and net price/gross profit impact in Japan, 2026E From current levels, we estimate the average retail price per pack for IQos consumables could rise by c+10% to ￥624; Ploom c+16% to ￥599, and glo c+20% to ￥571 by Q4 see heated tobacco volume growth tobacco >1x vs cigarettes). Considering that 36% of users selected they would 'reduce using heated tobacco sticks' if the price increased by 10%, as well as the price elasticity of demand in tobacco of around 0.3, we now expect heated tobacco category volume growth of +4.5% in 2026 (vs +8.3% in 2025). We expect a total tobacc0 volume decline of -0.5%, implying heated tobacco penetration of tobacco rises by +240bps to 48.8% 'ais peoa a on ed lad aud s,lanesnueu padxa a a (o ui sdaote+ s) Source: Company data, TIOJ, UBS estimates Thereafter, there is expected to be a ￥10 per pack pa excise tax (translating to >+3%) increase on heated tobacco sticks and cigarettes for three years beginning April 2027. with heated tobacco penetration rising by +2ppt pa, this could see heated tobacco volume growth slow to +3% by 2028, in our view. We expect heated tobacco revenues to grow broadly in-line with volumes over the next three years.