The Pitch: Turning Point Brands’ Bet Against ZYN’s Monopoly

It isn’t hard to see a path where TPB becomes a $5B company

I’ve been scouring the nicotine pouch investment space for the past year, and in reality only two names consistently stand out: $HAYPP and $TPB. My past predictions on nicotine pouch sales have been surprisingly accurate over the last two quarters, which makes it appropriate to take a step back and lay out how I see Turning Point Brands today.

For those unfamiliar, Turning Point Brands ($TPB) owns FRE and also operates ALP, a 50/50 joint venture with Tucker Carlson that launched just before last Christmas. The brand saw almost instant success, yet many investors still don’t realize it’s possible to gain exposure to it through TPB. While the stock has already moved up since it first landed on my radar, I still see a strong bull case worth laying out here.

Before diving into the strength of TPB’s business, two points need to be clear. First, nicotine pouches only represent about 20–30% of total revenue, depending on how the rest of the year develops. The rest still comes from more traditional tobacco products.

Second, TPB’s reported nicotine pouch revenue can be a bit misleading. Since ALP is a 50/50 joint venture with Tucker Carlson, not all of that revenue truly belongs to TPB. When you adjust for Carlson’s share, the nicotine pouch percentage of revenue isn’t actually as large as the Q2 headline figure suggests. The tricky part is that TPB doesn’t disclose the mix between FRE and ALP, so it’s hard to know the exact split. Correct me if I’m wrong here; it’s possible I’ve missed a detail in the filings that breaks this down more clearly.

The key takeaway is that when considering the bull case for nicotine pouches, you have to keep in mind two things: TPB is essentially operating two different businesses, and a significant portion of profits go to Carlson rather than TPB shareholders.

How TPB Creates value

TPB finds itself in a unique position. Unlike many potential entrants still waiting for approvals, TPB already has products on the market; FRE and ALP; giving it a head start in building share. This creates a favorable environment where TPB can grow without facing the same level of competitive pressure that usually exists in fast-growing categories.

The second factor is, of course, Tucker Carlson and his massive following. Many users have grown tired of ZYN and view it as a “liberal” product. Carlson seized that opening and branded ALP as the working man’s or right-wing pouch, and his audience seems to be embracing it. That backing from a public figure gives ALP an identity and reach that most challenger brands can only dream of.

But what reasons beyond branding do consumers have to switch? A big one is that TPB’s pouches are well-liked by users. They deliver not only on quality but also on strength and price. ALP offers higher-strength options at a lower cost, which is a powerful combination in this category. Having lived in Finland, I know that a significant portion of pouch users fall into this segment: they want the strongest products available, and they’re willing to compromise a bit on taste and texture if it means more strength for less money.

The result is a product that simply works; without much direct competition. And over time, as the U.S. market matures, more and more consumers are likely to move into this higher-strength, value-oriented segment where TPB is already well positioned.

How Much Could TPB Grow from Nicotine Pouches?

I believe the U.S. nicotine pouch market could reach $100 billion over the next 10–20 years. This is an aggressive target, but in my view the product is structurally superior to other nicotine alternatives.

The key question then becomes: what is a smaller, mid-sized player like TPB worth in such a market? I believe TPB has the potential to capture up to 10% market share, if not more. Under that scenario, TPB could realistically support a valuation in the $10–20 billion range.

Of course, this outcome carries significant execution risk and requires time to play out. My own DCF models in the past have landed closer to $4–5 billion, which still implies the stock could double from today’s levels.

Future Value Capture

It’s safe to assume that ALP and FRE will continue to grow in the near future. The U.S. market has little competition, demand is expanding rapidly, and the environment is ideal for TPB to gain share. But the real question is whether TPB will be able to capture value long term.

In the short term, growth is far more important than profits. Expanding distribution and building market share takes priority. However, at some point, investors will inevitably ask: does TPB offer something unique that allows it to capture lasting value?

This is where the debate begins. On one side, some investors believe nicotine pouches will behave like cigarettes: once users pick a brand, they stick with it, creating strong switching costs and enabling high margins. On the other side, there’s evidence that pouch users are far more experimental. They try new products, flavors, and strengths. My own observations lean in this direction; it isn’t very difficult to convince someone to switch. That said, this might simply be a reflection of the category’s early stage. As the market matures, it could still shift toward a more brand-loyal equilibrium.

The truth likely lies somewhere in the middle. Current evidence suggests nicotine pouch users aren’t as loyal to their brands as smokers are. The implication is that long-term margins may not reach the same levels as traditional tobacco. On the other hand, this dynamic benefits ALP and FRE in the short run, since lower brand loyalty makes consumers more willing to switch; and that means faster growth early on.

That’s my best guess: more growth now, lower margins later. But this remains an open question. Do you see it differently?

The Not-So-Good Part About TPB

Although I see a bright future for TPB, there are aspects of the company I don’t quite love. Yes, they currently have strong-performing products and a solid distribution network that allows them to expand quickly. But production is run very lean, and it appears that some; or even most; of their pouch manufacturing takes place in India. It’s not entirely clear how much, but this sits awkwardly with the “America First” branding that Tucker Carlson represents.

Another concern is how difficult it has been to interpret TPB’s numbers, especially around the joint venture. The way the results are presented makes it harder to understand how much true economic value to assign to TPB shareholders. It also raises the question: why is the reporting so vague?

I’d love to see a clearer breakdown; FRE vs. ALP contribution, online sales ratios, and other segment details; but so far, that level of transparency hasn’t been provided. The company’s investor relations still feel old school, and that lack of clarity makes building conviction in the long-term economics trickier than it needs to be.

Final Notes

I’ve been following TPB closely for the past year, but I still need to dive deeper into the details of their latest quarter. Once I’ve done that, I’ll put together a full deep dive and share my updated valuation of the company.

The last time I ran a DCF on TPB was almost a year ago. Back then, I speculated that nicotine pouch revenues could reach $150 million by 2025. Time will tell whether they can exceed their already raised guidance.

In any case, subscribe to my newsletter if you don’t want to miss my next $TPB post, where I’ll lay out a proper deep dive.

Disclaimer: I am not currently invested in $TPB.