepe, one of Spain's leading sherry labels. Today, our partners include leading Cava producer Codorniu S.A.; Champagne Pommery, famous for its elegant, dry champagne; and Vina Concha y Toro S.A., one of South America's leading wineries. In recent years, we have expanded our selection of wines by establishing ties with other leading wineries worldwide, including the Robert Mondavi Winery, a leading U.S. winery, and Italy's famed Marchesi de' Frescobaldi. We continue to focus on bringing the world's best-known wines to Japan. In so doing, we strive to contribute to the further development of Japan's growing wine market, as well as enhance our reputation among consumers.