Turning Point Brands, Inc. (TPB): A Bull Case Theory in the Evolving Alternative Tobacco and CBD Landscapes

The global landscape of alternative nicotine and cannabis-derived products is undergoing a profound transformation. At the forefront of this shift stands Turning Point Brands, Inc. (TPB), a company that has redefined its strategic trajectory to capitalize on two of the most promising sectors: premium nicotine pouches and hemp-derived CBD. By examining TPB's market positioning, financial performance, and forward-looking initiatives, a compelling bull case emerges for long-term value creation.

Strategic Market Positioning in Nicotine Pouches

TPB's pivot toward nicotine pouches has proven to be a masterstroke. In Q2 2025, Modern Oral sales-encompassing its FRE and ALP brands-surged by 651% year-over-year to $30.1 million, accounting for 26% of total revenue, according to the Q2 2025 results. This meteoric growth reflects the company's ability to tap into a rapidly expanding niche. The nicotine pouch market, projected to grow at a 30% annual rate through 2025 according to a SWOT analysis, is increasingly viewed as a safer alternative to combustible tobacco, aligning with regulatory trends and consumer preferences.

TPB's aggressive expansion strategy includes launching five new NewGen pouch flavors by March 2025 and securing distribution in 25,000 additional retail locations (per the company strategic plan). These initiatives are not merely incremental but transformative, aiming to capture 15% of the nicotine pouch market-a target that, if achieved, would solidify TPB's leadership in this category. The company's Q3 2025 strategic plan further underscores its ambition, with a goal of $45 million in nicotine pouch sales by year-end (company guidance).

Diversification into CBD and Smoking Cessation

While nicotine pouches form the core of TPB's current success, its foray into hemp/CBD and smoking cessation products signals a broader vision. By August 2025, TPB plans to complete a strategic acquisition in the hemp/CBD space (company strategic plan), a move that aligns with the explosive growth of the CBD market. According to a report by Mordor Intelligence, the global CBD market is valued at $10.04 billion in 2025 and is projected to reach $21.34 billion by 2030, growing at a 16.28% CAGR. North America, which dominated 88% of the CBD market in 2024, offers a fertile ground for TPB's expansion, particularly as hemp-derived CBD benefits from favorable legislation and scalable supply chains.

Simultaneously, TPB's planned Q2 2025 launch of a smoking cessation product line (company strategic plan) positions it to address a critical public health need while diversifying its revenue streams. This dual focus-on harm reduction and alternative wellness-enhances TPB's resilience against regulatory headwinds in traditional tobacco markets.

Financial Performance and Guidance

TPB's Q2 2025 results underscore its financial strength. Total consolidated net sales rose 25.1% to $116.6 million, with Modern Oral sales contributing 26% of this growth. Gross profit increased by 32.2% to $66.6 million, and Adjusted EBITDA rose 14.8% to $30.5 million. The company has raised its 2025 adjusted EBITDA guidance to $110.0–114.0 million and its full-year Modern Oral sales guidance to $100.0–110.0 million. These figures reflect not only operational efficiency but also the scalability of TPB's business model.

Long-Term Value Creation

TPB's strategic initiatives are underpinned by structural trends. The nicotine pouch market's 30% annual growth rate and the CBD industry's projected doubling in size by 2030 provide a robust foundation for long-term value creation. By diversifying into smoking cessation and hemp/CBD, TPB is insulating itself from sector-specific risks while tapping into markets with strong consumer demand and regulatory tailwinds.

Moreover, TPB's focus on innovation-such as its NewGen pouch flavors-ensures it remains ahead of competitors. The company's ability to secure retail distribution in 25,000 additional locations further amplifies its market penetration potential.

Conclusion

Turning Point Brands is not merely adapting to industry shifts; it is leading them. With a clear-eyed focus on nicotine pouches, a strategic pivot into CBD, and a financially robust balance sheet, TPB is well-positioned to deliver outsized returns for investors. As the alternative nicotine and CBD markets mature, TPB's proactive approach to innovation and diversification will likely cement its status as a dominant player in these high-growth sectors.