All right, a few people start trickling in from the breakout session, but good morning. I want to thank Philip Morris for joining us today. It's a pleasure to welcome them back to the CAGNY Conference. This morning, we are fortunate to have CEO Jacek Olczak with us today, as well as CFO Emmanuel Babeau. Fundamentally, Philip Morris has turned out to be a terrific story. PMI continues to execute one of the most successful smoke-free transformations in global staples today, with over 40% of its revenues and gross profit mix now derived from smoke-free products. The transformation is translating into sustained volume growth on a multi-year basis, margin expansion, and accelerating free cash flow generation for the company. With leverage now declining, a clear framework is in place for durable double-digit EPS growth over the next several years, with accelerating shareholder returns.
Philip Morris is now entering the next phase of its investment thesis. With that, I will welcome Jacek and Emmanuel to the stage. But first, let's give a round of applause to Philip Morris for sponsoring this evening's dinner reception.
Thank you. Thank you, Steve, for your kind words, for the introduction. Because we're sponsoring dinner tonight is the only reasons why we could afford to bring so many members of my management team. Otherwise, being cautious about our margin expansion plans, we wouldn't do it. Earlier today, two hours ago, we issued a press release reaffirming our 2026 guidelines, giving the earnings call two weeks ago. Materials from these presentations will be available on our website, including obviously the content of slides, which you will see in a minute. I ask you to read our forward-looking and cautionary statements, as usual in this type of communications with the investor community. Let me introduce my PMI executive team.
It's not all of the very important people who are helping us in navigating the walk in a park of a transformation. We have recently implemented the new organizational structure. Hence we brought with us today, Emmanuel, who you know very well, our Chief Financial Officer, but also Frederic de Wilde, who is heading our international business, Stacey Kennedy, who is heading U.S. business, Stefano Volpetti, who is our Chief Growth Officer, Massimo Andolina, who is running our very profitable and large European business, and Yann Guérin , who is our Chief Legal Officer. I will take... We divided this presentations into three parts or three segments. I will cover two. One is where we are, where we started, where we are with the transformations to become a smoke-free company.
We'll talk about the consumer, what we see, how we look at the market, trying to get a little bit deeper of the role of the different product platforms, heat-not-burn, vape, and the, and the pouches. And then I will hand over to Emmanuel to cover some of our financial KPIs achievements. And I think we'll summarize with, my very excellent slide of what, shareholders return Philip Morris has, historically offered to our investors. So that's about 11 years of our journey when we started, and I remember vividly in that sort of a setting, large group, CAGNY Conference, a much smaller meeting with the investors. 11 years ago, we were spending on average about the two-five minutes on the innovations in the tobacco industry.
Fast forward 10 years later, we're spending—we're blowing our scheduled time to talk about the innovations and how the different product platforms are penetrating very successfully every single market in which they appear. This generated for us today about the $17 billion in our $17 billion in smoke-free revenues and 180 billion volumes. If you would compare it to some other players in industry, this could have been a very important player in the tobacco industry, just on a standard standalone basis. We now have exceeded our target, which we set for ourselves some years ago, by 2025, be present in at least 100 markets. We are now present in 106 markets with our smoke-free portfolio.
Now, you know very well that we have put for ourselves also ambitious target to achieve, 2/3 of our revenues coming from smoke-free products by 2030. Obviously, one number is the consolidated global number for the group, but the change is happening at the market level, at the regional level. With the final progress and very important achievements of our European region, we actually, by the year end of, of last year, by Q4 of last year, we have had the three regions. We already have the three regions of the four regions, which have well exceeded the 50%, the mark of smoke-free products versus, to the total revenues. More importantly, these three regions represent today 75% of our operating income.
So this is not just the change coming from any sort of a market, but the market which also a very important contributor to the financial performance of the company. You could see today, you could see on the slide, and this is further support to my earlier statement that we also look at the quality of the markets in terms of the financial weight in the Philip Morris. In a top five of our own operating income markets, the smoke-free products represent 62% of our total revenues. Obviously, the question is what is happening in the larger by geography regions, but also by underlying cigarette volumes region, the South, Southeast Asia, Middle East, Africa, everything which is in this territory.
We're also very pleased that in every market in which we have a license to operate, and the regulators open these markets for at least the one category, if not three, we're actually making pretty nice progress. I mean, this is just the example of a few of the many geographies in this region. This is Saudi Arabia, Mexico, Indonesia, and Egypt. We're also very pleased, and I highlighted on the slide, what has happened in the Taiwan. Some of you who follow us very closely, we've been talking about the opening Taiwan for a smoke-free products for many, many years. We finally get the license for IQOS, for our Heat-not-Burn flagship product.
In Taipei, we have achieved a 6% market share of a combined cigarettes and a heated tobacco products within, I think this is within less than three months. So it just tells you that even the markets which are still closed for the smoke-free products, when they eventually open, they actually start benefiting from all the work, popularity, awareness, et cetera, of smoke-free categories. Okay, in this case, IQOS, and how quickly you can start generating quite a significant sales and a market share. What is very also, for us, important in Taiwan is the example of the market with Philip Morris historically had a very low or small presence in a cigarette category, and our share of the market was somewhere in the mid-single-digit numbers.
With that achievement, with IQOS, it means that within a year, we're on the path to doubling our share of the total, nicotine space in this country. Now, the critical consequences of our transformation, I think, is very well highlighted on this chart. So we essentially left behind the times of a classical characteristics of a tobacco, very much the cigarette industry or cigarette company, with declining volumes. And you know very well what was the growth, algorithm. We obviously offset it with the pricing. We have a pretty very good margins, which are also close to the bottom line.
Actually, over the five years, with the progress of a smoke-free, we're able to offset the underlying declines on the cigarettes, some of them which were purposefully triggered by our chasing, offering the smoke-free products to cigarette smokers. And essentially, we put the company on the volume growth target, which was answered, as I said, in the past. Which obviously means that our very strong top-line growth now is from a quality perspective of the composition of this top-line growth, is actually better than we used to have in the past, because obviously we carried with us the strong pricing power, but now we're adding a much better volume performance.
Now, here is the example of what is happening over the last five years in the divergent, if you like, total industry trends, and we differentiate the markets, but those who have access to the smoke-free products. This is what you have on a bar chart, and those who don't. We put here arbitrarily the threshold that if Philip Morris products have at least 2% of the market, we classify them as a smoke-free product, and the markets which products are not existing, so Philip Morris is less than 2%, we classify them as another SFP market or cigarette market. So you could see clearly the divergence in the trends, underlying trends for the volume. So on the five-year CAGR, the markets which are cigarette markets, essentially, still continue to be combustible cigarettes market.
You have a combined, compound, annual decline rate of 0.6%. You could argue it's essentially flat. But in the markets, when a smoke-free product entered the market, and remember, the bar is just the 2% penetration, that acceleration of a decline is the five-fold. So it's more than 3% on a compound, compound basis. Now, in the markets in which no smoke-free products are available due to the bans or restrictions, et cetera, actually, last year, we saw the cigarette sales going up. Now, this is, from a public health perspective, counterproductive what everyone wanted to achieve. So I believe the more people are getting familiar with that sort of a divergence in the trends, the faster it will allow us to open remaining markets, which are still quite substantial in terms of the underlying, cigarette volume.
Now, what has happened also over the last 10 years, and very much over the last three or five years, that we observe more mature, pragmatic, science- and fact-based conversations about the A, potential of a smoke-free product, B, very importantly, key component or key denominator in all of these products, which is nicotine. So you can read the statements. They will be, as I said, published on our website, but this is just the snapshot of the hundreds, if not thousands, of pages of statements made by the regulators, different health institutes, et cetera, across the globe. It's not just the U.S.-driven; more and more will see. This is, as I said, very mature, pragmatic, science-based conversations about the product and the role of nicotine.
As I have said a year ago in this conference and in many other occasions, yes, nicotine is addictive, but we all know it's not the primary cause of smoking-related diseases. Nicotine does not cause intoxication and is not functionally impairing. It can affect mood, cognitive skills, especially in the real focus, memory. That's the reason why people in the past were smoking cigarettes, and that's the reasons why people can migrate to the same product, prevailing the benefits or perceived benefits, while drastically reducing the risk coming from the exposure to all toxicants, which a smoker has while smoking a cigarette. Nicotine is not classified anywhere as a carcinogen and has not been found to itself cause cancer.
Obviously, all of the statements and all of these debates are translating into better and better operating environment, which we divided here into the regulatory policy, i.e., HTP product allowed, a product being regulated in a sense that the more and more product standards are being introduced. So it also helps with leveling the playing field. But how this also translates into the fiscal policy, because it is unquestionable fact that the products which offer such a significant reduction in a risk profile compared to cigarette, should be treated differently from the fiscal perspective. And you can read the slides, and this is just the progress which we have achieved or was achieved over the last two years, since 2023.
But you could see the very strong momentum that the regulations, both on the product side and on the fiscal side, are going in the right direction. I am by no means trying to say that there are not places in the world that we still have battles, that we still have to have conversations which are... Let me put it that way. Somebody very recently interested in this category and the opportunity of smoke-free products, told me, "Jacek, your problem is not that there is too little science about this product. Your problem is that there is too much politics about these products." Because the science is very indisputable what these products offer versus a cigarette. It just takes a while until it really starts penetrating and open the last, if I may say, closed minds in the world.
Now, this is an example of very large countries in terms of underlying cigarette volumes: India, Turkey, Brazil, Vietnam. Altogether, there is more than 440 billion cigarettes consumed annually in these places. Very much in these countries, you will see the cigarette sales going up, and the characteristic is none of these countries is allowing anyone to smoke-free product. I think with this growing momentum around the regulations and the recognition of the tremendous potential these products offer to individual consumer and public at large, these markets will get open as well because they're getting very isolated in what we see today. There are also some other smaller markets important to us, which we are pursuing our regulatory strategy.
I mentioned, I have here on the slide, Hong Kong, Singapore, Australia, and there are some other markets that maybe one or two of the categories within a smoke-free product portfolio still is somehow fully restricted. We have a case in Germany, Belgium, Canada, Ireland, Holland, Netherlands, and France. Now, let me move now to the consumer. Now, as I mentioned earlier, you know, 10 years ago, two-five -minute innovations in the tobacco industry, what are you doing? And, you know, do you have any meaningful innovations, or you're doing something on a fringe? We took it the hard way. We went into the product, how we can drastically change the performance of the product, offer consumers the same benefit, but drastically reduce the exposure to the toxicants, and therefore, it should lead this to the reduction of the harm.
The focus which we have, and this is what gives us a lot of further encouragement and how brightly we look at the future of PMI, is what has been achieved so far is just barely not even 20% of the total cigarette market. I mean, if I take a global basis, including U.S., obviously, for obvious reasons, excluding China, I mean, 81% of the total nicotine space is still occupied by the combustible cigarettes. So we're all very excited, and rightly excited, so about the heated tobacco categories, e-vapor category, and we know that the e-vape category depends on the geography very much.
Unfortunately, also in the U.S., we need to recognize that there is quite a significant element of the illicit products in the market and the nicotine pouches, which are barely on the global basis, 1%, very rapidly growing. But this is still we operate within a 20, not even 20% of a, of a total space. Good thing is that the space grows at the, at the double-digit number year after year. And again, this is a result of regulations, products getting better and better. But more importantly... the consumer demand, right? Because in today's world, the consumers are learning about this product very often, regardless of the regulators will allow those products in the market or not.
One of the criteria which we cross, which we watch very carefully is how many people start interacting versus smoke-free products versus what is the current share of the volume of the smoke-free product. And we consistently, year after year, see that there is a growing penetration of this product, in this case, past seven days use. Doesn't matter whether a consumer is immediately fully adopting this product. As we know, potential for adoption varies from a category to category. But it's a very important thing that if a smoker is trying to try the product, is trying to interact with the product, maybe today doesn't find the right product, but it means that his or her mind is open to jump into this category, just a matter of time.
So we have a growing usage or penetration measured by past seven days across the globe, and obviously, the volumes are trailing or following this trend. Now, if I have a different look and I divide now from PMI perspective, international and the U.S., and that's just two separate blocks, we obviously that the U.S., by the way, is a smoke-free country. If I measure this by the penetration of a smoke-free product, still bearing in mind there is a lot of illicit vape, et cetera, which I believe one day the issue is going to be resolved. The counter side of the or opposite side of this whole thing, how many exclusive cigarette use is still there? And obviously, on the internationally is a much higher in the U.S..
We're talking about the exclusive use of a cigarette, and obviously, you can see a rapidly declining numbers in the U.S. Now, there is one difference between the U.S. and international, from our perspective, which is in many of the countries on the international, we have a presence of all three categories. So again, a heat-not-burn, vape, and the pouches, and each of them are offering a different conversion potential to the cigarette smoker. I mean, obviously, inhalable products are somehow closer to the ritual of smoking. Heat-not-burn is very close. Vape is slightly similar, but slightly different. And oral category, obviously, or pouches, if you like, requires a little bit longer runway for the consumers to adopt fully the category, but doesn't stop consumers from interacting with the category. And I think this is behind the explanation.
While on the international, we see the much higher percentage of a smoke-free products exclusive use. Doesn't matter now, no—it doesn't matter now which category they're using. Are they using one or they're mixing a few categories together versus what we have in the U.S., as we know, heat-not-burn is still not present. Nicotine pouches, I mentioned a few times, have a important role in the switching consumer, switching smokers. We know also that the nicotine pouches are not only obviously sourcing from a traditional oral products, but also offer a good alternative for smokers and the users of the e-vape products. The only thing which you have to bear in mind, that the runway, as I mentioned, for adoption is longer.
So here is the example of the changes in the consumption of a daily consumption, measured in the number of pouches per day, among those who are just one year in the category or those which are three years. This is. There is a progress. It will take a time, and I put as the reference today, the average daily consumptions in Sweden, which in today's world is the standard, if you like, for the oral category. It took quite a while in Sweden to get to that level, but I think if you take it from a perspective, this is an opportunity which one day at that number or closer on that number, the market can go is the matter of fact.
Now, it's much more difficult to think where we're going to land or where the industry is going to land is essentially given. The question is now, how much time it will take that we land into that sort of a range of numbers? Now, the multi-category strategy, and we observe it after two years of the pursuing a multi-category strategy, is definitely accelerating the growth. In the markets when we are present with more than one product, we could see that our in-market sale, the IMS, grows more than 15%. In the markets when we're present with one smoke-free category, there is still a very strong growth, but this is 10%.
So we clearly, clearly see the advantage that offering smokers, offering the adult consumer a choice of three distinctively different product categories yields the better results than just offering one. There is a lot of polyuse, but I think it's a positive because as long as consumers will stay away from cigarettes and will become exclusive smoke-free product use, there's an opportunity, not only from a health perspective, obviously, it's an opportunity for a company like ours. Now, over a period of time, and very often we get the questions: Are you investing? When will you stop investing, or do you should you invest more, et cetera? Over a period of time, we have built, I think, essentially, some unparalleled infrastructure to support the smoke-free products, representing very much a very global footprint.
So we have 1.5 million points of sales, which are in which PMI products, smoke-free products can be found. We run close to 8,000 of our own brand retail networks, different formats, boutique, flagship stores, and other arrangements, when the consumer not only can try and enjoy the new products, but they are experiential points when the people are not just coming for the transactions, there is a more which is happening in the stores. We have more than 500 million interactions through this experiential touchpoint.
Obviously, there is a lot of data involvement around this whole thing, which starts with the fact that we very much want to register users of our products very early in the journey, which allows us also later on to deploy much better targeting, marketing and support of a conversions activity. That infrastructure was very much, until very recently, serving only one product, one brand, which was IQOS. Now, obviously, when we're rolling out the multi-category, we're getting to the point that the products like ZYN, the products like VEEV, our VEEV proposition, are essentially enjoying this platform with very little, if not at all, incremental cost to that platform which we have built. Now, I think our smoke-free product strength is very clear and is demonstrated by the share across the different category.
What is very important into this whole thing, in this picture, is that our combined share of smoke-free products as is today, it stays at the 65%, which is 2.5 times higher than the share which we have on the cigarette category. Obviously, the situation is dynamic. There is a competition. There will be a lot of innovations, there will be regulatory interventions, et cetera. But that the success of these transformations that we, that we didn't create that category 11 years ago as in addition to, but as a replacement to, actually, here are the results, because we're building not marginally better business, but by the factor of X, much bigger and the better business than we used to have. Now, there is innovation.
We today, the way we're looking at the innovations that behind each of the product platforms, again, heat-not-burn, pouches and electronic cigarettes, we try to have two, if not more, distinctive propositions. So not necessarily competing with each other, but very nicely complementing our portfolio vis-à-vis this vast number of the cigarette users. So we have two propositions on IQOS. One is sold per se, under the umbrella brand name of IQOS, and another is the BONDS and BLENDS . And you know that we have plans of rolling this more broadly to the number of geographies this year, this year. Then, when we play in the dry and moist, and the VEEV, which we go...
Which we play in the classical version of electronic cigarettes, but also we have the first-ever induction heating, so we essentially remove the electronics from a cartridge, which offers a variety of advantages to the consumers, and obviously, gives us much better cost profile of the proposition. We still have cigarettes. We have allocated massively our resources behind the smoke-free products. You know very well that 99.8% or 99.9% of our R&D spend is behind the smoke-free product, and the vast majority of our commercial spend is spent- is dedicated to the smoke-free products. But we still hold the fort when it comes to our presence in the cigarette market.
I think the market share of Marlboro and evolution of Marlboro, Marlboro market share is the testimony that we still use the cigarette category as the value creations, which further supports our transformations to smoke-free product, when we can still leverage our existing cigarette infrastructure, but still deliver a very strong results. By the way, this is the record highest share Marlboro ever had on international. I think this is the moment when Emmanuel will come on the stage and will share with you a few of the financial performance criteria, and we'll close with our shareholders with that. Thank you very much.
Thank you, Jacek. Good morning, everybody. As always, great to be here. So indeed, Jacek, over the last 30 minutes, has been leading you through why do we have such a powerful growth model? Between the very strong growth that we generate on our smoke-free portfolio and the resilience that we are enjoying on our combustible business. If we look at the past years, thanks to this strong growth model, we've generated very dynamic growth. Actually, we believe that we are going to continue to deliver such a dynamic growth in the coming years, and this is the reason why we have been confirming a few days ago, the growth algorithm for the year 2026-2028, at a similar level than the one we were targeting for 2024-2026. First, let me lead you through this growth algorithm.
Of course, it starts with a very strong performance on our smoke-free portfolio, and Jacek has been giving plenty of details of that. We are targeting for 2026, 2028, high single digit to low teen growth for our smoke-free volume. And this, we expect, is going to more than offset the decline on combustible, generating overall positive growth for our volumes. Then, and I'm going to elaborate on that in a minute, we are going to, on top of the growth of the volume, add a number of powerful driver to generate an organic revenue growth between 6%-8%. Then, as we are progressing and improving our profitability, again, I will provide detail about that, we are targeting an organic growth, growth of our operating income between 8%-10%.
Finally, we are targeting a growth excluding Forex of our adjusted EPS between 9%-11%. So now, let's enter into the detail of this algorithm and the growth model. As I said, everything is starting with our dynamism on our smoke-free portfolio. Actually, if you look at the last four years, there is a very dynamic and consistent pattern of growth. Everything is starting with IQOS. IQOS is at the very core of our growth, and as you can see, since 2022, the growth, in fact, has been quite consistent. We talk about an additional 15 billion sticks every year in a very consistent manner. But as we are increasingly now playing the multi-category approach, we are adding on top of the IQOS growth, the growth that is coming from VEEV.
Look at the acceleration that these two categories, these two brands, are bringing to our growth. You see that it has been growing to a record high of 20 billion stick growth in 2025, because we are accumulating the dynamism on three categories. So let's move now to the revenue growth. And indeed, of course, volume is the first, volume growth is the first pillar of this growth. But then we're adding two very powerful growth pillar or growth driver to this revenue progression. The first one is pricing. We have significant pricing power. It starts with combustible. As you know, over the past few years, we've been growing our price more than 7%.
For 2026, we've been guiding to around 6% growth, and it is showing our capacity with an attractive, desirable portfolio of brand, of course, centered around Marlboro, but very focused on a few brands, to increase power, and this is to increase prices, and this is acceptable to our customers because of the strength of our brand. We are also growing price on our smoke-free product, but here, the name of the game, and I will explain why in a few seconds, is more to maximize volume. But nevertheless, we've been delivering around a low single-digit growth on our smoke-free portfolio as well. The third pillar of our growth is the very positive mix that we are generating with our smoke-free portfolio, and I'm going to give details and elaborate on that because this is very important to understand this performance. Then you have a negative element.
This is the negative geographical mix coming from the fact that on combustible, the countries that are doing well on average are coming with a lower revenue per stick. And actually, as you can see, this is giving, again, a very consistent pattern of growth. First of all, the organic revenue growth itself versus the last five years and what we delivered in 2025. Remember, 2025, we had a technical impact of the change of business model in Indonesia. Otherwise, it would have been 7.9%, very much in line with the 7.8% that we delivered over the last five years as a CAGR. And then, if you look at the three components I've been describing, volume, price, positive mix from the smoke-free, it's very consistent as well.
3.4, 1.5, which is showing the robustness of this growth model on revenue. Now, let's pause on why we have such a positive mix coming from our smoke-free portfolio. Look, here you have the data. If you look at the revenue per stick, per unit equivalent, and here I'm speaking about dollar, okay? I am in dollar terms. We are generating on average, 2.5 times more dollar per unit than on our combustible portfolio. What does it mean? Well, it means that if we are just replacing, even not growing in terms of volume, which, as I said, we are, intending to do, the simple fact of replacing our combustible by a smoke-free business is generating a significant growth in our revenue.
If you took at the level of the gross profit per unit, here again, in dollar terms, it's equivalent, it's even a bit higher. We generate in dollar terms, 2.6 times more gross profit in dollar on our smoke-free portfolio than on our combustible business. The positive mix effect doesn't stop there, because if you look at the gross margin rate, smoke-free portfolio is also coming as an enhancer of our overall gross margin. Here you have, over the last three years, the progression of our gross margin rate, both on smoke-free and on our combustible business. We're growing on both, okay? We have a positive trajectory on the two. Look at the growth on our smoke-free portfolio.
We've been reaching almost 70% with a very dynamic growth over the last three years, and we are generating four percentage points of differential in growth between smoke-free and combustible. So of course, we're growing volume fast... They are very profitable in terms of $ per unit, and we are improving the margin. No surprise that in five years, we've been doubling up the share of our smoke-free product in our gross profit from about 22% to close to 43%. We grow, we are profitable. We are increasing the profitability with all the driver I've been mentioning, and that is explaining how we have been delivering close to double-digit and even in 2025, above double-digit organic growth in the past years. We've been very consistent in the performance once again between 2025 and the last five years.
As I explained, this is coming with an improvement in our gross margin, that has been coming at a climax, versus the past years in 25, with more than 40 basis point improvement of our operating income margin, and we've been passing 40% OI margin. There is one element in this performance that has... I have not been commented so far, and that is the fact that over the last three years, we managed to increase our gross profit faster than our cost, our SG&A. Here I want to clarify the fact that we make a big difference between what we call productive investment. When we build the brand, when we invest in marketing, when we invest in our commercial, impact, where we are indeed increasing a lot our investment. I won't elaborate by how much, of course.
And then the G&A, the back-office cost, where we are relentlessly looking for efficiency, looking for simplification, and of course, the next wave of big saving here is gonna come from leveraging artificial intelligence. We are happy to grow very fast in terms of organic performance, but at the end of the day, of course, we want to deliver strong growth in dollar terms. Look at the performance since 2020, we've been moving from $5.17, our adjusted earnings per share, to $7.54. We've been reiterating our guidance this morning, and we are targeting at the prevailing rate when we announce our full-year numbers, $8.38-$8.53.
If we deliver this guidance, that would be the third year in a row where we deliver close to double-digit or even above double-digit growth in dollar terms. We grow fast, we are very profitable, we are even further increasing profitability, and we deliver in dollar terms. We are also highly cash generative. Last two years, 2024 and 2025, we generated operating cash flow of more than $12 billion, and for the next three years, so 2026 to 2028, we are targeting to generate an operating cash flow of around $45 billion. At the same time, we're going to stabilize our CapEx with an average between $1.3 billion-$1.5 billion.
This strong growth in profit, stronge cash generation, is enabling us to deleverage first, and we confirm that we are targeting to be close to 2x net debt to EBITDA at the end of 2026. That is also allowing us to reward our shareholder. We are today about our target in term of payout ratio, which is 75% of our net profit into dividend, and that mean that in the future we're gonna be able to be increasing the speed of our dividend growth as we're gonna be much closer to the profit growth when it comes to the dividend growth. And it has started already in 2025, where we've been increasing by almost 9% our dividend.
Needless to say, that this, very strong cash flow generation, increasing profitability, is giving us extra flexibility in our capital allocation, including shareholder reward. And I want to finish on this one. We grow fast, we are profitable, we increase profitability, we are highly cash generative, we are rewarding our shareholder. This is translating into, total shareholder return, that has been, extremely high in, the last years. Whatever the reference you take, if you take since the spin, if you take last three years, last five years, as you can see, we've been beating, the MSCI Tobacco Index, the S&P 500, and the U.S. Staple, confirming our status of best-in-class company when it comes to total shareholder return in the consumer goods space. Thank you very much.
We may have time for one question maybe, and, after that, anyway, we have the breakout session, and I would really encourage you to join us, to answer all your questions. Thank you very much.
Thank you. I think I have time for one question from the room. Perhaps Eric?
Great. Thank you. Eric Serotta from Morgan Stanley. Jacek, with the increased focus on the multi-category SFPs, is there a need for increased investment or moving VEEV into more markets? It's always seemed like that's been less of a focus than obviously IQOS and even Vuse lately. How has your view towards the e-vapor category evolved, and how do you look at that going forward?
... Yes, you know, in the countries when IQOS already has established strong position, obviously, the requirement for the additional investments or incremental investments are much lower. So if I take Japan, it's more the function of, I don't know, competitive dynamics rather than infrastructure, and the heavy lifting has been done. Okay, I mentioned Taiwan. Okay, obviously, we'll have to invest a little bit, especially that our cigarette presence was very small. But on the other hand, every new market which we open these days or in a coming period is benefiting from the halo effect, which the brand has already built a carrying with its from abroad.
So obviously, you know, if you go to Taiwan, the 6% after three months is not happening by miracle because the Taiwanese consumers were aware of our—well, were well aware about the product in Japan and many surrounding places. Yes, I mean, if we open the large geographies, I mentioned a few of those, 4 of those, Turkey, India, etc. I mean, we have some infrastructure in some of these countries, so maybe the incremental again is the less of the spend needed to build awareness because the product already somehow is bringing this awareness from abroad and there is some retail investment. But this is nothing in the magnitude I would argue that a step up in the investments, which we had to have on the very beginning of the transformation.
Coming back to the vape, the way I look into this whole thing, and I know it's a lot of focus on the U.S. and the illicit market and, you know, how you know, these things can be cleared up. And there is a lot of similar type of dynamics in many international countries. Hence, also, our strategy for the vape is to engage when we think that there is more near term, not immediate, but near-term path to the sustainable from economics perspective, business model, and don't enter into the places where there is no level playing field. And, we better allocate the resources to the few other places when we can make more meaningful, also from economic perspective impact. Having said so, I always encourage everyone to take the view of the consumer.
If the consumer, U.S. and international, is using a vape product, the fact that today they're using this product from illicit market or legal market is a secondary. That problem has to be resolved. But the very important fact is that there is a demand for the vape product, and now it's the, you know, up to us, maybe industry and regulators, law enforcement, to go and clean up the market. Remember that illicit, illicit, use of a terminology of illicit product for vape product, for vape products is different than when we're talking about the illicit on the cigarette business, which still persists. We are at 11 or 12% on a global basis. But that illicit was very much driven by the tax avoidance, tax evasion, that sort of the things, a little bit of arbitrage between the pricing between the market.
Illicit on the smoke-free product is not driven by the fact that you have a differences in the fiscal treatment, in the tax rate. It is driven by the fact that the regulators is not paying enough attention to create the legal market, take the FDA in the U.S. Should the FDA be showing more authorizations to whoever are the players in the market, then you can address the illicit part of that market very quickly, because I believe most of those people would like to go into something which is... Consumers would like to go into something which, you know, has some reputation, has some assurance of the quality standard, okay, has been reviewed, authorized, et cetera, by the appropriate regulatory bodies, et cetera.
So you have two different illicit, and cigarette illicit is very difficult to resolve because you have this massive tax distortion, which creates to some, you know, opportunities for some criminals, unfortunately. But this is not a fiscal-driven illicit for vape. So again, I look at this, there is a demand for a vape product. That demand stays and will grow, which is a very nice problem to have. What has to be resolved is how you bring this, how you create the legal market, and I believe by mere fact, that the sheer fact that this legal market is being created, the problem is resolved. We've been a very. There's nothing wrong with having some luck in the business as well, but we have very, we're in a very good spot when it comes to heat-not-burn.
That the market definitely is not as much corrupted, quote-unquote, "as the from the illicit products or biased by the illicit products." I think we have a pretty good hold on the pouch categories. So the one category which has to be resolved is the vape product, but I think it's a very promising category. It's just today, and unfortunately for some years, economies of this whole thing, et cetera, is unbearable for the, you know, reputable or legal players. But I think it's gonna one day, it's gonna be resolved.
All right. Thank you to Philip Morris, and please join us in the breakout room.
Thank you.