By Timothy S. Donahue

Top Takeaways:

• White pouch surge: Modern Oral net sales rose 266%, now representing 34% of total company revenue.
• Investment cycle: EBITDA guidance reflects heavier front-loaded investment in sales, marketing and manufacturing in 2026.
• Brand ambition: Management believes the nicotine pouch market will consolidate into five to six dominant brands — and aims to be among them.

Turning Point Brands closed 2025 with a sharp acceleration in its nicotine pouch business, reporting 29% fourth-quarter revenue growth and outlining aggressive 2026 guidance focused on its Modern Oral segment. Revenue rose to $121 million in the fourth quarter, driven primarily by $41.3 million in Modern Oral net revenue. Adjusted EBITDA increased 14% to $30 million, for a 24.8% margin.

During its 2025 earnings call on March 2, CEO Graham Purdy called out the category momentum. “We are pleased with how the year wrapped up and the momentum we built for 2026,” Purdy said. “Our Q4 performance and sales growth trajectory support our long-term target of double-digit market share in the category.”

The company issued 2026 Modern Oral gross revenue guidance of $220 million to $240 million, with expected net revenue of $180 million to $190 million. White nicotine pouch sales were the standout. Net white pouch revenue increased 266% year over year, while gross sales rose 337%.

The segment now accounts for 34% of consolidated net sales, up from 12% the previous year. “We are ready, willing and able to increase our investment behind our white pouch brands,” Purdy said, noting that some investments will be accounted for as contra revenue under GAAP as the company prioritizes front-loaded growth.

Manufacturing Buildout

Turning Point is expanding U.S. white pouch production capacity to meet demand and improve margins over time. Chief Financial Officer Andrew Flynn said the first production lines at the new domestic facility are expected to be qualified in the coming months and will supplement supply from the company’s Indian manufacturing partner.

“We will continue to use our Indian partner because both brands are growing,” Flynn said. “So the U.S. will supplement the growth.”

Margin benefits from domestic production will not be immediate. “It’s going to take a while to get the inventory out of the — in the U.S. and through our P&L,” Flynn said. “We expect to see some green shoots in margin enhancements towards the end of the year.”

Consolidated gross margin held steady at 55.9% in the quarter. SG&A rose to $47.7 million, up $3.1 million sequentially, reflecting higher white pouch sales and marketing investments, as well as increased freight costs.

Flynn said investment levels will fluctuate. “The investment will be somewhat lumpy through the year as we see opportunities to invest that we think are high ROI projects,” he said.

The company ended the quarter with $222.8 million in cash and generated $19.2 million in free cash flow. Full-year 2026 capital expenditures are expected to total $4 million to $5 million, excluding Modern Oral projects. PMTA-related spending for Modern Oral is budgeted at $3 million to $5 million.

First-quarter 2026 adjusted EBITDA is projected to be between $24 million and $27 million, reflecting heavier upfront white-pouch investment.

Distribution and Brand Consolidation

Management signaled confidence that nicotine pouches will evolve into a concentrated brand landscape. “We believe the nicotine pouch space, like most other nicotine businesses, will ultimately feature five to six widely distributed brands that command most of the market,” Purdy said.

The company is ramping up distribution for both FRE and ALP. ALP, previously positioned as a direct-to-consumer-only brand, has already begun retail shelf tests ahead of schedule and is expected to expand its brick-and-mortar rollout in the second quarter. “We’re incredibly excited about the ALP launch in Q2,” Purdy said. “We think that we’re going to come out of the gate very strong there.”

Sales force expansion is ahead of plan, with management reporting progress toward doubling the team to support distribution growth. “There’s still tremendous amount of store opportunity out there,” Purdy said. “It’s not necessarily at all times about raw store count adds. It’s about the maturity of each of the stores that we get in distribution.”

Within Stoker’s, legacy brands grew 9% to $39.7 million, while loose-leaf declines were partially offset by Modern Oral gains. A new value-tier sub-brand, Stoker’s Proud, launched in the quarter to address pricing pressures. Zig-Zag net sales declined 13% to $40 million, but gross margin improved 40 basis points to 54.6%.

On the regulatory front, management downplayed competitive risks from potential nicotine-pouch tax hikes. “If you think about taxation in a specific state level, it impacts every product that’s within that state,” Purdy said. “There’s no disadvantage for one manufacturer or another.”

Purdy said growth is being driven by both increased usage among existing consumers and by new entrants switching from cigarettes and other tobacco products.“The great news is both,” he said. “We’re seeing consumer uptake from other tobacco products, specifically cigarettes and even vapes.”