Turning Point Brands, Inc. (TPB): Business Model Canvas [Dec-2025 Updated]

You're trying to figure out the real engine behind Turning Point Brands, Inc. (TPB) right now, and honestly, it's a tale of two businesses: the cash-cow legacy side and the high-stakes pivot to smoke-free. From my vantage point, the strategy hinges on leveraging the 60.2% gross margin from Stoker's moist snuff to fund an aggressive build-out, which is why Selling, General, and Administrative expenses hit $44.5 million in Q3 2025 alone, all aimed at accelerating Modern Oral growth. This Business Model Canvas lays out precisely how they are deploying their $201.2 million in cash and their established distribution network to hit projected 2025 Modern Oral sales between $125.0 - $130.0 million while managing complex FDA rules; you need to see the key partnerships and activities making this delicate balancing act work.

Turning Point Brands, Inc. (TPB) - Canvas Business Model: Key Partnerships

You're looking at the structure that lets Turning Point Brands, Inc. move product and secure future growth, especially in the fast-moving Modern Oral space. These relationships are the backbone for getting their brands, like Stoker's and the newer pouch offerings, onto shelves across the US. Honestly, the success in Q3 2025, with consolidated net sales hitting $119.0 million, shows this network is working, even with segment shifts like the Zig-Zag segment seeing a 10.5% net sales decrease to $44.2 million for the quarter.

Long-term marketing deal with Professional Bull Riders (PBR) for Frē brand

Turning Point Brands, Inc. maintains a marketing relationship with Professional Bull Riders (PBR) to support the rollout and brand awareness for its Frē brand within the Modern Oral category. This is a key part of the strategy driving the Modern Oral segment, which reported net sales of $36.7 million in the third quarter of 2025, making up 30.8% of total net sales. The company is aggressively investing here, raising its full-year 2025 Modern Oral sales guidance to a range of $125.0 - $130.0 million.

Key wholesale distributors for nationwide retail penetration

Nationwide reach relies on established relationships with major wholesale distributors. While specific distributor revenue splits aren't public, the overall scale of the business reflects this penetration. For instance, the Stoker's segment, which includes MST and looseleaf, saw its net sales increase by 80.8% to $74.8 million in Q3 2025, indicating broad access to traditional tobacco channels. The company is also actively expanding its sales force, ahead of schedule on its goal to double its size by the end of 2026.

Strategic chain partners for expanded in-store product assortment

Securing shelf space in major retail chains is critical for the Modern Oral category. The company is focused on accelerating the retail rollout for its ALP joint venture products. Turning Point Brands, Inc. ended Q3 2025 with total liquidity of $201 million, which helps fund the necessary slotting fees and marketing support required by these large chain partners.

Raw material suppliers for tobacco and nicotine pouch components

The asset-light model depends on longstanding supplier relationships. For the Zig-Zag segment, specific supply agreements dictate sourcing. The company is required to purchase all cigarette papers, tubes, and injecting machines it sells from RTI, subject to RTI fulfilling its obligations under the distribution agreements. Sourcing for cigar wraps and other Zig-Zag branded cigars comes from the Dominican Republic. The balance sheet as of December 31, 2024, showed significant inventory investment in these materials, which is a direct reflection of these supply commitments:

The company's commitment to its Modern Oral growth is also reflected in its capital structure, which includes financial partners supporting its funding needs.

Third-party logistics (3PL) providers for efficient distribution

Efficient movement of goods is managed through logistics partners, which is a growing expense area. Consolidated selling, general and administrative (SG&A) expenses for Q3 2025 were $44.5 million, up 50.5% from the prior year, partly driven by increased outbound freight costs to support the growing business. Furthermore, the company has established financial partnerships for capital raising, such as the At Market Issuance Sales Agreement with B. Riley Securities, Inc. and Barclays Capital Inc., where sales agents are entitled to a commission of up to 3% of the gross sales price of any shares sold.

• The company raised $97.5 million in net proceeds from an ATM offering in Q3 2025 to deploy across high-return opportunities.
• Total gross debt stood at $300.0 million as of June 30, 2025.

Finance: draft 13-week cash view by Friday.

Turning Point Brands, Inc. (TPB) - Canvas Business Model: Key Activities

You're looking at the core actions Turning Point Brands, Inc. (TPB) is taking right now to drive growth, especially in that high-potential Modern Oral space. Here's a look at the hard numbers behind their main activities as of late 2025, based on their Q3 2025 results.

Manufacturing and production of moist snuff and rolling papers

The heritage businesses are still key, but their performance is diverging. The moist snuff tobacco (MST) side, under the Stoker's segment, is showing significant strength, while the rolling papers business, Zig-Zag, is facing some headwinds.

For the third quarter of 2025, the Stoker's segment net sales jumped by an impressive 80.8% year-over-year. In contrast, the Zig-Zag segment net sales actually decreased by 10.5% compared to the prior year. Still, the Zig-Zag segment continues to generate substantial gross profit, reporting $25.4 million in Q3 2025, with a gross margin of 57.5%. To be fair, the Stoker's segment is also benefiting from consumer trade-down trends.

Accelerating the build-out of U.S. white pouch production lines

This is a capital-intensive activity, aimed at securing the supply chain for their fastest-growing products. They are clearly putting money to work here to control their destiny.

Turning Point Brands, Inc. is planning to qualify its first U.S. white pouch production lines in the first half of 2026. To fund these growth initiatives, the company raised $97.5 million in net proceeds from an At-the-Market offering program during the quarter. For the full year 2025, the budgeted Capital Expenditure (CapEx) is set between $4 million to $5 million, but that figure specifically excludes projects related to the Modern Oral business. Separately, they expect to spend between $3 million to $5 million for the full year 2025 just to supplement their Modern Oral PMTAs. CapEx for the third quarter alone was $3.8 million.

Sales force expansion, aiming to defintely double the 2024 headcount by 2026

You need boots on the ground to win shelf space, and Turning Point Brands, Inc. knows it. They are actively increasing their sales force headcount to improve distribution frequency and merchandising quality.

The stated goal is to approximately double the size of the 2024 sales force by the end of 2026. This expansion is a key part of the strategy to increase store visit frequency, expand distribution, and minimize out-of-stocks at retail. As of September 30, 2025, the company reported a total headcount of 310 employees. They are funding this growth with strong liquidity, ending Q3 2025 with total liquidity of $267.8 million, which includes $201.2 million in cash.

Navigating and managing complex FDA PMTA regulatory processes

Managing the Pre-Market Tobacco Application (PMTA) process is a non-negotiable cost of doing business in the Modern Oral space. These expenses show up in the Selling, General, and Administrative (SG&A) line.

For the third quarter of 2025, SG&A included $0.5 million in FDA PMTA-related expenses for Modern Oral products. This was lower than the $1.2 million recorded in the same period last year. Looking at the first quarter of 2025, the PMTA-related expenses were $1.6 million, up from $0.8 million in Q1 2024. As noted above, the company budgeted $3 million to $5 million for the full year 2025 specifically to supplement these Modern Oral PMTAs.

Brand marketing and promotional investment for Modern Oral growth

The investment in marketing is directly tied to the explosive growth in the Modern Oral segment. You can see the spending reflected in the SG&A line, which is fueling the revenue surge.

Third quarter 2025 consolidated SG&A expenses reached $44.5 million, which was an increase of 50.5% from the prior year, and this included increased Modern Oral-related sales and marketing investments. This investment is paying off: Modern Oral Net Sales for Q3 2025 hit $36.7 million, a year-over-year increase of 627.6%, now making up 30.8% of total company net sales. Based on this momentum, Turning Point Brands, Inc. raised its full-year 2025 Modern Oral sales guidance to a range of $125.0 million to $130.0 million. The company is also executing strategic marketing campaigns, including a partnership with Professional Bull Riders.

• Modern Oral Net Sales (Q3 2025): $36.7 million
• Modern Oral Sales as % of Total Net Sales (Q3 2025): 30.8%
• Full Year 2025 Modern Oral Sales Guidance Range: $125.0 million to $130.0 million
• Consolidated SG&A (Q3 2025): $44.5 million

Finance: draft 13-week cash view by Friday.

Turning Point Brands, Inc. (TPB) - Canvas Business Model: Key Resources

You're looking at the core assets Turning Point Brands, Inc. (TPB) relies on to drive its business, especially given the massive growth in its newer categories. These aren't just abstract concepts; they are concrete numbers and established market positions as of late 2025.

The company's financial strength provides a solid foundation for these resources. As of the end of Q3 2025, Turning Point Brands, Inc. reported a cash position of $201.2 million. This cash, combined with $66.6 million of availability under its asset-backed revolving credit facility, resulted in total liquidity of $267.8 million. This capital was bolstered by raising $97.5 million in net proceeds from an At the Market offering. That's a lot of dry powder to fuel expansion.

The portfolio is clearly split between its established anchors and its high-velocity growth engine. The heritage brands provide stability, while the Modern Oral segment is the growth story.

The established U.S. distribution network is a massive physical asset. Turning Point Brands, Inc. products are currently available in approximately 197,000 U.S. retail locations. When you factor in Canadian locations, the total North American presence is estimated at 217,000 points of distribution.

Intellectual property and proprietary product formulations are critical, especially in the regulated space. The investment here is evident in the spending to protect and advance these assets. For instance, the company budgeted between $3 million to $5 million for the full year 2025 to supplement its Modern Oral PMTAs (Pre-Market Tobacco Applications). In Q3 2025 alone, FDA PMTA-related expenses were $0.5 million.

You can see the resource allocation clearly in the segment margins, too:

• Stoker's segment gross margin improved 440 basis points year-over-year to 60.2%.
• Zig-Zag segment gross margin increased 210 basis points from the prior year to 57.5%.
• Consolidated Gross Margin for Q3 2025 was 59.2%.

Finance: draft 13-week cash view by Friday.

Turning Point Brands, Inc. (TPB) - Canvas Business Model: Value Propositions

You're looking at the core value Turning Point Brands, Inc. (TPB) delivers across its distinct customer groups, grounded in the late 2025 performance data. It's about balancing a steady heritage business with explosive growth in new categories.

Traditional Consumers: Consistent, high-quality, value-priced tobacco (Stoker's MST/loose-leaf)

For consumers loyal to the core Stoker's line, the value proposition centers on reliable product quality and established presence. While the Modern Oral segment drives headline growth, the legacy tobacco products still provide a significant revenue base and margin stability.

• Stoker's segment net sales reached $74.8 million in Q3 2025, up 80.8% year-over-year.
• Moist Snuff Tobacco (MST) sales were $27 million for the third quarter of 2025.
• Loose leaf sales for the quarter totaled $11 million.

Modern Consumers: Smoke-free, discreet, and flexible nicotine options (Frē/ALP pouches)

The value here is capturing the shift to smoke-free alternatives with high-growth, modern oral products like Frē and ALP pouches. This segment is the primary engine for the company's accelerated guidance.

• Modern Oral Net Sales exploded to $36.7 million in Q3 2025.
• This represents a year-over-year increase of 627.6%.
• Modern Oral products accounted for 30.8% of total consolidated Net Sales in Q3 2025.
• The company raised its full-year 2025 Modern Oral sales guidance to a range of $125.0 million to $130.0 million.

Retailers: Single-source supplier for both legacy and high-growth alternative products

Retail partners value the convenience of sourcing a broad portfolio from one trusted supplier, covering both staple tobacco items and high-velocity nicotine alternatives. This breadth supports their overall category sales.

High gross margins, with Stoker's segment at 60.2% in Q3 2025

The inherent profitability of the core business, especially when boosted by the mix shift toward higher-margin Modern Oral products within the Stoker's segment, provides a strong financial foundation.

The Stoker's segment achieved a gross margin of 60.2% in the third quarter of 2025, marking an increase of 440 basis points from the prior year. Overall consolidated gross margin for Q3 2025 was 59.2%.

Zig-Zag: Premium rolling papers and wraps with strong brand equity

The Zig-Zag brand offers consumers premium rolling papers and accessories, supported by deep brand recognition and ongoing efforts to engage a younger demographic. While facing near-term headwinds, the segment maintains a solid gross margin.

• Zig-Zag segment net sales were $44.2 million in Q3 2025.
• The segment's gross margin was 57.5% in Q3 2025.
• The Zig-Zag brand holds a 33% market share in the U.S. rolling paper market (as of year-end 2024).
• The perpetual distribution agreement for the papers portion renews in 2032.

Turning Point Brands, Inc. (TPB) - Canvas Business Model: Customer Relationships

Dedicated sales force managing direct relationships with key chain accounts is reflected in the overall distribution footprint and segment performance.

TPB products are available in more than 220,000 retail outlets in North America as of early 2025.

The investment in sales and marketing to support growth, particularly in new channels, is evident in Selling, General and Administrative expenses (SG&A).

• Third quarter 2025 consolidated SG&A expenses increased 50.5% from the prior year.
• Q3 2025 SG&A included increased Modern Oral-related sales and marketing investments.

High-touch, personalized engagement for Direct-to-Consumer (D2C) Modern Oral sales is driving significant revenue acceleration.

• Modern Oral Net Sales for Q3 2025 reached $36.7 million.
• Modern Oral Net Sales for Q3 2025 accounted for 30.8% of total Company Net Sales.
• Full-year 2025 Modern Oral sales guidance is set between $125.0 million and $130.0 million.
• Q1 2025 Modern Oral Net Sales were $22.3 million.
• Consolidated nicotine pouch sales guidance for full-year 2025 was raised to a range of $80.0 million to $95.0 million.

Brand loyalty programs for established, traditional tobacco consumers are a foundational element, with financial outcomes seen in the Stoker\'s segment performance.

The Stoker\'s segment Net Sales increased 80.8% year-over-year in Q3 2025.

While specific TPB loyalty program metrics aren\'t public, industry data suggests the value of such relationships:

Mass marketing and promotional activity in retail channels supports the broader portfolio, including Zig-Zag and Stoker\'s.

The Zig-Zag segment Net Sales for Q3 2025 were approximately $44.2 million.

The company raised $97.5 million of net proceeds under an At the Market offering program, capital intended to accelerate growth, including in the Modern Oral segment.

Financial outcomes across segments in Q3 2025:

Turning Point Brands, Inc. (TPB) - Canvas Business Model: Channels

You're looking at how Turning Point Brands, Inc. (TPB) gets its products-from rolling papers to modern oral nicotine pouches-into the hands of customers. It's a mix of old-school distribution muscle and aggressive new-channel development.

Wholesale distributors serving convenience stores and tobacco outlets form the backbone of the established network. This expansive reach is critical for legacy brands like Zig-Zag and Stoker's. As of late 2025, TPB's products are available in more than 220,000 retail outlets across North America. This scale is what supports the core business segments.

The company is actively working to enhance its presence in larger retail formats, which covers Mass merchandisers and food stores for broad retail reach. A key strategic focus involves Ramping up investment in major chain accounts. This is explicitly listed as a key investment initiative to accelerate growth, alongside increasing the headcount of the sales force.

The explosive growth in the Modern Oral category, which includes the ALP and Frē brands, highlights the success of targeted channel execution. The company is clearly pushing these products through both traditional and newer avenues. For instance, ALP started appearing on bricks-and-mortar shelves ahead of prior schedules during Q3 2025. The company is also focused on Direct-to-Consumer (D2C) e-commerce platform for ALP and Frē brands, with investment in improving its online presence being a priority. The first-ever D2C site for Stoker's was also launched.

Here's a look at the financial impact of the Modern Oral channel growth through Q3 2025:

For the Zig-Zag brand, the focus is on geographic expansion. The company is Ramping up investment in international distribution for Zig-Zag products, which is listed as a key investment area to deploy capital raised, alongside building out U.S. manufacturing.

The channel strategy is supported by specific go-to-market investments:

• Reallocating sales and marketing resources.
• Increasing the headcount of the sales force; ahead of schedule to double size by end of 2026.
• Improving the online presence for D2C efforts.
• Ramping up investment in chain accounts.
• Expanding to international markets.

The performance across the established channels in Q3 2025 shows mixed results outside of the Modern Oral surge. The Stoker's segment net sales increased by 80.8%, while the Zig-Zag segment net sales decreased by 10.5% year-over-year.

Turning Point Brands, Inc. (TPB) - Canvas Business Model: Customer Segments

You're looking at the core groups Turning Point Brands, Inc. (TPB) serves, based on their latest reported performance through the third quarter of 2025. This isn't just about who buys the products, but how much revenue each group drives right now.

Adult consumers of traditional tobacco products (MST, loose-leaf, cigars)

These are the established users within the Stoker's Products segment. You see consistent, though slower, growth here, which provides a solid base for the company's overall stability. The growth in these traditional areas helps fund the aggressive push into newer categories.

• MST (moist snuff tobacco) net sales grew 6% year-over-year in Q3 2025 to $27 million.
• Loose-leaf chewing tobacco net sales increased 4% year-over-year in Q3 2025, reaching $11 million.

Adult consumers transitioning to or seeking smoke-free nicotine alternatives

This is the explosive growth engine, centered on the Modern Oral nicotine pouch category. The numbers here are staggering, showing a clear shift in consumer preference that TPB is capturing rapidly. This group is the primary focus for capital deployment, with the company raising $97.5 million in net proceeds from an ATM offering to accelerate this growth. They are targeting double-digit market share in this category.

• Modern Oral Net Sales in Q3 2025 hit $36.7 million, a 627.6% increase year-over-year.
• Modern Oral accounted for 30.8% of total Company Net Sales in Q3 2025.
• Full-year 2025 consolidated Modern Oral sales guidance was raised to a range of $125.0 million - $130.0 million.

Wholesale distributors and large-format retail chains

This segment is served through the distribution network that carries both the Stoker's and Zig-Zag product lines. The Zig-Zag segment, which includes premium papers and wraps, represents the other major revenue stream, though it saw a slight dip due to a planned business wind-down. The sheer scale of distribution is a key asset here; TPB's products are available in more than 220,000 retail outlets in North America as of Q1 2025.

Here's a quick look at how the two main product segments, which rely on this distribution channel, performed in Q3 2025:

International consumers of premium rolling papers and accessories

While the primary footprint is North America, the company's engagement with the international market is suggested by the conference call details, where international participants called a specific number. Specific international revenue figures aren't broken out in the latest reports, so we focus on the scale of the core accessory/paper business, which is part of the Zig-Zag segment. The company is also prioritizing investments in international expansion, indicating this segment is a focus area for future growth.

The Zig-Zag segment, which houses the premium papers and accessories, generated $44.2 million in net sales in Q3 2025. The company announced groundwork for new products like Zig-Zag Natural Leaf Flat Wraps, showing continued development for this consumer base.

Turning Point Brands, Inc. (TPB) - Canvas Business Model: Cost Structure

You're looking at the cost drivers for Turning Point Brands, Inc. (TPB) as we move through late 2025. The story here is clear: high growth in Modern Oral is pushing up operating costs, especially in marketing and logistics, while capital spending ramps up for future capacity.

High variable costs for raw materials and manufacturing (Cost of Goods Sold)

The cost of making and acquiring the products sold remains a primary expense. For the third quarter ended September 30, 2025, consolidated Net Sales hit $119.0 million. With a reported Gross Profit of $70.4 million for that same quarter, the implied Cost of Goods Sold (COGS) for Q3 2025 was approximately $48.6 million ($119.0M - $70.4M). This resulted in a consolidated Gross Margin of 59.2% in Q3 2025. To give you a baseline from the prior full year, the Cost of Goods Sold for the fiscal year ending 2024 was $159.09 million against total revenue of $360.66 million.

The margin profile is shifting due to product mix, which directly impacts variable costs:

• Stoker's segment gross margin improved to 60.2% in Q3 2025.
• Zig-Zag segment gross margin was 57.5% in Q3 2025.
• The overall margin increase was mix driven, primarily related to outsized growth in Modern Oral.

Significant and increasing Selling, General, and Administrative (SG&A) expenses, which hit $44.5 million in Q3 2025, driven by Modern Oral marketing

Operating expenses are definitely climbing as the company aggressively supports its high-growth Modern Oral segment. Reported SG&A expenses for the third quarter of 2025 were $44.5 million. This figure represents a substantial year-over-year increase of 50.5%. Sequentially, SG&A rose by $4.2 million from Q2 2025.

Here's a breakdown of what drove that $44.5 million spend in Q3 2025:

For context, Q2 2025 SG&A included $1.7 million in FDA PMTA-related expenses and $0.8 million in non-recurring freight costs. The investment in the go-to-market plan for the white pouch business is clearly a major cost center right now.

Capital expenditures (CapEx) for U.S. manufacturing expansion

The company is putting capital to work to support future scale, particularly for the Modern Oral line. Budgeted CapEx for the full year 2025 is set between $4 million to $5 million, not including projects for the Modern Oral business. For those specific Modern Oral PMTA (Pre-Market Tobacco Application) related projects, Turning Point Brands expects to spend an additional $3 million to $5 million for the full year.

The actual spend in the latest reported quarter reflects this focus:

• CapEx for Q3 2025 was $3.8 million.
• CapEx for Q2 2025 was $4.0 million.

Distribution and outbound freight costs

Logistics costs are a notable component of the variable and operating expenses, directly tied to supporting the growing business. Increased outbound freight charges were explicitly cited as a reason for the sequential rise in SG&A expenses in Q3 2025. In the prior quarter (Q2 2025), non-recurring freight costs totaled $0.8 million. The company's robust distribution network reaches approximately 200,000 retail locations across North America.

Interest expense on total gross debt of $300.0 million

Financing costs are fixed based on the debt load taken on to fuel growth initiatives. Total gross debt for Turning Point Brands, Inc. stood at $300.0 million as of September 30, 2025. This debt structure includes a 7.625% high-yield bond issued in February 2025. Based on the total gross debt and the stated bond coupon, the annualized implied interest expense would be approximately $22.875 million ( $\$300.0 \text{ million} \times 0.07625$).

The balance sheet reflects this debt load:

• Total gross debt as of September 30, 2025: $300.0 million.
• Long-term debt as of September 30, 2025: $292.0 million.
• Net debt (total gross debt less unrestricted cash) as of September 30, 2025: $98.8 million.

Finance: draft 13-week cash view by Friday.

Turning Point Brands, Inc. (TPB) - Canvas Business Model: Revenue Streams

You're looking at the core ways Turning Point Brands, Inc. (TPB) brings in cash as of late 2025. The story here is clearly the explosive growth in the Modern Oral category, which is now a major pillar alongside the established tobacco and accessories businesses. Honestly, the numbers from Q3 2025 tell you everything you need to know about the current revenue mix.

For the third quarter ending September 30, 2025, consolidated net sales hit $119.0 million. This revenue is segmented across the company's main operational groups, showing a clear shift in contribution.

The Modern Oral Nicotine Pouches (Frē/ALP) stream is the clear growth engine. Management raised the full-year 2025 sales guidance for this category to a range of $125.0 - $130.0 million. To put that into perspective, the Q3 2025 sales for Modern Oral alone reached $36.7 million, which represented 30.8% of the total company net sales for that quarter.

Here's a quick look at the quarterly revenue breakdown by segment, showing the relative size of each stream:

The Stoker's segment, which houses the legacy Moist Snuff Tobacco (MST) and loose-leaf tobacco, remains the largest single contributor by volume, posting Q3 2025 net sales of $74.8 million. This segment's growth was heavily fueled by the Modern Oral sales included within it.

Digging into the traditional components of the Stoker's segment for Q3 2025, you see the stable cash flow sources:

• MST sales were $27 million, showing a 6% increase.
• Loose-leaf sales were $11 million, showing a 4% increase.

The Zig-Zag segment, covering rolling papers, wraps, and accessories, brought in Q3 2025 net sales of $44.2 million. This segment saw a year-over-year decrease, largely due to the strategic wind-down of the Clipper lighter business. Still, excluding that impact, the segment achieved mid-single-digit sequential growth.

Another component of revenue, though smaller in the quarter, comes from retailer incentives. Specifically for the Modern Oral products in Q3 2025, $1.5 million of slotting fees were recognized, which are accounted for as contra revenue.

Looking at the bigger picture, the Trailing Twelve-Month (TTM) revenue, which captures the full run-rate leading up to the end of Q3 2025, was approximately $435.72 million. That TTM figure represents a 51.72% year-over-year growth rate. Finance: draft 13-week cash view by Friday.