“We anticipate these price increases will impact category growth and volume for 2026, despite the fact that heat not burn consumers have demonstrated higher price resilience than cigarette smokers in the past.”

In context

“ncreased markedly this year, IQOS category share was broadly stable with most movement occurring among other players. We are encouraged by early signs that the increase in category activity is generating higher interest among more traditional adult smokers, a positive indicator for category growth. Looking forward, the upcoming excise tax increases on heat not burn in April and October make 2026 an atypical year. As discussed at the Morgan Stanley conference in December, the level of person makes this a headwind for the category representing about 50 to 100 Japanese yen per pack, which translates to two to 10 to 20% of current retail prices. With the greatest impact for products at lower price points. As announced recently, we have submitted an application to increase our prices in April. We anticipate these price increases will impact category growth and volume for 2026, despite the fact that heat not burn consumers have demonstrated higher price resilience than cigarette smokers in the past. Shipment volatility in 2026 is also possible driven by in-market sales trends around the April and October excise increase. Importantly, we do not expect the underlying category growth trend to change and we target substantial further growth from IQOS in Japan in the years to come. We are also pleased to report ZYN's successful pilot launch in Tokyo. Outside of The US, Japan, and Europe, all three of our small free categories are delivering strong broad-based growth with full-year shipment up plus 17%. This includes ICO's strong start in Taiwan during Q4, where we exited the year with around 4% of tech share, and rapid progress in markets such as South Korea, Malaysia, and The Philippines. ZYN momentum was notably strong in Pakistan and Mexico. In e-vapor, we've achieved excellent results”